Arizona school districts continue to spend less money in the classroom, new report says

The percentage of education dollars that ends up in the classroom has slipped once again.

New figures from the Auditor General's Office show that 52.1 cents of every dollar spent in the last school year goes toward instruction, which includes the salaries and benefits of teachers, aides and substitutes, in addition to general-instruction supplies, field trips and athletics. That compares with 52.6 cents the prior year. The figure is also the lowest in two decades that the Auditor General has been keeping track.

What makes the latest report significant is that it comes as Republican lawmakers are looking to put a measure on the November ballot to require schools to reach 60 cents.

Districts would have some time to get there, as they’d be directed to increase classroom spending by at least a nickel each year. But it also comes with the loss of certain state funds for failing to meet that goal.

Chuck Essigs, lobbyist for the Arizona Association of School Business Officials, said the numbers are not surprising. He said it represents the fiscal realities of not just fixed costs but also a declining enrollment, and it’s complicated by the fact that Arizona spends far less than the national average on education.

That's not just Essigs’ assessment. It's backed by reports from the Education Data Initiative and Forbes. Even the new Auditor General’s report puts per-student spending in Arizona at $14,629, versus the national average of $19,132.

But Essigs said certain costs remain fixed or increase even faster than teacher salaries.

For example, the new report shows actual instructional spending is about $30 higher per student than it was a year before. But plant services and maintenance, which includes utilities, is up by $59 per student. And Essigs said electric companies in Arizona are not giving schools a break.

The situation could be changing. Enrollment in public schools, which peaked at nearly 932,000 in 2008, is now down by 92,000, resulting in a commensurate reduction in state aid, which is based on attendance. That is forcing districts to close schools, which should reduce the need to heat and cool those buildings.

But Essigs said there are other factors, things that just cost a certain amount regardless of how much schools are being given, like food service and transportation.

The new report also points out that, while the overall number of students in public schools is declining, the number of students receiving special education services has increased, particularly for autism. And that can cause an increase in the category of instructional support — something that doesn't count toward that 60% goal for instruction — because it includes counselors, audiologists, speech pathologists, nurses and social workers. And such support costs increased by $33 per student last year.

Still, there were other costs that also increased, costs that some lawmakers say can be reduced.

Rep. Matt Gress (R-Phoenix) is pushing the legislation to require schools to get to that 60% figure for instruction and says he isn't buying the argument that there isn't enough money going into schools to reach that goal.

He said the Edunomics Lab at Georgetown University has a report which looks at education spending in Arizona between 2014 and 2024.

"How is it that we increase K-12 spending by 57%, certainly higher than the rate of inflation, and yet instructional spending went down?” Gress said. "It doesn't make any sense to me."

Howard Fischer/Capitol Media Services

And Gress has his own views on the growth of the cost of support services — 2.7% in the past year versus 0.4% for instruction.

"Schools have spent money on everything but the classroom," he said.

Nor is Gress buying arguments that transportation costs, up 2.7% year over year, really can't be controlled because districts still need to run buses. He said there is data — not in the Auditor General's report — showing total ridership is down 44%.

"You lost nearly half your ridership," Gress said. "And you're telling me that there were enough bus routes that were just fixed that not only did we maintain them, we actually increased the spending on them? I'm having a hard time wrapping my head around that concept."

Essigs said all that ignores what the new report says about an increasing number of special needs students. He said these are the ones who ride on the smaller buses, which can transport only a few students at a time, but still require drivers and fuel.

That still leaves the data, including in the report, that finds Arizona near the bottom of all states in what it provides in aid.

"I'm not going to dispute the per-pupil costs," Gress said, adding that it can be irrelevant to academic performance.

"Mississippi was able to make not only gains but read third grade reading — compared to some states like Massachusetts and California — while spending drastically less per pupil," Gress said.

Still, that Education Data Initiative report shows Mississippi spending more than Arizona on a per student basis.

Gress remains unconvinced, saying that the scores in standardized tests given to third and eighth graders in Arizona have fallen, which "suggests to me that monies are not being prioritized correctly," going back to his central argument about putting more into the classroom.

What the report also shows is that the average teacher in Arizona earns $65,613, up less than 1 percent from the prior year. That also compares with $48,472 in 2017.

But it also notes that some of the difference in this average can come from districts where more experienced and better paid teachers have left the profession and were replaced by more recent graduates.

For example, in 2017 the report showed 19% of teachers were in their first three years. That is now 21%. That was reflected in the other side of the equation, with 79% of teachers in the profession for at least four years, versus 71% in 2017.

Arizona spending comparison

Figures for 2023 — the most recent available for national comparison — show schools across the country spent 11.6 cents of every dollar for administration. The Arizona figure was 10.3 cents.

And the disparity becomes even more stark in actual dollars, with Arizona schools spending an average of $1,207 per student on administrative costs, versus the national average of $1,923.

On a pure dollar basis, the report also shows Arizona spends less than the nation as a whole per student on most other categories, including plant operations, transportation, food services and instructional support.

Only in the area of equipment — including furniture, vehicles, technology-related hardware and noninstructional software — is state spending on a per-student basis higher.

More dollars into classrooms

Aside from the proposed ballot measure to force instructional spending up to 60% in each district, the report also comes as lawmakers are wrestling with finding ways to restart a program to get more dollars into the classroom.

The original plan approved by voters in 2015 as Proposition 123 tapped into what have been considered excess earnings by the state land trust, generating an extra about $3.5 billion over a 10-year period.

Authorization to tap the trust fund expired last year. Lawmakers have absorbed the cost into their regular budget, so there has been no loss to schools. But there is a desire by many from both parties to restart the withdrawals to create more dollars or, at the very least, free up that $300 million a year for other state priorities.

Any renewal would have to go back before voters. But before it gets that far, the differences between what the political parties want have to be worked out.

Republican legislators, including Gress, want to earmark all the extra cash to provide an estimated $4,000 increase in teacher salaries, something that would have an immediate impact on the percentage of total funds that end up in the classroom.

Gov. Katie Hobbs, however, wants to give schools more flexibility with the extra dollars, including using the cash not just for teacher pay but support staff. She also wants to provide dollars for school capital and safety improvements.

Another hurdle is that some Republicans, Gress included, say they won't vote to put a renewed Prop. 123 on the ballot unless it includes something else. That includes enshrining into the Arizona Constitution the right of parents to get vouchers of tax dollars to send their children to private or parochial schools or to home school their children.

That right to vouchers exists now, but only because it was put into state law by prior Republican-controlled legislatures. And that means the law can be repealed away if Democrats gain control of the House and Senate and keep the Governor's Office.