Bad Apple?

Supporters say Prop 123 offers the best shot at better education funding, but critics complain that it’s rotten to the core

A remarkable political ad hit the airwaves last week: Gov. Doug Ducey sitting next to his former Democratic rival, Fred DuVal, as they both urged voters to support Arizona's schools by voting for Prop 123.

"I support Prop 123 because it puts $1.5 billion into the classroom over the next 10 years," DuVal says in the ad.

DuVal expanded on the importance of that revenue in an email to supporters urging them to support Prop 123, which taps the land trust set aside for education to provide $1.5 billion in funding annually for the schools.

"I have decided to endorse Prop 123 because it will put new money into our kids' schools right away—this year—and without that money, our kids will suffer," DuVal wrote. "It is the best opportunity we realistically have in the next few years to drive new dollars to our schools."

DuVal's appearance alongside the governor was a testament to the wide coalition that Ducey and his allies have assembled to support Prop 123, which voters will decide on Tuesday, May 17. The supporters include state lawmakers across the political spectrum: Senate President Andy Biggs and House Speaker David Gowan, but also Democratic state lawmakers such as Sen. Steve Farley and Rep. Bruce Wheeler. Business leaders such as Arizona Chamber of Commerce President Glenn Hamer, Tucson Hispanic Chamber of Commerce President Lea Márquez Peterson, Tucson Metro President Mike Varney and Southern Arizona Leadership CEO Ron Shoopman back it, as do education advocates such as the Andrew Morrill of the Arizona Education Association, Arizona PTA President Paula K. Purkhiser and Dana Naimark of the Children's Action Alliance. A host of other politicos have weighed in as supporters, including Phoenix Mayor Greg Stanton and Maricopa Sheriff Joe Arpaio.

There's little argument that the state is way behind the rest of the country when it comes to education spending. You can pick your statistic: Arizona turns up in bottom of all states in survey after survey regarding school spending, classrooms are getting more crowded and teachers are fleeing the state because they don't want to build careers in a place where they won't be able to earn a decent living.

And yet plenty of critics have emerged against the proposition. Former Southern Arizona congressman Ron Barber taped a YouTube spot opposing the proposition, saying that it "will do far more harm than good." The Pima County Democratic Party voted to oppose it, with chair Jo Holt saying that party officials "don't trust the state" to fund education even if the proposition passes. The League of Women Voters of Arizona is urging a no vote because "the governor and Legislature of Arizona have violated the will of the people and refused to follow the directives of courts." Ann-Eve Pedersen, who has led the Arizona Education Network, said that Prop 123 "is not the solution and I'm not of the belief it's even the beginning of the solution. I think it's the means to an ugly end." Current Arizona Treasurer Jeff DeWit says it's fiscally irresponsible to dip so deeply into Arizona's state land trust; that opinion is shared by several former Republican treasurers, including Dean Martin and Carol Springer. (Ducey, of course, is not among them.)

So, is Prop 123 the only way to get money into the classroom? Or is it a terrible deal that will weaken public education in the long run?

Or is it both?

Prop 123 is a political deal between Gov. Doug Ducey, Republican legislative leaders and the political leadership of Arizona's teachers and school administrators. It came together as part of an effort to settle a lawsuit that stemmed from GOP state lawmakers and former governor Jan Brewer deciding to stop increasing school funding to adjust for inflation way back in 2009.

The Legislature was obligated to increase education funding to account for inflation as part of a proposition passed in 2000 that increased the sales tax by .6 cents. The idea then was that if voters were going to hike their taxes to fund more education spending, then lawmakers should be obligated to ensure that the funding was going to supplement whatever the state was spending at the time.

The courts—including the Arizona Supreme Court—ruled in favor of the school districts and determined that lawmakers should increase annual school spending by at least $330 million. Left undetermined was whether the state should pay more than a billion dollars for the years they didn't increase education spending.

After an effort at arbitration fell apart last year, it was Ducey who came up with the idea of tapping into the State Land Trust K-12 Permanent Fund to settle the lawsuit.

A bit of background: When Arizona was granted statehood, part of the deal included the creation of the state land trust. Roughly 10 million acres were set aside across Arizona in the trust, which was designed to primarily benefit public schools. As the land is sold for development or leased for ranching or other uses, the cash is set aside in a trust fund that is invested in various ways. The schools benefit from interest from the trust, while the principal is allowed to grow.

If Prop 123 passes, over the next 10 years, the state would tap the State Land Trust K-12 Permanent Fund at 6.9 percent annually. That would boost school spending by an estimated $2.2 billion over 10 years (with another $800 million coming from reallocated education dollars and $525 million coming from new general-fund dollars, for a total of $3.5 billion over 10 years).

The state land trust now stands at roughly $4.8 billion. If left alone, it would grow to $9 billion, according to estimates from the Joint Legislative Budget Committee. But if Prop 123 passes, it will only grow to $6.2 billion.

That's important because the schools get 2.5 percent of the fund every year for education. So by dipping into the trust now, it means less money on an annual basis later; the State Treasurer's Office has estimated that the hit could be as much $100 million a year in lost revenue.

Critics see the reduction in future revenue as a big problem.

"If you deplete the land trust, we're talking about $100 million less a year for education beginning in 2026, forever," says Morgan Abraham, who is chairing the Prop 123 opposition effort. "That's concerning to me, especially being young and knowing that my kids will be going to school in that time."

Abraham sees another deal-breaker in Prop 123: An amendment to the Arizona Constitution that allows lawmakers to reduce education funding if ever becomes more than 49 percent of the state's general fund. This year, education spending makes up 42 percent of the state's general fund.

