school funding; inflation adjustment

HB2576 - 572R - I Ver

REFERENCE TITLE:
school funding; inflation adjustment

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2576

Introduced by

Representatives
Gutierrez: Abeytia, Austin, Blattman, Cavero, Connolly, Contreras P, Crews,
De Los Santos, Garcia, Liguori, Mathis, Simacek, Stahl Hamilton, Travers,
Villegas

AN
ACT

amending sections 15-185 and 15-961,
Arizona Revised Statutes; relating to school finance.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-185, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-185.

Charter schools; financing; civil penalties; transportation;
definition

A. A school district is not financially responsible
for any charter school that is sponsored by the state board of education, the
state board for charter schools, a university under the jurisdiction of the
Arizona board of regents, a community college district or a group of community
college districts.

B. Financial provisions for a charter school that is
sponsored by the state board of education, the state board for charter schools,
a university, a community college district or a group of community college
districts are as follows:

1. The charter school shall calculate a base support
level as prescribed in section 15-943, except that:

(a) Section 15-941 does not apply to these
charter schools.

(b) The small school weights prescribed in section
15-943, paragraph 1 apply if a charter holder holds one charter for one
or more school sites and the average daily membership for the school sites are
combined for the calculation of the small school weight. The small
school weight shall not be applied individually to a charter holder if one or
more of the following conditions exist and the combined average daily
membership derived from the following conditions is greater than six hundred:

(i) The organizational structure or management
agreement of the charter holder requires the charter holder or charter school
to contract with a specific management company.

(ii) The governing body of the charter holder has
identical membership to another charter holder in this state.

(iii) The charter holder is a subsidiary of a
corporation that has other subsidiaries that are charter holders in this state.

(iv) The charter holder holds more than one charter
in this state.

(c) Notwithstanding subdivision (b) of this
paragraph, for fiscal years 2015-2016 and 2016-2017, the department
of education shall reduce by thirty-three percent the amount provided by
the small school weight for charter schools prescribed in subdivision (b) of
this paragraph.

2. Notwithstanding paragraph 1 of this subsection,
the student count shall be determined initially using an estimated student
count based on actual registration of pupils before the beginning of the school
year.� Notwithstanding section 15-1042, subsection F, student level data
submitted to the department may be used to determine estimated student counts.�
After the first forty days, one hundred days or two hundred days in session, as
applicable, the charter school shall revise the student count to be equal to
the actual average daily membership, as defined in section 15-901, of the
charter school. Before the fortieth day, one hundredth day or two
hundredth day in session, as applicable, the state board of education, the
state board for charter schools, the sponsoring university, the sponsoring
community college district or the sponsoring group of community college
districts may require a charter school to report periodically regarding pupil
enrollment and attendance, and the department of education may revise its
computation of equalization assistance based on the report. A
charter school shall revise its student count, base support level and charter
additional assistance before May 15.� A charter school that overestimated its
student count shall revise its budget before May 15. A charter
school that underestimated its student count may revise its budget before May
15.

3. A charter school may use section 15-855 for
the purposes of this section. The charter school and the department
of education shall prescribe procedures for determining average daily
membership.

4. Equalization assistance for the charter school
shall be determined by adding the amount of the base support level and charter
additional assistance. The amount of the charter additional
assistance is $2,131.90 per student count in preschool programs for children
with disabilities, kindergarten programs and grades one through eight and
$2,484.69 per student count in grades nine through twelve.�
Beginning
in fiscal year 2026-2027, the legislature shall increase the amount of
charter additional assistance by at least two percent.� for fiscal year
2027�2028 and each fiscal year thereafter, the legislature shall increase the
amount of charter additional assistance by a minimum growth rate of either two
percent or the change in the gdp price deflator, as defined in section 41-563,
from the second preceding calendar year to the calendar year immediately
preceding the budget year, whichever is less, except that the amount of charter
additional assistance may not be reduced below the base level established for
fiscal year 2026�2027.

5. The state board of education shall apportion
state aid from the appropriations made for such purposes to the state treasurer
for disbursement to the charter schools in each county in an amount as
determined by this paragraph. The apportionments shall be made as
prescribed in section 15-973, subsection B.

6. The charter school shall not charge tuition for
pupils who reside in this state, levy taxes or issue bonds. A
charter school may admit pupils who are not residents of this state and shall
charge tuition for those pupils in the same manner prescribed in section 15-823.

7. Not later than noon on the day preceding each
apportionment date established pursuant to paragraph 5 of this subsection, the
superintendent of public instruction shall furnish to the state treasurer an
abstract of the apportionment and shall certify the apportionment to the
department of administration, which shall draw its warrant in favor of the
charter schools for the amount apportioned.

