Governor Hobb’s plan delivers $317 million to schools in FY26, creates permanent funding source for teacher pay
Phoenix, AZ – Today, Governor Katie Hobbs released an outline of a Prop 123 extension plan that includes a permanent funding source for teacher pay along with flexible funding to support public schools.
The plan will deliver a projected $216 million for teacher pay in 2026 and make the funding source permanent. Additionally, public schools will receive an estimated $101 million in flexible funding in FY26, with the increased distribution lasting 10 years. As the state land trust grows, funding will increase, generating further dollars for public schools.
“We must address the impending expiration of Prop 123, and do it this year,” said Governor Katie Hobbs. “If we fail to act, we are throwing away an opportunity to fund teacher pay raises and give Arizona’s children the opportunity they deserve – all without raising taxes on a single Arizonan. I’m proud my plan delivers $216 million for teacher pay while making funding permanent so no public school needs to worry about paying their teachers with an impending fiscal cliff. I urge members of the Legislature to act swiftly to put a bipartisan Prop 123 extension plan on the ballot for this November. They have already missed one deadline to act on this critical issue, Arizona’s children cannot afford for them to miss another.”
Governor Hobbs’ plan will:
- Enshrine a permanent 5.5% State Land Trust distribution rate:
- Maintains the 2.5% base distribution requirements (Classroom Site Fund (CSF) and Basic State Aid).
- Places proceeds from the 3% distribution into the CSF to provide increases to teacher pay.
- FY 2026 projected increase of $216 million or $158 per pupil.
- Adds an additional ten-year distribution rate of 1.4%.
- Funds will be used to increase Base Level funding, adding approximately $101 million in school funding in FY 2026.
- Reform the Prop 123 triggers that allow the Legislature to not fund inflationary increases by requiring a 2/3 vote.