"That basically caps education funding forever," Abraham says. "The goal is to make sure that Arizona is not in the bottom five forever, and we won't be able to do that with that trigger."

Abraham argues that it makes more sense to tap the state's current surplus—which is estimated to be more than $600 million at the end of the fiscal year—rather than dig into the principal of the state land trust, especially since after 10 years, that funding goes away, leaving education facing a fiscal cliff.

"If we have a budget surplus, it doesn't really sit right that we have to deplete future earnings—basically steal from the future," Abraham says.

By Abraham's own admission, it's a David vs. Goliath battle. Supporters of Prop 123 have raised more than $4 million for the political campaign, while Abraham's group has raised around $10,000.

Beyond those issues, there's a fundamental concern among many opponents of Prop 123: Even if it passes, the state's Republican leadership will continue to chip away at the underpinnings of public education.

The examples abound: This year, legislation that would have allowed any parent to get a voucher of roughly $5,000 to put their kids in any private school passed the Senate but stalled in the House. A revised voucher plan—which would give $5,000 vouchers to any child in a household eligible for free or reduced school lunch programs (or households earning $44,863 or less), which accounts for about 58 percent of Arizona schoolchildren—could still pass. State Sen. Debbie Lesko (R-Phoenix) has pushed legislation to eliminate funding for desegration programs in districts such as Tucson Unified School District, which would cost the district more than $60 million a year. And Ducey has continued to push for lower taxes, even though a recent report shows that corporate income tax cuts will cost the state hundreds of millions of dollars annually because they did not result in the economic boom that supporters promised they would.

State Sen. Steve Farley (D-Tucson), who voted against sending the plan to the ballot but is supporting Prop 123 nonetheless, says those attacks on public education are going to happen whether Prop 123 passes or not.

"If these people keep the majority, they are going to keep attacking public education," Farley says. "I have absolutely no doubt." At least with its passage, teachers across the state stand a chance of getting raises and students stand a chance of getting smaller classes and decent supplies.

Farley acknowledges that there are many flaws in the plan and he understands why education advocates would oppose it.

"I get the frustration," Farley says. "I've felt the frustration every day in this Legislature for the last 10 years. The bad guys win, no matter what. They put you in a corner and it sucks. I get the whole thing about wanting to teach Gov. Ducey and the majority a lesson, but the people who pay the price are the teachers and the students."

Even DuVal, who is appearing alongside Ducey in that TV spot, has plenty of reservations about Prop 123. He acknowledged in his email to supporters that the schools are getting less than three-fourths of what they should have received had lawmakers fully funded education.

"I am clear that this proposition only settles the inflation funding lawsuit and does not provide a blueprint for how to ensure our children's schools receive the funding they need beyond ten years," DuVal said. "I recognize that it does not move the funding needle or rankings as far as we desire. More must be done to invest in our schools at the level they need for every child to succeed.

But, he added, "it is the right first step. It can pass now. And dollars can get to the classroom this year. If Prop 123 fails, our kids will endure more years of inadequate school funding. Droves of teachers will leave. Prop 123 isn't exactly the full funding plan I want. It is a compromise, but one that has earned broad bipartisan support, and almost all the major education and children's advocacy organizations support its passage." 

For DuVal, Prop 123 is the only viable alternative on the horizon.

"What scenario realistically gets you to a better deal in the next year, or two or three?" DuVal asked rhetorically in his letter. "Is there a viable ballot initiative? Will there be a historic-level change in legislative race outcomes? No. Every other scenario is hypothetical or wishful thinking: be it for legislative seats that haven't been won, for budgets that lack the votes, for renewed litigation to settle or for initiatives that haven't qualified for the ballot."

DuVal said that the state's Republican leadership will argue that Arizonans just don't want to spend more money on education if Prop 123 fails.

"They will conclude that Arizona voters don't support additional education funding and have the election results to back that up," he warned. "We could be set back many more years."

One state lawmaker from Tucson flipped from a supporter to an opponent earlier this week.

State Rep. Bruce Wheeler had plenty of reservations about Prop 123, but last week, he told the Weekly the proposition was “the only game in town.”

“If we don’t do this, then there’s nothing, and we go back to court, and there will be nothing while we’re in court, and that’s at least three years,” said Wheeler, who urged voters to support the proposition in the state’s official publicity booklet mailed to voters.

But earlier this week, Wheeler flipped from a yes to a no.

“I was wrong,” the Tucson Democrat told the Weekly.

Wheeler now says he doesn’t trust Republicans to stop cutting education programs, so the additional Prop 123 dollars won’t make a difference anyway.

“The attacks on public education are continuing,” Wheeler said. “They’re giving with one hand and taking away with another.”

He predicts that next year, Republican lawmakers will strip TUSD of its desegregation funds, which will result in a cut of roughly $60 million. (Legislation to do just that failed this year.)

On top of that, with the latest budget proposal that is floating around the Capitol this week, Republicans continue to hollow out the state’s finances with tax cuts, Wheeler said.

“In addition to corporate tax breaks that were enacted three years ago and are being phased in and that are going to cost us $350 million next year, they want other tax breaks?” Wheeler said. “I’ll say it again: Where is the sincerity in educating our kids this year, next year and the year after? Why is that money going to schools, if they’re so concerned about them?”

“Prop 123 is a sham,” Wheeler said. “And I’m kicking myself for not catching what a sham it is until now.”

Editor's Note: This story has been updated from the print edition to reflect stat Rep. Bruce Wheeler’s decision to oppose Prop 123.

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