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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
state budget; structural balance; estimates
Purpose
Requires the annual general appropriation act to be balanced for each fiscal year. Reduces the amount owed to each school district for Basic State Aid (BSA) and additional state aid entitlements in the FY 2025 General Appropriation Act (K-12 rollover).
Background
The annual general appropriations bill is constitutionally required annual legislation that may not include any item other than appropriations for the departments of the state, state institutions, public schools and interest on public debt. When passed by the Legislature, the General Appropriations Act is effective on the signature of the Governor (Ariz. Const. art 4, pt. 2, § 20).
The format of the appropriations for the support and maintenance of state departments and institutions must be for each fiscal year for all budget units (A.R.S. § 35-121). The general appropriation act must include a provision that delineates the revenue and expenditure estimates for the following three years. The expenditure estimates must be based on existing statutory funding requirements and before adopting the general appropriation act, the Legislature must discuss the estimates in a public hearing (A.R.S. § 35-125).
In FY 2003, the Education Omnibus Budget Reconciliation deferred the initial $191,000,000 of BSA and additional state payment (Laws 2002, Ch. 330). The FY 2022 General Appropriations Act appropriated $65,000,000 from the state General Fund (state GF) to eliminate the K-12 rollover for school districts with a student count of less than 2,000 pupils (Laws 2021, Ch. 408). The FY 2023 General Appropriations Act appropriated $65,000,000 from the state GF to eliminate the K-12 rollover for school districts with a student count of less than 4,000 pupils (Laws 2022, Ch. 313). The FY 2025 General Appropriation Act deferred $800,727,700 of BSA and additional state aid in FY 2025 and advance appropriated the monies from the state GF in FY 2026 to the Arizona Department of Education (ADE) and the Superintendent of Public Instruction (SPI) for BSA and additional state aid. The funding deferral does not apply to charter schools or school districts with a student count of less than 4,000 pupils (Laws 2024, Ch. 209).
H.B. 2919 would prohibit deferring the K-12 rollover after FY 2027 which would result in a fiscal impact to the state GF.
Provisions
1. Requires the format of the appropriations for the support and maintenance of ADE and the SPI for each fiscal year to recognize the BSA and additional state aid entitlement paid to school districts in the same fiscal year that the school district's budget capacity recognizes the state aid.
2. Requires the annual general appropriation act to be balanced each fiscal year and specifies that the general appropriation act is balanced for a fiscal year if the unreserved state GF beginning balance, together with the state GF revenue estimate, is equal to or greater than the expenditures for that fiscal year.
3. Requires the expenditure estimates to be balanced for each fiscal year and specifies that the estimates are balanced if the unreserved state GF beginning balance, together with the state GF revenue estimate, is equal to or greater than the state GF expenditure estimate for that fiscal year.
4. Requires the expenditure estimates to recognize any spending authorized in the budget year that was authorized in the prior fiscal year as ongoing spending for the purposes of calculating the structural balance of the fiscal year.
5. Reduces the amount owed to each school district in FY 2026 for the K-12 rollover by the school district's total ending balance as of June 30, 2024, from the school district's maintenance and operations fund or unrestricted capital outlay fund that is not included in the school district's FY 2025 adopted budget.
6. Allows a school district governing board, for FY 2026, to use any portion of the school district's total ending cash balances as of June 30, 2024, from the school district's maintenance and operations fund or unrestricted capital outlay fund that was not included in the school district's FY 2025 adopted budget to replace any revenue resulting from the reduction of the K-12 rollover.
7. Makes conforming changes.
8. Becomes effective on the general effective date.
House Action
APPROP 2/24/25 DPA 11-6-0-1
3rd Read 3/3/25 32-26-2
Prepared by Senate Research
March 28, 2025
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