Arizona State Treasurers raise big red flag on Prop. 123

Four former state treasurers, all of them Republicans, told The Arizona Republic they would urge voters to reject Prop. 123. A fifth former state treasurer said he was leaning against the measure. Among the 10 others who have held the treasurer’s job since 1974, at least four oppose Prop. 123, two could not be reached, and two are dead. One is leaning against it.

(From left, current Arizona Treasurer Jeff DeWit; Dean Martin, treasurer from 2007-2010; Carol Springer, treasurer from 1999-2003; Ernest Garfield, treasurer from1971-1973; Morris Herring, treasurer from 1969-1971; and Bart Fleming, treasurer from 1973-1978.) Credit: The Arizona Republic

Doug Ducey, the ice cream man hired by Koch Industries to run their Southwest subsidiary formerly known as the state of Arizona, is the only state treasurer in the past 45 years known to support the measure. The cheese stands alone.

This is a big red flag on Prop. 123 that voters should seriously consider.

The Arizona Republic reports, Prop. 123 is a flop with former Ariz. Treasurers:

If Arizona’s former state treasurers decided the fate of Proposition 123, lawmakers and educators would have to go back to the negotiating table.

The former treasurers, who controlled the $5 billion land-trust fund that would provide increased education funding under Prop. 123, believe the deal will cost more than the fund can support.

“There’s more resources they could use for education. But the way that they crafted it they weren’t interested in a long-term sustainable solution,” said Dean Martin, who served as Arizona treasurer from 2007 until 2011. “You don’t need to trust me. Ask yourself if you think a politician can predict where the market is going to be for the next 10 years.”

“To me, it’s a temporary political Band-aid on a long-term challenge that needs to be addressed by the Legislature,” said Clark Dierks, the treasurer from 1979 until 1983. “They’re going to take a big chunk of money out of something that was intended to be forever. I think that’s wrong.”

The former treasurers’ views stand in contrast to the near-lockstep support for Prop. 123 from the business community and education activists.

* * *

The scattered opponents of Prop. 123 mostly would welcome more funds for education, but say the plan pulls more money from the land trust than it can reasonably replenish over the next 10 years.

* * *

Jeff DeWit, the current treasurer and also a Republican, has been its most prominent opponent, saying it takes too much too quickly from the trust while still leaving schools underfunded.

For whatever their view is worth, the former GOP treasurers, all of whom are no longer in politics, worry about the land trust under Prop. 123.

* * *

“I think they’ll damage (the trust fund),” said Ernest Garfield, who was treasurer from 1971 until 1973. “That was sacrosanct when I was there and I still consider it that way.”

Carol Springer, who was treasurer from 1999 to 2003 and held other elective offices, too, thinks Prop. 123 would set a worrisome precedent.

“The governor, having been a treasurer, should have understood that the trust is a pretty special trust. The idea that you can dip into it for temporary budget relief is a really, really bad idea,” she said.

“Having been the chairman of the Appropriations Committee in the Senate besides being the state treasurer, I’m very familiar with the state budget. I understand how it works. … If you can do this once, you can do this more than once. When times get kind of rough, you can just go tap that pot again. I just think that’s such a violation of the concept of the trust in the first place.”

Elliott Hibbs, who served from 2006 to 2007 and later worked with the state’s Department of Education, said he hasn’t studied the issue enough to judge its impact on the trust fund. Still, he worries that taking more from the trust will slip into an unaffordable habit he likened to Congress borrowing from the Social Security trust fund.

“I just have a concern from that perspective. That’s like robbing from the future of our children,” he said. “This is tough for me, having been in education and knowing this solution would provide substantial money for education. Nevertheless, those concerns for me are making me wonder whether I will vote for it or not. … I’m leaning more to opposing it than supporting it.”

Like DeWit, Martin thinks the trust fund could support higher payments than it currently makes. Each December the state calculates a five-year average of the trust fund balance and sends 2.5 percent of that figure to the beneficiaries. The five-year balance is intended to smooth out the investment market’s ups and downs.

The 2.5 percent distribution amount could be permanently lifted, perhaps even doubled, DeWit says, without jeopardizing the fund. Martin favors a range, perhaps from 2 percent to 10 percent, which would be adjusted annually to reflect the best current estimate of how the state’s investments may do.

The treasurers may evaluate Prop. 123 with a mathematical detachment that most do not.

The treasurers are familiar with the volatility of investment markets, where nimble trading can mean the difference between adding or losing tens of thousands of dollars in a single day.

In January alone, the state’s trust fund dropped about half the money it would need to pay for a year under Prop. 123. The fund recovered those losses by March, but investors can see such movement as unnerving.

The treasurers also take the long view.

The past five years have been the best in the trust fund’s history, delivering returns exceeding 7.4 percent. That’s in part because financial markets have bounced back from the worst recession since the Great Depression. Matching that kind of performance for years more seems unlikely, the former treasurers said, and so does avoiding another recession for 10 years.

The current economic expansion began in June 2009 and is more than 73 months long. Since 1945, the average expansion has lasted 60 months, or five years. The longest lasted 10 years. The nation is seven years into the current expansion.

