How to make PHP variables in blocks accessible from template?

I have a lot of backend PHP code that I am using on a template I defined, so I want to hide away most of it in a block. But when I do this, the variables I declared and assigned in the block are not accessible in the template file, even though the template file is properly calling in the block.

As as an example, let's say I have a very basic template file being used, home1.php. home1.php includes this code:

In the blocks folder, I have a file called setup.php. In this file, let's say I just have some very simple PHP code, like

$x = 5;

But then in home1.php, if I do this:

echo $x;

It won't work, because home1.php doesn't have access to the variable $x from setup.php. The actual code is much more complex of course, but if I can figure out how to access PHP variables in blocks from the templates that call them, that would be very helpful. Or, maybe there is another way I should be doing this? I just don't like having 300 lines of PHP code at the beginning of my template file, but I don't see a way around it unless I can put it in a block. Do I just need to use the PHP require function to call an outside PHP file or something?

Thank you for any help.