Category: State Budget

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.

2022 Governor's Budget Hits & Misses

Each year, Arizona’s legislative session begins with the Governor’s State of the State speech and the unveiling of his or her annual priorities and proposed budget. This session presents Governor Ducey a rare opportunity in his final year in office to provide much-needed help to children and families in Arizona. Despite the lingering pandemic, Arizona’s revenues have reached historic highs in large part due to the multiple federal economic rescue packages and temporary unemployment insurance expansion. Arizona currently has $1 billion in ongoing and $2.1 billion in one-time revenues. This is in addition to billions of dollars in unspent federal COVID relief dollars.

Also at the beginning of each year, Children’s Action Alliance publishes its list of legislative priorities. It is our hope each year that the Governor's priorities align with ours. This year, while we did see a few bright spots that address longstanding needs, that largely did not happen. Take a look at a comparison of where the Governors priorities and ours find common ground, and where opportunities missed the mark or weren’t addressed.

On mobile? View our printable PDF.

Early Childhood

	Secure state general fund investment in child care assistance Not addressed in the Governor’s budget or State of the State.
	Increase Arizona Early Intervention Program provider rates Nearly 11,000 children under the age of 3 who have disabilities or developmental delays receive therapies and other support from the Arizona Early Intervention Program. Current rates paid to providers are significantly below comparable rates paid by the program that provides services to children over age 3. The Governor’s budget proposal adds $18.6 million per year starting in fiscal year 2024 to bring the rates in line with rates paid by other programs. A temporary rate increase will be funded in fiscal year 2023 using federal dollars.
	Secure state investment in Healthy Families home visitation program The Governor’s budget provides $10 million, of which $7.5 million is new funding and $2.5 million replaces funds that will no longer be available. Healthy Families currently serves 4,000 families. The Governor’s budget would add an additional 1,500 families. The Governor’s budget also includes a total $15 million for fiscal years 24 and 25 which would increase the program’s ability to serve 8,000 families.
	Fight any use of state funds appropriated for online early education Not addressed in the Governor’s budget or State of the State.

Education

	Prevent a $1.2 billion cut to public schools by authorizing an annual exemption to the K-12 expenditure cap for this school year by March 1 If the legislature does not override the education spending limit by March 1, 2022, Arizona’s district schools will be required to cut their current year budgets by $1.2 billion. This issue is not addressed in the Governor’s budget or State of the State.
	Refer a measure to the ballot to update or eliminate the outdated K-12 expenditure authority. Not addressed in the Governor’s budget or State of the State.
	Expand access to affordable higher education and prevent increases in student debt The Governor’s budget proposal increases the Promise Grant funding by $12.5 million for a total $20 million. These additional dollars will serve an additional 3,300 students. The Promise Grant program covers the balance of tuition that remains for students who are fully eligible for Pell grants. The Governor’s budget, however, continues to suspend $10 million of the statutorily required deposit into the Student Financial Aid Trust Fund. This issue is not addressed preventing tuition increases.
	Reduces inequities in school funding The Governor’s proposal increases results-based funding for excelling schools by $60.8 million for a total $129 million. The Governor’s proposal also includes moving this funding into the Basic State Aid appropriation where it will lose its separate identity. Schools continue to receive results-based funding as long as they meet the criteria. For struggling schools the Governor’s proposal includes $58 million to create the Operation Excellence program which provides $150 per student for three years.

Family Health

Extend postpartum Medicaid coverage to 12 months (currently 60 days)

Approximately 15,000 to 18,000 pregnant adults could benefit from extended AHCCCS coverage. This issue is not addressed in the Governor’s budget or State of the State.

Comprehensive adult dental coverage through Medicaid

Currently only a maximum of $1,000 annually of emergency services are available for most adult populations. This issue is not addressed in the Governor’ budget or the State of the State.

Streamline Young Adult Transitional Insurance (YATI) re-enrollment for former foster youth

Young adults who “age out” of foster care at age 18 are automatically eligible for enrollment in AHCCCS, the state’s Medicaid program. If they do not respond to redetermination notices or requests for additional information, often because AHCCCS does not have an accurate address, they are disenrolled. More than 5,200 young adults are currently enrolled through YATI. This issue is not addressed in the Governor’s budget or State of the State.

Children's Health

Waive the Medicaid five-year residency requirement for otherwise eligible pregnant people and kids who are lawfully present immigrants

Between 7,000 and 11,000 Arizona children are ineligibility for the state’s health insurance program because they have not been in the US for at least five years. This issue is not addressed in the Governor’s budget or State of the State. Adopting the Immigrant Children’s Health Improvement Act (ICHIA) option would allow the state to provide high-quality health coverage to these children and to receive a higher federal reimbursement for their care.

