Scottsdale Schools M&O status, declining enrollment holds future of district in balance

The Scottsdale Unified School District Governing Board, pictured above, at its May 14 meeting. The Governing Board meets at Coronado High School. (Independent Newsmedia/Arianna Grainey)

As the Scottsdale Unified School District faces a decision on whether or not to ask its voters for a maintenance and operations override continuation, its tax rate comparison is nearly half of surrounding districts.

Meanwhile, SUSD lost more than double its projected enrollment decline this year, officials say.

On May 14, the Scottsdale Unified School District Governing Board was provided with information, timelines and details of adding an M&O override continuation to the all-mail Tuesday, Nov. 5 ballot.

Interim Chief Financial Officer Jeff Gadd presented the information to the Governing Board at their regular meeting held at Coronado High School, 7501 E. Virginia Ave.

The M&O override allows SUSD to ask voters for an increase of up to 15% of its state-imposed budgetary limitation.

Overrides are approved for a term of seven years. SUSD’s current M&O override, renewed in November 2014, will begin sunsetting if the Governing Board decides not to call for an election on the issue, or if the override makes it to the ballot but fails to receive voter approval.

Since this is a continuation of the last override, a passing ballot measure would not increase or add to SUSD voters’ taxes, school officials content. The estimated 37-cent tax would be a continuation of the current override tax.

The Governing Board had few comments or questions, mostly digesting the information.

According to Mr. Gadd, the Governing Board’s June 11 meeting will include a resolution seeking approval calling for the election. If that passes, the board would then issue a pro statement in August, followed by the approval of an election pamphlet.

Governing Board Vice President Allyson Beckham, President Patty Beckman and Superintendent Dr. John Kriekard. (Independent Newsmedia/Arianna Grainey)

The ins and outs of an override

The Scottsdale Unified School District has the lowest tax rate compared to several other Valley unified districts, Mr. Gadd says.

Information presented at the meeting shows total tax rates for Valley districts are:

  • Scottsdale: $3.70
  • Gilbert: $6.10
  • Paradise Valley: $6.56
  • Deer Valley: $6.64
  • Chandler: $6.67
  • Dysart: $6.90
  • Peoria: $7.02
  • Mesa: $7.22.

These tax rates include the primary and secondary taxes, and are based on $100 per assessed valuation.

“The current tax rate is extremely low, extremely low,” Mr. Gadd said. “It is only 37 cents of our $3-plus tax rate. Relative to this entire amount we’re discussing, which is $19.5 million of additional funding for maintenance and operations budget.”

Mr. Gadd says Scottsdale’s tax rate is the lowest he’s seen in his career.

“You’re extremely fortunate here. If you’re a homeowner in this district you will be benefited immensely by having not only very high quality schools but paying the least in the east Valley and in the central Valley for that privilege.”

The 15% M&O override districts can ask voters for is based on a calculated formula. Shall the district’s maintenance and operations budget go down, the amount generated by revenue goes down accordingly, Mr. Gadd said.

“If it goes down, as ours has been going down because of declining enrollment, the amount generated by revenue goes down accordingly,” he said. “It’s always a percentage of formula not a dollar amount that stays fixed each year. It fluctuates.”

Earlier in the meeting, while approving an amendment to the current fiscal year’s budget, Mr. Gadd noted that SUSD had projected to lose 253 students this year, but saw an actual loss of 641 students. The loss comes primarily from the elementary age, he said.

The loss of more than 600 students affected the district’s M&O budget — which is calculated based on student population — by a decrease of $1,847,362.

If the override is added to the November ballot, and is approved, it would be effective beginning July 1, 2020 through June 30, 2025.

The override would be used for areas such as maintain current class size; maintaining all-day kindergarten; continuing music, arts, world languages, athletics, and co-curricular activities; continuing an emphasis on technology; and continuing to provide competitive teacher compensation.

Shall the override not pass, SUSD would begin seeing a sunset of their current M&O override, decreasing by 5% for the next three fiscal years.

The approximate loss, shall the override not be renewed, is about $6.5 million over three fiscal years beginning in FY 2020-21.

“I would like to point out to you, this district is likely to be incurring some declining enrollment in the future,” Mr. Gadd said. “That coupled up with a relatively low inflation rate, which will probably be back in the 2% range again, will likely give you very little, if any, new funds for next year.”

Mr. Gadd says due to the district’s declining enrollment, any growth in funds from inflation will likely be offset.

“That leaves you with almost no growth in the budget to deal with what you think are higher priorities,” he said.

“If you couple this item with that, the severity of that becomes much greater; now you’re starting with $6.5 (million) negative, and trying to work your way out of that, at the same time you’ve got this list of things you’d like to do … it gets exasperated significantly by not having these funds available.”

In Scottsdale’s past, it experienced the consequences of not passing an M&O override.

Maricopa County Records Office records show the override failed in 2012 and 2013:

  • 2012: 52.66% of ballots cast voted “no” to a budget increase; while 47.34% voted “yes”; and
  • 2013: 50.28% of ballots cast voted “no” to a budget increase; while 49.72% voted “yes.”

In 2014, the override passed with 55.46% of ballots cast.

The school district cut special programs and every child only attended a half-day of classes every Wednesday.

Next steps

The next steps for the potential M&O override includes the school district notifying Maricopa County of its intent to call for an election, followed by a signed resolution.

In August, the district must submit a pro statement, as well as proposed ballot language.

The Nov. 5 election will be an all mail-in election, as it’s a non general election year. The last day to register as a voter is Monday, Oct. 7.

Governing Board member Jann-Michael Greenburg (Independent Newsmedia/Arianna Grainey)

Governing Board member Jann-Michael Greenburg said during the meeting that he was pleased with knowing what the funding will be used for.

“I think everyone in this district, and on this board, all have ideas of what we could be using the cash we do have for — to improve our programs and maybe offer new programs,” he said.

“Having looked at these numbers and done a rudimentary trajectory, I just don’t think we will have that really quite, cool opportunity to investigate some of those if we’re also having to deal with declining enrollment that could affect our M&O.”

Governing Board Vice President Allyson Beckham asked Mr. Gadd specific questions regarding the election, and the Governing Board’s roll if it moves forward.

Mr. Gadd says the administration is intending to make a recommendation to call for an election.

“Once that election is called, the district is precluded from using any resources. Any support needs to come from an external group, that’s where a PAC would generally come in to play,” Mr. Gadd said, noting district officials can provide factual information and should be positive.

“It’s important to tell them ‘these are all the things we’re doing, and doing right with your money; it’s evidenced in our study achievement and we want to continue doing that.’”

Northeast Valley News Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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