Category: State Budget

Arizona Preschoolers Are at Risk of Being Left Behind

Last Thursday, the National Institute for Early Education Research (NIEER) released its annual State of Preschool Report. The report is a state-by-state comparison of preschool program funding, access, and best practice policies. This year’s report notes that preschool programs are at a critical juncture. During the COVID pandemic, enrollment in programs decreased drastically while there was an influx of pandemic relief funding intended to help maintain the infrastructure. As that temporary federal funding is ending, states, including Arizona, face the choice of producing their own additional resources for preschool or backsliding on their progress.   

During the 2022-2023 school year, enrollment of 4-year-olds in public preschool increased, but Arizona still lags far behind the rest of the country, placing forty-third out of fifty. State spending totaled $20,779,103 (almost all attributed to First Things First funds), and an additional $11,450,342 in federal recovery funds supported the program, up $10,792,365 (50%), adjusted for inflation since last year.  Policymakers have invested zero general fund dollars into preschool. Arizona remains unchanged and way behind the rest of the nation in meeting only three of the ten best practice benchmarks. While much of the rest of the nation has made noteworthy progress, children are being left behind in states like Arizona that have not made any fundamental changes. Access to high-quality preschool is one way to ensure that young children arrive at kindergarten ready to succeed.  

It is more important than ever for our policymakers to prioritize investing in high-quality early childhood programs. 

Click here for the full report.

$100M in Gov. Hobbs budget proposal for child care.

Our thanks to Governor Hobbs for prioritizing child care in her budget proposal. On Friday afternoon, the Governor released her budget proposal signifying her priorities for the upcoming legislative session.  Included in that budget was $100M to stave off a looming funding cliff facing child care providers and parents in Arizona.   

During the COVID-19 pandemic, federal child care relief stabilized Arizona’s early care and education system. It helped child care programs keep their doors open and improve wages, benefits, and professional learning for their workforce. However, these funds will sunset in September 2024, resulting in a child care fiscal cliff that could see as many as one-third of Arizona’s child care programs close and nearly 100,000 children and their families could lose the child care they depend on. 

We can’t let that happen for families, providers, or our economy. Yes, the $100,000 million in Governor Hobb’s budget is just as vital for the Arizona economy as Arizona’s families. A recent report by the Century Foundation showed that without sustained childcare funding: 

  • Arizona employers will lose $278 million in employee productivity. 
  • As many as 5,000 child care jobs will be lost. 
  • Arizona parents will lose a combined $257 million as a result of cutting hours or leaving the workforce altogether. 

This proposed funding is a great first step to address this crisis. Now, that Governor Hobbs has prioritized child care, we’ll be working with legislators, partners, and community members like you to get this proposal across the finish line for Arizonans

For more information on the Governor’s Budget Proposal click here.

State budget has small key wins for AZ children & families, BUT more needs to be done

Children's Action Alliance's annual legislative agenda is designed to assure the necessary community conditions exist so all Arizona families have equitable access to high-quality education, health care, child well-being, services, and economic opportunities. Our agenda is advanced through funding in the 2023-2024 state budget.  Last week, Governor Hobbs passed and signed the budget, and there were some small but key wins for Arizona children and families including:

  • KidsCare Program Expansion: The budget expands KidsCare eligibility within Arizona Health Care Cost Containment System (AHCCCS) to 225% of the federal poverty level, providing healthcare to an additional 12,000 children. Children's Action Alliance advocated for a higher threshold of 300% of the federal poverty level.
  • Strong Families AZ Home Visiting System: The budget allocates $2.5 million to support the Nurse-Family Partnership in the Strong Families AZ Home Visiting System.
  • Reducing financial barriers for youth attempting to exit the Juvenile Justice System:  The budget allocates $250,000 to offset the loss of revenue from the elimination of some fees and fines that often create financial barriers for young adults.
  • Positive Parenting Program Pilot: The budget establishes a pilot program for the Positive Parenting Program, focusing on post-permanency placements.
  • Emergency Shelter and Transitional Living: Funding is increased to provide better emergency shelter and transitional living options for children and youth in foster care.

While acknowledging the importance of these investments, more is needed to determine how these programs will be implemented.  And much more is needed to allow all Arizona families to thrive.

These are Children’s Action Alliance’s legislative priorities that still need to be addressed: 

Early Childhood 

  • State investment to increase child care provider reimbursement rates. 
  • Increased access to high-quality early learning settings such as Head Start, child care, and preschool. 
  • Expansion of mental and behavioral health support in care and education programs. 

