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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
TPT; use tax; education
Purpose
Establishes new revenue distributions for education and the Classroom Site Fund (CSF) subject to an amendment to the Arizona Constitution. Conditions the enactment of this legislation on the affirmative vote of the people of S.C.R. 1001 at the next general election.
Background
Proposition 301 was approved by voters in November 2000 and established a 0.6 percent transaction privilege tax (TPT) and use tax that was set to expire in mid-2021. Laws 2018, Chapter 74 extended this 0.6 percent TPT and use tax beginning July 1, 2021, and ending June 30, 2041, with the same distribution of revenues as Proposition 301, except the $64.1 million distributed for school facilities bond debt was appropriated to the CSF (A.R.S. § 42-5029).
The CSF provides additional funding to public schools from Proposition
301 and K-12 endowment earnings. Each school district or charter school
distributes the CSF as follows: 1) 40 percent for teacher compensation
increases based upon performance and employment-related expenses; 2) 20 percent
for teacher base salary increases and employment related expenses; and
3) 40 percent for maintenance and operation purposes (A.R.S.
§ 15-977).
Currently, CSF monies must be spent for maintenance and operation purposes as follows: 1) class size reduction; 2) teacher compensation increases; 3) assessment intervention programs; 4) teacher development; 5) dropout prevention programs; and 6) teacher liability insurance premiums (A.R.S. § 15-977).
FY 2019 Estimated Classroom Site Fund Revenues
|
Proposition 301 Sales Tax |
$435,277,400 |
|
Endowment Earnings |
$103,425,500 |
|
Prior Year Carryforward |
$60,250,200 |
|
Total Estimated Revenues |
$598,953,100 |
S.B. 1080 repeals the 0.6 percent TPT and use tax authorized by Laws 2018, Chapter 74. It is contingent upon voter approval of S.C.R. 1001 which amends the Arizona Constitution to levy a 1 percent TPT and use tax beginning July 1, 2021.
According to the Joint Legislative Budget Committee, due to the restructuring of the CSF, there will be a shift in costs of $93,280,500 in FY 2022 to the state General Fund from expenses currently covered by Proposition 301.
Provisions
Distribution of Revenues
1. Stipulates all monies collected, as outlined in the constitutional amendment, are distributed each fiscal year as follows:
a) 73 percent paid monthly to the CSF;
b) 22 percent, paid monthly to the Arizona Board of Regents, to be distributed proportionally to each university based on the number of students receiving in-state tuition for the purposes of maintaining an in-state tuition rate consistent with the Arizona Constitution; and
c) 5 percent paid monthly as follows:
i. $1.5 million to each community college district for trade and workforce development programs, not including a community college tuition financing district;
ii. $1.5 million to the treasurer or other designated depository of each qualifying Indian tribe that owns, operates or charters a community college on its Indian reservation for trade and workforce development programs at each community college;
iii. $1 million in FY 2022 and $500 thousand each fiscal year after to each provisional community college district and community college tuition financing district for trade and workforce development programs; and
iv. the remaining monies are distributed proportionally, based on the full-time equivalent student count, to each community college district, qualifying Indian tribe, provisional community college district and community college tuition financing district.
2. Requires the qualified entities receiving monies to jointly present annually to a legislative committee tasked with workforce development regarding the use of monies.
3. Requires the monies collected to be distributed in addition to any other appropriation, transfer or allocation of public or private monies from any other source and prohibits the monies from supplanting, replacing or causing a reduction in other school district, charter school university or community college funding sources.
4. Conditions the enactment of this legislation on the passage of the constitutional amendment at the next general election contained in S.C.R. 1001.
Classroom Site Fund
5. Removes requirements, for school districts and charters, to allocate the following amounts from the CSF:
a) 40 percent for teacher compensation increases, based on performance and employment‑related expenses;
b) 20 percent for teacher base salary increases and employment-related expenses; and
c) 40 percent for maintenance and operation purposes.
6. Removes requirements that CSF monies be spent for maintenance and operation purposes including:
a) class size reduction;
b) assessment intervention programs; and
c) teacher liability insurance premiums.
7. Adds requirements that CSF monies be spent for the following purposes:
a) teacher compensation;
b) educational interventions;
c) voluntary full-day kindergarten;
d) the increased cost of additional school days enacted in 2000;
e) student support services;
f) tutoring;
g) character education; and
h) school resource officers.
8. Removes the transfer of funds to the CSF, from the 0.6 percent TPT and use tax, set to begin on July 1, 2021, that was authorized by Laws 2018, Chapter 74.
Miscellaneous
9. Repeals A.R.S. § 42-5010.01 relating to the additional 0.6 percent TPT and use tax beginning in 2021.
10. Repeals A.R.S. § 42-5029.02 relating to the distribution of revenues collected for education.
11. Repeals A.R.S. § 43-1072.02 relating to a refundable tax credit.
12. Makes technical and conforming changes.
13. Defines terms.
14. Becomes effective on July 1, 2021, subject to the provisions of the conditional enactment.
Prepared by Senate Research
January 23, 2019
JO/gs