Posts Tagged ‘K-12’
Written on December 15th, 2009 by ccottrellone shout
PHOENIX — As lawmakers plan to return for another special budget session later this week, Arizona’s treasurer laid out the state’s dismal outlook in an economic briefing Tuesday afternoon.
“We are basically tapped out at this point,” Treasurer Dean Martin said.
About a dozen legislators attended the briefing as Martin reviewed the status of Arizona’s deficit and the “ramifications of the current cash flow crisis.”
“The state is literally broke,” Martin said.
Arizona could run out of available credit and cash as soon as January, when a $320 million K-12 school payment is due.
That news comes just weeks after the state was forced to take out a private bank loan to pay its bills for the first time since the Great Depression.
But for the current fiscal year, the state’s deficit is estimated at $1.6 billion.
Combine that with what remains of last year’s deficit and revenue losses, Martin said Arizona would need about $5 billion to break even.
That’s so deep, that state officials said even if Arizona fires every single state employee, it wouldn’t be enough to make up the difference.
“We are at our limit and have no place else to go,” he said.
The state is spending hundreds of millions more than it’s bringing in every month.
And as revenue collections continue to decline at an increasing rate, the deficit will likely grow, according to a recent report by state budget analysts.
“Given the on-going weakness in receipts … the shortfall estimates may rise again by January when revenue estimates are updated,” the report said.
The upcoming one-day special session is slotted for Thursday.
The session is the fifth one this year. It also comes just weeks after lawmakers last met, when they cut roughly $450 million from the state’s budget — most reductions coming from K-12 education and social services.
“We need to get our spending under control,” said Sen. Bob Burns, R-Peoria.
In this week’s session, lawmakers will aim to slice about $200 million from several state departments.
They will also attempt to approve a special election for two big-issue items: A sales tax increase and changes to voter-approved spending mandates.
The temporary sales-tax increase would be one cent per dollar, lasting three years. It’s estimated that would bring in an estimated $1 billion annually.
Because of state law, legislators can cut only from roughly 30 to 40 percent of the budget. By loosening spending mandates, it would allow leaders to spread cuts more evenly.
“We got to get beyond the one-time stuff,” Burns said. “And we need to get into making these adjustments permanent, or else we just aren’t going to be able to correct what’s in front of us.”
Written on December 15th, 2009 by ccottrellone shout
PHOENIX— State and university employees could wind up with IOUs in their pay envelopes instead of checks in February if the planned sale of state buildings hits a snag, state Treasurer Dean Martin warned Monday.
And that could leave worker with a piece of paper that won’t help them buy food for their families, pay the mortgage or heat their homes.
Martin told legislators that by the end of January the state will have borrowed about $1.1 billion to pay its bills. The total amount Martin has available, both internally and from Bank of America, is $1.2 billion.
But the state is obligated to make a payment of about $325 million to public schools on Feb. 1.
What’s supposed to happen around the third or fourth week of January, Martin said, is the state will sell off — at least in title only — a dozen state buildings in exchange for at least $737 million. Martin said that will provide enough operating capital to keep the state going and, more important, to ensure that the payroll checks and bill payments that are sent out are good.
“Should that not happen, should there be a hiccup, a sneeze, something, anything gets lost in the mail, we will not be able to make the February school payment,’’ Martin said.
“There’s just not enough cash,’’ he continued. “The credit cards are maxed out, you’re at your limit.’’
That leaves him only one legal option for paying those to whom the state owes money: IOUs.
“They’ll get a note saying, ‘We’ll give you the money on this date,’ up to 90 days’’ in the future.
The state would be obligated to pay interest. But Martin said it likely would be the same discounted annual rate he got from Bank of America for the state’s line of credit: about three-fourths of a percent.
“The bigger issue is what that does to the economy,’’ he continued. “You put 30,000 state employees without paychecks, the trickle effect throughout the economy, what that does to the vendors, it needs to be avoided.’’
California issued IOUs earlier this year while it was trying to get its finances in order.
The banks did cash those — for a while. But Martin said the chances of banks honoring the IOUs here are minimal, as the state already is borrowing just to cover the checks it already is writing.
