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Arizona lawmakers eye school reserves for budget fix

PHOENIX – Some legislators are looking at school districts’ savings as a possible way to find hundreds of millions of dollars that could be used to help balance the state budget.

The idea is that if school districts are pushed to spend the estimated $330 million in their accounts when the new fiscal year begins July 1, the state could reduce its appropriation for K-12 schools by the same amount.

The state faces a projected shortfall of roughly $3 billion in the next state budget. That’s based on spending of $11 billion, an amount sure to be reduced by funding cuts included in whatever budget is eventually approved.

“We can balance our budget without a tax increase and without debt financing,” said Rep. Carl Seel, a Phoenix Republican who is pushing the idea. “Where the state saves is being able to recognize that they have the savings (and) authorize them to spend the savings.”

Officials of several school groups expressed strong concerns about the proposal.

Republican leaders said Seel’s proposal is under study for possible inclusion in House and Senate budget proposals, but they said no final decisions have been made.

Seel said he’s reviewed figures from several sources and is confident that the money is available for use as he proposes.

The $330 million is money expected to be in districts’ regular “carryforwards” at the beginning of the next fiscal year. There’s also $100 million of unspent money provided by the state for repairs and maintenance, he said.

School advocates said they have yet to see specifics on Seel’s proposal but that they suspect that much of the money may not be in the accounts come July 1 or, if it is, available for spending on operations.

Some of it may be intended to pay bills early in the next fiscal year. Other money could be reserves set aside for emergencies or bound for debt payments, special utility projects and other allowed purposes, advocates said.

“The convoluted exercises you have to go through to actually get the money might be pretty tricky and might not be worth the trouble,” said Mike Smith, a lobbyist for an association representing school administrators.

Seel expressed certainty that his idea would move forward, but GOP leaders were more restrained.

House Majority Whip Andy Tobin, R-Paulden, said the school districts’ money “may be available to use” and that Seel’s idea could be included in the proposal.

Senate Majority Leader Chuck Gray said Seel’s idea is being studied but “is certainly not part of the plan yet.”

School districts are permitted to “carry forward” up to 4 percent of their operating budgets, and Gray said that limit is the starting point for examination of what money the school districts have stashed away.

“We’re investigating as to whether or not those monies should even be there at all,” said Gray, R-Mesa.

A lawmaker who serves on a school district board said Seel’s idea is too flawed to get support.

In the case of his own district, Scottsdale Unified, some of the money that Seel may be eying apparently was set aside to help offset the state’s budget cuts, said Rep. Eric Meyer, D-Paradise Valley. Seel’s idea “is not a sensible solution,” Meyer said.

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