Last fall, before lawmakers sent Prop. 123 to voters, DeWit hosted five of the former treasurers in a reunion of sorts. Garfield and Martin said none of them backed the idea that has taken shape.

This “robbing Peter to pay Paul” plan is a bad settlement, and sets a bad precedent by letting our lawless Tea-Publican legislature and governor off the hook for their theft of funds from Arizona’s children in order to free up money to give tax breaks to their corporate cronies. Prop. 123 will only continue business as usual in the GOP culture of corruption in Arizona.

Hold these lawless Tea-Publicans accountable for their crimes. Why you should vote no on Prop. 123, then kick every lawless Tea-Publican out of office.

11 thoughts on “Arizona State Treasurers raise big red flag on Prop. 123”

  1. Money is not correlated with results in education. Vote it up, vote it down, irrelevant. In fact, Arizonas latest results, having the largest math and reading gains in the nation from 2011fourth graders to 2015 eighth graders, at the same time that operation and maintenace spending on district schools fell $300 million, open up the prospect that there is a negative correlation between money and results now revealed by punching into new territory.

    Frugality may be an asset in that it creates an environment where the compliance culture and pension culture are absolutely forced to give way to competitive culture. In other words, to meet its own needs, it has to do what it takes to move to a higher level.

    Technology has the ability to revolutionize education the way it has other forms of information transfer by creating motivation through student networks. Prop 123 may bridge us into that future with a minimum of kerfuffel.

    Failure to pass 123 mmay force us into that future even faster.
    It would put off new funding for years.

    There is one school that gives us a hint of this future. Shou-lang elementary in taiwan has 11,000 students with only rudimentary student networking. There are 40,000 bees in a hive, up to 300 million ants in a colony and over 800 million people on facebook. The forces and value that can be released by bringing networks to education are simply breathtaking. Education devolved into a stratified hierarchy in the mid 1800s devolving from two primitive human networks systems known as the bell and lancaster systems.

    There has been surprisingly little curiousity about shoulang and why it is both so big and so effective and so orderly. With even more intense networking effects possible, it predicts a future where schools grow to over 50,000 students and average academic gains quadruple. This means that all aspects of society change. All the professions become open to minorities, criminality drops to a fraction of its current level and the cost of government plunges to a fraction of its current level. That future cant even be seen because we are all culturally trapped by the years we spent in the current system, a system that manufactures criminals and failure.

    • I thought we agreed you’d spend less time web surfing and more time looking for a job.

    • Great point John, but why is it you all keep increasing per student spending in charter and private schools with my tax dollars??? Guess money matters there. At least when it comes to lining pockets.

  2. Who is paying for all of the pro 123 adds on TV and Radio? I have seen them repeatedly on the local TV stations (if you watch local ads). I am afraid it is going to pass because the ads are pretty convincing to the low information voter. Who has that much of a financial interest in this being passed?

    • Donna Gratehouse covered this earlier.

      The biggest contributors were GoDaddy founder Bob Parsons and his wife, Renee, who each gave $250,000 to the campaign. Greater Phoenix Leadership has given $220,000, while the Helios Education Foundation contributed $100,000.

      Salt River Project and the Arizona State University Foundation each gave $75,000. Cox Communications, DMB Associates, Blandford Homes and auto dealership magnate Larry Van Tuyl each gave $50,000. Developer Edward Robson and his company, Robson Communities Inc., each gave $25,000 to the campaign.

  3. This, exactly. Prop 123 needs to be voted down and legislators forced to obey the law. Those that don’t should be summarily removed for violating their oath of office, starting in the Koch’s Governor’s mansion

  4. VOTE NO on prop 123
    Stand with AZ Constitution Vote NO

  5. In spite of the sugar coated ads for 123, this thing sounds like another scam to sell off public lands at bargain basement prices to donors and chronies, and then funnel whatever money was collected to for-profit diploma mills instead of public education. If Arizona ever expects to attract real industry, it will be through a well educated workforce and that has to be accomplished through private and corporate taxation, not through slight of hand tricks and schemes.

    • To Dodgy Farmer: I agree that we should ideally raise revenue for education through taxation, but need to set the record straight on one of your statements. Prop 123 does not “sell off” any public lands. All it does is increase the withdrawal rate from the fund revenue from 2.5% to 6.9%. No land sales are part of the deal.

      • While Prop123 doesn’t explicitly say land will be sold the money in the fund comes from somewhere. Can you help me understand how land gets turned into dollars in this case? Thanks!

        • Proceeds from Land sold and land leased since 1912 is invested in a fund. This fund currently has a balance of about 5 BILLION dollars. The interest from this fund and maybe a little of the principle will be paid out to the schools. At the end of the increased payout for the next 10 years the balance will still be about 5 billion dollars. Prop 123 has no effect on land sales which are not handled by the Treasurers Dept.

          Prop 123 is settling a lawsuit brought against the Legislature for illegally withholding payments to schools since 2010. The Legislature refused to settle this suit for 5 years and refused to consider raising taxes or using the rainy day fund/surplus to pay the funds they were ordered to pay by the court.

          Unfortunately this settlement is the best outcome that could be negotiated when one party refused to acknowledge that they owed any money. This settlement does not solve the problem of a dedicated, sustainable funding stream to bring AZ education into the 21st century.

Comments are closed.