SCHOOL DISTRICT EXPENDITURES BEYOND THE EQUALIZATION BASE:
IMPACTS OF ARIZONA SCHOOL DISTRICT OVERRIDE AND BOND ELECTION
OUTCOMES ON STUDENT ACHIEVEMENT
Authors: Michael J. Hoffman, Ed.D.; Richard L. Wiggall, Ed.D., Mary I. Dereshiwsky, Ph.D.,
Gary L. Emanuel, Doctor of Arts
Abstract
This paper is an extraction of an earlier dissertation study by Hoffman (2013) that examined the effects
fluctuations in funding had on student achievement measured by the Arizona Instrument to Measure
Standards (AIMS) tests in Arizona school districts. The fluctuations studied were the variations in
expenditures per pupil beyond the Revenue Control Limit (RCL) made possible by successful school
budget override and bond elections.
The study used archived data comprised of six years of school districts’ grade level AIMS math
scale scores from the third, fifth, eighth, and tenth grades ranging from 2007 through 2012, in conjunction
with expenditure outcomes of district override and bond elections held in the same years.
M&O override expenditures had significant effects on AIMS math scale scores in grades 5, 8, and
10 (high school). Post hoc tests showed significant differences in AIMS math scale scores between
differently funded districts based on low, medium and high funding categories established in the study.
Debt service expenditures, increased by successful bond elections, had significant effects on
AIMS math scale scores for all grade levels studied. Comparisons between funding categories of debt
service expenditures showed a significant difference between and across all categories at all grade levels
studied. The mean AIMS math scale scores for each category show trends such that the higher the district
expends per pupil for general obligation bonds the higher the math scores tend to be.
There are clear indications that adequate funding levels are not generally provided for Arizona
school districts to reach the state’s educational goals. It stands to reason that if Arizona districts were
expending at adequate levels to provide educational opportunities then local funding increases in some
districts would not have significant impacts on math scores. Since, once a district is spending adequately
then providing additional monies would meet with diminishing returns.
The results this study has outlined have serious implications for state school finance policy. First,
Governor Brewer signed SB1293 into law during April 2013 that set up a pilot program for outcomebased (i.e. performance) funding of schools. Concern is warranted over the widening disparities in
funding that the Governor’s performance plan might exacerbate. Second, districts that serve significant
numbers of students from impoverished families have a higher proportion of “difficult to educate”
students. These students come to school with many needs that must be addressed in order for them to
reach academic proficiency. Additional funding through overrides and bonds is generally too sporadic
and undependable for many high needs districts on which to build solid and stable intervention supports.
Finally, the de-funding of the Arizona School Facilities Board and other attendant statutes of Students
FIRST many districts are left with facilities that continue to deteriorate without the capacity to address
critical needs in renewing infrastructure, expand facilities to accommodate increasing student populations,
or improve infrastructure to handle future needs in educational technology. The disparities introduced into
the school finance system are again as problematic as they were when the Roosevelt v. Bishop (1994)
lawsuit was initiated.
INTRODUCTION
Over the past half-century, funding for Arizona public schools has eroded significantly. The
deterioration, however, is not connected to the state’s fiscal capacity for providing resources to
its schools. Arizona’s tax effort in funding K-12 education is among the lowest in the nation,
falling from thirty-fourth in 1995 to forty-sixth in 2012 (Education Counts, 2013). In 2012,
combined state and local funding monies for K-12 schools was at a decade low of $6,421 per
student, falling well below the 2003 level of $7,3841(Joint Legislative Budget Committee,
2011/2013).
Falling school revenues have compelled some districts to take advantage of Arizona’s
budget override and bonding mechanisms to secure additional revenues. Successful override and
bond referendum permit districts to levy additional taxes beyond the initial allocations based on
the Revenue Control Limit (RCL) to fund additional instructional staff, programs, and capital
projects that meet the diverse needs of their students. The disparity among districts’ capacities to
organize and run successful override and/or bond elections has keen implications for districts’
budgets and, as will be shown, student achievement outcomes.
The fact that a number of districts currently rely on override and bonding funds for
fundamental needs is concerning since a significant number of districts either do not seek, or are
unsuccessful in seeking, these additional funds that allow them to budget beyond the RCL. Based
on these concerns, a study was conducted that asked whether success in override and/or band
elections significantly affected student achievement; additionally, the study sought to find if
success rates on school funding elections were predictable by measures of district wealth
(Hoffman, 2013)
DIMINISHING FISCAL RESOURCES FOR ARIZONA PUBLIC SCHOOLS
Historically, Arizona’s school funding has not always been near the bottom of national rankings.
Arizona ranked twenty-ninth in per pupil expenditures during the 1969-70 school year funding at
89.7 percent of the national mean. This was during the period when the first school funding
equity lawsuits were being brought to courts in several states. Most notable were Serrano v.
Priest (1971) in California and Rodriguez v. San Antonio Independent School District (1971) in
Texas. Arizona had Shofstall v. Hollins (1973), a similar school finance lawsuit to Serrano
1
Inflation adjusted dollars per the Arizona Joint Legislative Budget Committee.
