SCR1005 - 571R - Senate Fact Sheet

Purpose

Subject to voter approval, statutorily requires each school district and charter school to revise its salary schedule to increase the base salary of all eligible teachers if the voters approve an increased distribution rate from the Permanent State School Fund. Establishes the Teacher Pay Fund, consisting of legislative appropriations and distributions from the Permanent State School Fund, to support the required salary increases. Outlines administrative, distribution, eligibility and reporting requirements.

Background

A school district governing board (governing board) and charter school governing body (governing body) must annually provide each school district or charter school employee a total compensation statement that is broken down by category of benefit or payment for each employee, including the employee's base salary and any additional pay. The budget format for school districts and charter schools must contain: 1) a statement identifying proposed pupil-teacher and pupil-staff ratios; 2) the average salary of all teachers employed for the current year; 3) the average salary of all teachers employed for the previous year; 4) the dollar increase in average teacher salary; and 5) the percentage increase in average teacher salary (A.R.S. §§ 15-189; 15-341; and 15-903).

Statute allows a governing board, at any time, to employ and fix employees' salaries and benefits for the succeeding year. A governing board must use monies received from the state and county apportionment exclusively to pay the salaries of teachers and other employees and contingent expenses of the district. A governing board may reduce salaries or eliminate certificated school district teachers to effectuate economies in the operation of the district or to improve the efficient conduct and administration of schools within the school district (district school). Notice of general salary reduction must be given to each certificated teacher affected (A.R.S. §§ 15-502 and 15-544).

Each governing board and governing body must establish a system to evaluate the performance of certificated teachers that results in at least one valuation each year for each certificated teacher. The evaluation system must include four performance classifications, designated as: 1) highly effective; 2) effective; 3) developing; and 4) ineffective (A.R.S. §§
15-189.06 and 15-537).

The Arizona State Land Trust supports Arizona public schools, universities and other agencies by generating revenues via the sale and use of lands and the investment of proceeds associated with acreage granted to the state. Each beneficiary has a separate permanent fund comprised of expendable and permanent monies. The Permanent State School Fund is established as the permanent fund for Arizona common and high schools. For FYs 2016 through 2025, the annual distribution rate from the permanent funds is 6.9 percent of the average monthly market values of the permanent funds. In FY 2026, the annual distribution rate decreases to 2.5 percent (Ariz. Const. art. 10 § 7; Ariz. Const. art. 11 § 8; JLBC).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Requires, if the voters approve an increased distribution rate from the Permanent State School Fund, each school district and charter school to revise its salary schedule or schedules to increase the base salary of all eligible teachers who are, or will be, employed by a district school or charter school.

2. Establishes the Teacher Pay Fund, consisting of legislative appropriations and distributions from the Permanent State School Fund.

3. Requires ADE to administer the Teacher Pay Fund and establish procedures for determining whether a school district or charter school is eligible to receive Teacher Pay Fund monies.

4. Requires the State Treasurer, by March 30, to annually provide JLBC Staff with an estimate of the amount of distributions from the Permanent State School Fund that will be deposited in the Teacher Pay Fund for the budget year.

5. Requires JLBC Staff, by March 30, to annually determine a per-teacher-amount from the Teacher Pay Fund for the budget year using the statewide number of eligible teachers reported and based on the State Treasurer's estimate.

6. Determines, if voters approve an increased distribution rate from the Permanent State School Fund, that the increase must be:

a) the amount annually estimated by the State Treasurer to be deposited into the Teacher Pay Fund; and

b) the same amount for each eligible teacher without regard to teacher experience levels.

7. Directs ADE, if the voters approve an increased distribution rate from the Permanent State School Fund, to allocate Teacher Pay Fund monies to each eligible school district or charter school in an amount equal to the amount determined by JLBC multiplied by the number of eligible school teachers employed by the school district or charter school.

8. Prohibits a school district or charter school, if the voters approve an increased distribution rate from the Permanent State School Fund, from reducing the base salary of eligible teachers who are, or will be, employed by the school district or charter school below the base salary schedule reported to ADE in FY 2026.

9. Specifies that the prohibition on salary decreases below the reported base salary schedule for FY 2026 does not restrict a school district's or charter school's authority to adjust an individual teacher's salary in a manner consistent with the applicable base salary schedule, including an adjustment for any change in employment status.

10. Authorizes a school district or charter school, in any budget year in which the school district's or charter school's estimated total current expenditure per pupil is below the total current expenditures per pupil calculated by ADE for FY 2026, to reduce the base salary of eligible teachers below the base salary that the school district or charter school reported to ADE in FY 2026 by an amount that does not exceed the percentage reduction in the total current expenditures per pupil for the budget year compared to the total current expenditures per pupil for FY 2026.

11. Specifies that the authorization for a salary reduction relating to the total current expenditure per pupil amounts applies only to the current budget year.

12. Specifies that Teacher Pay Fund monies:

a) are continuously appropriated and exempt from lapsing;

b) are in addition to any other monies, including public or private, that the school district or charter school receives from any lawful source;

c) may not supplant, replace or otherwise cause a reduction in other funding sources for the school district or charter school; and

d) are exempt from a school district's revenue control limit.

13. Requires ADE, if the Legislature appropriates monies to the Teacher Pay Fund for additional salary increases, to allocate the appropriated monies to each eligible school district and charter school according to the terms of the appropriation.

14. Requires each school district and charter school that receives Teacher Pay Fund monies to submit an annual report by November 15 to the Superintendent of Public Instruction that provides an accounting of the expenditures of monies distributed from the Teacher Pay Fund during the previous fiscal year.

15. Directs ADE, in conjunction with the Office of the Auditor General (OAG), to prescribe the format for each school district's and charter school's annual report.

16. Requires ADE, on report from the OAG, to determine whether school districts and charter schools are complying with prescribed requirements relating to salary increases.

17. Stipulates, if ADE determines that a school district or charter school is not in compliance or has failed to correct a deficiency within 90 days after receiving notice from the OAG, that the school district or charter school is ineligible to receive Teacher Pay Fund monies from the date of the determination until the OAG reports the school district or charter school is in compliance with the requirements.

18. Defines eligible teacher as a person who is employed by a charter school or district school:

a) for a full school day or for a full class load, or their equivalent, and devotes more than 75 percent of work time to non-administrative activities that provide instruction to students; or

b) as a special education teacher for a full school day or a full class load, or their equivalent, and devotes more than 50 percent of the person's time at work to support student academic achievement as prescribed by the governing board or governing body.

19. Specifies that eligible teacher includes current teachers and teachers who begin work for the school district or charter school after the general effective date.

20. Specifies that eligible teacher does not include:

a) an administrator; or

b) a person who has been designated in either of the two lowest performance classifications after a teacher performance evaluation is conducted.

21. Adds, to the budget format prescribed for school districts, a requirement to include a statement identifying the number of eligible teachers who are employed by the school district for the current year.

22. Adds, to the budget format prescribed for charter schools, a requirement to include:

a) the salary schedule for eligible teachers who are employed by the charter school for the current year; and

b) a statement identifying the number of eligible teachers who are employed by the charter school for the current year.

23. Makes technical and conforming changes.

24. Requires the Secretary of State to submit the proposition to the voters at the next general election.

25. Becomes effective if approved by the voters and on proclamation of the Governor.