Following a lengthy vote count and a special election replete with controversy over missing informational packets, Gov. Doug Ducey announced the education funding plan Proposition 123 has passed.
Dan Hunting, senior policy analyst at ASU’s Morrison Institute for Public Policy, said the arguments for and against the proposition were sound and that the proposition is a small step toward fixing a larger problem with funding education.
Prop. 123’s passage means schools will receive more money without an increase in taxes. However, Hunting said that is not enough to completely change the state’s educational climate.
“This is not a large fix” he said. “There’s not going to be more money for schools unless the taxation situation changes.”
Hunting said schools are funded by the state’s trust land. The state can lease out the land, the proceeds of which go into a permanent fund.
The state funded schools prior to Prop. 123 by taking an annual 2.5 percent withdrawal from the permanent fund, which grew by more than 2.5 percent every year, Hunting said.
Prop. 123 increases these withdrawals to an annual 6.9 percent.
Opponents of the proposition are concerned that increasing the land trust fund’s withdrawals from 2.5 percent to 6.9 percent would go beyond the fund’s growth and cut into the capital, termed corpus, Hunting said.
“The difficulty is that that body is not specifically defined,” he said. “If you sold an acre in Scottsdale in 1912, it probably would’ve gone for $10. Is that the corpus?”
Hunting said even the most knowledgeable of experts are not sure exactly how much money the corpus of the fund holds, making it hard to say whether Prop. 123 would cut into the corpus.
Morgan Abraham, the chairman of The Committee Opposing Proposition 123, said he took issue with the increased withdrawals from the permanent fund.
“We felt that it was a ridiculous idea for the governor and the legislature to want to use the land trust money,” he said. “This is a trust fund that’s designed to benefit every generation of Arizonans, not just one.”
Abraham said Arizona has other means of revenue from which it could pull without having to go near any of the land trust revenue.
“We thought them raiding the land trust when they had a $600 million budget surplus was ridiculous,” he said. "They could’ve solved this problem using their own budget."
J.P. Twist, Prop. 123’s campaign manager, did not respond to multiple requests for comment.
The proposition serves not only as a new method of funding for schools, but also as a settlement to a statewide education lawsuit.
Hunting said the lawsuit came about after a lapse in funding for schools across the state.
Starting in 2012, the state funded schools by withdrawing 2.5 percent out of the permanent fund and directing that money toward educational institutions, Hunting said.
Prior to that, the state did not use a fixed percentage to fund schools. Rather, it used a sliding scale based on the economic climate of recent years to keep in step with any market changes. The 2008 real estate crash resulted in the state failing to direct any money toward schools in 2010.
As a result, the Cave Creek Unified School District filed a lawsuit against the state demanding additional funding, Hunting said. Prop. 123 settles just more than 70 percent of the money requested in the lawsuit.
“If the schools are lucky, they’ll get the full amount,” Hunting said.
As it stands, Prop. 123’s increase in funding will expire after 10 years, at which point Hunting said funding will go back to its pre-2012 levels. After all is said and done with the proposition, Arizona will have given $3.5 billion toward schools, according to arguments filed with the Secretary of State’s office.
In a statement following his announcement, Gov. Ducey said the proposition’s passing signals a move toward the state setting its priorities straight.
“After years of lawsuits and fighting, we are moving forward and funding our teachers, students and schools – instead of lawyers,” Ducey said in the statement. “Thanks to the voters, schools will soon see a cash infusion, with billions of new dollars flowing in the years ahead.”
Although voting went smoothly on the May 17 special election, counting results took several days.
Matt Roberts, a spokesman for Secretary of State Michele Reagan, said Reagan’s office values accuracy over speed, and wanted to make sure every vote was counted properly before officially announcing a result.
The Secretary of State’s office has to count ballots cast on election day, as well as early ballots. Roberts said that with large areas such as Maricopa County, this can be a large task.
“I suspect Maricopa will probably be the last to complete the processing and tabulation of ballots,” Roberts said. “As Maricopa finishes, that will effectively be it.”
Although the proposition passed with just more than one percent of the vote, Hunting said it illustrated how those on both sides of the political aisle are able to see how much funding the educational system needs but does not receive.
“I haven’t come across anybody — opponents or supporters — that think schools have enough money,” Hunting said.
Reach the reporter at jwbowlin@asu.edu or follow @mrjoshuabowling on Twitter.
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