The treasurer’s warnings came as lawmakers sought some answers about the state’s finances.
Legislators know that the current anticipated deficit for this year stands at about $1.6 billion, even with the spending changes made last month, because sales tax collections have been so much weaker than a year earlier as consumers buy less and construction is slowed. And Richard Stavneak, staff director of the Joint Legislative Budget Committee, said the state is on track for a $3 billion gap between revenues and spending next year.
What they wanted to know was how the state manages its finances while trying to come up with a fix.
Stavneak said the temporary sales tax hike being pushed by Gov. Jan Brewer won’t do much, if anything, to help the current mess.
He said that levy could bring in up to $950 million a year. But if an election isn’t conducted until March, it might not be until May or even June before the increased collections show up in the treasury; the fiscal year ends June 30.
That leaves the state struggling to pay its bills in the interim.
Lawmakers approved a plan earlier this year to sell off state buildings for up-front cash and then lease them back. The plan is more akin to a mortgage, with investors buying shares in that $737 million debt in exchange for some rate of return over the next 20 years.
In the interim, Martin has obtained a $700 million line of credit from Bank of America. He also has access to about $500 million from various internal accounts, money that doesn’t belong to the treasury.
And when that’s gone?
“You send out the IOUs,’’ he said.
Martin said he probably can finesse the debt if it looks like the sale of the buildings will take place within a few days after the school payment is due. But if there’s some legal or other impediment to completing the sale, he can only send out IOUs.
“That’s what the statutes require,’’ he said.
There is another legal option: Delay the payment to schools. Martin said though, that would require legislative action.
But he said that’s not a solution, as the schools then would have to borrow money themselves — and agree to pay interest — to meet their payroll and other obligations until the state finally came up with the cash it owes.
“Essentially what you would be doing is shifting the state’s borrowing off to the schools,’’ Martin said. He said that, from a political perspective, lawmakers likely would agree to pay any interest costs the schools incurred.
Howard Fischer, Capitol Media Services
Information from: http://www.aztreasury.gov/media/2009/DouglasDispatch-12-08-09.html, Douglas Dispatch
Written on September 29th, 2009 by ccottrellno shouts
Arizona State Treasurer Dean Martin said the actions of the governor and Legislature show a “disconnect with reality,” and he’s calling for a return to 2005-06 spending levels.
Martin stopped in Lake Havasu City Tuesday as he travels around the state speaking with residents and city and county officials about the state’s current budget crisis.
Currently the state is short about $1 billion, and next year the deficit is expected to hit $3 billion to $4 billion.
“The budget continued to grow even as the recession hit. In fiscal year 2008 spending increased 10 percent while revenue declined that much. In FY 2009 spending was up 6 percent while revenues dropped 19 percent,” Martin said. “That’s a disconnect with reality.”
Martin also questioned Gov. Jan Brewer’s insistence on a new sales tax.
“The economy is at its weakest point right now. No time is a good time for a tax increase but this is absolutely the worst time,” Martin said. “And even if it passed, we’re not at a sustainable level.”
To get to the point where revenues could support state services, Martin said the immediate solution is to reduce the budget back to Fiscal Year 2005-06.
“If you talked to most private sector businesses these days, they’d be happy to be at 2005 levels. They’ve cut back even further,” he said.
He also suggests that reserves — currently depleted thanks to legislative drawdowns over the past two years — be set by major budget sector and those agencies take responsibility to maintain the reserve levels as set by law.
“And we have to deal with a major spending leak — the entitlement programs,” Martin said. “We’ve grown welfare while cutting K-12 (education) and public safety.”
The problem involves the use of tobacco settlement money. Under the voter-approved plan, the first 20 percent of the budget for the Arizona Cost Containment Health Care System has to be paid for from the state’s general fund before the tobacco money is used.
“So you have to pay that 20 percent and if revenues to the state are off 10 percent, that’s even more that has to be made up somewhere else,” he said.
Martin said the solution he’s suggesting is two ballot questions. The first asking voters if the public health insurance and welfare system be funded solely by the tobacco funds and nothing come from the general fund. The other would be whether voters would like a tax increase to make up the difference between the tobacco funds and the expenditures.