C. If a pupil is enrolled in both a charter school
and a public school that is not a charter school, the sum of the daily
membership, which includes enrollment as prescribed in section 15-901,
subsection A, paragraph 1, subdivisions (a) and (b) and daily attendance as
prescribed in section 15-901, subsection A, paragraph 5, for that pupil
in the school district and the charter school shall not exceed
1.0. If a pupil is enrolled in both a charter school and a public
school that is not a charter school, the department of education shall direct
the average daily membership to the school with the most recent enrollment
date. On validation of actual enrollment in both a charter school
and a public school that is not a charter school and if the sum of the daily
membership or daily attendance for that pupil is greater than 1.0, the sum
shall be reduced to 1.0 and shall be apportioned between the public school and
the charter school based on the percentage of total time that the pupil is
enrolled or in attendance in the public school and the charter school.� The
uniform system of financial records shall include guidelines to apportion the
pupil enrollment and attendance as provided in this section.

D. Charter schools are allowed to accept grants and
gifts to supplement their state funding, but it is not the intent of the
charter school law to require taxpayers to pay twice to educate the same
pupils.� The base support level for a charter school or for a school district
sponsoring a charter school shall be reduced by an amount equal to the total
amount of monies received by a charter school from a federal or state agency if
the federal or state monies are intended for the basic maintenance and operations
of the school. The superintendent of public instruction shall
estimate the amount of the reduction for the budget year and shall revise the
reduction to reflect the actual amount before May 15 of the current
year. If the reduction results in a negative amount, the negative
amount shall be used in computing all budget limits and equalization
assistance, except that:

1. Equalization assistance shall not be less than
zero.

2. For a charter school sponsored by the state board
of education, the state board for charter schools, a university, a community
college district or a group of community college districts, the total of the
base support level and the charter additional assistance shall not be less than
zero.

E. If a charter school was a district public school
in the prior year and sponsored by the state board of education, the state
board for charter schools, a university, a community college district or a
group of community college districts, the reduction in subsection D of this
section applies. The reduction to the base support level of the
charter school shall equal the sum of the base support level and the charter
additional assistance received in the current year for those pupils who were
enrolled in the traditional public school in the prior year and are now
enrolled in the charter school in the current year.

F. Equalization assistance for charter schools shall
be provided as a single amount based on average daily membership without
categorical distinctions between maintenance and operations or capital.

G. At the request of a charter school, the county
school superintendent of the county where the charter school is located may
provide the same educational services to the charter school as prescribed in
section 15-308, subsection A. The county school superintendent
may charge a fee to recover costs for providing educational services to charter
schools.

H. If the sponsor of the charter school determines
at a public meeting that the charter school is not in compliance with federal
law, with the laws of this state or with its charter, the sponsor of a charter
school may submit a request to the department of education to withhold up to
ten percent of the monthly apportionment of state aid that would otherwise be
due the charter school. The department shall adjust the charter
school's apportionment accordingly. The sponsor shall provide
written notice to the charter school at least seventy-two hours before
the meeting and shall allow the charter school to respond to the allegations of
noncompliance at the meeting before the sponsor makes a final determination to
notify the department of education of noncompliance. The charter school
shall submit a corrective action plan to the sponsor on a date specified by the
sponsor at the meeting. The corrective action plan shall be designed
to correct deficiencies at the charter school and to ensure that the charter school
promptly returns to compliance. When the sponsor determines that the
charter school is in compliance, the department shall restore the full amount
of state aid payments to the charter school.

I. In addition to the withholding of state aid
payments pursuant to subsection H of this section, the sponsor of a charter
school may impose a civil penalty of $1,000 per occurrence if a charter school
fails to comply with the fingerprinting requirements prescribed in section 15-183,
subsection C or section 15-512. The sponsor of a charter
school shall not impose a civil penalty if it is the first time the charter
school is out of compliance with the fingerprinting requirements and if the
charter school provides proof within forty-eight hours after written
notification that an application for the appropriate fingerprint check has been
received by the department of public safety. The sponsor of the
charter school shall obtain proof that the charter school has been notified,
and the notification shall identify the date of the deadline and shall be
signed by both parties. The sponsor of a charter school shall
automatically impose a civil penalty of $1,000 per occurrence if the sponsor
determines that the charter school subsequently violates the fingerprinting
requirements. Civil penalties pursuant to this subsection shall be
assessed by requesting the department of education to reduce the amount of
state aid that the charter school would otherwise receive by an amount equal to
the civil penalty. The amount of state aid withheld shall revert to
the state general fund at the end of the fiscal year.

J. A charter school may receive and spend monies
distributed by the department of education pursuant to section 42-5029,
subsection E, section 42-5029.02, subsection A and section 37-521,
subsection B.