(1971) and Rodriguez (1971), brought to the Arizona Supreme Court where the court originally
found parts of the state school finance system unconstitutional; although, once the San Antonio v.
Rodriguez (1973) decision was handed down by the U.S. Supreme Court stating that education
was not a fundamental constitutional right under the Equal Protection Clause and placing the
problems of school finance in the realm of state governments, the Arizona court reversed its
decision and ruled in favor of the state.
When Roosevelt v. Bishop (1994) made its way to the Arizona Supreme Court, with
plaintiffs claiming that the way the state financed capital expenditures violated the education
clause in the state’s constitution, Arizona had fallen to fortieth in state rankings of expenditures
per pupil. A this point the state was funding at 80.1 percent of the national mean, and placing
thirty-fourth in profiles of tax effort based on a ratio of state education per pupil expenditures in
relation to the state’s per captia gross domestic product (Baker , Sciarra, and Farrie, 2010) .
The plaintiffs in Roosevelt (1994) were successful. The Roosevelt (1994) decision had the
eventual effect of expanding funding mechanisms for capital projects and items from voterapproved bonds that were serviced by locally-raised property taxes to a program that relied on
established statewide school facility standards and state-level funding. Legislation stemming
from Roosevelt (1994) generated the Students FIRST statutes which established the Arizona
School Facilities Board (SFB). The SFB was initially funded through revenue from the state
transaction privilege tax, to ensure an adequate minimum quality for non-charter public schools
(Hull v. Albrecht, 1998; Hunter & Gifford, 2000). Students FIRST appropriations were
suspended by the Education Budget Reconciliation Bill in 2009. The deferment continued into
2013 when the School Facilities Board went through extensive statutory changes which included
the repeal of the building renewal formula (Harris, 2013).
In 2003, an adequacy suit, Crane Elementary School District v. State of Arizona (2003)
was brought to the Arizona courts. By this time, Arizona had fallen to forty-ninth in state
rankings of expenditures per pupil, spending at 72.8 percent of the national average. The
plaintiffs in Crane (2003) alleged that the state was not adequately funding education so that “atrisk” students would be afforded the programs they require to meet the state’s prescribed
academic standards.” The courts found in favor of the state in both Crane (2003) and the appeal
three years later in Crane v. Arizona (2006). In the majority opinion, Judge Kessler asserted that
“no plaintiff has ultimately prevailed without convincing the court of the existence of a positive
correlation between expenditures and educational opportunity” (Crane, 2006, para. 46).
Although article XI, § 1 of Arizona’s constitution calls for “the establishment and
maintenance of a general and uniform public school system,” the ruling in Crane(2006) noted
that the Roosevelt (1994) case produced clear disparities between districts while the funding
mechanisms for maintenance and operations questioned in Crane (2006) are “constitutionally
uniform in terms of funding” (para. 30). The funding system for maintenance and operations
allots approximately the same amount of funds per weighted pupil for each school district. The
Crane (2006) court, addressing the plaintiff appeal, acknowledged, “…an educational system
that is uniform is not necessarily adequate in terms of providing a basic education… (para. 33).
SCHOOL FUNDING, PROPERTY TAXES, AND LOCAL EFFORT IN ARIZONA.
Bonds and overrides are not equalized by state aid. The secondary tax rate, which funds these
voter-approved fiscal measures, has varying capacities to support debt service and override
payments in the different districts based on the secondary assessed valuation. Successful
overrides and bond referendums trigger an increased secondary tax rate. Thus, there is a
significant difference in cost to taxpayers in the different districts with varying fiscal capacities
to support overrides and bonds since these measures do not take into account the concept of
wealth neutrality. This fact tends to influence the willingness of property-owners to tax
themselves in order to finance these district proposals. As Olson (2009) notes, “Likely
influenced in part by this difference in the taxpayers’ cost, some districts pass several overrides
and large bonds while other districts have no voter-approved overrides and much smaller bond
projects. These differences result in funding inequities” (p. 27-28).
Therefore, it is apparent that despite an equalization base in the school finance formula
that is geared towards making per pupil expenditures equitable across districts significant
funding disparities exist. In fiscal year 2012, Laveen Elementary School District on the outskirts
of metropolitan Phoenix spent $2,9052 per pupil while Hyder Elementary School District, about
120 miles to the southwest in a rural agricultural area, spent $8,5153 per pupil (Olson, 2009).
These dollar amounts have been adjusted to reflect classroom dollars expended. Other funds for
transportation and small school adjustments enlarge the actual difference significantly,
2
3
Classroom dollars expended based on report from Arizona Auditor General
See note 2
increasing Hyder’s expenditures per pupil to $15,733 and Laveen’s per pupil expenditures to
$5,653 (Office of the Auditor General, 2013). These large disparities warrant investigation as to
whether these funding differences make an impact in student achievement.