 Children and Family Health 

  • Comprehensive dental care for adults covered by Medicaid. 
  • Streamlined enrollment and uninterrupted AHCCCS coverage for children. 
  • Extended AHCCCS eligibility for non-citizen children and pregnant individuals. 

 Child Welfare 

  • Establish a coordinated and collaborative statewide effort to review and reform Arizona’s mandated reporting system. 
  • Ensure foster children placed with kin receive the same level of support as they would get in a community foster home. 
  • Increased access to services for kinship families not formally involved in the child welfare system. 

Concerns Surrounding the Budget 

Children's Action Alliance has some concerns about the recently passed budget, considering the crucial need for increased investments in Arizona's children and families. One major concern is the potential shortfall in actual state revenues or higher-than-projected expenditures. 

The budget relies on a small ending balance that could quickly diminish. The projected ending balance for fiscal year 2024 is $7.8 million – less than 1% of projected revenue. Should revenues fall short of projections, it is very likely the budget will become unbalanced. While $1.4 billion is available in the Rainy-Day Fund, those dollars would provide a one-time solution. If it is determined that ongoing spending exceeds ongoing revenue, the legislature would have two choices: (1) Permanent cuts to spending or (2) Permanent increases to revenue. 

The budget fails to adopt any controls on the growth of the Universal Empowerment Scholarship Account (ESA) Program.  In the eight months since applications for universal ESAs opened up, enrollment in the ESA program (including the categories that previously existed) has grown from 13,200 to 56,134 students as of May 15, increasing by nearly 1,000 in one week. Enrollment is expected to increase as the new school year approaches. The cost to the state’s General Fund depends not only on the number of ESA students but also on whether those students had previously been enrolled in a public school (and therefore at least partially funded through the state’s General Fund). The absence of a cap or any other limiting criteria, such as an income limit, means participation in the ESA program could far exceed available funding. Learn more about ESAs here:  

The budget provides only one-time funding for issues that appear to be ongoing. The budget process requires the legislature to identify projected ongoing revenues and expenditures for the two years following the year being appropriated. One-time expenditures are not included. While capital projects, highway construction, and repairs are clearly one-time expenditures, other spending that has been categorized as one-time appears to really be ongoing. This includes $12 million in the Department of Child Safety to replace federal and other funds that will no longer be available and $60 million in the Department of Corrections for increased contract costs. While the Statement of Revenues and Expenditures reports more than $700 million remaining at the end of the fiscal year 2026, that number would shrink if even a portion of the nearly $3 billion identified as one-time expenditures for the fiscal year 2024 is actually ongoing. 

Arizona's Voters Deserve a Say in the State's Budget

The voices of voters are once again being silenced. After several moves that are undemocratic, lacking in transparency and clearly an attempt to rush through billions of dollars of taxpayer money with almost zero input from the public, the final floor vote is set for tomorrow morning.   

 At 5pm yesterday evening, the state legislature introduced its slate of budget bills publicly. The budget details, negotiated between the Governor’s Office and Republican Leadership, were released and committee hearings were held less than 24 hours later. The public had little to no chance to review the content, synthesize the material or share their feedback on an approximately $17 BILLION budget. This budget is made up of tax dollars paid for by you, the citizens of Arizona. This is a continuation of the pattern of silencing the voices of voters in recent years

 Worse, the House Appropriations committee, in a partisan move, immediately combined all 17 bills into one vote. And then limited members ability to ask questions of staff about the content. They allowed zero public comment on the measures. This even though members of the public had taken time to be present to testify. 

 Questions and concerns from Representatives as well as stakeholders and other members of the public had begun to bubble up, in particular about the long-term budget ramifications of the failure to place a cap or any meaningful oversight on the out-of-control expansion of Empowerment Scholarship Accounts (ESA’s).

Rather than hear or work to address those concerns in the only public forum the citizens have once budget bills are released, Committee leadership chose to close ranks and shut out dissent. 

 Children’s Action Alliance and the Arizona Center for Economic Progress believe strongly that citizens should take every opportunity to participate in the process of government and have their voice heard and that lawmakers have a duty to listen to those they represent, even the ones they disagree with.   

 *CAA and the AZ Center will have additional analysis of the budget proposal in the coming days.   

