THE State Budget Crisis

Today’s Presentation

Arizona’s budgetThe impact of the economic declineWhere the money comes fromWhere the money is spentWhat MPS needs to do to get

through the current budget crisis

Arizona’s Revenue Sources

AZ Sales

Tax

AZ Income

Tax

Other

JLBC Actual Fund Revenue, FY2007

Where Does Arizona Spend Its Money?

K-12, 42%

Universities,

11%

AHCCCS, 14%

DHS, 6%

Corrections,

10%

DES, 8%

Other, 9%

Arizona’s Constitution Requires A Balanced Budget

0

2

4

6

8

10

12

Planned

2008-09

Actual

2008-09

Estimated

2009-10

Revenue Total (Billions) Spending

Arizona’s Revenue Is Declining

0

2

4

6

8

10

12

Planned

2008-09

Actual

2008-09

Estimated

2009-10

Revenue Total (Billions) Spending

The Budget Crisis Is Hurting All Sectors and States

Budget Cuts or Revenue Increases?

“[House Appropriations Chair John ] Kavanagh said that he and most Republicans are unwilling to consider tax hikes, even temporarily, instead of further spending cuts.

    “I’m not going down the tax road until the situation is so dire that there’s no other alternative,’’ he said. “And I’m not prepared to concede that at this point.’’ ”

--East Valley Tribune, February 1, 2009

K-12 Arizona Education Funding Has & Will Experience Cuts

In 2008/09 K-12 education was cut $133 million.

The estimated cuts to K-12 education in 2009/10 is estimated to be between $470 million and $1.4 billion

Potential State Education Budget Cuts

The following budget cuts have been proposed by state legislators:

Phase out of Career Ladder Elimination of Young Learner and Full-Day

Kindergarten Eliminate annual increase of 2% in funding Base Funding was decreased 2.6% this year

and will be decreased even more in the next budget

Funding to offset utility bills may not be provided

Soft Capital will be eliminated or significantly cut

State Funding is Only One of Several Challenges Impacting MPS

MPS cut $19,800,000 in 2008/09

Other Challenges: Enrollment Has Declined

65000

67000

69000

71000

2001 2002 2003 2004 2005 2006 2007 2008 2009

-685-537

-1406

-2135

+162

+580

-67 +107

Other Challenges: Passing The Override

8.8% of salary is contingent on the overrideFunding for 136 teachers is from the overrideSecurity positions are funded by the overrideTechnology trainers are funded by the

override

This decline can be dealt with by cutting ‘fat’ and not cutting people’s jobs or salary

Mesa puts more money in the classroom than most districts

Mesa has fewer administrators than average

•Arizona Auditor General

Budget Misperceptions

Most of Our Money Goes To People

Salaries

76%

Benefits

15%

Utilities

5%

All Other

4%

Most of Our M&O Money Goes To Teachers

Certificated,

73%

Admin, 5%

Support,

22%

Our Staff Has Helped Mesa Schools Be Very Successful

96% of elementary parents give MPS an A+, A or B grade. America’s Promise Alliance named the district as No. 1 in

graduation rates among the nation’s 50 largest cities in 2008. U.S. and News Report magazine recognized all six MPS

comprehensive high schools in its “Best High School 2008 Search.” 

The Class of 2008 was offered over $45 million in scholarships. The Class of 2009 includes 25 National Merit Semifinalists and

five Presidential Scholar finalists. MPS students earned state championships in academics,

athletics, creative and performing arts, and career and technical education in 2007-08.

MPS captured 27% of the seats in the all state orchestra and band while having only 7% of the students in the state.

Existing bond funds may be used for other budget categories

Budget Misperceptions

Budget Misperceptions

Funding may not increase, but it won’t go down

So Where Will Cuts Be Made?

If 91% of our operating budget goes to people, we will have to have fewer people and/or pay people less.

We will also have to eliminate some programs and activities and increase efficiency.

How Will This Impact MPS?

Local, 36%

Federal, 5%

Other, 8%

State, 50%

Local, 36%

Federal, 5%

Other, 8%

State, 50%

What Is MPS’s Plan?

Educate our legislatorsInform our staff and community Reorganize district based

operationsAdjust staffing to match the decline

in enrollmentEnsure district expenditures match

projected (declining) revenue

MPS’s Plan For 2008/09

Cut $20 million from budget in July 2008 Froze job openings except for classroom

teachers Reduced all supply budgets Cancelled $3 million in purchases of

textbooks, software and similar items Reduce substitute teacher costs

MPS’s Plan For the 2009/10 Budget

Potentially cut $30-$??? millionReduce positions in district

departmentsExamine programs and offerings and

reorganize to maximize efficiency Identify non-state funding sourcesAdjust teaching and support staff to

reflect lower enrollment.

Timeline

February: Share budget status with staff; give initial teacher allocations to schools

March: Develop budget plan for possible state funding levels

March/April: State sets 2009/10 budgetSoon after: MPS announces changes

based on the budget provided

So Now We Know

Arizona’s budget picture is grimProposed education cuts in the state

budget will be significantMPS budget cuts will mean fewer programs,

paying fewer people and possibly paying people less if the state cuts certain funds

We need to understand the situation, we need to come together to weather the storm and we need to work to strengthen district finances where we can

Mesa Succeeds

The Long Depression of 1872-1897

The Panic of 1893

The Stock Market Crash of 1929

The Great Depression 1929-1938

OPEC Oil Crisis &

Runaway Inflation of the 1970’s

The Savings & Loan Crisis and Recession of the 1980’s

Mesa Succeeds

“It is our attitude at the beginning

of a difficult undertaking which,

more than anything else,

will determine its successful outcome.”

-- William James

Have A Suggestion?

Do you have an idea that could be implemented that would save money?

Go towww2.mpsaz.org\abetterway

and submit ideas or send district mail to “A Better Way Suggestion”

as soon as possible

THANK YOU