A heavy ballot for bond and budget measures in Arizona
Arizona voters are facing a large array of bond and school override proposals on the Nov. 5 ballot.
At least 48 school districts across the state are seeking bonds or budget limit override measures, with 26 in Maricopa County, which includes Phoenix and its suburbs, according to a list compiled by the advocacy organization Expect More Arizona.
Along with the school districts, the affluent Phoenix suburb of Scottsdale is asking voters for $319 million of bond authority for parks, community spaces, public safety and technology. The bonds are split into three proposals. Scottsdale voters passed two of six requests in 2015 but rejected all bond requests in 2010 and 2013.
Located in the Salt River Valley, or the "Valley of the Sun," east of Phoenix, Scottsdale’s estimated population in 2018 was 255,310. The city is known for its luxurious golf courses and other tourist attractions, along with upscale retail. Median family income is high at 150% of the U.S. average, according to the 2017 American Community Survey.
After a 40% decline in market value following the 2008 recession, the city's market value has grown by 86% to $73.3 billion in 2020, surpassing its pre-recession peak, according to S&P Global Ratings. The city's net limited assessed value, which is used for setting the tax rate, has grown consistently in recent years, and totaled $6.3 billion in 2020, a 10.5% increase from 2018.
“We expect continued growth in property values in coming years as the ongoing development within the city persists, including residential development and remodeling, new commercial growth, and increased investment in the Scottsdale Stadium,” S&P said.
Scottsdale had about $547 million of outstanding general obligation bond debt as of its last issue in 2017, according to Moody’s Investors Service.
As voters consider the city proposal, they will also weigh about $22 million of bonds for the Scottsdale Unified School District.
Arizona's school issues will be decided entirely through mail-in ballots, in which voters can drop ballots in the mail or return them to a voting location. In 2017, the first year all school ballot measures were conducted by mail, voters approved all 27 bond and override proposals.
Among the larger proposals this year is Chandler Unified School District’s record request for $290 million of bonds for school construction and improvement, new technology and school buses. With more than 45,000 students and 44 schools, Chandler USD, headquartered in the city of the same name 15 miles southeast of downtown Phoenix, is the second largest in Arizona, serving portions of Gilbert and Queen Creek.
The district’s previous record bond request of $196 million won voter approval in 2015.
Rated Aa1 by Moody’s Investors Service, Chandler USD has a growing tax base and a median household income that is nearly 132% of the U.S. average.
“Arizona school districts face an improving operating environment due to increased state per-pupil funding, recovering taxable property values, and stable enrollment trends,” Moody’s analyst Nathan Carley noted in an April report. “Nevertheless, balance sheets are typically very weak given delayed state aid payments and districts’ reliance on counties for cash flow needs.”
Deer Valley Unified School District, headquartered in Phoenix, is seeking $175 million of bond money and to renew a $30 million maintenance and operations override. The bond money would improve technology in district schools, renovations to school buildings, safety and security upgrades on schools and replace school buses.
Deer Valley is the fifth largest school district in the state, serving sections of Phoenix, Glendale, Peoria, New River and unincorporated areas of northwest Maricopa County.
In May, Moody's removed a negative outlook on Deer Valley’s Aa2 rating ahead of a $47 million issue, the last of voter-authorized debt. The last issue brought the district’s outstanding debt to $239.7 million, per Moody’s.
“We expect the debt burden will remain at similar levels going forward given the rapid amortization and future debt plans,” analyst Steven Goodman-Leibof noted.
Another Maricopa County district, Dysart Unified, is seeking $152.5 million of bond money for renovations, technology, buses and equipment and a $22.4 million override for maintenance and operations. Dysart’s enrollment of nearly 24,000 pre-kindergarten through 12th grade students in the northwest Phoenix metropolitan area is expected to grow by 1,808 students over the next five years.
West of Phoenix, the Tolleson Union High School District is asking for a $125 million of bond authority for new schools, safety and security improvements along with maintenance, buses and equipment. The district, based in the town of Tolleson, 13 miles west of Phoenix enrolls nearly 12,000 students in six high schools, with a seventh expected to open in 2020.
Rated Aa1 by Moody’s, Tolleson Union has shared in the Phoenix area’s recovery since 2014. Moody’s does not provide an outlook because the district only has about $54 million of outstanding debt.
“Growth of the district’s large tax base will continue as new home construction remains strong,” Moody’s observed in a January report. “The full market value of the district’s tax base increased a solid 9.8% in 2019 to a strong $12.4 billion, and has now full recovered from recessionary declines. Tax base growth has averaged an exceptionally strong 16.3% annually over the last five years and has grown consecutively for the last five years.”
Gilbert Unified School District, which serves 35,000 students in Gilbert, Chandler and Mesa east of Phoenix, is seeking $100 million of bonds and a $32 million maintenance and operations override, which is an increase from Gilbert's current override limit. The bonds would renovate aging school buildings, including roof replacements and flooring upgrades. The override money would be used to reduce class sizes, ensure a full-time social worker at every district elementary and junior high school and add a mental health counselor at certain schools.
Maricopa Unified School District is asking voters for $68 million of bond authority that would be combined with $23 million from the Arizona School Facilities Board to build a high school and additional funds for the purchase of land. The district is headquartered in the town of Maricopa, which is Pinal County.
Districts can seek two kinds of overrides. Maintenance and operations overrides, the most common type, are used for operational expenses such as teacher salaries and student programs. District additional assistance overrides supplement capital funding and typically pay for technology, books and other equipment. An override can increase a district's classroom budget by up to 15% for seven years.
Mesa Public Schools in Phoenix’s most populous suburb would have to cut $37 million over the next three years if the district’s request for a 15% override isn’t approved, officials said. The state’s largest school district has been operating under a 10% override since 1995, but district officials say they need to increase that to 15%, providing an extra $54 million per year for five years.
With 64,000 students, MPS operates has 82 schools, which includes 55 elementary schools, nine junior high schools, six high schools and several alternative schools.
Last year, Arizona voters approved 77% of school bond and override elections, according to the public finance firm at Stifel Nicolaus in Phoenix.