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ARIZONA STATE LEGISLATURE

Fiftieth Legislature – First Regular Session

JOINT LEGISLATIVE STUDY COMMITTEE ON

SCHOOL DISTRICT UNIFICATION AND CONSOLIDATION

Minutes of Interim Meeting

Tuesday, August 30, 2011

House Hearing Room 3 -- 9:30 a.m.

CoChairman Goodale called the meeting to order at 9:35 a.m. and roll call was taken by the secretary.

Members Present

Senator Rich Crandall, CoChairman                          Representative Doris Goodale, CoChairman

Senator Steve Smith                                                   Representative John Fillmore

Toni Badone                                                               Patrick Sinnott                                               

Tim Carter                                                                   Andy Smith                                                   

Don Covey                                                                  David Snyder                                                 

Jeffery Crandall                                                          Vanessa Whitener

Margo Seck

Members Absent

Senator Olivia Cajero Bedford                                   Representative Ruben Gallego

Bob Martin

CoChairman Goodale advised that maps are displayed at both ends of the dais showing school districts in Arizona, topographical issues, etc., for the Members and audience to view.  She asked anyone who would like information relating to school district unification and/or consolidation to contact her, CoChairman Crandall or Mr. Fillmore.

Committee Outcomes

CoChairman Goodale stated that a few meetings remain to accomplish the goal of determining Committee outcomes.  She outlined tentative subjects for discussion in future meetings:

· September:  Consolidation of services by school districts. 

· October:      Draft recommendations.

· November:  Final version of recommendations.

Historical Background

CoChairman Goodale stated that Marty Shultz who chaired the previous School District Redistricting Commission is out of town, so his presentation will be rescheduled for the next meeting.

School District Presentations

Dr. Roger Freeman, Superintendent, Littleton Elementary School District, stated that the Tolleson Union High School District overlays five elementary feeder school districts, one of which is Littleton, where voters in the school district cast ballots to approve unification.  Meetings were held with Marty Shultz, representatives from the Arizona Department of Education (ADE) and their attorneys, and at least 14 issues were found for which statutory relief was needed on governance issues.  The governing board decided that it did not have the time, talent or resources to incur the expenses to resolve all of the issues involved with unification. 

He made the following points:

• A disincentive to unification is the cost of associated legal and logistical issues, which could be addressed by providing a source of funds through another agency or regional service center (RSC).
• The previous unification and consolidation law had a three-year window for implementation, whereas the School District Redistricting Commission envisioned implementation immediately following the election.  Both of those do not take into account the scope of differences between the school districts involved in tax rates, debt loads, salary schedules, benefits, etc.  The time period in which unification takes place could be scaled to the magnitude of those logistical differences. 
• Attempts were made to collaborate between the six school districts in the Tolleson regional system and intergovernmental agreements (IGA) were written for special education services, curriculum, etc.  The number of school districts involved depends on the goodwill and common interests of the governing boards.  For example, an attempt was made to unify the rate paid to substitute teachers since all of the school districts draw from the same pool, which was nearly accomplished, but over the last few years, the rates drifted apart as school districts competed for this scarce resource. 
• A major issue is the loss of local control and the sense people have that the smaller the school district, the better relationships will be with elected officials.  Perhaps something could be put in place for liaisons with the community as school districts become larger. 
• Research was done on student achievement.  Compared to other large, urban school districts, there was not much evidence that student achievement would be impacted by unification. 
• There would be minimal savings with unification, but the big cost is in the transition.  As an administrator, not speaking for the governing board or its constituents, making that happen would involve moving money around within the budget, which inevitably would impact programs for students.  It would be helpful to have an outside consultant who is an expert on the logistics of unification.

In response to a question about the 14 statutory changes that may be required for unification,
Dr. Freeman indicated that there was no resolution of those items during the work of the School District Redistricting Commission. The Commission’s model anticipated immediate implementation; however, financial guidelines in statute had to be followed when issues still needed to be worked out with the governing boards.