School accountability measures mixed with shrinking state budgets have districts in
Arizona increasingly turning to local communities to ask for expansions of their operating and
capital budgets in order to meet instructional and other resource needs. In 2009, Maricopa
County saw more education overrides than ever before with 24 districts seeking new funding or
permission to extend their current overrides (Miller, 2009). These came in the aftermath of $133
million in state cuts to education and the moratorium of most of the funding of the School
Facilities Board. Overall, Arizonans saw 89 funding proposals for schools appear on ballots
across the state in November 2009 (Arizona Education Network, 2009).
During this time, a community relations manager with the Phoenix Union High School
District (PUHSD) commented that, “This is not a tax increase. It is simply a continuation of what
taxpayers have already been funding. When you don’t pass an override, in effect you start cutting
funding and programs” (Miller, 2009). It turned out that the voters did not approve the reissuing
of the override that had been in place for PUHSD since 1989 and was estimated to affect the high
school district budget by about $10 million annually (Miller, 2010).
Arizona school bond and override issues. A 2012 analysis by the Arizona Republic
showed that 69% of the districts that were authorized to issue bonds in Arizona were essentially
restricted from doing so by the bonding limits and the recent devaluations in assessed property
values (Ortega, 2012 March). That percentage figures to 141 districts, of which include 108
districts that either have not issued a bond in more than a decade, or have had their bond
referendum defeated each time it has been brought to ballot. Meanwhile, the situation for 31
districts is that voters have approved bonds, but the districts are prohibited from selling them due
to plummeting property values that have effectively lowered the cap on debt servicing (Ortega,
2012). The 2013 legislature remedied this plight by increasing bonding capacity to 20 percent for
unified districts and to 10 percent for elementary and union high school districts – essentially
doubling their previous capacities under Students FIRST, but still below the constitutional limits
of 30 percent for unified districts and 15 percent for elementary and union high school districts.
However, many Arizona districts have assessed property values that are extremely low,
so that to raise any meaningful level of funding, they would need to ask voters to approve
burdensome tax rates. For instance, secondary assessed property values, on which bonding
capacity in based, range from $514 per pupil in Piňon Unified School District to nearly $2
million per pupil in Walnut Grove Elementary School District (Ortega, 2012). It was specifically
these vast disparities that Roosevelt v. Bishop (1994) and the subsequent legislative remedies in
the Students FIRST statutes addressed.
The November 2011 balloting for school funding initiatives returned a 67% approval of
bond issues requested, but only 41% of the budget override proposals were approved statewide
(Arizona Education Network, 2011). An approval rate of 67% might be seen as satisfactory in
2011, nonetheless, when Judy Richardson of Stone & Youngberg, a public finance underwriting
firm, reports that there was a 100% approval rate going back to 2000 prior to the 2010 ballot,
when 77% of the bond referendums passed, the 33% drop in the rate of success in the last two
years indicates that voters have started to have second thoughts about increasing their more
visible secondary property taxes (Faller, 2011). Overrides, which have historically been less
favorable with voters, are also coming up short in many districts. This can be very troubling for
those districts that have historically relied upon overrides for their programs. According to
Chuck Essigs, Director of Government Relations with the Arizona Association School Business
Officials, "It used to be that overrides were designed to pay for extra things, but now because of
cuts in funding, for many districts they're part of their basic survival" (in Faller, 2011).
Student achievement and accountability. School districts relying on override and
bonding funds for fundamental needs is concerning since a significant number of districts either
do not or are unable to secure these additional funds that essentially allow them to budget beyond
the Revenue Control Limit (RCL), a limit set by the legislature.. Based on these concerns, a
study was conducted that asked whether success in override and/or bond elections affected
student achievement. In essence, the study sought to provide additional answers to the longstanding question of whether money matters in education. In addition, the study sought to find if
success rates of school budget elections, in terms of funding beyond the RCL, were predictable
by measures of district wealth, specifically using proxies for wealth in the form of free-andreduced lunch percentages and assessed valuation per pupil (AVPP).
STUDY OVERVIEW
The study examined effects of Arizona school district expenditures per pupil on student
achievement in math as measured by the AIMS tests from 2007 to 2012. Expenditures per pupil
can fluctuate in Arizona and be increased beyond the Revenue Control Limit (RCL) through
successful voter-approved overrides and bond initiatives. Examining the effects these variations
in expenditures had on district AIMS math scale scores in the third, fifth, eighth, and tenth
grades helped highlight the importance of adequate funding in improving student achievement
outcomes.
Population and Sample
This study encompassed all public school districts in Arizona. Charter and private schools don
not have the authority to hold override and bond elections to raise operating and capital funds.
Sub-groups consisting of district categories entailing type of district and district size were used to
help in explaining data analysis outcomes. District types are delineated in five basic categories
by the Arizona Department of Education (ADE): a) elementary, b) high school, c) unified, d)
accommodation, and e) joint-technical education district (JTED). Accommodation districts and
JTEDs were excluded from this study since they have significantly different funding structures.
