Ducey proposes $176 million in new spending, largely on K-12 education

Gov. Doug Ducey filled in the details of many of the proposals he unveiled in his State of the State address with an executive budget plan that includes $176 million in new spending for fiscal year 2018, with the lion’s share going to K-12 education.

Of the new spending in the governor’s $9.8 billion budget, $83 million will be ongoing and about $97 million will be one-time money.

Ducey’s budget includes $76 million in baseline funding for K-12 schools to keep up with inflation and student growth, along with $318 million from Proposition 123. In his State of the State address, Ducey vowed to increase funding beyond those preexisting requirements for every year that he’s governor, and his budget included $114 million to meet that pledge in FY2018.

The largest chunk of new K-12 spending will go toward a “results-based funding” proposal that would increase per-pupil funding for high-performing schools. Ducey wants $38 million for the program, in which schools whose AzMerit test scores in the top 10 statewide would receive an additional $225 per student, with the number jumping to $400 for low-income schools where at least 60 percent of students are receiving free or reduced-price lunches. District schools currently receive $3,681 per student.

Perhaps the biggest applause line in Ducey’s State of the State was a promise to increase teacher salaries, and his budget delivers on that, though in a small way. Ducey is proposing a two-percent raise that would be phased in over five years. Ducey budgeted $13.6 million for the first phase of that pay hike in FY2018, and it’s estimated to cost $68 million per year once fully implemented.

Ducey is also proposing $6.4 million to give $1,000 signing bonuses to teachers who agree to teach at low-income schools.

Full-day kindergarten was poised to be one of the biggest issues of the 2017 legislative session, with a coalition of business, education and political figures pushing for the program to be implemented across the state.

In his budget, Ducey proposed $10 million for full-day kindergarten funding in FY2018, which would go only to schools where at least 90 percent of students are eligible for free or reduced lunches.  The funding would jump to $20 million in FY2019 and beyond. The Ninth Floor expects about 8,000 students to benefit from the literacy program.

However, the Governor’s Office said the funding does not necessarily have to be used for kindergarten, and can instead go toward other literacy programs aimed at boosting reading levels. And while the full-day kindergarten coalition has advocated for a five-year phase-in of the program, the Ducey administration is not committing to expanding kindergarten in future budgets.

Ducey is also proposing a one-time appropriation of $20 million to aid schools where enrollment fell below budgeted estimates. Another one-time appropriation of $17 million would go to the School Facilities Board for school building renewal projects. That money would be used for existing facilities.  The governor proposed another $5 million that would be combined with federal matching funds to expand broadband to rural, tribal and low-income schools.

On the higher education front, Ducey wants to redirect $37 million in transaction privilege taxes paid by the universities back to them, $30 million of which, along with a match from the universities, would enable higher education officials to issue up $1 billion in bonding capacity for research and development facilities and deferred maintenance projects.

The new money would free up resources that the universities would be able to use for other projects. Ducey wants the other $7 million in TPT, which would come from local governments’ portion of state-shared revenue, to go toward general operating expenses for universities.

One project that the new money could potentially open the door for is Ducey’s proposal for an Arizona Teachers’ Academy. Ducey touted the academy as a tuition-free institution where people could be trained to become teachers and graduate debt-free.

The Ducey administration is leaving it up to the state’s universities and community college to figure out the details. Among the possible requirements for students in the academy would their commitment to teach in Arizona schools for an as-yet unspecified period of time. Ducey wants the new academy to be in place by fall of 2018.

As the session began, legislative leaders and the Ducey administration had joined in an Arizona Chamber of Commerce-led lawsuit that seeks to overturn Proposition 206. The voter-approved initiative increased Arizona’s minimum wage to $10 an hour in 2017, and ultimately to $12 in 2020.

GOP leaders have argued in court that Prop. 206 comes with a price tag for the state, and Ducey’s budget reflects that claim by increasing funding for people who provide care for the elderly and the developmentally disabled through state programs. Ducey proposed nearly $8 million to cover those wages in the current fiscal year, and an additional $21 million for service providers in FY2018.

Following Ducey’s State of the State, the biggest question circulating at the Capitol was how the governor planned to pay for what sounded like an expensive and ambitious agenda, given that the Joint Legislative Budget Committee had estimated only $24 million in additional revenue for new spending.

The governor’s budget anticipates a little over $90 million that’s available to spend in FY2018 while keeping the state’s spending plan structurally balanced. That’s roughly $70 million compared to JLBC’s earlier estimate of $24 million.

Under Ducey’s budget, the Health Insurance Trust Fund for state employees would receive $30 million in general fund money, with another $30 million coming from other sources.

The executive budget contained smaller amounts of money for a number of other new initiatives that Ducey laid out in his State of the State.

The governor proposed giving prison inmates access to the anti-addiction drug Vivitrol in a bid to reduce recidivism. His budget includes $400,000 for a pilot program that would include six substance abuse counselors for high-risk inmates with histories of addiction, while the Department of Corrections would use existing funds to pay for the Vivitrol.

And Ducey proposed using $2.8 million to extend cash payments under the Temporary Assistance for Needy Families program from 12 months to 24 months for people who are seeking employment. Ducey and lawmakers cut eligibility to 12 months in 2015.