Discussion followed concerning the following:

§ Feasibility of unification or consolidation.

§ Transition (cost, governing board issues).

§ Sustainability.

§ Potential savings.

Mr. Carter asked if any of the governing boards attempted to use existing statute to unify or consolidate.  Dr. Freeman answered that he does not believe any of the boards would because of the cost.  The boards would have to find a way to work together, probably through an IGA, with staff conducting a feasibility study.  Programs are currently being cut, and no one wants to cut more programs to do this.  The Littleton governing board would be interested if someone provided funding for the research.

Mr. Carter asked if there would be an advantage if the Legislature allowed school districts to increase the Revenue Control Limit (RCL) or an amount outside of the RCL for a certain number of years to provide funding to consolidate or unify, and whether the system could be sustained if the RCL is later reduced by the same amount.  Dr. Freeman responded that there would be a way to make that plan work, but a certain amount of expertise within the school district would be needed to develop a rational plan for the additional revenue that does not create a long-term legacy liability; however, no one in his region has the experience that is needed.  

Mr. Carter asked if it would be helpful if the Legislature drafted language so that once the voters or boards voted to unify or consolidate, during the interim from when the election took place to the time of implementation on July 1, the individual boards would continue to function and the collective board would have the authority to function as a newly-created district board. 
Dr. Freeman opined that there has to be an overlap.  Existing statute citing “immediately the following July 1” would not work because of the feasibility study and other items that need to happen.  One of the problems the board has that was also a problem for the School District Redistricting Commission was lack of staff, so if the intent is to structure it that way, the new umbrella board would need some staff to function. 

In response to a question, Ms. Seck related that she is the Superintendent of the Tolleson Union High School District and advised that research written by experts about student achievement in similar socioeconomic areas across the country was reviewed.  She indicated that her governing board would be interested in the feasibility study.  She added that in 2020-2021 the size of the school districts combined is estimated to be 39,593 students, provided the economy improves, which is considerably more than the current student population.  If unification occurred, there may be fewer superintendents, business managers, directors of transportation and food services, but middle management may grow.  A major concern is the impact on the tax rates with six different school districts having bonds and overrides.  For example, the Buckeye Valley Education Alliance is discussing combining Arlington Elementary, Buckeye Elementary, Liberty Elementary, Palo Verde Elementary and Buckeye Union High School Districts, but an analysis in 2006-2007 showed that the tax rate for the Arlington Elementary School District would increase 150 percent. 

Barbara U’Ren, Superintendent, Cottonwood-Oak Creek Elementary School District, related that consolidation of the Mingus Union High School District and Cottonwood-Oak Creek Elementary School District was presented to the voters.  Forty percent were in favor and sixty percent were opposed, so the governing boards began discussions on how to increase efficiencies by merging the transportation departments with one director and eliminating some bus routes.  Those discussions evolved into conversations about more shared services, and ultimately, unification because the governing boards do have the authority to unify.

She said one of the greatest concerns was the discrepancy in salaries in the amount of $1 million. 

Senator Russell Pearce and Representative Andy Tobin were approached and asked about the possibility of support from the Legislature, which resulted in the introduction of HB2587, school districts; unification assistance, to provide additional RCL: in the first year for the cost of  transition, the second year three percent and the third year an additional three percent.  The funds were to be utilized only for equalizing teacher salaries and school districts were required to create an administrative structure showing the reduction in administration which, in their case, amounted to about $700,000.

Ms. U’Ren continued that one of the issues faced was territory.  She and the other superintendent had two-year contracts, so there were conversations, which sometimes became heated, about who would take the lead or whether there would be a shared superintendent role.  When HB2587 was amended so local taxpayers would pay the cost rather than the state, the governing boards were not willing to pass that on to constituents, and since conversations were strained, that was the catalyst in determining not to move forward with unification. 