In fiscal year 2006-2007, 15 high school districts, and 95 unified districts. Of the 108 elementary
districts, nine were considered transporting districts and were excluded from the study because
they had no students attending schools within the district. In fiscal year 2011-2012, the endpoint
of this study’s timeline, there were 97 elementary districts, 15 high school districts, and 96
unified districts (Huppenthal, 2011). District size classifications are made by the ADE based on
ranges of student population numbers. The delineation of size categories, the number of school
districts in each category, the statewide ADM within each category, along with the percentage
share of statewide ADM that each category carried for the 2006-2007 and 2011-2012 fiscal years
are shown in Table A1. The numbers of districts by type (i.e., elementary, unified, and high
school) are shown for the 2006-2007 and 2010-2011 fiscal years are shown in Table A2.
STUDY METHODOLOGY
The analysis of AIMS math outcomes in relation to successful override and bond elections was
performed using two-way ANOVA techniques. The dependent variables included the overall
mean of the district AIMS math scale scores for each of the grade levels included in this study
from 2007 through 2012. The independent variables were the districts’ average per pupil
expenditures allowed and made due to M&O, Capital Outlay, and K-12 Special Program
overrides as well as Debt Service expenditures connected to general obligation bonds. District
type (e.g. elementary, unified, and union high school) was the second independent variable used
in the two-way ANOVA tests.
Pearson correlations were used to construct a correlation matrix to explore associations
between dependent variables. This procedure was followed because MANOVA was considered,
but MANOVA works best when the dependent variables are only slightly correlated.
Correlations for the study’s variables showed that the dependent variables of AIMS math scores
for third, fifth, eighth, and tenth grades were highly correlated among each other (Table A3).
Pearson r values ranged from .613 (p < .001) for the third grade and tenth grade AIMS math
scale scores and .892 (p < .001) for the relationship between third and fifth grade math scores.
All r -values were above .80 except those associated with tenth grade math scores. High
correlation between dependent variables is problematic because most of the variance is
accounted for once the first variable is fit into the model (Ashutosh, 2010). Therefore, ANOVA
was employed to test for effects between variables.
Preliminary investigation with Levene’s test for equality of variances indicated that the
assumption of homogeneity of variances was violated. ANOVA is known to be robust for nonconstant variances as long as the sample sizes are equitable. However, the categories for
expenditure levels are not equal due to the nature of the data; therefore, the ANOVA was
remediated using weighted least squares regression weighting the sample by district size
(Leemann & Gill, 2011).
Development of Categorical Funding Variables
Variables of district type and size were taken directly from Arizona Department of Education
(ADE) classifications. However, the ADE does not provide categories for funding levels beyond
the RCL. Therefore, it was necessary to create those categories in order to discriminate possible
effects of this funding on student achievement.
In the original study, funding categories were developed for each of the four voterapproved funding mechanisms studied (Hoffman, 2013). These funding sources are initiated by
successful budget overrides for maintenance and operations (M&O), K-3/K-12 special programs,
and capital outlay along with successful general obligation bond referendums. However, in this
report, only M&O overrides and debt service resulting from bonds were used. The distributions
of average expenditures per pupil for the budget items were analyzed. First, the four expenditure
items beyond the RCL and annual district ADM counts were collated from the Arizona
Superintendent’s Annual Reports from 2007 through 2012 for each district in the study. The
expenditures for the four budget items were averaged and each district’s ADM for the six-year
range of the study were averaged as well. The means for district ADMs were used to calculate
the average per pupil expenditure for each of the four categories: a) M&O; b) K-3/K-12 Special
Program; c) Capital Outlay; and d) General Obligation Bond Debt Service.
The distribution of each category was analyzed using descriptive statistics that yielded
the mean, range, percentile values, and standard deviation for each distribution. Due to the
significant number of districts that had no expenditures for some or all of the categories, none of
these distributions were normal, all were positively skewed. Histograms for each of the
expenditure categories are provided in Appendix A to depict this situation.
As the distributions were positively skewed with a large number of cases having $0.00
values and the phenomenon of no funding beyond the RCL versus funding significantly beyond
the RCL is key element in this study three funding level categories were created to reflect the
nature of inquires being made. A binary comparison between funding and no funding beyond the
RCL for each category could be made; however, a further delineation is possible to provide an
increase in gradation to assist in the interpretation of results. It was found that three justifiable
categories of funding based on the distributions’ characteristics could be made labeled low,
moderate, and high. The distributions’ $0.00 values were all grouped into the low category
associated with each expenditure item. The remainders of cases were divided in a way to provide
a logical treatment of cases (i.e., cases with similar and nearly equal values were not placed in
different groups) and to provide a reasonably equitable balance of cases between groups.
FINDINGS
The ANOVAs and subsequent Tukey post hoc comparisons showed significant effects for
funding beyond the equalization base for M&O override and general obligation bond debt
service expenditures on AIMS math scale scores. No significant effects were found for K-3/K12 Special Program or capital outlay overrides on math scores. However, it was noted that M&O
override expenditures were strongly and positively correlated to K-3/K-12 Special Program
override expenditures. A cursory review of school funding elections revealed that M&O and K-
12 Special Program overrides are often sought by districts simultaneously. Post hoc comparisons
between districts in funding categories based on low, medium, and high expenditures per pupil
beyond the RCL for M&O overrides and general obligation bond debt service found significant
differences in students’ AIMS math achievement. Outcomes revealed that districts securing more
resources through M&O overrides and bond referendums significantly outperformed those with
less voter-authorized resources.
