House Study Committee on the American Recovery and Reinvestment Act

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Presentation on State Fiscal Stabilization Fund

John Arnold, Director, Governor’s Office of Strategic Planning and Budgeting (OSPB), gave an overview of the State Fiscal Stabilization Funding (SFSF) portion of the American Recovery and Reinvestment Act (ARRA), explaining that the purpose of SFSF is to replace reductions that states were making to the education systems, which is how Arizona is using the funds (Attachment 1). He explained that the total amount received was just over $1 billion and has been divided into two portions:

· Governor’s Discretionary Funds ($185 million) for use for any state functions

· Education Funds ($831 million) for higher education and K-12

Education Funds arrive in two phases:

· Phase 1 requires application from the state and assurance that the state will keep 2006 Maintenance of Effort (MOE) levels.

· Phase 2 is much more in-depth and requires a more thorough application with assurances that the state will achieve certain goals.

Mr. Arnold said that he does not know when Phase 2 dollars will reach the state. He stated that the monies must be distributed to all local education agencies (LEAs, both public and charter schools) which must first submit applications. He addressed Members’ questions about property taxes and how other states are handling SFSF.

Karla Phillips, Governor’s Education Policy Advisor, reiterated that Phase 2 compliance requires much more data, specifically thirty-seven data requirements. She explained that the state must assure that it can collect and verify the data and that the data will be updated frequently and publicly reported (Attachment 1). Compliance must be reached by September 30, 2011. She stated that Arizona is currently not able to complete all the requirements, but she discussed plans to comply. Many are brand-new and must be put in place in Arizona.

Chairman Lesko asked about the cost to achieve compliance. Ms. Phillips replied that there is no cost at this time as current staff will be used. She added that some LEAs may have some costs associated with achieving compliance.

Ms. Phillips then discussed P-20 Data Collection, which requires 12 data elements outlined in federal law, seven of which are already in place in Arizona (Attachment 1). She addressed questions about what will happen if Arizona does not meet these criteria by stating that the Governor signed in good faith that Arizona would succeed and many of these data elements are things that Arizona wishes to do.

Presentation on Race to the Top

Dr. Carol Peck, Governor’s P-20 Coordinating Council, addressed the Committee to explain that the Race to the Top (RTTT) application came from the work of the Governor’s P-20 Coordinating Council and the four task forces (Standards and Assessments, Statewide Longitudinal Data Systems, Great Teachers Great Leaders, and Supporting Struggling Schools) (Attachment 1).

She explained that the RTTT application is a $4.3 billion competitive grant through ARRA. Arizona’s application will be for $250 million and to qualify the state must demonstrate enhanced accountability and transparency, provide alternative certification and on-line learning, and other requirements.

Dr. Peck discussed some of the broad initiatives, including STEM (science, technology, engineering, mathematics) strategy, a rural strategy, and a focus on transitions.

Ms. Phillips stated that legislation is not required, but there are some legislative and State Board issues to be considered. These include performance-based pay, terminology changes, and alternative certification (Attachment 1).

Presentation on Education Funds Direct to Schools

Art Harding, Government Relations, Arizona Department of Education, introduced individuals from the Arizona Department of Education who are present in today’s meeting to discuss the ARRA. He distributed a handout showing the anticipated distribution of ARRA funds (Attachment 2).

Vicki Salazar, Business and Finance, Arizona Department of Education, discussed the Arizona formula grant funds which came directly from the United States Department of Education and are listed on the right-hand side of Attachment 2. Also listed are competitive grants for which school districts can apply to the federal government; these funds will go directly to the district, rather than through the Arizona Department of Education which has no involvement with them.

Chairman Lesko asked what would happen if federal funds are used to hire teachers but then those funds run out.

Richard Valdivia, Program Operations, Arizona Department of Education, addressed her question, stating that funds are good until September 30, 2011. There has been discussion about extending the funds but no decision has been yet made.

Without objection, the meeting adjourned at 4:20 p.m.

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Jane Dooley, Committee Secretary

February 4, 2010

(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

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HOUSE STUDY COMMITTEE ON THE
AMERICAN RECOVERY AND REINVESTMENT ACT

January 28, 2010

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Representative Chad Campbell	Representative Michele Reagan
Representative Steve Farley	Representative Debbie Lesko, Chairman
Representative Steve Montenegro

Members Present

Members Absent