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LESC adopts FY27 public school support recommendation totaling about $5.03 billion, flags virtual‑school and insurance issues
Summary
The Legislative Education Study committee voted to adopt staff’s FY27 public school support recommendation—roughly $5.03 billion—while flagging urgent questions about rapidly rising virtual‑school enrollments and more than $110 million in projected insurance costs for next year.
The Legislative Education Study committee on Tuesday adopted staff’s FY27 public school support recommendation, endorsing a package of recurring and nonrecurring investments that LESC staff say balances educator compensation, targeted programs and the state’s revenue constraints. The committee accepted the recommendation after a staff walkthrough and member questions and will carry the position into negotiations during the upcoming session.
LESC staffer Daniel, who covers public‑school finance for the committee, told members the package would set FY27 public school support at about $5,030,000,000, an increase of roughly $257.8 million or 5.4 percent over the current year. “We think as staff, the recommending 3% is the right thing to do,” he said of a proposed 3 percent compensation increase that would cost about $108,100,000. The recommendation leaves the School Equalization Guarantee (SCG) intact and proposes no methodology changes for FY27.
Daniel highlighted two budgetary pressures: insurance and virtual education. Staff included two insurance items totaling more than $110 million—roughly $73.2 million to pay for a proposed bill requiring districts and charters to cover 80 percent of employee health premiums and about $47.7 million to absorb anticipated premium increases—saying the combined effect makes insurance sustainability a central consideration for next year. Staff also flagged a potential supplemental request of up to $35 million after two providers, CHAMA and Santa Rosa, enrolled roughly 3,000 out‑of‑district virtual students in one year, a rapid growth that staff say requires PED follow‑up.
The adopted recommendation also uses nonrecurring capacity to fund multiyear projects through the Public Education Reform Fund (PERF). LESC staff recommended depositing $52.2 million into PERF, with priorities including high‑impact tutoring ($30.6 million total over three years) and community schools ($21.6 million total), both slated for multiyear evaluation to test effectiveness before any statewide scale‑up.
Members questioned program distribution and equity. Representative Block pressed staff about a $500,000 line for litigation fees tied to the Martinez‑Yazzie sufficiency litigation; Daniel said the estimate came from PED. Several lawmakers urged closer attention to rural transportation funding—staff had inserted $5.3 million in “adequacy” transportation funding at the committee’s request to help districts with long routes.
The committee moved and approved the recommendation after discussion; Senator Stewart moved acceptance and Vice Chair Romero seconded the motion. The committee recorded no roll‑call detail in the meeting transcript; the chair announced the LESC recommendation was adopted as the committee’s position going into the session.
What happens next: the LESC adoption is the committee’s endorsed position heading into session negotiations with the Legislature’s finance committees and the administration. Staff and members said they will continue to monitor PED’s clarification on the virtual‑education enrollment surge and pursue additional policy work on insurance sustainability and transportation adequacy as the session approaches.
