Three Myths About Prop. 123
By Chris Thomas, ASBA General Counsel/Director of Legal and Policy Services
1. Prop. 123 does not provide any new money – just money that was owed to schools.
Actually Prop. 123 provides $625 million of new money: $50 million per year for the first five years and $75 million per year for the next five years. This is on top of the inflationary increases that are mandated to be paid based on a new, higher, reset base level of student funding. While one could make the argument that the $625 million is in consideration for the cumulative loss of funding that occurred during the time which the Legislature did not provide inflation funding, the fact is that no court has ordered “back pay” and even if the court had, that order would have to go through the appellate process and could be decided on pure equity grounds (meaning there is no clear controlling law determining what amount is owed – a court very well could not award back pay).
2.Prop. 123 will eat into the corpus of the permanent fund (State Trust Land sale proceeds) because the draw is greater than the investment proceeds.
The truth is there are no multiple funds (one which constitutes proceeds from investments and another that constitutes the “corpus” of the Trust). There is only one fund. Prop. 123 proposes to increase that annual draw from that fund from 2.5 percent to 6.9 percent, an increase of 4.4 percent which will be used – in part, along with an on-going General Fund obligation – to pay for the inflationary increases. The 6.9 percent is based on a five-year average to smooth out fluctuations occurring in the investment of the trust land proceeds. It can be decreased if it does not produce the expected return. It is important to note that the value of the land trust has increased exponentially from $1 billion to its current value of $5.2 billion over the last 16 years – a period of stagnated, and then dramatically decreased, funding for K-12 education. The state land trust is still projected to have over $6 billion in it after 10 years with the increased distribution.
3. Prop. 123 sets in stone the use of Trust Lands funding and sunsets the requirement to provide inflation after 10 years.
Not true. Prop. 123 is a 10 year deal to pay for the inflationary mandate which goes on, with its current language, unless the people decide to repeal it – and if that doesn’t happen the inflationary mandate continues forever, certainly long after the Prop. 123 expires. There is a provision that is part of Prop. 123 that limits overall K-12 spending to no more than 49 percent of the state general fund budget. This provision only goes into effect after ten years. However, it is worth noting several points about this.
First, the 49 percent figure only applies to General Fund appropriations made through the Department of Education’s budget – it does not apply to Classroom Site Fund monies (Prop. 301 sales tax + 2.5 percent original draw on permanent fund) nor state capital expenditures through the School Facilities Board. Also, it is critical to give the 49 percent figure context: in FY2007 the “peak” of recent year K-12 funding, Arizona spent 43 percent of its General Fund budget on K-12 education – and this included state funding of all-day kindergarten and full funding for soft capital expenses. In order to get to the 49 percent figure, Arizona would have to cut more than $700 million from other programs in the current budget and spend that on K-12 to bump up against that ceiling. The last time Arizona spent more than 49 percent of its budget was 1983, and that was a time when other parts of the state budget – Medicaid, prisons, higher education, child welfare – took substantially less of a percentage of the state budget. Lastly, keep in mind that the 49 percent figure is a result of a compromise that provides badly, needed dollars to schools today. If the voters of 2026 and beyond do not believe in this restriction, they can repeal it.
Learn more about Prop 123 and the current state of education funding in the upcoming ASBA Spring Legal Webinar Series and In-Person Seminar.
Meet Tadeo De La Hoya, Yuma County Director
The Arizona School Boards Association is proud to announce this year’s County Directors for each county in Arizona, with two for Pima and Maricopa Counties due to their higher populations. ASBA will be featuring one county director a month. This month we are proud to feature Tadeo De La Hoya, County Director for Yuma.
District: Gadsden Elementary School District #32
How long have you served on your board? 7 years
How will you serve you county district members this year as the ASBA County Director? By being their voice and representative at ASBA. By providing them helpful information including but not limited to ASBA upcoming events and trainings. I also intend to forward any articles/information that could help them when representing their districts. In addition to being a member of ASBA’s Board of Directors I am also a member of the Board of Directors of the National Association of Latino Elected & Appointed Officials and a member of the Young Elected Officials Network (YEO); I’ll use these memberships to be a direct voice for all members of Yuma County and improve education in our state.
County Directors serve two-year terms on ASBA Board of Directors. This year, elections were held for nine County Director positions. The board is responsible for oversight of the association, including financial management, and meets at least four times a year.
What does Nike and Google have in common with the Equity Event?
This year, ASBA is excited to announce a top line-up of speakers that will join keynote speaker Dr. Pedro Noguera at The Equity Event, March 10-11, 2016. Join us to dig deep into leadership strategies and promising practices. Learn from many speakers that will focus on education equity and other related topics. Special guests include Vada Manager, prior senior director of Global Issues Management for NIKE, Inc. and Jaime Casap, Global Education Evangelist for Google Inc. Register online.
Hispanic/Native American Indian Caucus proudly presents their 4th Annual Spring Scholarship Fund-Raising Golf Tournament on Saturday, April 30, 2016 at the Arizona Grand Golf Course. Deadline to register is Friday, April 27.