Higley USD proposes to use its more than $26 million in budget balance carryforward as a contingency against substantial budget cuts that could be required of it under the state Constitution.
District officials outlined the plan to the HUSD Governing Board at its Jan. 18 meeting.
Cuts could be required of school districts if the Arizona Legislature does not waive the Constitutional Aggregate Expenditure Limit, which puts a limit on how much money districts are allowed to spend without regard to how much money the districts have been allocated.
Not waiving the limit, as the Legislature did in 2021, would put $22.7 million of the district’s $119.87 million maintenance and operations budget this fiscal year at risk, HUSD Chief Financial Officer Tyler Moore said.
The district has a budget balance carryforward of $24.36 million, which the district can use as a hedge against the cuts that would have to be made on this year’s budget if the Legislature does not pass an override by March 1.
That would allow the district to carry out the remainder of the school year without any operational changes, Moore said.
However, nearly wiping out the budget balance carryforward would have an impact on the fiscal year 2023-24 budget. Without any contingency money, the district likely would have to institute hiring and salary freezes, Moore said.
The AEL, as educators often refer to it as, was enacted into the state Constitution in the wake of property tax revolts in the late 1970s and early 1980s. It became a big issue in the Legislature last year because of a change in the Classroom Site Fund, an education-targeted 0.6% sales tax fund that was established in 2000 by Proposition 301. While the proposition gave the tax a 20-year life, the Legislature renewed it for another 20 years in 2018.
However, in doing so, the tax changed from a voter-approved one to a Legislature-approved tax and a ruling was made that Classroom Site Fund monies, which previously had not counted toward the limit, would now have to be counted toward it.
The Legislature did pass an override to the limit in 2021 but declined to pass a more permanent fix that schools sought, and then-Gov. Doug Ducey declined to bring the Legislature into special session to make such a fix, as he had promised during budget negotiations last year.
Because it is part of the Constitution, an override requires a two-thirds supermajority vote of the Legislature.
Moore’s comments came as part of a first review of a proposed maintenance and operations budget for fiscal year 2023-24. The M&O budget pays for the day-to-day operations of the district, including most salaries.
The district’s initial proposal is for a $122.88 million budget, up a little more than $3 million from the current budget. The proposal assumes the AEL forces no reduction. It also was developed with a number of other assumptions:
The district will have no increase to its “average daily membership,” an enrollment-based number that is a key part of the state’s education funding formula;
An inflation adjustment of 2% to the base support level for students in the funding formula;
A 0.12% increase to Arizona State Retirement System contributions;
An estimated $26 million budget balance carryforward.
What remains unknown, Moore said, is how much money will be needed to transfer from the M&O budget to the district’s unrestricted capital budget to pay for middle school leases and to support other capital projects after the district’s bond proposal was defeated in the November election.
The district plans to make an initial capital budget proposal at the Feb. 8 governing board meeting.
Tom Blodgett Senior News Editor | Gilbert @sp_blodgett
Meet Tom Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.
Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.
Education: Arizona State University with a BS in Journalism.
Random Fact: He lived in Belgium during his freshman year of high school.
Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).
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