K. If a school district transports or contracts to
transport pupils to the Arizona state schools for the deaf and the blind during
any fiscal year, the school district may transport or contract with a charter
school to transport sensory impaired pupils during that same fiscal year to a
charter school if requested by the parent of the pupil and if the distance from
the pupil's place of actual residence within the school district to the charter
school is less than the distance from the pupil's place of actual residence
within the school district to the campus of the Arizona state schools for the
deaf and the blind.

L. Notwithstanding any other law, a university under
the jurisdiction of the Arizona board of regents, a community college district
or a group of community college districts shall not include any student in the
student count of the university, community college district or group of
community college districts for state funding purposes if that student is
enrolled in and attending a charter school sponsored by the university,
community college district or group of community college districts.

M. The governing body of a charter school shall
transmit a copy of its proposed budget or the summary of the proposed budget
and a notice of the public hearing to the department of education for posting
on the department of education's website not later than ten days before the
hearing and meeting. If the charter school maintains a website, the
charter school governing body shall post on its website a copy of its proposed
budget or the summary of the proposed budget and a notice of the public
hearing.

N. The governing body of a charter school shall
collaborate with the private organization that is approved by the state board
of education pursuant to section 15-792.02 to provide approved board
examination systems for the charter school.

O. If allowed by federal law, a charter school may
opt out of federal grant opportunities if the charter holder or the appropriate
governing body of the charter school determines that the federal requirements
impose unduly burdensome reporting requirements.

P. For the purposes of this section, "monies
intended for the basic maintenance and operations of the school" means
monies intended to provide support for the educational program of the school,
except that it does not include supplemental assistance for a specific purpose
or title VIII of the elementary and secondary education act of 1965
monies. The auditor general shall determine which federal or state
monies meet this definition.
END_STATUTE

Sec. 2. Section 15-961, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-961.

District additional assistance; growth rate

A. District additional assistance
per student count is established as follows:

1. For school districts
with a student count of less than one hundred for kindergarten programs and
grades one through eight, $663.81. For school districts with a
student count of one hundred or more and less than six hundred for kindergarten
programs and grades one through eight, multiply $474.47 by the weight that
corresponds to the student count for kindergarten programs and grades one
through eight for the school district as provided in section 15-943,
paragraph 1, subdivision (a), column 3. For a school district with a
student count of six hundred or more in kindergarten programs and grades one
through eight, the limit is $549.45.

2. For school districts
with a student count of less than one hundred for grades nine through twelve,
$732.87. For school districts with a student count of one hundred or
more and less than six hundred for grades nine through twelve, multiply $494.39
by the weight that corresponds to the student count for grades nine through
twelve for the school district as provided in section 15-943, paragraph
1, subdivision (b), column 3. For a school district with a student
count of six hundred or more in grades nine through twelve, the limit is
$600.86.

3. For programs for
preschool children with disabilities, $549.45.

B. District additional
assistance for a school district shall be computed as follows:

1. Select the applicable
district additional assistance per student count for the school district.

2. Multiply the amount
or amounts selected in paragraph 1 of this subsection by the appropriate
student count of the school district.

3. If a school district's student count used for the
budget year is greater than one hundred five percent of the student count used
for the current year's budget, increase the adjusted district additional
assistance determined in paragraph 2 of this subsection by fifty percent of the
actual percentage increase in the school district's student count.

C. An amount for the purchase of required textbooks
and related printed subject matter materials shall be used to increase the
district additional assistance for a school district as determined in
subsection B, paragraph 2 or 3 of this section, whichever is
applicable. This amount shall equal the student count in grades nine
through twelve multiplied by $84.93.

D. Notwithstanding subsections A, B and C of this
section, district additional assistance for a common school district that is
not within a high school district or for a transporting school district is
district additional assistance as prescribed in this section but excluding
pupils who are admitted to another school district as provided in section 15-824,
subsection A, paragraph 2 or 3, except that if the school district transports
high school pupils, the district additional assistance amount prescribed in
this section shall be increased by an amount equal to fifty percent of the
district additional assistance per pupil amount prescribed for the school
district pursuant to this section multiplied by the number of high school
pupils transported.

E. Beginning in fiscal year
2026�2027, the legislature shall increase the amount of district additional
assistance by at least two percent. For fiscal year 2027�2028 and
each fiscal year thereafter, the legislature shall increase the amount of
district additional assistance by a minimum growth rate of either two percent
or the change in the GDP price deflator, as defined in section 41�563, from the
second preceding calendar year to the calendar year immediately preceding the
budget year, whichever is less, except that the amount of district additional
assistance may not be reduced below the base level established for fiscal year
2026�2027.

END_STATUTE