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"Excess Utilities" or Unfunded Energy Costs FAQ

How did we end up with “excess utilities?”

More than 20 years ago the Legislature capped their funding of utility costs at 1985 levels and arranged for any unmet need to come from the property tax. For most schools, this meant that any increases over student growth or inflation would have to come from the local property tax or from other parts of the school budget.  Even when actual, real utility costs exceeded what the state provided, the school districts would get no more than they received in 1985. These unfunded energy costs- the difference between the 1985 allotment and the real costs- were labeled “excess utilities.”

Why do some districts have higher excess utilities than others?

At the time this new formula was adopted, districts had wide differences in their energy costs due to climate, condition of buildings, power-provider rates and, to a certain extent, energy management programs. This meant that the need to go to the property tax or to leave other parts of the school budgets unfunded due to increases in energy costs impacted each district differently. You see these variables today in the resulting excess utility rates across the state. 

 Why have excess utilities gone up so much?

Over the last two decades a series of powerful circumstances has aggravated the action taken during the 1980’s. First, until Proposition 301 required the state to provide some inflation funding, districts often went without a funding increase. Because districts can only increase their formula spending for utilities if the state increases education funding, districts had to take money from other programs or go to the property tax to pay the utility bills when state increases were either not provided or simply insufficient to meet ballooning utility costs. Low funding and double-digit increases in utility rates, combined with the telecommunication demands of our digitized world, have drastically impacted the growth of the unfunded portion of our utilities bill. Simply stated, the utility formula is dated and incapable of supporting today’s power, water and technology realities.

 Why are schools in jeopardy of losing so much of their utilities funding?

In 2000, the Legislature agreed to send a sales tax increase to fund teacher pay to the voters. In exchange for support of the one-sixth of one percent increase, some stakeholders at the Capitol asked for and received a repeal of the “excess utilities” funding. This measure was Proposition 301 and it passed. No arrangements were made at that time to replace that lost revenue or for the state to lift the 1985 cap that determines today’s state funding for utilities.

 What does this potential loss mean for Scottsdale Unified School District?

If nothing is done, our district will have to budget for a $6 million loss beginning in the 2009-10 school year.  This is the equivalent of 125 teachers.  Since 96% of our Maintenance and Operations budget is salaries, benefits and utilities costs, there are few places to cut without impacting the classroom.

What are we doing and what can you do?

The district is already working hard to reduce our energy consumption (last year by 1.2 million KwH), and we are building more energy efficient buildings like our new high schools.  Even so, our utilities bill last year increased by $400,000 simply due to rate increases.

The Scottsdale Parent Council and the district have also joined forces with other districts across the State to bring this serious problem to the attention of our Legislators and the Governor.  They are lobbying and asking our representatives to find some solution to this unfunded energy cost crisis.

We need to you to get educated, talk to your friends and neighbors, and make your voices heard down at the Legislature and in the Governor’s office.  The SPC will be forwarding “Legislative Alerts” to all PTA/PTOs and we hope that you will take the time to read them and take the proposed action.  Your voice does make a difference!

The Scottsdale Parent Council Legislative Watch page will contain the most current on-going information and progress on this vital issue.  They have also provided a sample letter and a list of our legislative representatives for us to use to add our voices to this crucial cause.  Thanks so much for your continued support of our schools!

SAMPLE LETTER:

*If you are e-mailing, please put "Please fix excess utilities" in the subject line*

Dear (my representative),

I am writing to express my deep concern about the issue of excess utilities. As you know, beginning in 2010, our district and many others across the State will lose our local ability to fund our utility bills above the 1985 levels that the State pays. The loss of these funds- close to $6 millions for Scottsdale Unified School district- will be catastrophic for our schools.

Please do everything you can to make sure this issue gets addressed this year. Although we do not need any money this year, our School Board will begin the 2010 budget process next Spring and we need to know that funds will be available to pay the electric, water and phone bills at our schools.

Thank you for representing the interests of our children and for moving Arizona forward.

Sincerely,

(Your name and address)

Scottsdale Parent Council 2008 Legislator Roster
 

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Last modified: 09/23/2008