Student Success Funding: How Can Arizona School Districts Spend It?

Governor Janet Brewer proposed a Kindergarten through twelfth grade (K-12) performance funding plan based on the letter grades assigned to State of Arizona school districts by the Arizona Department of Education (“ADE”).  The intention of Governor Brewer’s student success funding plan was to financially reward school districts that were able to demonstrate the goals established by the State of Arizona Legislature when it enacted Arizona Revised Statute (“A.R.S”) §15-241.  Those goals (translated as the school district’s letter grade) are based on current year achievement and longitudinal academic growth with a specific emphasis placed on the growth of all students, including the lowest achieving students.

After gathering input from the school district and business communities, Governor Brewer updated the performance funding plan by moving the focus from the goals set by A.R.S. §15-241 and the ADE to basing the metric on individual student success.  Governor Brewer dubbed the program the “Student Success Funding” program.  It is important to note that the Student Success Funding program does not base any calculations on the school district letter grades assigned by the ADE pursuant to A.R.S. §15-241; this is a wholly separate performance funding structure that requires a unique measure of student success for the award of funding.

According to the provisions of the Student Success Funding program, school districts earn flexible funding when the school district can demonstrate that its students reach (or exceed) grade-level proficiency on the state assessment, show improvement (or above-average growth) from the prior year, and graduate from high school.  For tested grade levels, the additional flexible funding awarded to the school district is based on how an individual student achievement level fits into narrowly calculated growth percentiles.  According to the chart provided by Governor Brewer’s website (available in the “Answers to Frequently Asked Questions” section at web page http://azgovernor.gov/SSF.asp) there are four categories of student; the initial level, “Approaches Proficiency”, “Meets Proficiency”, and “Exceeds Proficiency.”  Those four categories are then compared to the Student Growth Percentage (“SGP”) and based on how much a student in any one of the above named four categories improved there is a corresponding per student flexible funding payout to the school district.  For example, at the high end an initial level student who demonstrates a student growth percentage of Eighty-Three Percent (83%) to Ninety-Nine Percent (99%) would earn the school district Two Hundred Dollars ($200.00) in flexible funding.

The calculations as to what each school district “earned” with respect to the Student Success Funding program for school district fiscal year 2014-2015 were made prior to December 2014.  As per information from the State of Arizona Auditor General’s Office, what Student Success Funding a school district is eligible for will most likely be paid out to the school district in December 2014 or January 2015.  The amount of Student Success Funding awarded to any one particular school district will vary, and could result in a substantial award.

The statutory support for the Student Success Funding program is found in A.R.S. §15-917 which provides,

“A. The student success fund is established consisting of legislative appropriations or other monies designated for student success funding. The department of education shall administer the fund. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

B. Each eligible school district and charter school shall establish a local level student success fund to receive allocations from the state level student success fund.”

It is worthy of note that this statutory language does not impose any limitations on what the funds may be used for.  The statute also does not indicate that these funds will be “swept” if not used by the end of the then current school district fiscal year or that the funds may not be used to supplement or supplant salaries.  This does not mean that these funds could never be “swept” and also does not mean that the school district that receives the funds is at liberty to spend them in any way it sees fit.

The State of Arizona Auditor General’s Office issued guidance regarding accounting for the Student Success Funding program awarded funds.  As per the Accounting Services Division of the State of Arizona Auditor General’s Office, school districts are directed to use “Fund 080 – Student Success Fund” to account for the revenues and expenditures of Student Success Funding program monies.  Fund 080 is a cash controlled fund, and was included in the fiscal year 2015 School District Annual Expenditure Budget forms on page six (6).  However, at the time those forms were issued, school districts were advised to leave that section blank as the amount was unknown.  As per the State of Arizona Auditor General’s Office, school districts may revise the 2015 expenditure budget to account for Student Success Funding program funds any time prior to May 15, 2015.  The above-referred to guidance also specified that when a school district receives Student Success Funding program funds, it should record it as unrestricted revenue from the State of Arizona using Object Code 3160.

The use of Student Success Funding is relatively unrestricted.  The funds could be used for the purchase of materials, teacher salaries, student activities, classified staff salaries, administrative staff salaries, to augment maintenance and operation (“M&O”) funds, or a variety of other purposes.  However, it is important to remember that even though the Student Success Funding is not restricted as far as the purpose the school district chooses to use it for, the school district itself is restricted to using any funding (including Student Success Funding) for purposes that the school district is authorized to use it for under applicable State of Arizona or Federal law.

For example, a school district may decide to use Student Success Funding to award its teachers a bonus.  As per the State of Arizona Constitution’s Gift Clause, this would be impermissible unless there were language in the teachers’ contracts which contemplated such an increase in salary mid-school district fiscal year or a legally sufficient corresponding increase in teacher responsibilities.

It is also worthy of note that there are no guarantees that the funding provided through the Student Success Funding program will be available in future school district fiscal years.  This makes using the funds to increase base salaries in the upcoming school district fiscal year problematic.  It is highly recommended that each school district consult with its attorney(s) prior to utilizing the Student Success Funding awarded to the school district to ensure that the intended use is not only legally permissible but sustainable as well.

 

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding TITLE, or any other estate planning matters, please feel free to contact at  480.461.5300, log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.