Ms. U’Ren made the following points:

• Dr. Freeman’s suggestion about an outside consultant who is not invested in the community is a good idea. 
• In relation to whether consolidation is beneficial, there is much research indicating that academic achievement is not necessarily significantly different. 
• School districts are currently fighting for the same limited resources, such as teachers and bus drivers, which would no longer be an issue with unification. 
• With unification, there would be the same expectations for students upon graduation from high school. 
• A major issue of the entire process is politics. 
• Transition is difficult and school districts could use some help financially and with resources to move forward. 

Ms. Whitener endorsed the suggestion about a third party who would be objective.  She opined that it is also important to involve the community because people want to do what is best for their children, but they need information and studies in order to make informed decisions.

In response to questions posed by Mr. Fillmore, Ms. U’Ren provided the following:

• If there had been a specific date by which the unification process should be accomplished, and if there had not been any turf wars, it would have been done. 
• The assistance provided in HB2587 would have been sufficient, along with attrition. 
• Cottonwood-Oak Creek Elementary School District and Mingus Union High School District are small school districts and unification would have resulted in a school district of about 3,300 students, so a basic structure could be maintained that would meet the needs of a school district that size. 
• As to the structure for administrators, the higher salary was used to show the savings that could be captured, with the assumption that higher-salaried persons will probably retire sooner than others. 
• As far as the discrepancies in paying teachers, superintendents would like to have more liberty in how those dollars are spent.  Unfortunately, the Cottonwood-Oak Creek Elementary School District went through difficult financial times in the last three years; the budget was reduced by nearly $2 million, so a school was closed.  In order for students to have programs like art and physical education, counselors and nurses, there will not be as much funding available for teacher salaries.  The school district has had to determine if it is too program-rich and money should be transferred toward teacher salaries; however, the budget committee composed of teachers placed the funds into programs.

Mr. Fillmore stated that he wants to provide more money for teachers and classrooms and submitted that personnel at the Cottonwood-Oak Creek Elementary School District could be reduced.  He asked, if more authority is given to county superintendents and changes are made to Chapter 15 in relation to funding sources and pay scale for teachers, the superintendent could have the ability to provide direction within the county, satisfy local control and overcome the problem of the initial dollars offset.  Ms. U’Ren replied that the community would probably support that, but she is not sure how it would work at a local level where there are many layers.  It would have helped if the two superintendents were able to leave and someone trusted by both boards led the transition, but that is not what happened. 

CoChairman Goodale stated that she hopes to have a superintendent at the next meeting who will speak about a school district that successfully completed the process of unification.

Carl Zaragoza, Advocacy Director, Stand for Children, stated that Stand for Children views the concept of unification and consolidation as an opportunity to create a better system to maximize efforts and resources to help students succeed in school and life.  The organization specifically focuses on struggling schools and children in poverty.  Research has pointed out that focusing on systemic change can make a difference and accelerate learning for all, organizational design does matter, alignment and staff collaboration are critical and leadership matters. 

He stated that Arizona currently has a hodgepodge of K-8 and high school districts.  Accountability and support functions would be more easily supported and analyzed in right-sized K-12 school districts that have the proper resources for systems, interventions and data.  Consolidating these school districts, which is bringing two districts into a single district, and unification, which is ensuring that the districts are designed kindergarten through twelfth grade rather than K-8 and 9-12, feed success.  To help under-resourced school districts, to help align the school districts and to help parents that are seeking K-12 alignment, he said he hopes to see advancement on the following strategies (Attachment 1), specifically 1-4:

• Improve tools for parents.  The statutes allow for a petition process at the local level, but it is very difficult to use for small changes and allows governing boards to essentially overrule parents.  For example, simplify the process for a common school district to petition to take control of the high school for its attendance area.
• Performance-based triggers for low-performing school districts and schools.
• Engage county superintendents to help design and trigger changes.
• Protocols and standards for IGAs across school districts or counties with clear responsibilities.

