School Funding

Empowerment Scholarship Account & STOs

Let’s begin with the most recent additions to Arizona school funding system. Student Tuition Organizations and Empowerment Scholarship Accounts, or STOs and ESAs respectively.

Since 1998, Arizona has passed laws that allow individuals, couples, and corporations to donate their public tax credits to non-profit Student Tuition Organizations that provide financial aid to families wishing to send their students to a private school. Although contributions vary based on different levels of tax liability, STOs offer Arizonan’s a choice in determining how to best support education. More importantly STOs create greater accessibility to specialized or high performing schools for thousands of students each year.

An Empowerment Scholarship Account (ESA) is similar to a checking account with 90% of the state funding that would have been received by the school the child previously attended. These funds can only be used for specific, education related, expenses such as tuition, fees, tutoring or therapy services. In 2017, Governor Doug Ducey expanded the ESA program to be available to all Arizona families. Typically, ESA funds are used as financial aid for families wishing to enroll their student at a private school.

Both programs are often criticized for defunding the public education system, but in practice STOs and ESAs redirect funding to the schools parents are choosing for their students, kind of like putting the funds in a student’s backpack and sending it to school with them.

Public District School Funding

When school funding is discussed, people are most often referring to funding for Arizona’s public schools. However, under the umbrella of public school funding, there are several distinctions between district, charter, and online schools.

Let’s start with the biggest recipients of public funding, Arizona school districts. In 2018, district schools were funded on average $9,920 per pupil and spent $7,482,028,504 in total on operations. So how are these schools funded?

Each year, school district administration forecasts the budget they believe their schools will need to operate for the upcoming fiscal year. Let’s call this “the bucket of need.” The first form of revenue going to fill this bucket comes from local taxation on property. School districts have local taxing authority and can propose additional taxes in the form of bonds and overrides. This is why school boards are chosen through general elections and additional taxes referred to the ballot box.

These local funds most often fill a majority of a district budget needs, in some cases filling the bucket of need almost entirely. These districts are often located in communities with very high property values and a higher average income level. If local taxes do not fill the bucker of need, districts then turn to the state. The Arizona Department of Education receives money from the state general fund and then administers these funds based on something called Average Daily Membership, which is a districts average enrollment over the first hundred days of school.

Simply put the ADE provides funding based on the average daily membership to fill the rest of a district’s bucket of need. Across the state in 2018, district schools received an average of $4,011 in state funding and $4,592 from local sources.

District schools also receive federal funding for various programs that support Special Education, low-income, or ELL programs. These funds are available to all public schools but amounts to about $1,317 across Arizona districts.

So, in total, Arizona’s district school pull from three sources to fill their budgetary bucket of need, local, state, and federal which amounts to that earlier average of $9,920 per pupil. However, this amount can range from $10,800 per pupil at Scottsdale Unified School District to $9,409 at Mesa Unified School District just to the south.

Public Charter School Funding

Public charter school funding is a bit more straightforward because they are only eligible for two of the three major public funding sources described above, state and federal.

Charters school receive federal funding because they offer many of the same entitlement programs mandated by the US Department of Education such as services for students with disabilities, low-income students, and English Language Learners.

However, because of the public-private nature of most charter schools, they are not a part of school districts and therefore do not receive funding from local taxation. As a result, public charter schools must rely on state funding to make up a vast majority of their operating budget. The Arizona State Constitution prescribes that the legislature “shall enact such laws that provide for the establishment and maintenance of a general and uniform public school system.” Since charter schools are public schools but unable to generate funds from local taxes the state commonly funds them at a high per pupil level compared to district schools.

Now before you start believing the headlines and think charter schools get more funding, when including funding from all sources of revenue, charter school received an average of $951 less per pupil than district schools, according to a 2018 report by the Joint Legislative Budget Committee.