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Error shorts ARIZONA schools $38 million

calculation-errorAn error in calculating classroom funding since 2006 has shortchanged hundreds of Arizona public and charter schools while causing others to be overpaid.

Virtually every school in the state is affected, and Arizona Department of Education officials are now scrambling to reimburse $38million to the districts that were underfunded and are setting up payment plans to recoup the $6 million that others were overpaid.

The error, discovered during a business meeting with school officials, will mean lump-sum payments to some districts and charter schools in March. Schools that were overpaid will likely have the money subtracted from their monthly state payments over a 17-month period.

The money comes from a 0.6-cent-per-dollar sales tax approved by voters in 2000. The ballot measure, Proposition 301, sets aside money in a classroom-site fund and is earmarked to pay teachers and provide instructional support in the classroom. The available money fluctuates each year based on sales-tax revenue.

Preliminary figures show the largest underpayment is likely to Mesa Public Schools at $3.3 million. The largest overpayment was $324,000 to a charter school that department officials declined to name because the school has not been notified.

“I am fairly certain every school district and every charter will either owe money or be owed money back,” said Lyle Friesen, the department’s deputy associate superintendent of school finance.

The state has more than 2,200 public schools. Within the next week, department officials plan to release figures on each district or school. Friesen said the department is developing options for those schools that owe larger sums of money. “The $324,000 example I see as one that we’ll definitely have to work with,” he said.

He gave other examples without attaching names. The state overpaid one school district by $91,500 and underpaid another by $600,000. Another charter school is owed $70,000.

The original formula for distributing the Proposition 301 money set a per-pupil allocation in March based on state revenue estimates. Schools then used that estimate to budget for the following school year. When estimates fell short of revenue, there was no mechanism in the law to make up for prior-year shortages. So state law was changed to allow for adjustments.

When the education department made the shortfall adjustments, however, officials used current-year student enrollments instead of previous-year enrollments. Some schools gained or lost students and therefore received incorrect per-student funding.

Charter schools and districts that grew or declined rapidly likely have the greatest funding discrepancies, Friesen said.

The problem was discovered during a meeting of school business officials when someone noticed that some schools received an incorrect amount.

Some of the funding discrepancies are small, Friesen said. One charter school was overpaid a total of $22, according to preliminary figures. “Hopefully, we can take that in one lump sum and not keep adjusting” over 17 months, he joked.

The impact on charter schools and districts will depend on the size of their budgets, said Chuck Essigs, director of governmental relations for the Arizona Association of School Business Officials. A $300,000 hit to a charter school could be significant, he said.

Classroom-site-fund money can be carried over into subsequent years, Essigs said. So schools wouldn’t have to spend the windfall this year. If the district receives money, however, “Once teachers find out about it, they are going to want it,” he said.

Schools that owe money would like to see the adjustments made in ways that cause as little disruption as possible, Essigs said. “Anything (the department) can do to give flexibility … would be very much appreciated,” he said.

Friesen said there is enough money available to cover the payments. The department plans to distribute the $38 million in March. For the schools that owe, “to prevent a heart attack,” the money likely will be subtracted from their monthly state payments through July 2014. Some schools that were overpaid have requested the department not reduce payments this school year.

Friesen said department officials are evaluating that request.

Mesa Public Schools spokeswoman Helen Hollands said district officials haven’t been notified of the amount and haven’t analyzed the potential impact of the $3.3 million. In fiscal 2012, Mesa received $16.3 million in classroom-site-fund money.

Source: The Republic – by Anne Ryman

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This entry was posted on January 28, 2013 by in Arizona, Charter Schools, State funding and tagged .

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