Discussion ensued about mobility of students and the recommendations made by Mr. Zaragoza. 

In response to questions, Mr. Zargoza indicated that he will provide the Members with a copy of a 2001 study on school districts that was conducted in Texas.

Ms. Whitener asked why models of efficiency used in charter schools are not implemented in public schools and whether smaller school district voters could vote to use the charter school fiscal model.  CoChairman Crandall replied that a school district can convert to a charter school, but it forfeits the right to taxpayer funding and still has to take any student who shows up.  The voters can do so by electing school board members who support such a change.   He added that the option has been available for many years but it has never been used.  Mr. Andy Smith said his board president asked him to look into that because of high needs in transportation, high school tuition and special education. 

Public Testimony

Denise Finell, representing self, related her background experience working in various-sized school districts.  She stated that whether unification or consolidation occurs, the same dollar amount per student is paid by school district taxpayers.  She noted that she created spreadsheets and found that there was equality in the total tax rates with unification and separate districts.  She included 10 different variables such as assessed valuation, etc., and found that whenever school districts are combined, some people will pay more taxes and some will pay less; however, the bottom line needs to be the education of children.  She noted that she went one step further and included a large corporation with properties in multiple school districts and found interesting results about what happens to their tax rates. 

Ms. Finell stated that she understands parents’ feelings about local control.  She questioned why everyone cannot work together, think outside the box and create a better world for students because, she opined, there does not need to be enmity between administration and classrooms or the continual criticism of public school districts.  Charter schools do not seem to be undergoing the scrutiny or criticism the public school districts are going through, which, she said she believes is due to the difference in the type of funding.

Jeff Kleck, Superintendent, Maricopa Unified School District, related that he was an administrator in Oregon when school districts experienced budget cuts and Proposition 5 eliminated the real estate tax.  Four elementary school districts were directed by legislation to consolidate by the beginning of the next school year, so there was one county office and a reduction in staff.  He also experienced a situation in which a school district board met and determined there was no money, resulting in consolidation of the John Day and Mt. Vernon School Districts.  Politics was a huge issue.  Consolidation and creating financial efficiencies was quickly accomplished.

Mr. Kleck indicated that the Maricopa Unified School District has 1,200 to 1,500 students that are taken by the Tempe Union High School and Kyrene Unified School Districts.  For four years, three attempts were made to pass an override, and a fourth attempt will be made in
November 2011.  He said $10 million was cut over the past two years out of a $37 million budget.  District office personnel were cut so much that it is not possible to maintain compliance issues.  If projections hold, another $5 million or $6 million in cuts will be made next year.  If he has to cut another 100-plus teachers, class sizes will be in the 50s and 60s in the elementary grades, which begs the question of whether the school district will be educationally viable or if consolidation should be forced in order to try to create efficiencies.

Mr. Fillmore asked if the problem would be solved if Tempe Union was unable to take those students.  Mr. Kleck replied that it may not solve the problem, but it would help.  Maricopa loses regular education students and the remaining special education students cost more to educate.  If there are going to be charter schools in the school district, it would be helpful if the charter schools would take special education students because Maricopa does not receive enough money to cover what it costs to educate them.  Passing an override would also help, but could cause confusion in relation to people who take their students to another school district in which they do not have to pay for an override.

Ms. Badone referred to Ms. Finell’s comment about business tax rates, which she did not complete, and asked if it could be addressed at the next meeting.  CoChairman Goodale replied that she believes it will be possible to garner some information on tax implications of unification or consolidation.

Set Date for Next Formal Meeting

CoChairman Goodale indicated that staff will check with the Members to schedule a meeting during the last week of September 2011.

Without objection, the meeting adjourned at 11:41 a.m.

                                                                        _______________________________

                                                                        Linda Taylor, Committee Secretary

                                                                        September 13, 2011

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

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JLSC ON SCHOOL DISTRICT

UNIFICATION AND CONSOLIDATION

                        August 30, 2011

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