Provide 12-month continuous enrollment for children participating in AHCCCS or KidsCare

More than 850,000 Arizona children are enrolled in Arizona’s Medicaid or CHIP programs. Though children who qualify are eligible for 12 months, families who experience income volatility may lose coverage due to a temporary or one-time increase. This has a negative impact on children’s health outcomes and presents an administrative burden to both AHCCCS and the families who lose coverage. This issue is not addressed in the Governor’s budget or State of the State.

Eliminate three-month wait period for KidsCare enrollment

Arizona’s KidsCare program requires a child cannot be covered by any health insurance for three months prior to enrollment. This presents a barrier to enrollment. Even short lapses in health insurance coverage have a negative impact on children’s health outcomes. This issue is not addressed in the Governor’s budget or State of the State.

Child Welfare & Juvenile Justice

	Increase kinship foster care stipend The Governor’s proposal quadruples the unlicensed rate from $75 to $300 per month and also increases the daily allowance that pays for clothing, school supplies, etc. This increase adds $19.8 million for a total $24.8 million for kinship placements.
	Reduced barriers to licensure for foster care and kinship care providers Licensed foster care providers receive more than $600 a month compared to the current $75 for unlicensed kinship providers. The Governor’s budget proposes removing barriers to licensure for kinship caregivers while maintaining home life and safety standards.
	Increase the independent living subsidy provided for youth in extended foster care Currently, 651 former foster youth between ages 18 and 21 receive the independent living subsidy. Currently the maximum subsidy is $715 and is reduced by $50 every six months. Neither the Governor’s budget nor the State of the State address this issue.
	Reduce or eliminate juvenile court fines and fees This issue is not addressed in the Governor’s budget or State of the State.

Arizona’s legislators missed a unique opportunity this legislative session

Arizona’s legislators had a unique opportunity this legislative session. The pandemic did not result in state revenues falling to the $1 billion deficit that was expected. Instead, analysts projected there was more than $1 billion in ongoing, unobligated revenues plus nearly $3 billion in one-time cash. These funds could have been used to invest in Arizona’s future. From public schools to health care to state highways, many opportunities exist to make improvements that would have long-lasting impacts on our state. Instead, the legislature squandered this opportunity and passed record-breaking tax cuts that reduce revenue so much the tax cuts cannot be fully phased in until after fiscal year 2024.

Below is information about changes to General Fund appropriations for programs that benefit Arizona’s families. Included are some of the missed opportunities - what else could have been done for everyday Arizonans rather than the few that will receive significant tax increases. We also include information about the Department of Corrections’ budget not only because it has become the third largest state agency as far as General Fund dollars are concerned, but also because many Arizona families are impacted when a family member is incarcerated.

Note: This legislative session included a number of supplemental increases for fiscal year 2021. Because the budget wasn’t signed until June 30, it’s unlikely much, if any, of these additional funds will be spent in fiscal year 2021. However, agencies will be able to spend these funds in fiscal year 2022.

Debt Payoff - The budget pays off ahead of schedule $977 million in building project debt and $1 billion in pension payoffs for the Departments of Public Safety and Corrections.

Increased Federal Match Rate – Congress increased the federal match rate for Medicaid and related programs as part of the fiscal relief provided to states. This freed up $134 million in fiscal year 2021 and $267 million in fiscal year 2022. The budget assumes these increased rates will not continue into fiscal year 2023.

Salary Increases – The new budget includes more than $66 million for employee salary increases in six state agencies. In the Department of Public Safety, all employees will receive an increase; in the remainder, increases are restricted to certain classifications or positions. No funding is allocated for the more than 10,000 employees in other state agencies. The last general salary adjustment for all state employees occurred in fiscal year 2013, but this increase did not offset the pay cuts enacted in fiscal year 2011.

Good ideas that didn't fit the bill

The Arizona legislature set a deadline that any bills that did not receive an initial committee hearing by the end of last week cannot advance this session. Committee chairs wield a lot of power in deciding which bills receive consideration or not and with 1,823 bills introduced this session, we understand there simply is not enough time to hear every bill. But there were several good ideas that would improve the lives of Arizona’s children and families introduced this year that never had the opportunity to be considered in committee. Even though time has run out this year for those bills, we want to take a moment to highlight a few of those good ideas that merit stronger consideration in the future:

