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| January 20, 2021 Day 10 |
| Senate Finance SB 1041 STOs; aggregate cap increase (Livingston) passed 6-4. ASBA is opposed. State Revenue Update The Legislature’s budget office (JLBC) released its annual revenue forecast last week, and issued its monthly report on state revenue for January today. They estimate that the state will have a budget surplus of as much as $1.6B going into FY22, after accounting for mandated spending including the K-12 formula and inflation funding, and it could grow. A large portion of this ($600M) is due to budget surpluses in K-12 education due to reduced enrollment and savings in the Medicaid program (AHCCCS) due to federal spending. Another large portion is because the state deferred its income tax filing deadline from April (FY20) to July (FY21), effectively moving a large chunk of revenue from one year to the other. Because of this, JLBC warns that of this surplus, only $300-$400M should be dedicated to ongoing (permanent) spending, which would include permanently reducing revenue through tax cuts. The remainder is primarily a “one time only” windfall. This growth in revenue is driven primarily by steady increases in sales tax, particularly retail and construction sales tax, despite the pandemic. Restaurant and bar sales continue to be poor, resulting in tax declines compared to this point last year. The state’s Finance Advisory Committee will have its quarterly meeting tomorrow afternoon to provide Legislators with an update on the economic forecast. As budget discussions move forward, ASBA continues to advocate for the K-12 budget surplus to be reinvested in Arizona’s public schools.  How the Biden Administration Could Impact Arizona With the inauguration of President Biden today, the US Department of Education (USDOE) will be under new leadership, and the same party holds the presidency and both houses of Congress until the end of 2022. Below are some things we are watching for out of the administration as it begins: –COVID Initiatives: Obviously, all of us are anxious to make progress on COVID and get back into “normal” schooling safely. With his proposed “Rescue Plan” which he announced last week and will be sending to Congress, an accelerated vaccine rollout plus additional federal dollars to school districts could aid districts in that effort. The odds of the administration getting what it asks for are much greater with Democrats also in charge of Congress. –Secretary of Education: The selection of Miguel Cardona, the former Connecticut education commissioner, as education secretary, and Cindy Marten, former superintendent in San Diego, as deputy secretary, the Biden administration signals a return to placing public schools at the forefront of federal education policy, which is a welcome departure from the USDOE under Trump. –Assessment: The USDOE is the entity that can waive or modify the federal assessment requirement for the current school year. If not a waiver, we are hopeful that we will be able to get federal flexibility on assessment requirements such as the requirement that 95% of students be tested. –Federal Education Funding: The National School Boards Association and others have long proclaimed the need to increase the baseline federal funding level for students with special needs through the Individuals with Disabilities Education Act (IDEA). Impact Aid has also been a point of contention. If the administration makes it a priority, we could see some real progress in these areas.  Senate Ed Approves Special Ed alternative assessment task force |
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