District type played a significant role in differing capacities to secure additional funding
and produce higher math achievement with unified districts, on average, significantly
outspending and outperforming elementary districts.
M&O override expenditures had significant effects on AIMS math scale scores in grades
5, 8, and 10 (high school). Significant effects were not found for grade 3; however, results from
post hoc tests for third grade scores, while not considered formally, showed intriguing trends of
higher scores for higher spending districts (Hoffman, 2013). Post hoc test for grades 3, 5, and 8
showed significant differences in AIMS math scale scores between low and medium funded
districts, as well as low and high funded districts (Table B1).
Debt service expenditures had significant effects on AIMS math scale scores for all grade
levels studied. When comparing general obligation bond debt service expenditure categories
(Table B2) a significant difference was found between and across all categories (low, medium,
and high) at all grade levels studied. The mean AIMS math scale scores for each category show
trends in differences are such that the higher the district is funded and expends for general
obligation bonds the higher the math scores tend to be. Debt service expenditures account for
between 11% of the variability of AIMS math scores at the high school level and 26% of the
variability at fifth grade with eighth grade and third grade falling in the middle of that range with
19% and 24% respectively.
CONCLUSIONS AND IMPLICATIONS FOR POLICY
Student math achievement and expenditures beyond the revenue control limit
The findings that connect student achievement in math to expenditures beyond the RCL
authorized by local referendum and supported by local taxes raises concerns over the provision
of a basic equal and adequate educational opportunity throughout the state.
District financial factors that this study identified as having a significant effect on AIMS math
scores were as follows:

Districts that had higher expenditures for M&O overrides had significantly higher
AIMS math scores in fifth, eighth, and tenth grades.

Within the third, fifth, eighth and tenth grades, AIMS math scores of districts that
had no or low expenditures for M&O overrides had significantly lower scores
than districts that had medium and high expenditures for M&O overrides.
(Categories for low, medium, and high expenditures were established within this
study.)

Expenditures for general obligation bond debt service showed that districts with
higher debt service expenditures had higher AIMS math scores in third, fifth,
eighth, and tenth grades.

Comparisons of debt service expenditures, by category (low, medium, high)
within grade levels, showed significant differences in AIMS math scores between
all categories for each grade level (i.e., medium spending districts had
significantly higher math scores than low spending districts, and high spending
districts had significantly higher math scores than medium and low spending
districts).
Regular expenditures for M&O make up the vast majority of a school district’s funds and
are comprised mainly of salaries and benefits for staff. They also include student transportation
costs, teacher experience payments and other annual operating costs. A 10 – 15 percent increase
on the bulk of a school district’s allowable expenditure funding is a substantial amount of
additional monies available for various district activities such as hiring more teachers, reducing
class size, or increasing salaries to retain effective teachers. Districts that are able to expend
more funds to pay more teachers, hire more instructional aides, provide more extensive
professional development, buy more supplies, better maintain and expand buildings, purchase
new equipment and technology tend to have significantly higher math scores. Therefore, the
current base level support for districts looks to be insufficient to support higher levels of student
math achievement.
The findings showed that M&O override and bond debt service expenditures had
significant effects on district AIMS math scores with those districts with no or low-level funding
from these legislatively granted options tending to have lower scores. Based on the findings of
this study, if and when the state implements a comprehensive performance funding plan based on
school district ratings, as Governor Brewer is currently proposing, then these funding policies
proposed by the governor that initiate further inequities into the Arizona school finance model
would further penalize some districts that have lower scores and already lower funding capacity.
The Governor has already signed SB1293 into law in April 2013 that sets up a pilot program for
outcome-based (i.e. performance) funding of schools and is pushing for $54M in funding to fully
implement the performance funding program (Christie, 2013; Arizona Revised Statutes, 2013).
Therefore, concern is warranted over the possible widening of disparities in funding that the
Governor’s performance plan might exacerbate.
Districts that serve significant numbers of students from families living in poverty have a
higher proportion of “difficult to educate” students. These students come to school with needs
that must be addressed in order for them to reach academic proficiency. Meeting the academic
needs of students from poor families requires additional funding to provide more intervention
and support (Grubb, 2009; Odden et al., 2004). Funding inequities created by Arizona’s school
finance structure are problematic because achievement gaps between students from poorer
families and those from wealthier ones already exist, as evidenced by the strong, negative
correlations between free-and-reduced lunch percentages (FRL%) and AIMS math scale scores
(Hoffman, 2013). As findings from this study show, districts that are in the low funding
categories for M&O override and debt service expenditures, mainly districts that receive no
funding in these areas, performed worse on the AIMS math tests than districts with more fiscal
resources.