HB 2416: Sponsored by Representative Pawlik to appropriate $13 million for child care to raise reimbursement rates. Arizona’s child care assistance program continues to reimburse providers for care at rates that are far below what it costs to actually provide that care. Parents often have to pay the difference between the reimbursement rate and the cost, making accessing child care too expensive even for many low-income families who are eligible for the program.
HB 2291: Sponsored by Representative Osborne to provide comprehensive dental care to eligible pregnant women. Pregnant women are especially vulnerable to developing oral health problems, which if left untreated are associated with adverse birth outcomes and increased risk of dental disease in early childhood.
HB 2273: Sponsored by Representative Butler to increase income eligibility for KidsCare, Arizona’s health insurance program for low-income children, from 200 percent of the federal poverty level to 300 percent of the federal poverty level. Arizona currently has one of the lowest income eligibility thresholds for its children’s health insurance program in the nation. After years of progress toward reducing the rate of uninsured children, Arizona has taken an unfortunate turn. Between 2016 and 2019, the number of uninsured children grew by roughly 22%. In 2019, 161,000 Arizona children were uninsured – the fourth highest rate of uninsured children in the United States.
HB 2659: Sponsored by Senator Marsh to establish an annual conference on children and youth to identify and recommend policy solutions to the legislature that will improve the lives of children in Arizona.
HB 2146, HB 2147, HB 2148, HB 2283, HB 2566, SB 1098, SB 1736, SB 1737: Sponsored by Representatives Friese, Lieberman, and Bolding; and Senators Alston and Bowie. Several bills were introduced this session to provide much-needed reform to the private school tuition tax credit program which diverts public tax dollars to private schools. These bills would restrict use of these tax credits to low-income families and would limit the amount which can be used for administrative costs. The expansion of private school tuition tax credits has had a significant impact on reducing state revenues growing from a cost of $14 million in 1999 to $177 million in 2019.
HB 2728: Sponsored by Representative Sierra to make participation in extended foster care until the age of 21 an opt-out rather than opt-in program for youth aging out of foster care when they turn 18. Extended foster care can provide a better bridge to adulthood especially during the current health and economic crisis.
SCR 1017: Sponsored by Senator Quezada. A legislative proclamation identifying racism as a public health crisis affecting our entire society and avowing to support policies that reduce racial and ethnic health inequities and promote social justice.

The list above is not an exhaustive list. We are glad to see so many lawmakers introducing bills this session that will benefit Arizona’s children, and we hope many of those bills become law in the future.

Image source: ABC's Schoolhouse Rock

Governor Ducey’s proposed budget - The good, the bad and more tax cuts

Last spring when the COVID pandemic began, the legislature passed a basic “skinny budget” so they could rapidly end the legislative session and return home. At that time, with large portions of the economy shutting down and thousands of Arizonans losing their jobs, state budget experts were predicting a $1.1 billion shortfall for the fiscal year and an even larger shortfall for the coming fiscal year. But, unexpectedly, instead of ending fiscal year 2020 with a shortfall, the state’s ending balance was more than $370 million. This was largely due to an infusion of federal dollars, including about $396 million in federal COVID relief dollars that Governor Ducey used to pay for state agency operations that normally would be paid with state general fund dollars. Increased federal unemployment payments and two rounds of stimulus checks also contributed to what the governor’s budget projects is a $1.1 billion ending cash balance for the current fiscal year and a projected $923 million revenue surplus, after the governor’s spending proposal, for the coming fiscal year.

Governor Ducey released his fiscal year 2022 budget proposal last week which centers around a phased-in tax cut that would grow to a cost of $600 million in three years. If passed, and combined with the $386 million in tax cuts enacted in 2019, would result in nearly $1 billion less in revenue each year.

Governor's proposed budget changes compared to previous year

What is missing from the Governor’s budget proposal are the investments needed to help Arizona’s children and families get through the health and economic crisis, like:

Increasing child care subsidy reimbursement rates to provide safe, quality child care options for working parents of young children;
Making up for the estimated $389 million in state funding that Arizona’s public schools will lose during the pandemic due to declining enrollments and reduced formula funding for virtual instruction than in-person instruction;
Expanding eligibility for food assistance resources;
Making health care more accessible for Arizona’s children by expanding eligibility for KidsCare, Arizona’s Children’s Health Insurance Program;
Doubling the kinship stipend from $75 to $150 per child per month for children the Department of Child Safety places with grandparents and other relatives.

The Governor’s budget does include some important investments, like:

$18 million to fund the continuation of the childcare waitlist and for a new pilot program that provides child care to children of parents pursuing education and nursing degrees;
$92.7 million in supplemental funding for the stabilization of child care centers and to further support providers during the pandemic;
$10 million to renew and bolster the Rural Broadband Grant Program.

In the coming weeks, Governor Ducey and lawmakers will begin to negotiate what the final budget will look like. With so much economic uncertainty still present, we will continue to urge them that now is not the time for more tax cuts and they should instead pass a budget that puts the needs of Arizona’s children and families first.

State of the State

This week, the Arizona legislature begins its work for the year at a time when many Arizona children and families are struggling to meet their basic needs during this health and economic crisis. Recently released data by the U.S. Census Bureau shows 1 in 6 Arizona households with children (16%) said they had only slight confidence or no confidence at all that they would be able to make their next rent or mortgage payment on time. Increasing numbers of Arizona households with children are also reporting they do not have health insurance and/or do not have enough food to eat, and communities of color are disproportionately suffering.

