January 18, 2022

What’s in the Governor’s Proposed FY23 State Budget for Education?

On January 14 Governor Doug Ducey released his $14.25B proposal for the fiscal year 2023 budget. Priorities in the budget included education, water and public safety, among other issues. The budget, which has been touted as the largest in the state’s history, increases the rainy day fund by $425M to $1.4B, includes a $58M corporate tax cut that has yet to be defined and ends with over $1B cash on hand.

The budget is crafted largely with the assumption that Prop 208 will be overturned by the court and the flat tax proposed last year will not be overturned by voters.

When it comes to education, here’s what we were looking for in the budget:

How are resources being allocated to increase education attainment throughout the education continuum?

Education attainment is the number of working adults who have a degree or credential. Right now, Arizona’s attainment rate is 46%, 14 percentage points behind the Achieve60AZ goal that the state has adopted. Moving the needle on this goal isn’t just about making investments in postsecondary education, it also requires investing in strategies in K-12 and early education.

How are we responding to the COVID pandemic?

We’ve seen major dips in student performance and decreases in access and opportunities to early learning and postsecondary education for Arizona students, not by any fault of educators or students, but as a result of the pandemic. Our K-12 schools and early learning programs across the state are experiencing a teacher and school staff shortage crisis that is affecting everything from bus routes, food service and the ability for schools to provide in-person learning.

Our state’s ability to respond to the pandemic and to prioritize education attainment (P-20) matters to our students today and to our future economy.

How does the budget stack up? Here’s what the Governor proposed regarding education:

For education, here are the highlights of the Governor’s proposed budget:

  • Nearly doubling results-based funding with an investment of $61M
  • $58M for Operation Excellence for low-performing schools
  • $100M for summer camps (using federal funding)
  • $46M for the Arizona Board of Regent’s New Economy Initiative
  • $12.5M for the Arizona Promise Program
  • $10.8M to restore STEM funding for Maricopa and Pima Community Colleges
  • $7M for rural community colleges and a number of other initiatives

A full summary of proposed investments can be found below.

Let’s break down a few of these proposed investments…

Pandemic Response & Recovery

The Governor proposed using $100M in federal funding to create the AZ Back on Track Summer Camp with $100M in federal funding that will help students catch up on unfinished learning from the pandemic. The idea of this proposal has merit. Two things to watch with this proposal include how the state will recruit the 5,900 instructors needed to run the program and how this effort will be paired with longer-term strategies to build on and sustain the progress made during the summer program. Recovering from the pandemic will take multiple years – it won’t be solved through summer school on its own. In addition to summer school, we should prioritize long- and short-term strategies to support student success. Specifically, the state should address math education and should implement the State Board of Education’s literacy recommendations to increase the number of literacy coaches.

While not related to the pandemic, it is worth mentioning the Governor has proposed using $58M in state funding for a new program called Operation Excellence that seeks to improve schools with D and F letter grades (C-rated schools with a 60% or higher free and reduced priced lunch status will also be encouraged to participate). We appreciate this investment and willingness to support struggling schools. We’d like to see additional details of this proposal and would welcome being a part of those conversations.

Reaching Arizona’s Achieve60AZ Attainment Goal

More so than in his state of the state address, the budget goes into additional detail about the Governor’s proposed investments in postsecondary education. There are a number of proposals worthy of support including funding for community colleges, the state universities and expanding the Arizona Promise Program, a scholarship for low-income Arizona students to go to a state university. Ideally, we’d like to see the Arizona Board of Regents’ New Economy Initiative be fully funded and the Arizona Promise Program expanded to serve more students at a greater scale.

Opportunities for Improvement

With his budget proposal, the Governor is leaving more than $1B cash on hand, is nearly doubling the amount of incentive funds for results-based funding (an increase of $61M) and adding $5M in incentives for schools that do well on the state-required civics exam. This funding could be repurposed to make a greater investment in initiatives that could directly benefit our students and educators at all levels.

