The facts about Tucson Unified and Prop 301 monies

District clears up misinformation about handling of funds

Posted Oct. 6, 2016

What is 301 funding?

In 2000, Arizona approved Proposition 301, which created a funding stream using sales tax to increase teacher salaries and to give teachers an opportunity to earn performance pay. Each year, a committee of teachers and administrators develop a performance pay plan that outlines eligibility and criteria for payment. The plan is subject to approval by the Tucson Education Association and the Governing Board. Proposition 301 expires in 2021.

Timeline: 301 Payout to Teachers. 2011-12 - $1,800. 2012-13 - $1,200. 2013-15 - $1,200. 2015-16 - $1,500 (first year of Sánchez/Soto budget). 2016-17 - $3,000. In 2013-14: began $1 million salary equalization process/corrected pay. In 2014-15: Step advance awarded on salary schedule. In 2015-16: $500 step advance plus $200 added to base salary. In 2016-17: $500 step advance plus $700 added to base salary.
Timeline: 'Reserve' Funding Year-by-Year. 2011-12: $20.4 Million. 2012-13: $147 Million. 2013-2014: $2-.6 Million. 2014-15: $17.3 Million. 2015-16: $20.3 Million(First year of Sánchez/Soto budget)

A recent article in the Arizona Daily Star contained inaccuracies about Tucson Unified School District's handling of Proposition 301 monies under the current administration.

In the years that Superintendent H.T. Sánchez and Chief Financial Officer Karla Soto have had control of the budgeting process, Classroom Site Funds, often called Prop. 301 funds, were handled correctly and in accordance with best accounting practices.

To be clear:

  • Under Dr. Sánchez, no 301 funds have been used to balance the district's budget.
  • Under Dr. Sánchez, no 301 funds have been used to pad the budget or fill "reserve accounts."
  • Each year under Dr. Sánchez, every teacher who qualified for payments received them. Over the past three years, on average 93 percent of teachers have met the criteria and received performance pay.

When Dr. Sánchez arrived on July 1, 2013, the 2013-2014 district budget was set and employee agreements had been negotiated. The district had a history with recurring negative audit findings relating to the accounting of Prop 301 dating
back as far as 2008.

With Ms. Soto's appointment as Chief Financial Officer in January 2014, these findings were quickly addressed. In the 2015-2016 budget, the first entirely under Sánchez/Soto purview, the district corrected bad practices and ensured that going forward, the district would have a system that would make the distribution and reporting of 301 monies transparent and fair. 

Dr. Sánchez and his leadership team have also adjusted teacher pay across the board to ensure pay schedules were fair to new and existing teachers, provided raises to nearly all teachers and made the criteria for performance pay clear and attainable to all contracted teachers who wished to earn it. Teacher pay schedules now clearly identify the amount of 301 monies teachers can earn.

The following is an example of an audit finding for fiscal year ended June 30, 2011: "10. Due to an error on the budget worksheet, the budget limit was overstated by $1,914,002 in Fund 012 and understated in Fund 011 and Fund 013 by $3,173,014 and $4,142,690, respectively."

"Questionable practices related to the management of 301 monies did not begin on my watch, but my administration has ended them," Dr. Sánchez said.

Clarifications Posted on October 7, 2016

We shared information about Prop. 301 monies in the Arizona Daily Star on October 6. Mr. Steller wrote another column today in the Arizona Daily Star. Here are some clarifications on that one.

In this column, Tim Steller accurately states that many of Tucson Unified's audit findings had been corrected prior to Dr. Sánchez's being hired in July 2013. However, the pervasive finding that relates to the handling of Prop. 301 monies was not corrected until Dr. Sánchez and Chief Financial Officer Karla Soto changed the practice.

While we appreciate that Mr. Steller attempted to correct the implication in his previous column that this administration has used 301 monies to balance the budget, Mr. Steller does not seem to understand how these funds are reported. Also troubling is that Mr. Steller has relied on Jimmy Lovelace for some of his incorrect information. It's important to note, since Mr. Steller failed to do so, that Mr. Lovelace was head of Tucson Unified Audit Committee when the majority of the previous audit findings occurred.

It is also clear that neither Mr. Lovelace nor Mr. Steller understands how Prop. 301 monies are reported. Prop. 301 monies are listed in a separate fund from maintenance and operation funds. This can be confirmed in the Annual Financial Report documents submitted to the Arizona Department of Education and the Comprehensive Annual Financial Report that is reviewed by the Tucson Unified Audit Committee and submitted to the Government Finance Officers Association of the United States and Canada.

Mr. Steller incorrectly stated the current balance of the Performance Pay fund as $20 million. The correct figure is $15 million. Looking back, the fund balance at the end of 2012-2013 in Performance Pay was indeed $6 million, as stated in Mr. Steller's article. The following year, the fund balance grew by 55 percent to $10 million, and the Pay for Performance stipend was not increased. It remained at $1,200. In 2014-2015, the fund balance grew another 30 percent, or $3 million, and again the Pay for Performance was kept at $1,200. It wasn't until 2015-2016, the first Sánchez/Soto budget, that the Pay for Performance stipend was increased by 25 percent to $1,500 in spite of the fact that revenues for that year only increased 11 percent. The Performance Pay fund balance grew that year by 18 percent to $15 million. These fund balances can be found in the reports mentioned above.

District staff members have spent hours with Mr. Steller discussing the handling of Prop. 301 monies, an issue with complexities that date back many years. Had Mr. Steller portrayed the facts completely, the district would not have been compelled to clarify them in his newspaper.