Is Prop 123 the ONLY Solution You Could Come Up With?
April 7, 2016
The May 17th Special Election for Arizona is quickly approaching us. Prop 123 is the State’s answer to a years-long lawsuit filed in 2010 by a coalition of school districts and organizations against the state government for cutting inflation adjustments to education during the recession. The root of the dispute is over a voter-approved 2000 law that raised the state sales tax by 0.6 percent and required the money be spent on annual inflation increases for schools. Lawmakers quit providing the annual boosts in 2009 because state revenues were decimated by the recession. They started paying them again in 2013 when the Arizona Supreme Court ruled they were constitutionally required to provide inflation increases. In July 2015, a Maricopa County judge ordered the State to pay an additional $317 million per year in education funding payments in order to reset base level school funding to where it would have been if the inflation increases had been given in each year. In order to avoid having to pay billions in backpack, the State came up with Prop 123. While I understand that the State is still trying to emerge from the recession, I have to ask not only as a voter but as someone who does care about the future of Education in this State if Prop 123 is REALLY the RIGHT solution to the problem?
Proposition 123, if passed, would put $3.5 billion into Arizona’s K-12 public schools over the next 10 years. About $1.4 billion would come from general fund money and $2 billion would come from increasing annual distributions of the state land trust permanent funds to education. It would raise the distributions from 2.5 percent of the average value of the funds to 6.9 percent for the next 10 fiscal years. Now I am sure you are all asking – what does that mean? Arizona’s Permanent Land Endowment Trust Fund is currently worth $5 billion. Revenue from the sale of trust land is deposited into this account. Right now, 2.5% of the value of the trust is paid on an annual basis to beneficiaries like K-12 public schools, which own the majority of the trust.
To put what is happening in layman’s terms, let’s say I owe you money. I can’t seem to find the money to pay you back but I have the power to possibly take money out of YOUR retirement account, that you are currently pulling a salary from every month, and pay you with it! So the salary you are getting every month from YOUR retirement is going to raise. You are happy right? You are getting paid back – who cares if the money I am paying you back with is coming from your OWN retirement account. Makes sense huh? Not really! Which is why a lot of people, including the Arizona Treasurer, have an issue with Prop 123.
So if Prop 123 is nothing but a short term solution that will rob Peter to pay Paul, why are the schools supposedly for this deal? Well, because it’s a short term solution that will get money into the classrooms today. It means schools don’t have to continue going through long drawn out lawsuits after lawsuits. It’s a solution, but is it the right one? It helps the current generation, but what about Arizona’s future? According to State Treasurer Jeff Dewit, by dipping into the principal we will not only face potential lawsuits that could tie up the money for years anyway, but we also will face a huge financial shortfall in just ten years that will create yet another gigantic education funding problem. If passed, and no lawsuits are brought forward, in just 10 years Arizona will be back to the drawing board.
So I ask again – is Prop 123 the ONLY solution that you could have come up with, Lawmakers? I don’t have a solution. This is a complex problem with a lot of money involved, and I don’t believe there is a simple answer; however, I also don’t believe robbing Peter to pay Paul with no plan in sight regarding the future of the Trust Fund is the solution this State and the children of Arizona need.