Robb: Prop. 123 – what’s best for Arizona schools?

Robert Robb, The Republic | azcentral.com
http://www.azcentral.com/story/opinion/op-ed/robertrobb/2016/05/11/prop-123-vote-yes/84191600/

Should getting more money to Arizona schools be this hard?

If Proposition 123 passes next Tuesday, schools will get a lot of additional dough. And quickly.

Schools would get an additional $224 million the very next month, June. And an additional $230 million over the next fiscal year (July 2016 through June 2017). So, a total of $454 million over the next 13 months.

Education organizations representing teachers, administrators, school boards and parents are supporting Prop. 123. The business community has rallied strongly behind it and provided the pro campaign with a ton of cash.

Still, what opponents lack in organization and money they are making up in hot air. And, oddly, their narrative has dominated the public debate and discussion.

The opposition narrative, however, is based mostly on material misrepresentations and wishful thinking about alternatives. So, it’s worth revisiting some Prop. 123 basics.

Why are we voting on this, anyway?

Prop. 123 settles a lawsuit brought by some schools over the failure of the state to increase the base level, the starting point of the basic state aid formula, to reflect inflation for four years following the recession.

According to opponents, the courts have ordered the Legislature to increase the base level by $337 million and the Legislature has ignored the order. That’s a fundamentally dishonest description of the status of the litigation.

At issue is the maintenance of effort requirement in Proposition 301, referred by the Legislature in 2000 and approved by voters. Prop. 301 increased the sales tax by six-tenths of a percent and earmarked the proceeds for education. It also required the state to increase the base level for basic state aid to reflect inflation, up to 2 percent.

The schools filed the lawsuit in 2010. The first Superior Court judge to hear the case found that the Legislature owed nothing. That the people, acting in their legislative capacity, couldn’t bind a future Legislature acting in its legislative capacity.

$337 million or $75 million? That’s the fight

The schools appealed. Ultimately, the Arizona Supreme Court found that the Legislature had to abide by the maintenance of effort requirement. But the Supreme Court didn’t order that the state pay any specific amount. Instead, it remanded the case to Superior Court.

There is now a legal dispute over how to calculate the inflation adjustment. For three years during the 2000s, the base level was increased by more than inflation.

The Legislature says that these supplemental increases shouldn’t count in calculating what is owed today. Since the Supreme Court decision, it has appropriated what it maintains is owed, roughly an additional $75 million a year.

The schools maintain that if the Legislature increases the base level by more than inflation in any particular year, that just ratchets up the base for future inflation adjustments. That yields the $337 million number.

Schools get more in this deal than lawmakers

Another Superior Court judge found in favor of the schools. The Legislature has appealed. Rather than continue to litigate, a settlement midwifed by Gov. Doug Ducey’s office was reached.

Under the settlement, schools will receive nearly $300 million more in annual funding, or much closer to the position of the schools than the Legislature. There’s a reason the schools regard the settlement as a win.

Part of the settlement funding comes from an increase in distributions from the state land trust. The distribution is set forth in the Arizona Constitution. Changing it requires a constitutional amendment. The Arizona Constitution can only be changed with a vote of the people. Hence Prop. 123.

If Prop. 123 fails, the $454 million goes away

If Prop. 123 passes, schools will receive an additional $3.5 billion over 10 years. Of that amount, $2.2 billion would come from the additional distribution from the trust. The state general fund would be responsible for $1.3 billion.

And if Prop. 123 fails?

Here’s what we know for certain. The additional state land distribution will not occur.

As a litigation strategy, the Legislature would probably continue appropriating the $75 million that is owed as it calculates inflation.

The settlement obligates it to appropriate an additional $50 million a year for five years and $75 million a year for the five years after that. That obligation would go away.

The schools would not receive an additional $454 million over the next 13 months.

Other than that, everything is uncertain.

The litigation would presumably resume. How long it would take and what the outcome would be is speculation.

Surplus is gone and tax cuts aren’t enough

The breezy claim that there are easy alternatives to getting schools the same or more money is obfuscation.

The surplus? It’s gone. The Legislature spent it in the last budget, partly on education and partly on other stuff, such as the Department of Child Safety.

Delay tax cuts? According to legislative budgeteers, there is just $124 million in new and phased-in tax cuts scheduled for the next fiscal year. So, that’s $330 million short of what Prop. 123 will produce in the same period of time.

Taxes can be increased. I’m all for it. I’ve been advocating a general fund tax increase since it was clear that the temporary 1 percent sales tax wasn’t going to be an adequate bridge from the recession’s decimation of state revenues.

But the schools are owed a measure of political realism. Should increased funding for them be based on a bet that defeat of Prop. 123 will change Ducey’s mind about taxes or that a Legislature willing to increase taxes will be elected this November? That’s a very bad bet.

Prop. 123 doesn’t stop larger funding talk

And here’s the most perplexing thing about the opposition to Prop. 123: Its passage doesn’t preclude any of the alternatives opponents claim to prefer. Nothing about passage of Prop. 123 prevents the election of what opponents would regard as a better Legislature and governor. Passage of Prop. 123 doesn’t preclude a broader education funding initiative in 2018.

In fact, a broader discussion of education funding is inevitable. The expiration of Prop. 301’s sales tax in 2021 makes it unavoidable.

In the meantime, if Prop. 123 passes, the schools would be getting more money at a time they really need it.

And at a time they have been shortchanged not only by the general fund, but also by the state land trust. Since 2000, the trust has retained rather than distributed $1.7 billion in earnings. Prop. 123 mostly requires the trust to disgorge earnings that the schools should have been receiving all along.

Money goes to public – not private – schools

The schools are both the plaintiffs in the lawsuit and the beneficiaries of the trust. If they think the settlement is fair and increased distribution from the trust is appropriate, shouldn’t some deference be paid to that? Opponents who say continue the litigation or get the money from some other source are claiming they know what’s best for schools better than those who run them or teach in them. A bit of hubris there.

There is a lot of politics in the opposition. Opponents fear that passage of Prop. 123 will enable the agenda of Ducey and GOP legislators to cut taxes and increase assistance to charter and private schools. But they have the analysis backwards.

The settlement appropriates an additional $625 million over the next 10 years from the general fund to public schools based upon enrollment. If Prop. 123 is defeated, that money is up for grabs.

Voting down Prop. 123 won’t punish lawmakers

And then there is the emotional gravamen. For many opponents, Prop. 123 isn’t really a school finance measure. It’s a referendum on Ducey and the GOP Legislature.

In this view, a yes vote means that Ducey and the Legislature are doing a good job on education. A no vote means that they aren’t.

But that’s also massively unfair to schools. Prop. 123 is a school finance measure. If it is defeated, nothing bad happens to Ducey and the Legislature. But the schools lose $454 million over the next 13 months.

Passage of Prop. 123 gets the schools more money and settles a lawsuit. Its defeat guarantees nothing and provides a pathway to nowhere.

Reach Robb at robert.robb@arizonarepublic.com.


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