Arizonans Weigh Pros and Cons of Education Funding Amendment Prop 123

May 16, 2016

Arizona voters head to the polls tomorrow to decide on an Education Finance Amendment, Proposition 123. It would settle a lawsuit brought against the state by public schools for failure to increase K-through-12 funding based on inflation during the recession. It would also give a $3.5-billion-dollar cash injection to public schools over the next 10 years. More than 60 percent of that money would come from the State Land Trust, given to Arizona upon statehood in 1912 as a means to generate revenue for schools. Opponents of Prop 123 say the settlement jeopardizes the land trust and should be paid entirely out of the state’s general fund. Supporters believe it’s an immediate opportunity to pump money into K-through-12 education. Both sides admit it’s a short term plan to the issue of school funding. KNAU reached out to voices on both sides of Prop 123. Morgan Abraham, a Tucson investment advisor and the chairman of the No on Prop 123 campaign, spoke with Arizona Public Radio’s Gillian Ferris. Flagstaff City Councilman, Jeff Oravits supports the amendment and spoke with Arizona Public Radio’s Ryan Heinsius. 


Jeff Oravits: What it is, ultimately, is settling a lawsuit. It is also at least a beginning step in my opinion to funding education at a higher level. But I see this as a solution at least in the short to midterm. You look at FUSD and you’re seeing just serious deficiencies in what our teachers are being paid. We’re looking at about $4 million extra. Is it going to solve all our problems? Absolutely not, but hopefully it gets the ball rolling for a longer-term solution.

Ryan Heinsius: If Prop 123 is the short or midterm solution, what is the long-term solution?

We definitely need to get the best minds together, and we have a little, let’s call it breathing room right now if this passes. But we don’t have a lot of breathing room. So, I would call for the best people we can find around the state. But let’s come together and figure out a way to make this sustainable.

If Prop 123 does pass, it still leaves Arizona at 48th in the nation for per-pupil funding. What does this state need to do to get out of the bottom ranks of states?

I think when you’re at the bottom in per-pupil funding that’s a challenge. I would like to see us increase the funding and hopefully, like I said before, we can get some smarter people in the room to come up with those long-term solutions. And if it’s a funding issue, great, let’s fund it more. If there’s other issues, let’s find out what they are.

Some critics of Prop 123 say a better way to settle the lawsuit and fund education would be through the state’s budget surplus and general fund. Why not just allocate money the state already has?

I see this as more of a stand-alone solution to settle that lawsuit. And when you’re dealing with cyclical terms of the economy and legislatures, they come and go every two years, it’s switching out, there’s term limits down there. Do you want to put your faith in that for the next 10 years? And me, personally, I do not.

Critics of Prop 123 would counter that with, “Well, the land trust is also tied to the economy and the stock market and to money markets that are also in fluctuation.” Why is that more trustworthy or stable than going through the legislative process?

I just think it’s a more reliable source and it’s more immediate. If you’re dealing with the legislature, they may have to do a little bit this year, a little bit next year, and it doesn’t solve the problem and settle a lawsuit in one stroke of the pen.

If Prop 123 doesn’t pass, it’ll go back to court. Where does that leave state education funding?

We lose, what, $450 million dollars in the next coming year as a state. There’s no plan B that I know of, and I think Governor Ducey had mentioned this: This is the plan. So they will have to go back to the drawing board, go through a long court process probably, and then there may be a settlement down the road. But who knows how long? And in the short term, that just leaves our teachers with lower pay quite frankly, and that’s a problem.

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Gillian Ferris: What do you feel is the long-term – and the short term solution – for our need to bring up per-pupil funding in Arizona to come up to even close to a national average?

Morgan Abraham: I think, one, we have to settle this lawsuit. The Supreme Court ruled five to nothing that the legislature violated the VPA (Voter Protection Act), so the legislature needs to put their budget surplus towards education and just settle the lawsuit right off the bat. On top of that, I think we need to get out of this mindset that these corporate tax cuts that have basically been pulling more and more money from education, that these corporate tax cuts are a good thing. You can’t have it both ways. You can’t expect to cut taxes and raise revenue. It just doesn’t work like that, so I think we need to get out of that mind set, and on top of that I would be in favor or looking at other revenue sources, whether that’s a re-allocation of sales tax, an increase in the Prop 301 sales tax. There are a lot of avenues and they’re all doable right now. But if we pass Prop 123, it really limits what we can do in the future.

Why not pay this out of the general fund or out of the rainy day fund? They replenish much faster than the State Land Trust.

Right. Yeah. So, I think when you’re looking at this land trust you have to realize that this is a trust in perpetuity. It’s designed to benefit every generation of Arizonans equally. So, with us pulling $2 billion dollars out of that trust, we’re basically taking money from future students and future teachers. I mean, the math is just there. There’s no argument against that. So, what we’re saying is why aren’t we using general fund money? Why aren’t we using the budget surplus that’s at the capitol right now and using that to settle the lawsuit? We don’t want to put future students and future teachers at risk, and we don’t want to make the problem worse and kick the can down the road.

Within this argument, some fingers point to the Great Recession as a big contributor to this problem, and that may be. But Arizona – historically – has had low per-pupil spending. The year before the Great Recession we were spending less than the national average is. So, it doesn’t seem like this is a new problem.

Absolutely. It’s not even short sighted, it’s negative. It has a net negative effect on education. If we don’t spend this budget surplus that we have at the capital right now, if we don’t spend that on education, we cut more taxes, this problem only gets worse and worse and worse. And so our campaign is a very pro-education campaign. We want to see more money spent on education, we support teachers, we support schools. But we want money from the general fund. We’re tired of tax cuts, we’re tired of the type of budgets that the legislature and the governor have been proposing, and we don’t want to spend future teachers’ and future students’ money and cut taxes. There should be no reason why we’re doing that. So, we’re 100 percent onboard to work toward this issue. But this is not a first step forward the way we see it. This is a first step backwards.

Do you feel that this proposition – Prop 123 – threatens the future of the state land trust?

There’s no question that Prop 123 depletes the land trust. You can talk to any financial expert, any budget expert and, I mean, there is no question that this depletes the land trust. If this was such a good idea, why aren’t we doing it forever? Why are we just doing it over the course of 10 years? And the answer is because we can’t afford to do this forever. After these 10 years, if Prop 123 passes, our trust is going to be so depleted that we’re not going to be able to continue at that kind of distribution rate. I think the question voters have to look at is, once they realize Prop 123 is a bad thing, do they see a path forward? Can we fund schools the right way? Or is this the only deal on the table?