“ACCHS is currently at $1.5 billion. Even in the best of times the state can’t sustain that,” he said. “But only the voters can solve this one.”
Meanwhile the state is looking to borrow about $500 million, pledging its revenues against the loans to cover the day-to-day operations. Bids from major lenders are due today and will be decided on next month.
“The state has never done anything like this before,” Martin said. “We’re not sure how those bids are going to come back.”
He said that internal borrowing sees the state pay anywhere from .5 to 1.5 percent in interest, and he expects the bids from the private sector lenders to come in at about that level or a bit lower.
“But if the market freezes or the state’s financial condition worsens, that could go up,” Martin said, noting there is a 2.5 percent cap set by law.
“You can’t spend more than you make,” he said. “Essentially the state is broke. We have to bring expenditures and revenues in line.”
David Bell , Havasu News
Information from: http://www.aztreasury.gov/media/2009/HavasuNews-09-22-09.html
Written on February 3rd, 2008 by ccottrellno shouts
The Super Bowl and the events leading up to it are the last places you’d expect to hear any sound financial advice.
The game itself is a competition in which multimillionaires smack one another on the field for 60 minutes in front of fans who forked over the equivalent of a car down payment for tickets.
Then there are the spectators at home.
They’re subjected to several hours of high-cost commercials designed to ply the cash from their wallets.
Who needs a $150 billion tax-rebate plan to stimulate the economy? Let’s just watch Super Bowl commercials once a month.
But on this fiscally uneven playing field, there was one pregame event designed to instill a sense of frugality.
Visa – yes, the credit-card company – sponsored a Phoenix news conference and demonstration touting its “financial football” software.
The program aims to teach teens and young adults a few key moves out of the personal-finance playbook, covering topics such as credit card, banking and budgeting basics.
Visa brought in 36 students from Alhambra High School in Phoenix, divided them into two teams and let them compete by answering questions from the software.
Larry Fitzgerald, wide receiver for the Arizona Cardinals, recounted how he’s been saving money ever since landing his first job as a Minnesota Vikings ballboy at age 16.
“You get that first taste of money and you want to spend it,” he told the students. “But my dad was on me to put some of it away – he instilled that in me at a young age.”
Adrian Peterson, rookie running back for the Minnesota Vikings, said he, too, places a high value on prudent money management.
“I’ve heard too many stories (of pro athletes blowing their riches),” Peterson said. “After a time, these guys don’t have anything to show for it.”
The Visa football game, which is rather clever, can be played for free at www. practicalmoneyskills.com.
Contestants move the chains and ultimately score points by answering multiple-choice personal-finance questions correctly.
Sample questions include:
• What type of organizations provides information on your past use of credit?
• What does APR stand for?
• What’s the purpose of using a PIN for a bank account?
“I had learned a lot of that already in an economics class,” said Melissa Tapia, an Alhambra senior, after playing the game. “But it’s good to review because you do use that stuff.”
Arizona Treasurer Dean Martin, who also spoke at the Visa event, said he hoped the software’s entertaining format would help teens remember key money lessons.
Fitzgerald’s father, also named Larry, wasn’t a formal participant at the Visa event but instead attended as a member of the news media.
He never played professional sports and has felt the sting of a job layoff, which perhaps explains why he appreciates the importance of saving.
“My mother taught me to save a quarter out of every dollar,” the elder Fitzgerald said. “It’s hard to do, and it takes a lot of discipline, but you’ve got to put some money away so you can survive those bumps and down periods.”
That’s sound advice, especially on Super Bowl Sunday.
Russ Wiles The Arizona Republic
Information from: http://www.aztreasury.gov/media/2008/AZRepublic-02-08.html, Arizona Republic
Written on January 28th, 2008 by ccottrellno shouts
More than 25 students from Alhambra High School got a money management lesson Monday outside the classroom, with Arizona Cardinals All Pro wide receiver Larry Fitzergerald and Offensive Rookie of the Year Adrian Peterson playing teacher.
The duo, along with Arizona Treasurer Dean Martin and Visa Inc., kicked off Super Bowl week with a computer learning game for the lucky group.