Arizona poised to end seizure of benefits owed to foster children

Arizona is one of a growing number of states considering proposals to prohibit child welfare agencies from seizing foster children’s federal benefits. Nationwide and in Arizona, roughly 5% of all children and youth in foster care qualify for Social Security Administration disability and survivor benefits. They qualify for these benefits because they are disabled or have lost their parents. But most foster children never see these benefits, or even know that are receiving them. That is because the Arizona Department of Child Safety (DCS) intercepts the funds and applies them to the costs of the child’s own foster care. This longstanding practice, known as “benefits mining,” has come under scrutiny following a 2021 investigation by the Marshall Project and National Public Radio. The investigation estimated that in 2018 alone, child welfare agencies across the US seized $165 million dollars owed to foster children and used the money to pay for the costs of their foster care placements. During the 2022 Arizona State Fiscal year, DCS seized an average of $764 a month from nearly 700 foster children, totaling $6.25M in revenue.   

Legislation to end Arizona’s practice of "benefits mining" is currently working its way through the state legislature. House Bill 2559 (Montenegro) will prevent DCS from using children’s federal benefits to pay for the cost of their own care while in DCS custody and require that the benefits be accounted for, protected, and saved for the children’s own use when they exit foster care. The fate of HB 2559 will depend on whether it survives state budget negotiations as a General Fund appropriation will be needed to make up the dollars that DCS will lose.   

While the funds DCS “mines” from foster children represents just a tiny fraction of the agency’s budget, for a child who has experienced foster care they represent the ability to pay for college, a car, a house, or even food and other necessities. For a young adult who may not have another safety net after aging out of care, these funds can be the difference between surviving and thriving.  

Learn More 

The Countdown Begins - AZ Students Need a Permanent Fix to the School Spending Limit

Arizona voters approved into law a limit on what public schools can spend in a year based on the needs in 1980. If schools exceed the limit in a school year, as they did last year and again this year, the law allows the legislature to provide an “expenditure override” to allow districts to spend funds that have already been budgeted, with a two-thirds vote in both the House and Senate. An expenditure override does not increase taxes and is independent of the legislature’s budget decisions during the year. 

The spending limit is antiquated and based on what school needs were like in 1980. That is evident by the fact that Arizona is hitting the spending limit this year despite Arizona school funding being the lowest in the nation. Without the expenditure override, schools would be forced to make extreme cuts before the end of this school year. It would be an economic disaster for the Arizona public school system especially since the state funding per pupil ratio is among the lowest in the nation. Arizona’s public schools are already experiencing a teacher shortage and struggling with additional costs caused by the pandemic. 

Today’s school state funding should not be restricted to budgets created over 40 years ago.  

The Arizona legislature must: 

  1. Send a referral to the ballot to permanently address the issue.  
  1. Continue to pass a resolution to override the limit for each school year until voters address the issue.

The Problem with the Limit. Arizona’s Aggregate Expenditure Limit is outdated. It is based on education spending in the 1980s – before personal computers, the emphasis on STEM education, concerns about school safety, teacher shortages, and increased spending for special education students. Today, it threatens Arizona’s ability to make the investments needed to increase its per-student funding ranking above 48th in the nation.  

Overriding the Limit. Arizona’s constitution allows school districts only one option to avoid budget cuts – a one-time override that must be passed, not by voters, but by the state legislature, and not by a simple majority but by two-thirds of both chambers. Should this override approval not occur by the March 1 deadline, districts will be directed to reduce their budgets to keep within the limit and submit a revised budget in April.  

To make a permanent change to the limit, either the legislature would need to refer the issue to the voters or signatures would need to be collected to place the issue on the ballot at a future general election.  

 Options for a Permanent Fix to the Spending Limit. The only option to avoid districts having to cut their budgets in the middle of the school year is for the legislature to pass a one-time override. But Arizona needs a permanent fix to the current expenditure limit. Here are some options for a permanent fix: 

  • Reset the Base Year. If Arizona retains the Aggregate Spending Limit calculation, it needs to be based on what today’s public schools pay for – computers and technology, student safety, increased pay for teachers, and all other district staff. This option requires voter approval to amend the state constitution. 
  • Use the Weighted Student Count. Instead of using a student count that reflects just enrollment, a weighted student count would take into consideration the higher costs of providing education to students with special needs, small school districts, grade level, and English language learners. 
  • Expand the List of What is Exempt from the Limit. The school spending limit should not include spending linked to school or student characteristics, such as increases in the number of special education students, students with disabilities, or English language learners, or the mix between elementary and secondary students. 