For example, we’d support increased investments in strategies like dual enrollment (programs that allow students to earn high school and college credits in high school) and increasing the number of school counselors available to help guide our students as they prepare for their education beyond high school. We’d also advocate for including investments to support teachers and solve for the teacher shortages schools and early education programs are experiencing. Additionally, funding could be invested to create a pool of substitute teachers who could meet an immediate need that schools need help with now and in future school years.

Our students with disabilities and English Language Learners should not be forgotten. The proposed budget does not make any additional investments to support either of these student groups.

Also, early education has largely been left out of the budget. While the state has received a significant amount of federal funding to expand access to quality early learning through 2024, there is still an important role for the state to play to fill the gaps that still exist (e.g., widely accessible Pre-K and full day Kindergarten) and restore state scholarships for low-income families to access quality early learning.

Aggregate Expenditure Limit

The biggest K-12 funding issue is not a budget issue, it is actually a spending issue: the aggregate expenditure limit. A spending limit was passed by voters more than 40 years ago for Arizona schools. Due to a number of reasons, it is expected that the cap will be exceeded this school year. Schools can exceed the limit and have done it at least twice before with a two-thirds vote of the legislature. If it is not addressed by March 1, 2022, schools will be required to cut $1.1B of existing funding during this school year. Let’s be clear: these funds have already been allocated to schools, but schools will not have the authority to spend them unless the legislature takes action. Although the aggregate expenditure limit is not a state budget issue, this is worth mentioning because of the significant potential impact this could have on school finances.

Take Action

Join us as we raise our voices to let the Governor and legislators know what should be prioritized in the budget this year. With just a few clicks, you can personalize a message to send to the Governor and to your legislators. Your voice matters!

Governor Ducey’s Proposed FY2023 Budget Summary

  • K-12 Education
    • $60.8M in additional results-based funding that would provide schools additional funding based on the letter grade they earn and the percent of the school’s free and reduced-price lunch students.
    • $58M for Operation Excellence to support all D and F rated schools (some C rated schools may also be included). Each will be given multiple pathways and resources to improve. One of those models builds on the Project Momentum concept that has been implemented in various school districts in Arizona. Schools will get $150 per pupil per year for three years. After three years, if schools don’t make adequate progress, they will be subject to additional action by the State Board of Education.
    • $6M for the Arizona Industry Credentials Incentive Program which incentivizes the attainment of CTE credentials.
    • $5M to reward schools with high-achieving results on Arizona’s required civics exam. Schools can earn $300-450 per student, depending on their score and the percent of the school’s free and reduced price lunch students.
    • $20M to continue the Transportation Modernization Grants.
    • $183.3M in one time and $16.7M in permanent Building Renewal Grants, plus $93.1M for this existing budget year.
    • $89.5 in new school construction in Liberty, Queen Creek, Sahuarita, Vail and Yuma Unified districts.
    • $150K for the State Board of Education to promote open enrollment$150K to Read on Arizona for literacy tracking$4M for the statewide assessment, and increases to the State Board for Charter Schools and the State Board of Education to conduct investigations.
    • $93.6M for inflation and growth in base permanent funding (inflation increase is capped at 2%).
  • Postsecondary Education
    • $46M for ABOR’s New Economy Initiative
    • $12.5M for the Arizona Promise Program, a scholarship that helps low-income students afford attendance at a state university
    • $25.7M to create an accelerated nursing program with Creighton University
    • $10.8M for Pima ($454K), Pinal ($1.7M), and Maricopa Community Colleges ($8.5M) STEM and Workforce funding
    • $5M for Freedom School funding
    • $7M for rural community colleges (based on enrollment)

The Governor also highlighted two initiatives that will be funded with federal COVID relief funding:

  • $100M for the AZ Back on Track Summer Camp that will help students catch up on unfinished learning from the pandemic. It is projected to impact over 200K students and will require nearly 5,900 instructors.
  • $30M for the Arizona Workforce Accelerator project that will create six advanced manufacturing training centers located at community colleges. This is modeled after the successful Drive48 collaboration between Lucid Motors and Central Arizona College and will be managed by the Arizona Commerce Authority.