Prop. 123 Deemed Unconstitutional

Cross-posted from RestoreReason.com.

Capitol Media Services reported yesterday, that a Federal judge ruled Governor Ducey’s funding scheme, that became Proposition 123, is unconstitutional. Judge Neil Wake “said the federal Enabling Act that made Arizona (and New Mexico) a state in 1912 and gave it lands to hold in trust for schools allows the state to use only the interest off the money earned. The idea, Wake explained, was to preserve the body of the trust – and the future interest it would earn – for future generations.” Wake deemed that Prop. 123, the solution to settle the lawsuit filed in 2010, does not comply with that law.

“Nowhere in the history does anyone request or suggest that Congress give unfettered discretion to either state or that it was abdicating its oversight obligations under either state’s Enabling Act,” he wrote.

Ducey’s attorney however, said there is a provision in recent federal legislation that authorizes future payments from the trust that helps fund the school finance formula, but also ratifies the $344 million in payments already made. The Governor’s press aide, Daniel Scarpinato, said, “We’re not terribly worried”.

The federal government originally gave Arizona about 10 million acres, of which 9.2 million remain. About $4.8 billion currently exists in the trust from sales and leases of the land. At pre-Prop. 123 withdrawal levels, the fund was estimated to grow to about $9 billion by 2025. Post Prop. 123, the account is projected to grow to only $6.2 billion.

“The schools’ current incentive to get extra money for their current needs is at odds with the interests of future Arizona students,” the judge said. “Congress’s conscious plan to vest all citizens with property rights in the trust was necessary to uphold the trust against collusive violations.”

Even though it was passed by voters in 2016, Prop. 123 was very controversial from the beginning, with AZ Treasurer Jeff DeWitt warning Governor Ducey that the radical change to use of the state trust lands could only be made by amending the Enabling Act. Education advocacy organizations such as the Arizona School Boards Association and the Arizona Education Association, agreed to the settlement in order to avoid many more years of litigation and get critical money to the schools sooner rather than later.

There is no doubt that Prop. 123 has helped our starving schools with $491.5 million more received FY 2018 versus 2015. With this funding, districts hired 1,791 more full-time teacher equivalents and increased the average teacher salary by $2,044. All in all, districts put 90% of Prop. 123 funds into paying and hiring teachers, with the other 10% used to comply with the new minimum wage increase, help fund building maintenance and renewal (cut by the Legislature nearly $2.4 billion since 2009), and give raises to employees in instructional and teacher support (who had also experienced salary freezes.)

I’m sure there will be much more to come on this issue. Two things though, are for certain. First, the AZ Legislature’s raiding of district funding caused this problem in the first place, leaving Arizona K–12 per pupil funding with the highest cuts in the nation from 2008 to 2014. Secondly, if the Prop. 123 funding is taken away, Arizona citizens MUST demand that Governor Ducey and his Legislature find new revenue for our district schools. Even with Prop. 123, our teachers are the lowest paid in the Nation, and our schools have almost $1 billion less in annual funding than prior to the recession. The situation is dire, and the legislation recently forwarded to Governor Ducey for signature to extend the Prop. 301 sales tax at current levels doesn’t do anything to fix it.

It is time for real leadership. If it doesn’t come from our Governor and Legislature, it MUST come from the voters in August and November.