With a quickie special session coming to a close, the education-funding package that settles a major education-funding lawsuit is passing out of the Senate today, giving Gov. Doug Ducey a big victory in delivering $3.5 billion in additional dollars to schools over the next decade.
The deal—which will have to be approved by voters next May—is fairly complex, but the most troubling element is how much of the state land trust dollars will be diverted to ongoing education expenses.
That element had both legislative Democrats and Republican such as state Treasurer Jeff DeWit and former state treasurer Dean Martin complaining that the plan busts the state trust in a significant manner. And they’re right: Never before have state leaders moved to get such short-term gain over long-term growth with the state land trust dollars.
The state land trust now basically pays out the interest that is earned from the trust, which grows as state land is sold or leased and the proceeds are deposited in the trust. (It’s more complicated than that, but that’s the gist.) The idea, which dates back to statehood, is that the land trust would grow in perpetuity while providing annual payouts for the schools.
Right now, the trust pays out a steady 2.5 percent of its value to the schools every year. The plan increases that to 6.9 percent annually for the next decade.
Today, the trust is worth about $6 billion. In 10 years, if you leave the current rules in place, it’ll be worth about $9 billion and will generate about $180 million a year for schools. If you go forward with Ducey’s plan, in 10 years the trust will be worth a little more than it’s worth today—and will only generate $100 million a year for schools. (All of those numbers are estimates that depend on how much land is sold over the next decade, what happens with the stock market, etc.)
This is the big downside of this deal: If Ducey and the Republicans could have just decreased the percentage from the trust to 4 or 5 percent, you’d make less of a long-term dent—and you’d likely turn some critics into supporters.
The education lobby that is supporting this—School Boards Association, the Children’s Action Alliance and others—all say that this is the only way to get funding to schools now, which is probably a safe bet. Even if they win the lawsuit at the Arizona Supreme Court, lawmakers could just ignore the order to provide more funding or drag it for years. So they’re taking the deal now and arguing that the state will still need more for education in the future—an argument that’s not likely to persuade legislative Republicans, who are going to say they’re done their part for schools.
Democrats are arguing that there are plenty of dollars available to the state right now to fund the schools. That’s sort of true—although there aren’t nearly enough dollars to fund everything the state should be doing, from taking care of highways to helping single moms afford daycare so they can keep their jobs to ensuring the state investigates cases of child neglect to lifting the one-year lifetime limit for families that are down on their luck to get a little bit of cash assistance to supporting the universities to making needed repairs at state parks to…well, the list goes on.
Ducey gets to brag that his deal settles the education-funding lawsuit without raising taxes—and a resistance to raising any taxes under any circumstances remains at the top of Ducey’s agenda. And what using the trust dollars really does is open the door for Ducey to argue once again that the state can afford more tax cuts that will, if past experience is any indication, primarily go to Arizona’s wealthiest residents. Watch and see.
This article appears in Oct 29 – Nov 4, 2015.
SO WHAT IS THE WEEKLY’S EPIC CURE FOR THE STATE EDUCATION FUNDING WOES???????????
How about the State follow the Arizona Constitution for education funding, just as the courts told them they had to. This grandstanding crap is going to end up costing more after all the Per Diem pay and election costs are figured in. Plus, there’s no guarantee this money won’t get yanked in the future, which you know will happen at the first sign of slowing prison spending.
TUSD will only waste it by spending it on the administration and then ask for more.
Will there be political opposition to the May vote?
@SonoranWinds
You bet your sweet cakes there will be. I’m not going to stand here and let them find one more way to sell out the future even if it benefits our kids now. Decades of that kind of thinking has led us where we are today and I’m about fed up.
So does this mean that you’ll cancel your recall effort?
So as we spend more. we should spend more still!!! Raise sales taxes, income taxes too, but only on the wealthy! As we do so what should the upper limit be and who are wealthy. Become more like California, where these concepts originate and then watch the wealthy leave in droves. Who will you over tax then in 10 years? Spend ever more on illegals, administration and consultants and see what that gets you. What percentage of University Graduates stay in the state? How much do the Chancellors and Administrators make? How high is up for the professor salaries?
3 billion more stolen from working legal residents to pay for illegals.
While trying to twist the law to extort more money from taxpayers for illegals, Ldonyo suggests we follow the Arizona constitution. I agree.
As free as possible. I wonder what the Presidents of the Universities and those that support those liberal indoctrination centers think of that.
Section 6. The university and all other state educational institutions shall be open to students of both sexes, and the instruction furnished shall be as nearly free as possible. The legislature shall provide for a system of common schools by which a free school shall be established and maintained in every school district for at least six months in each year, which school shall be open to all pupils between the ages of six and twenty-one years.
I am not sure to what extent the ASBA’s support for this settlement represents the views of the school boards that it nominally represents.
Wait until the lege passes more tax cuts, using the general fund surplus. Then you’ll see how their shell game works.
Okay naysayers…. you conveniently skip over many points. The voters approved the money for education that the state withheld. Now the state wants to use education money(land trust) to pay it back and to change the conditions on money they should get in future years because of inflation. Ducey et.al. want to take education money to pay education back and reduce the principal thus creating less money in future years for education. By using the land trust money, they are taking away an important part of education’s infrastructure. You don’t have to be a rocket scientist to see this is a bad deal. Also there is a 1.1ish billion surplus because of all the cuts to education and other social services. Quit throwing in the garbage about illegals. We are 50th in the nation in funding education. Period.
Hey Mark. The ASBA special meeting on the settlement included 25 people from every county in the State, plus the Hispanic caucus and the Black caucus. Pima County has two representatives. You can call Jim Love and he can explain the whole process. No one in ASBA likes the settlement except as a vehicle to get money to schools, hopefully sooner than later. ASBA statements clearly state this settlement DOES NOT solve the education funding issue. This does not move Arizona from 49th or 50th, up to 45th. It barely holds us in place. Despite any rhetoric from the Ninth Floor this is not a wonderful model for helping students get what the law demands.
Got this message yesterday from our guv and since he wants it shared widely thought I’d better pass it along so all who read the Weekly can see what a great deal the schools and the state have got…… or not.
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Friend,
Who says you can’t make government work?
We just did it here with the most far-reaching, high-impact education funding bill in our state’s history. News like this is too good not to share, so spread the word by forwarding this message along!
We’ve just passed, signed, and are ready to go with a bill that:
Puts $3.5 billion into education to dramatically improve our schools.
Increases per-student funding to $3,600 each year and gives educators the resources they’ve been asking for.
Doesn’t raise taxes while maintaining our balanced budget.
Provides relief from lawsuit abuse so funds go into classrooms, not attorneys’ pockets.
Maximizes the State Land Trust by drawing a modest amount as a shrewd investment in our kids.
I’ll never forget the good friends and strong, loyal supporters who gave me this job and the accompanying charge to solve problems and get results. Your support was, is, and will always be a source of tremendous inspiration.
Thanks so much,
Governor Doug Ducey
P.S. Help me share our fast-breaking news. Tell your friends, family, neighbors and colleagues that we got something great done for Arizona’s future. And we’re not done by a long shot. In fact, we’re just getting started!
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If that doesn’t (1) infuriate and (2) scare you, it should.
Nope. Just nope.