School districts illegally stockpiled millions of dollars

Sonoran Alliance (AZ), May 1, 2009

(STATE CAPITOL, PHOENIX) – As the rest of the state struggles with devastating economic conditions with cuts, layoffs and the associated financial and emotional trauma, schools have been illegally and secretly stockpiling millions of dollars.

“I am outraged at members of the education community for their blatant deception and hypocrisy. They have launched huge attacks against cuts to education to balance the budget, while they hid the fact that they were sitting on hundreds of millions of your taxpayer dollars,” declared Sen. Pamela Gorman, R-Anthem.

The Annual Report of the Superintendent of Public Instruction indicates that school districts began the current fiscal year with more than $2.3 billion in the bank. A relatively small portion of this cash balance could be used to help balance the FY 2010 budget.

This small portion of the cash balances that would be used to balance the budget resulted because districts deliberately and regularly overestimated their authorized property tax levy. This portion of the balances does not represent school district savings; it is not a rainy day fund that the districts prudently set aside for emergencies; it was a miscalculation of property taxes. Arizona statutes require the districts to refund this balance back to the property taxpayers. But many districts have ignored this law and accumulated this cash balance that they are not authorized to spend.

Statutes even prohibit districts from increasing property taxes to account for estimated uncollected taxes.

“Districts have been violating state law and illegally amassing larger and larger cash balances while crying out that we at the Legislature are decimating public education,” Gorman said. “It is shameless!”

“At a time of Arizona’s worst fiscal crisis, we need facts not fiction. Taxpayers should demand to know why every fiscal year seems to be ending with a substantial surplus that nobody can really account for. Until those funds are accounted for, no one should be making reckless claims that education is underfunded without a full investigation,” said Dr. Vicki Murray, associate director of education studies at the Pacific Research Institute in Sacramento, Calif.

The idea of using these funds to balance the budget is not new. In fact, the Legislature employed a very similar approach to balance the state budget in 1992.

There is more information about K-12 education cash balances at:

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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