The game, dubbed “Financial Football,” is being distributed Monday by Salt River Project to more than 600 high schools and junior high schools. The goal ofthe nationwide initiative, now in its 13th year, is to help students tackle their financial futures.
Fitzgerald and Peterson shared their personal experiences of making it big and maintaining their financial control after watching dozens of their peers in the National Football League squander their savings.
“You really have to know how to manage your money,” said Peterson, who still is adjusting to a mortgage and multiple car payments. The Minnesota Vikings running back just concluded his rookie campaign after playing three seasons with the University of Oklahoma.
Fitzgerald, who is in contract negotiations with the Cardinals, has made community involvement a priority since arriving in the desert.
“It’s important to reach out to youth. It’s important to create a good image for them, to be a role model,” he said.
He said his father was a frugal guy who stressed financial security, even during Fitzgerald’s first job as a ball boy for the Vikings. “You never know when your last play is going to be,” he said.
In a state suffering from poor student achievement, Martin said financial literacy is needed.
“Everyone is going to need to balance a checkbook. We need to help improve our curriculum and get this into the classroom,” he said.
The game was developed in cooperation with the NFL and Players Inc., a group of active and retired NFL players, along with Visa. The game is the centerpiece of a national financial education initiative that also includes a classroom curriculum. The game also can be downloaded free on cell phones.
Chris Casacchia The Business Journal
Information from: http://www.aztreasury.gov/media/2008/BizJournal_01-08.html, The Phoenix Business Journal
Written on August 30th, 2007 by ccottrellno shouts
If you’re interested in learning how to earn more than an 11 percent return on your money, you might want to talk to Dean Martin, the state treasurer, who is about to pony up nearly $70 million to Arizona’s K-12 schools, more than double last year’s amount from the Common School Fund of the state’s Permanent Endowment.
“It’s all from improved performance on our investments,” Martin told the Herald/Review in a stop on his weeklong swing through the southeast part of the state. “And the Legislature can’t adjust their formulas for funding education based on our performance. It’s the most protected source of revenue we have.”
The Permanent Endowment — a financial feature unique to states in the West — exists in perpetuity to fund 13 “beneficiaries” in Arizona with the invested proceeds from the sale of state lands. Currently valued at $2.45 billion, the principal is never touched, and distributions to schools are made based on a five-year “rolling average” to mitigate market fluctuations.
Other beneficiaries — each with their own trust land and separate trust fund — include the Arizona School for the Deaf & Blind, the School of Mines and penetentiaries.
The $70 million is a landmark increase and is good news for school districts, teachers and students as well. According to statute, the money may only be used for class size reduction, teacher pay raises, teacher training, AIMS assistance and dropout prevention programs.
Funds are allocated based on weighted student count, and districts can determine how to expend the money within the statutory guidelines. Commonly called the “classroom site fund,” the fiscal year 2007-08 historic distribution works out to approximately $1,430 per full-time teacher or classroom.
“Some people are under the impression that the jump is because of recent land sales that commanded high prices,” Martin said. “But that’s not the case. We haven’t even received most of that money yet. Another billion dollars will be deposited into the endowment over the next seven years, which we’ll invest and then be able to grow money even faster.”
Martin believes the “endowment model” is key to the long-term funding of education that is a state obligation that “doesn’t go away.”
Using all-day kindergarten as an example, he said that when it was passed by the Legislature, it wasn’t priced out “all the way through” to include new classrooms that will be needed for the larger number of students serviced by schools in a state with a growing population. “You can’t create a permanent liability for the state with money that may not always be there,” he cautioned.
The youthful Martin gets excited when talking about his office’s successful management of the endowment’s portfolio. “It’s like a train leaving the station,” he said. “It picks up momentum.”
The forecast for distribution to the Common School Fund in 2010 is $90 million.
The treasurer explained that the state holds approximately 8.1 million acres in trust and that only 17 percent of Arizona’s land is in private hands. He believes his office has been more creative and “retail” oriented than other states when marketing parcels for public auction. Martin’s mother was a high school math teacher.
Cindy Skalsky, Herald/Review
Information from: http://www.aztreasury.gov/media/2007/SierraVista-Herald-09-07.html, Sierra Vista Herald