The variances in district math scores when analyzed by bond debt service expenditures
are troubling since these types of disparities had triggered a lawsuit in 1991 that led to the
Roosevelt v. Bishop (1994) decision. Roosevelt (1994) had the effect of expanding and shifting
funding mechanisms for capital projects and items from voter-approved bonds that were serviced
by locally-raised property taxes to state apportioned funding through Students FIRST and the
establishment of the School Facilities Board (SFB). Since the SFB has been effectively disabled
since 2009 by the Education Budget Reconciliation Bill and completely reconfigured by the
repeal of the Building Renewal formula in 2013, districts will need to increasingly rely on
initiating general bond referendums to fund large capital projects to maintain, repair, and
upgrade facilities. Those districts that do not have communities that are willing or able to fiscally
support bond initiatives or administrations that have the knowledge to propose bond referendums
are at a distinct financial disadvantage. Districts across the state have aging buildings that are
inadequate to support emerging educational technology trends and older districts have concerns
over imminent problems with deteriorating infrastructure.
According to the Arizona School Boards Association and Arizona Association of School
Business Officials the imminent implementation of Arizona’s Common Core Standards will be
costly to the state and its school districts (Arizona School Boards Association, 2013). Some of
these costs entail infrastructure improvements to computer technology systems that require
substantial amounts of capital funding. If districts are forced to seek bonds from their
constituents the success rates of those elections will play a critical role in the level of math
achievement attained across districts.
The disparities introduced into the school finance system are again as problematic as they
were when the Roosevelt v. Bishop (1994) lawsuit was initiated. Judge Hall, presiding judge for
Crane Elementary School District v. State of Arizona (2006), defended Arizona’s school finance
system when denying an appeal by the plaintiffs by affirming that the “…financing scheme for
maintenance and operations budgets is structured to provide equal access to the same basic
educational opportunities for all students, it satisfies federal constitutional requirements” (p.26).
In light of the findings of this study and the conclusions drawn regarding sizeable gaps in math
scores connected to varying M&O as well as debt service expenditures that exceed the
equalization base it seems clear that the school finance system does not provide the same basic
educational opportunities for all students.
General Obligation Bonds and Students FIRST
Inequities inherent in property wealth of school districts across Arizona that produced serious
disparities in districts’ capacities to fund capital projects are still present today. Since 1998, the
Students FIRST program, administered by the State Facilities Board (SFB), has been in place to
address disparities in district capacity to fund necessary capital projects. The problem is that the
SFB is not funded close to an adequate level to handle the needs of Arizona school districts.
Some districts continue to rely on local bond referendums to raise funds for capital projects
while others go without needed funds to correct deficiencies and renew infrastructure. Moreover,
the Joint Legislative Budget Committee reported in January 2013 that 125 school districts have
outstanding voter approved bonds. Of those districts, 29 were unable to issue additional “Class
B” bonds because they had no unused bonding capacity under the statutory caps set in A.R.S. §
15-1021 (Joint Legislative Budget Committee, 2013).
Bonding capacities for school districts have decreased in recent years due to declining
property values. The legislature passed a bill in June 2013 which Governor Brewer signed to
double the bonding capacities for school districts. While this will help those 29 districts that
already have bonds passed, but were unable to sell them, due to the retroactive clause in the law,
it does nothing for those districts that are unable to secure a bond to fund capital projects.
Most districts are left with facilities that continue to deteriorate without the capacity to
address critical needs in renewing infrastructure, expand facilities to accommodate increasing
student populations, or improve infrastructure to handle future needs in educational technology.
This study found that increased student math achievement is closely tied to increased districts’
expenditures for debt service; the inadequacies in Arizona’s school finance system to provide a
necessary level of funding to meet the state’s educational goals are starkly illuminated.
Concluding Remarks
In Arizona, districts’ capacities to secure additional fiscal resources that exceed the equalization
base have been shown to be strongly connected to math achievement scores where the effects of
increased funding have led, in some way, to increased AIMS math scores. There are clear
indications that adequate funding levels are not generally provided for districts to reach the
state’s educational goals. Specifically, districts’ M&O expenditures beyond the Revenue Control
Limit (RCL) have a significant effect on AIMS math scores where low spending districts have
considerably lower math scores across grade levels than higher spending districts. Moreover,
expenditures for general obligation bond debt service show significant effects on AIMS math
scores between districts that have negligible resources from bonds and the moderate and high
spending districts. Lowering spending districts, on a per pupil basis, tend to have lower math
scores. This trend continues between moderate and high spending districts demonstrating that
math scores increase with each increased level of spending on capital projects.
Spending on schools is a political choice. The choices made by legislators in Arizona
have failed to fund schools adequately as evidenced by the clear connections between levels of
funding in both facilities and general spending and student math achievement. The inadequacies
created by the school finance system are not a matter of state budget constraints due to economic
conditions. The trends of inadequacy in Arizona school funding have been consistent despite
fluctuations in the economy over several decades. Moreover, the legislature has made little effort
to fund school districts with concentrated student need at levels that would provide adequate
funding to assist those districts in helping students meet the state’s academic goals.
The School Facilities Board was intended to be a stable entity that would allocate facility
funding in an established, sustained manner allowing districts to effectively plan for future needs
in providing adequate school facilities for Arizona’s children. The vision was there, but never
given the sustenance of funds that was required to attain its goals.