Eliminate the Expenditure Limit Altogether. The K-12 aggregate spending limit was adopted at a time when major changes were being made to how the state’s public schools were to be funded. Concerns existed that these changes might result in significant tax increases. Today, we know that school spending is controlled in several ways. It increases to the per-student base-level spending formula are restricted to inflation or 2 percent, whichever is less, and are set each year by the legislature. Beginning in fiscal year 2025, these inflationary increases to base-level funding can be suspended or even reversed if inflation and employment growth do not exceed limits passed by voters or if K-12 education’s portion of the state general fund budget reaches 49 percent or more. Eliminating the expenditure limit does not mean eliminating all spending limits. 

Download the AEL one-pager PDF here

Win for Prop 208 and the Voters of Arizona


June 23, 2022 

$800 Million in New Ongoing Funding for Public Education is a Win for Prop 208 and the Voters of Arizona 

(PHOENIX, AZ) When nearly 1.7 million Arizona voters passed Proposition 208 in November 2020 they sent a clear message that they wanted to substantially increase funding for K-12 public education and they supported raising taxes on the wealthiest Arizonans to do so. While the Supreme Court’s heavy-handed decision striking down Prop 208 went against the will of the voters, the Supreme Court could not erase the strong message that voters had sent: that they were tired of Arizona having the most underfunded schools in the nation and they would no longer tolerate the state legislature’s failure to properly fund public education.

So make no mistake about it, the more than $800 million in new ongoing funding for public education included in the new state budget would not have happened without all of the Arizona voters who supported Prop 208, and all of the teachers and other community volunteers who worked so hard to make it happen. Initial budget proposals did not include anywhere near the amount of new public education investments that made it into the final budget. But lawmakers could no longer ignore the will of the voters. That is why the new budget includes new annual investments in our public schools that are nearly equivalent to the amount of annual funding that would have been raised by Prop 208.

The additional funding includes:

  • More than $500 million increase to the funding formula
  • $100 million for the new opportunity weight
  • $100 million increase for special education
  • $50 million for more school safety officers and counselors

“We are pleased to see that Arizona’s public schools will be getting close to the same level of investments that Prop 208 would have provided,” said David Lujan, President and CEO of Children’s Action Alliance, one of the organizations behind Prop 208.

But if we are painting the complete picture, while the new investments for public education are certainly a bright spot in this budget, the budget package also contains millions of dollars in new tax cuts and tax credits that will threaten the sustainability of this new education funding in the future, and will make it virtually impossible to make the additional investments that would be needed to get Arizona closer to the national average in education funding. Even with these new investments, Arizona will still remain in the bottom 10 nationally in per pupil funding. Continuing to drain future state revenues through tax cuts will likely lead to big budget cuts when the next recession arrives. Expanding school vouchers will also divert even more public tax dollars away from public schools to private schools with no accountability.

Arizona still has much work to do to ensure all of Arizona’s public school students have the resources they need to succeed. We need to make sure we are electing state legislators who both support new investments in our public schools and who will put an end to the annual practice of draining future state revenues by doling out tax breaks to big corporations and the rich. That is why it is so important for Arizona voters continue to have their pro-public education voices heard this November.

Budget Proposal Shortchanges Arizona Children and Families

The Arizona legislature is considering a new state budget proposal this week as they seek to avoid a state government shutdown with only 8 days remaining before the deadline. While we wish we could praise this budget proposal for including some new investments that we have been seeking for many years, unfortunately, those new investments do not outweigh the fact that overall this is a budget that shortchanges the future for Arizona children and families.

State lawmakers have an unprecedented $5 billion revenue surplus on-hand as they work to craft the state budget. The revenue surplus provides an opportunity to make much-needed new investments for things that have been underfunded for years, like K-12 public education, children’s access to health care, and early childhood education. It also requires lawmakers to make fiscally responsible decisions that will avoid huge budget cuts the next time there is an economic downturn.

Unfortunately, the budget proposal being considered this week both misses many opportunities to make the meaningful new investments that are necessary, and it includes fiscally irresponsible tax cuts and funding shifts that, when the next recession hits, will jeopardize future funding for the resources that children and families count on.

Read our summary of the budget proposal covering what’s good, what’s bad, and what’s missing or not enough.

The Good

Kinship care stipend increase – Increases the stipend paid to grandparents and other relatives who are caring for children family members placed with them through the foster care system from $75 a month to $300 a month. 52% of the children currently in Arizona’s foster care system are placed with relatives, yet non-relative foster homes receive considerably more ($641 a month) than the relative foster providers.