That is why it will be so critical for lawmakers to focus their work on helping families achieve financial stability, and keeping children healthy and safe during these difficult times.

Our 2021 legislative priorities include:

Making health care more accessible for Arizona’s children by expanding eligibility for KidsCare, Arizona’s Children’s Health Insurance Program;
Restoring supports to grandparents and other kinship caregivers who step in and prevent children from entering foster care when parents are unable to care for their children;
Provide safe, quality child care options for working parents of young children by increasing the child care subsidy reimbursement rates;
Providing Arizona’s public schools with the same amount of funding for conducting virtual schools during the pandemic as they receive for in-person instruction.

What Arizona does not need is more tax cuts which will only reduce state revenues that struggling Arizona families are counting on to provide housing and food supports, and make child care more affordable. Rather than shortsighted tax cuts, we urge Governor Ducey and lawmakers to take a more responsible approach and prioritize a plan to stop the uncontrolled spread of COVID-19, and put Arizona on a path to recovery from this health and economic crisis.

Read our 2021 Legislative Priorities

KIDS COUNT Data Book is the only source to focus on statewide trends about Arizona’s children

Children’s Action Alliance (CAA) is proud to present the 2020 Arizona KIDS COUNT Data Book—the only biennial source to focus on statewide trends about Arizona’s children. Thanks to the support of the Annie E. Casey Foundation, this powerful resource helps inform decision-makers and stakeholders about the economic, social, and physical well-being of children and their families throughout the state. In addition to the Data Book, statewide and county indicators can be found on our new and updated website – along with other resources, toolkits, and information on how to advocate for children and families.

As you know, CAA regularly uses data as a compelling tool to find common ground across geography and political ideology to create an Arizona where every child is safe, loved, and has access to quality education and affordable health care. In this KIDS COUNT Data Book, the data show Arizona has made important strides in improving the conditions for children since the Great Recession - before the unprecedented challenges our communities, our state and our nation have faced due to the COVID-19 health crisis.

The 2020 Arizona KIDS COUNT Data Book offers a closer look at the strengths and contributions of immigrant families as more than 1 in 4 children are growing up in an immigrant household and 6 in 10 Arizona children are children of color. Despite the changing demographics in the state, children of color are more likely than their White peers to lack the fundamental supports to grow up healthy and strong. It is our hope that YOU - lawmakers, advocates, and state agency leaders use the information in this Data Book to address the long-standing structural inequities in our state. It is time to move towards an Arizona that provides opportunity for all children, not a privileged few.

As advocates for children, we will continue to challenge ourselves to think creatively and critically to find new ways to support Arizona’s children and families. Join us and use the Data Book and other resources on our new website to spark action for measurable and positive change.

ACTION ALERT: Tell Congress to Include every American Family in COVID-19 Relief and Recovery

The U.S. Senate finally introduced their version of the next COVID-19 relief bill and a vote could come as early as this week. Though there is speculation that the new bill doesn't have the votes to pass, now is a critical moment to reach out to lawmakers. With this next legislation, we have an opportunity to put our stated values into action and include families of all backgrounds in the recovery. Join us on this day of action for immigrant families by contacting your senators to let them know how you feel.

Even though 1 in 4 children in Arizona have a parent who is an immigrant, the previous federal COVID-19 relief packages left out entire households, simply because of one parent’s citizenship status. In Arizona, 104,000 children live in an immigrant household that did not receive a stimulus payment due to an ITIN filing. Nearly, 1 out of 6 immigrants in Arizona works in an essential job, including caring for sick and elderly people, growing food, and keeping grocery stores stocked. Additionally, many immigrants and low-income Arizonans have not had adequate access to COVID-19 medical services. It’s critical that testing, treatment, and vaccines are readily available to everyone, regardless of their ability to pay or immigration status.

Roughly 45% of all confirmed COVID-19 cases in children (age 0-17) are Latino but, Latinos make up 25% of the U.S. child population (data as of August 13, 2020).
Nineteen percent of non-elderly Latinos had no form of health insurance before the pandemic. As of July 21, more than 22% of Latinos report having no form of health coverage.
Throughout July, 21% of Latino households with children have food insecurities.
A recent poll by UnidosUS in Arizona, Florida, and Texas, more than 40% of laid off Latino workers did not know if they qualified for unemployment insurance. Of those who applied, roughly one-third were rejected or never heard back.

Immigrants are valued members of society, and the exclusion of certain immigrants undermines our economic recovery and public health. CAA believes that we are stronger when everyone in society gets the same chance to thrive and succeed. Email Senators Sinema and McSally today and demand a more inclusive recovery bill that provides health access and economic relief to everyone.