A similar impediment within Arizona’s school finance system exists for student
achievement. The basic flaw in general school funding, like facilities funding, is that it lacks a
stable source of adequate revenue to allow districts to effectively plan and implement appropriate
programs to meet students’ academic needs. As long as most of Arizona’s school districts are not
adequately funded the vision of providing a high quality public education to all Arizona’s
children remains illusory, an obligation that is not assumed by those responsible. Adequate
funding for education is a prerequisite for supporting higher levels of learning and achievement
for students in all public schools.
REFERENCES
Arizona Education Network (2009, October 2). Arizona school districts take funding to local
voters: October 2009. [Web log message]. Retrieved from
http://www.arizonaeducationnetwork.com/2009/10/arizona-school-districts-take-funding-tolocal-voters/
Arizona Revised Statutes (ARS) A.R.S. § 15-917. Performance incentive fund, (2013).
Arizona School Boards Association. (2013). ASBA/AASBO survey reveals common core
implementation costs. Retrieved from http://www.azsba.org/
Ashutosh, N. J. (2010, March 29). MANOVA [Video file]. Retrieved from
http://www.slideshare.net/Lordnikhil/manova-3591071
Baker, B.D., Sciarra, D.G., & Farrie, D. (2010). Is school funding fair? a national report card.
Education Law Center: Newark, NJ. Retrieved from
http://www.schoolfundingfairness.org/National_Report_Card.pdf
Christie, B. (2013, April 11). Gov. Brewer signs bill creating school performance plan. Arizona
Capitol Times. Retrieved September 11, 2013 http://azcapitoltimes.com/news/
Crane Elementary School District v. State of Arizona, 205 Ariz. 584, 74 P.3d 258 (2003).
Crane Elementary School District v. State of Arizona, No. 04-0076 (Ariz. App. Nov. 22, 2006).
Education Counts (2013). Education counts research center. Data retrieved from
www.edcounts.org
Faller, M. B. (2011, October 30). 20 districts in county seek bonds, overrides: They're easier to
pass in an off-year election, some say. azcentral.com-12News. Retrieved from
http://www.azcentral.com/12news/news/articles/2011/10/30/20111030 maricopa-countydistricts-seek-bonds-overrides.html#ixzz20wYXz7Tz
Grubb, W. N. (2009). The money myth: School resources, outcomes, and equity. New York, NY:
Russell Sage Foundation.
Harris, D. (2013, July). A ‘fair’ schools budget: after years of deep cuts, officials say 2014
spending is moving in right direction. Arizona Capitol Times. Retrieved July 13, 2013 from
http://azcapitoltimes.com/news/
Hoffman, M. J. (2013). Connecting voter-approved budget-limit exemptions and student
achievement: Inequities in school funding. (Doctoral dissertation) Available from ProQuest
Dissertations and Theses database. (Order No. 3562136)
Huppenthal, J. (2011). Annual report of the Arizona Superintendent of Public Instruction: Fiscal
year 2009-2010 (Vol. 1). Retrieved from
http://www.azed.gov/superintendent/files/2012/01/vol1.pdf
Joint Legislative Budget Committee. (2013). Fiscal year 2014 baseline book. Retrieved from
http://www.azleg.gov/jlbc/14baseline/14BaselineLinks.pdf
Leemann, L. & Gill, J. (2011). Weighted least squares. In B. Badie, D. Berg-Schlosser, & L.
Morlino (Eds.). International encyclopedia of political science (pp. 2740-2743). Thousand
Oaks, CA: SAGE Publications, Inc. doi: 10.4135/9781412959636.n641
Miller, D. (2009, October 23). School districts betting heavily on upcoming overrides. Retrieved
from http://azcapitoltimes.com/news/
Miller, D. (2010, February 1). Districts weigh options following election struggles. Arizona
Capitol Times. Retrieved from http://azcapitoltimes.com/ news/2010/02/01/districts-weighoptions-following-election-struggles/
Odden, A. R., Picus, L. O., Fermanich, M, & Goetz, M. (2004). An evidenced-based approach to
school finance adequacy in Arizona. Lawerence O. Picus and Associates. Scottsdale, AZ: Rodel
Foundation.
Office of the Auditor General (2012, March). Arizona school district spending (classroom
dollars) fiscal year 2012: A report to the Arizona legislature. Division of School Audits, Report
No. 13-01.
http://www.auditorgen.state.az.us/Reports/School_Districts/Statewide/2013_March/AZ_School_
District_Spending_FY2012.pdf
Olson, J. (2009). Arizona school finance. Phoenix, Arizona Tax Research Association. Retrieved
from www.arizzonatax.org
Ortega, B. (2012, March 3). Arizona school funding gap grows between ‘have’, ‘have-not’
districts. Arizona Republic News. Retrieved from http://tucsoncitizen.com/arizonanews/category/arizona-republic-news/
Rodriguez v. San Antonio Independent School District, 337 F. Supp. 280 (W. D. Tex. 1971).
Roosevelt Elementary School District No. 66 v. Bishop, 179 Ariz. 223, 877 P. 2d 806, 93 Ed.
Law Rep. 330 (1994).
