The Payson Unified School District ended up with $200,000 more “spending authority” last year than it originally projected, the school board learned on Monday.
But don’t get all excited.
Note the phrase “spending authority.” This means the district spent less than it projected — not that it’s got an extra $200,000 in the bank.
On the other hand, the district’s budget experts have been reading the legislative tea leaves and say they hope this year to avoid the big deficits that forced layoffs and school closures in the past two years.
Welcome to the bizarre world of school finance — where even if you guess which fiscal shell the pea hides under, the Legislature will change the formula.
Last July “we adopted a budget based on the information we had at that time,” said budget director Kathie Manning.
“We adopted the budget in July, but you have until the end of August to spend the prior year’s budget.”
But wait: It gets worse. The state doesn’t actually finish adding and subtracting until December, when it lets districts know how much “spending authority” will actually carry forward from the fiscal year that ended in the previous July.
All of which sort of accounts for how easy it is for a district to guess wrong, as Payson did last year when it ended up some $1.8 million short in cash — forcing the district to draw on a line of credit and jack up this year’s property tax rate to make up the difference.
Complicated state formulas tightly control how much money a school district can spend. The state gives each district money based on enrollment, but adjusts that total for each district depending on local property taxes.
The district had to boost its local property tax rate by nearly 50 percent this year, but didn’t get to actually keep any of the extra money raised.
The district often has to make educated guesses about trends in state funding, enrollment and its own cash flow far ahead of time.
Manning said sharply reduced spending on substitute teachers contributed to what amounted to $200,000 in savings.
As a result of the adjustment, the district will carry forward $438,000 in unused “spending authority” on its $13.8 million operations and maintenance budget — which amounts to a 3 percent cushion.
But don’t get too excited. First deduct $269,000 on account of the change in the per-student funding formula the Legislature approved earlier this year to cope with its budget problems.
With other adjustments, that leaves the district with a spending cushion of about $170,000, which means that if the district’s cost go just 1 percent over the adopted budget, it won’t have the legal authority to spend the needed money.
The state gives the district base level funding of about $3,308 per student, a total that has been declining inexorably in the past several years. Arizona remains 47th in per-student spending nationally, according to the U.S. Census Bureau, ahead of only Idaho and Utah. Arizona spends less than half as much per student as the top-spending states.
Fortunately, so far this year Arizona has been taking in more money than it projected, which means district officials are hoping the Legislature at least won’t cut the base level funding this year.
Unfortunately, that won’t prevent the gradual elimination of “career ladder” funding, which gave the district a 5 percent boost in its base rate. That translated into higher pay for most of the district’s teachers. That extra money will disappear in the next few years.
Fortunately, the rise in state sales tax collections should offset those reductions for most teachers with an increase in “performance pay” provided by the voter-approved Proposition 301 several years ago. This year the Proposition 301 money provided the district with an extra $120 per student. Next year, projections suggest the program will provide an extra $200 per student, said Manning.
One other number has caused district officials to heave a sigh of relief. This semester, the district lost about 50 students overall. That will reduce district funding by roughly $175,000. By contrast, the loss of 100 students last year cost the district closer to $500,000, partly because the state then provided more money per student.
Manning noted that she was relieved when the state figures came back with an extra in spending authority. She noted that the district has made conservative assumptions about the budget.
In part, that’s to cushion the blow of losing another $400,000 at the start of next year due to the elimination of extra money from the U.S. Forest Service that goes to districts with lots of federal land not on the property tax rolls.
“It’s extremely complicated, that’s for sure,” said Manning of the effort to track spending, with a razor-thin margin for error. “Your budget is built from a formula the state prescribes, and you can spend up to that amount — so whatever you don’t spend is considered carry over — and it should be in line with the cash to support it, but last year we were short, so that did increase the tax rate, but it did not provide additional budget.”