Despite passage of a citizen's initiative nine years ago that raise hundreds of millions of dollars for public education, Arizona's school districts are now spending even less money in the classrooms, according to a study conducted by the state Auditor General's Office.

The state's 2008 statewide percentage of dollars spent in classrooms was 57.3 percent, almost 4 percent less than the national 61 percent average reported by the National Center for Educations Statistics, wrote Auditor General Debbie Davenport.

Davenport also noted that the state's 2008 classroom average spending is the lowest she has witnessed during her eight years with the office.

The results indicate the many of the state's 223 school districts are spending a smaller percentage of their budgets in classrooms than they were prior to the passage of Proposition 301, which created the classroom site fund, an account filled by revenue generated by a six-tenths-of-a-cent increase in the state sales taxes.

The money was largely restricted for classroom spending, such as increasing teacher pay, and state law dictates the money must add to – not replace – other funding streams dedicated to instructional spending.

Since 2002, the classroom site fund has received an average of $300 million each year. And in 2008, school districts spent almost $461 million from the fund, according to the auditor general.

The report also states that if pre-Prop. 301 classroom spending percentage levels were maintained, districts would devote 59.7 percent of their money to educational spending, and average teacher salaries would be about $7,500 higher.

John Wright, executive director of the Arizona Education Association, a union that includes 29,000 teachers, said his group has had concerns about the spending of Prop. 301 money, and the study likely will push them to address the issue with districts.

"I am, we are at AEA, worried that in difficult financial times some districts might be using this money and then moving some other money that may provide compensation into some other funds," he said.

The AEA plans to read the report carefully and negotiate with local districts to "see whether or not we need to bring some inappropriate spending to light," said Wright.

Public school teachers in Arizona received an average salary of $44,600, according to the most recent AEA statistics that cover the 2006-2007 school year. Wright said that figure is $6,500 below the national average.

While instructional spending by districts has continued to decrease, other costs associated with support services such as teacher training and physical and speech therapies for students has increased.

State auditors found that districts "appear to have switched from in-house employees" to more expensive contract workers to perform the duties. The number of students requiring special education has increased since 2001.

The study, which the Auditor General's Office noted did not include some quality-control measures typical of official audits, ruled out inflationary pressures as having a role in classroom spending statistics.

Davenport's study also examined the relationship between school district size and the percentage of classroom spending, finding that larger districts tended to be able to put more money into classrooms by benefiting from economies of scale.

The finding appears to back claims made by proponents of a 2008 school redistricting ballot proposal. Supporters claimed merging independent school districts into larger conglomerates could save money by eliminating administrative layers, aligning curriculum and allowing bulk purchases of products such as gasoline and food.

In turn, opponents said the goals ignored the fiscal costs and logistics involved in merging multiple districts that have varying tax rates, bond structures and salary scales.

The proposal was largely rejected by voters in affected districts, and lawsuits based on the language of the proposal negated the initiative's passage in areas of Pima County and west Phoenix.

Davenport's study concluded that districts with the lowest classroom spending percentages had twice the amount of students living below the poverty level and spent more money transporting students than districts with high instructional spending averages.

Additionally, some smaller districts reduced non-instructional costs by having employees perform multiple tasks and through the use of part-time employees. Those districts were able to devote higher percentages of their money to classroom spending, according to the study.

Wright said he believed that larger districts can benefit through economies of scale, but that large efficient districts can reach a "tipping point" and become excessive and costly.

Susan Bitter-Smith, a former member of the Arizona School Redistricting Commission, which formed the district unification plans, said she believed the auditor general's study confirmed that money could be saved by forming larger school districts.

"I still believe it validates the theory that there are cost benefits to redistricting," said Bitter-Smith, a former congressional candidate and former member of the Scottsdale City Council.

Panfilo Contreras, the executive director of the Arizona School Boards Association, did not return phone calls for comment.