San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S. Ct. 1278 (1973).
Shofstall v. Hollins 515 P. 2d 590, 110 Ariz. 88 (1973).
Appendices
APPENDIX A – Sample Size, Distributions, Correlations
Table A1
Distribution of Arizona School Districts by ADM and Size
District Size
20062007
0299
300599
600999
10004999
50009999
10,000+
Totals
# of
Districts
77
28
16
68
22
26
237
% of
Districts
32.5%
11.8%
6.8%
28.7%
9.3%
11.0%
100.1%
ADM
7,984
12,146
13,053
165,504
145,644
591,483
935,814
% ADM
0.9%
1.3%
1.4%
17.7%
15.6%
63.2%
100%
20112012
0299
300599
600999
10004999
50009999
10,000+
Totals
# of
Districts
81
29
17
64
27
22
239
% of
Districts
33.8%
12.1%
7.1%
26.7%
11.3%
9.2%
100%
ADM
8,636
12,334
13,515
159,575
189,943
530,410
914,413
% ADM
0.9%
1.3%
1.5%
17.5%
20.8%
58.0%
100%
Changes
from
2007 to
2011
0299
300599
600999
10004999
50009999
10,000+
Totals
∆ # of
Districts
4
1
1
-4
5
-4
3
Note. Compiled from Annual Reports of the Arizona Superintendent of Public
Instruction (Horne, 2007; Huppenthal, 2011).
Table A2
Distribution of District Types at Beginning and End Points of Study: Number and Type of
Arizona School Districts
Number of Districts by Year
2006-2007
2011-2012
∆ 2006-2007 to 2011-2012
Elementary
99
97
-2
Unified
95
96
1
District Type
High School
15
15
0
Note: Disparities between the two tables occur due to ADE’s inclusion of Arizona Online
Instruction and Accommodation districts in the Distribution of Arizona School Districts by
ADM and Size. These districts are not included in Table 2. The study population does not
include online or accommodation districts.
Note: Compiled from Annual Reports of the Arizona Superintendent of Public Instruction
(Horne, 2007; Huppenthal, 2011).
Table A3
Pearson Correlation Coefficients for Mean Math Scale Scores, District Average Daily
Membership, and Free-and-Reduced Lunch Percentages in Arizona 2007-2012
ADM
FRL %
G3 Math G5 Math G8 Math G10 Math
Scores
Scores
Scores
Scores
ADM
1
-
-
-
-
-
FRL%
-.235** 1
-
-
-
-
G3 Math Scores
.300** -.465** 1
-
-
-
G5 Math Scores
.311** -.478** .892**
1
-
-
G8 Math Scores
.283** -.470** .812**
.832**
1
G10 Math Scores
.301** -.508** .613**
.677**
.764**
1
Note: Data from Connecting voter-approved budget-limit exemptions and student achievement:
inequities in school funding (Hoffman, 2013). Significance *p < .05, ** p < .001
Appendix B – ANOVA and Tukey Post Hoc Test Results
Table B1
Summary of ANOVA and Tukey Post Hoc Tests for M&O Override Per Pupil
Expenditures Beyond the RCL and AIMS Math Scale Scores
Post Hoc Comparisons of
M&O Funding Level
Categories (Tukey HSD)
Mean Difference
Variable
Df
F
ηp2
Low-Med
Low –
High
MedHigh
3
M&O
District
Type
(2,187)
(1,187)
2.70
15.36**
.028
.076
-
-
-
5
M&O
District
Type
(2,186)
(1,186)
3.55*
15.57**
.037
.077
-10.26*
-10.85*
-.59
8
M&O
District
Type
(2,180)
(1,180)
3.92*
3.24
.042
.038
-8.89*
-10.94*
-2.05
10
M&O
District
Type
(2,103)
‡
13.36**
‡
.206
‡
-5.66
-9.45
-3.79
Grade
Level
Note. Significance *p < .05, ** p < .001
‡ Effect not estimable due to extreme disparities in sample sizes for Unified (n = 94)
and Union High School (n = 15) districts.
Table B2
Summary of ANOVA and Tukey Post Hoc Tests for General Obligation Bond Debt Service Per
Pupil Expenditures Beyond the RCL and AIMS Math Scale Scores
Grade Level
Variable
df
F
ηp2
3
GOB Debt
Service
District
Type
(2,187)
28.70**
.235
(1,187)
5.07*
.026
GOB Debt
Service
District
Type
(2,186)
33.30**
.264
(1,186)
5.75*
.030
GOB Debt
Service
District
Type
(2,180)
21.07**
.190
(1,180)
1.98
.011
GOB Debt
Service
District
Type
(1,103)
13.73**
.107
(1,103)
17.41**
.118
5
8
10
Note. Significance *p < .05, ** p < .001
Post Hoc Comparisons of
General Obligation Bond
Debt Service Expenditure
Level Categories (Tukey
HSD)
Mean Difference
LowLow MedMed
High
High
-19.56*
-28.52*
-8.97*
-21.73*
-32.30*
-10.57*
-14.83*
-25.95*
-25.95*
-13.57*
-23.83*
-10.26*