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State Fiscal Stabilization Fund
Update to Arizona Association of School Business Officials
July 22, 2009
Arizona Office of Economic RecoveryJanice K. Brewer, Governor
Arizona’s Fiscal Crisis
7,000
9,000
11,000
13,000
15,000
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Est. FY 2010 Est. FY 2011 Est. FY 2012 Est. FY 2013 Est. FY 2014 Est.
$ in millions
Expenditures Revenues Federal with Sales Tax
1,323
2,531
4,000
State Fiscal Stabilization Fund (SFSF)
Pursuant to the American Recovery and Reinvestment Act (ARRA) the U.S. Department of Education allocated $1.017 billion in SFSF monies to Arizona
Funds available in FY 09, 10, & 11 to offset education cuts to K-12 and higher education as well as encourage progress along four reform criteria as stipulated in ARRA
Reform Criteria
Develop rigorous college and career-ready standards and assessments
Establish Pre-K through college data systems to track and foster performance and improvement
Improve teacher effectiveness and the equitable distribution of qualified teachers
Provide intensive support and interventions to the lowest performing schools
SFSF Has Two Components…
Education Stabilization Fund (82%/$832 M) The State must use this fund for the
support of public elementary, secondary and higher education
Government Services Fund (18%/$185 M) The State may use this fund for
education, public safety, or other government services solely at the discretion of the Governor
…Distributed in Two Phases
Phase I: 2/3rds of the SFSF is sent to the State
following a relatively straight-forward initial application ($557M)
Phase II: Remaining 1/3rd will be distributed in
the fall of 2009 following a more detailed state application to US DOE ($275M)
Rules of the Road: MOE and Mandatory Restorations
Maintenance of Effort (MOE): State Funding cannot drop below FY 06 funding levels as long as federal funds exist
Mandatory Restorations: K-12 and Higher Education must be funded at higher of 2008 or 2009 funding levels as long as federal funds exist• For LEAs, the 2009 funding level is higher
FY 2009 Restorations = $433 M
For FY 2009, the total restorations = $433 M Mandated Restoration for Higher Education
for FY 2009 cuts: $183M Mandated Restoration for K-12: $250 M
To offset reductions that occurred in the May budget fix for FY 2009
Note: No requirement to restore $123 M in reductions from January budget fix for FY 2009 pursuant to the ARRA guidance from U.S. Department of Education
FY 2010 Amounts = ???
FY 2010 Restoration and Award amounts cannot be determined until budget is final, due to ARRA Shortfall Clause
Shortfall Clause
In the event that insufficient funds are available to restore all LEAs and IHEs to higher of 08/09 funding levels:
The Governor shall allocate Education Stabilization funds between K-12 and Higher Education in proportion to the relative shortfall in State support
Award Estimates for FY10-FY11
Application 6/30 Budget
7/6 Budget* = est.
LEA Eligible Reductions
10: $300 M11: $ 0
10: $439 M11: $0
10: $191 M11: $ ?
SFSF Funds
10: $223 M11: $ 0
10: $257 M11: $0
10: $191 M11: $ 90 M*
IHE Eligible Reductions
10: $226 M11: $ 0
10: $244 M11: $ 0
10: $ 53 M11: $ ?
SFSF Funds
10: $176 M11: $ 0
10: $142 M11: $ 0
10: $ 53 M11: $ 65 M*
Reporting
For each year of funding, the state must provide reports regarding the uses, distribution, and effects of funds received among other requirements
LEAs will be able to meet requirements through use of ADE grant management system
Arizona Office of Economic Recovery has purchased reporting software package to facilitate ARRA reporting. First report due to US DOE on October 10
Process: Phase I, Step 1
Apply for funds:
Governor Brewer filed an application on May 21 to qualify Arizona for the first two-thirds of the SFSF
Arizona’s application was approved on June 4
Phase I, Step 2
Establish the application process for local education agencies (school districts and charter schools) and institutes of higher education (universities and community colleges) COMPLETED
Create the application COMPLETED Establish accounting, transparency and
reporting methodologies IN PROCESS
Phase I, Step 3
Evaluate applications:
The process used to evaluate the applications will be straightforward, with attention paid to accounting and oversight strategies
Phase I, Step 4
Allocate Funds:
Distribute funds to local education agencies and institutions of higher education in accordance with allocation guidelines
Inform recipients of reporting requirements including the information mandated for quarterly reports to the U.S. Department of Education
Phase II
Emphasis will be on education reform following ARRA mandates and guidance from the U.S. Department of Education
The U.S. Department of Education will release the guidance and funding application for Phase II later this year
$832 Million
(82% SFSF)
State Fiscal Stabilization Fund (SFSF)*
*based on initial applicationEDUCATION STABILIZATION GOVERNMENT SERVICESGovernor issues application for
funds
$1.017 Billion
Funds available for ARRA administration and other uses at the discretion of the Governor with certain restrictions and reporting requirements. Available for use in FY 2009, 10, & 11.
OSPB
Office of Economic Recovery
Shortfall Clause:
The Governor shall allocate those funds between K-12 and Higher Education in proportion to the relative shortfall in State support.
Funds available in FY 09, 10, & 11 to offset education cuts to K-12 and higher education as well as progress along four reform criteria as stipulated in ARRA
K-12
$250 Million
GENERAL STIPULATIONS•The Governor must commit funds before September 30, 2011.•For each year the state must provide reports regarding the uses, distribution, and effects of funds received among other requirements.•2/3 of total funds are distributed by the Department following the initial application (Phase I). •1/3 is distributed in FY 2010 after additional information including reform progress is received (Phase II).
Restore K-12 Funding (greater of ’08 or ’09)
Restore Higher Education
(greater of ’08 or ’09)
$185 Million
(18% SFSF)
FY 2009
Community Colleges
$29 Million
Universities
$154 Million
FY 2010
$433 Million $399 Million