AZ School Budget and Finance

Essay by pakinderUniversity, Bachelor'sA+, April 2007

download word file, 14 pages 4.9

The Arizona Constitution and Title 15 of the Arizona Revised Statutes, which were enacted into law by the Arizona Legislature, govern School Budget and Finance systems in Arizona. School districts are required by law to follow the prescribed budget formulas to determine the budget available to that school district. Several factors must be taken into account and guidelines followed when budget formulas are being constructed.

Arizona's school finance process uses a lot of acronyms that refer to specific sections of the budget and their revenue sources. Some of these are historical. Prior to 1980, Arizona school districts funded their budgets primarily from local property taxes. Although they did receive state aid on a per pupil basis, it was supplementary and there was no restriction on local expenditures other than they had to spend it all each year because none could be carried over. The property tax portion of their budget had an exception, called "30/60" levies, which allowed schools to levy a thirty cent tax rate (unified districts could levy sixty cents) on whatever property they had in their districts and accumulate it from year to year in a capital reserve.

In 1980, the Arizona Legislature implemented a major school finance reform that radically changed how schools were budgeted. All school districts were given precise spending limit amounts per pupil for maintenance and operation (M&O) expenses in one budget and precise amounts per pupil in another budget for capital. This "equalization formula" was implemented so as to provide equal dollars per pupil for school operations through a balancing of the local Qualifying property Tax Rate (QTR) and state financial assistance. The idea was to control the amount of revenue that school districts could raise, and the M&O limit was called the Revenue Control Limit (RCL), while the capital limit...