Healthy Families – Invests $15 million to fill the funding gap for Healthy Families, a nationally accredited, evidence based voluntary home visitation program for new parents that sets the foundation for a healthy start to their child’s life.

Postpartum AHCCCS coverage – Expands AHCCCS coverage (Arizona’s Medicaid program) for one year after pregnancy ends to pregnant people earning less than 156% of the federal poverty level who also meet residency and citizenship requirements. Currently, eligibility is reevaluated 60 days after their pregnancy ends.

AHCCCS eligibility for foster youth – Appropriates funding to eliminate unnecessary bureaucratic procedures, and align Arizona law with federal law allowing former foster youth to stay enrolled in Medicaid until age 26.

The Bad

Property tax cuts – Eliminates a $344 million annual funding source for public education by repealing a state property tax. By eliminating this state property tax, it will place a greater responsibility to fund public schools on the state. This loss of revenue will be felt during future economic downturns, making public education more susceptible to future budget cuts.

Expands private school tax credits – reduces state revenues by $2 million this year, with that amount growing annually, to expand the amount of public tax dollars being redirected to private school tuition organizations leaving fewer dollars available to invest in public schools.

Expansion of private school vouchers – While not in the budget itself, it is widely believed that a budget deal is contingent on a major expansion of private school vouchers. Even though Arizona voters overwhelmingly rejected private school vouchers at the ballot box, lawmakers continue to want to divert public tax dollars away from underfunded public schools to private schools.

Missing or Not Enough

Not enough for K-12 public education – The budget proposes $540 million in new ongoing investments for K-12 public education. With Arizona ranked 49th in per pupil funding, and with a growing teacher shortage crisis, it would be inexcusable to not use more of the unprecedented $5 billion surplus to make significant new investments in our public schools. Arizona voters passed Prop 208 in 2020, only to have the Supreme Court strike the measure down earlier this year. Prop 208 would have provided nearly $1 billion in ongoing funding for public education annually. The legislature can and should provide at least the amount of new ongoing funding that Prop 208 would have provided.

Missing is any fix to the constitutional school spending limit – Any new investments in public education will be meaningless if schools cannot spend those dollars. That will almost certainly be the case next year and every year thereafter unless the legislature refers a measure to the November ballot to either repeal or modernize the outdated school spending limit in the state constitution. Currently, the school spending limit is outdated based on what it cost to educate students in 1980.

Missing are any new investments to expand eligibility for children’s heath care - KidsCare is Arizona's Children's Health Insurance Program. It provides low-cost care to children under 19 who live in households earning between 133-200% of the federal poverty limit. Arizona has the fourth-highest rate of uninsured children in the U.S., and more than 16,000 - 10% of all uninsured children in our state - live in households earning slightly too much to qualify for KidsCare. A $12 million appropriation would expand eligibility to thousands of Arizona children.

Missing are any new investments to make child care more affordable – Child care is crucial to Arizona’s economy. For the past decade, Arizona has eliminated almost all state funding for resources to make child care more affordable for Arizona families.


Break the school funding cycle

The legislature has successfully addressed one of the most important issues this session by lifting the school spending limit for this school year. This allows Arizona’s public schools to spend the money they had already received and budgeted for, and avoid $1.2 billion in devastating cuts. But the threat remains. Arizona’s public schools will likely face a similar crisis next year (and probably every year thereafter) unless the legislature refers a measure to the ballot to either repeal the school spending limit permanently or, at the very least, modernize it to reflect what it costs to educate students today.

The current school spending limit is based on what it cost to educate students in 1980. While the limit is adjusted annually to account for inflation and student growth, it does not account for all of the changes that have occurred over the past four decades in how schools educate students. For example, in 1980, schools did not have computers and other technology. The need for additional school safety measures is much higher today than it was in 1980. And Arizona did not have charter schools in 1980. But the clearest evidence that Arizona needs to modernize the spending limit is that Arizona is last in the nation in funding our public schools despite already well-exceeding the spending limit. Therefore, before Arizona can increase funding for public education, we must first raise or eliminate the school spending limit. Because the school spending limit is in the state constitution, the legislature cannot make permanent changes to the spending limit – only voters can. But the legislature can refer a measure to the ballot for voters to do just that, as soon as this November’s election.

Let your state legislators know that you want them to refer a measure to the ballot this year to fix the school spending limit so that we don’t have to do this all over again next year.