Pros & cons of Prop 123

File photo/Larson Newspapers

The vote on Proposition 123 occurs Tuesday, May 17, marking the moment Arizona legislators resolve an ongoing lawsuit concerning K-12 education funding or become embroiled in ongoing litigation.

According to the proposition’s ballot wording, “A ‘yes’ vote shall have the effect of increasing distributions from the State Land Trust Permanent Endowment Fund in fiscal years 2016-2025 from 2.5 percent to 6.9 percent of average monthly market values to benefit Arizona K-12 schools, colleges and other beneficiary institutions, including $259,266,200 distribution in fiscal year 2016; includes protections for state funds in the case of a severe economic downturn.

“A ‘no’ vote shall have the effect of retaining the existing 2.5 percent distribution formula from the State Land Trust Permanent Endowment Fund and maintaining current funding levels for Arizona K-12 schools, colleges and other beneficiary institutions.”?

Pros

If the fund-dispersal mechanisms work properly, the state does not become embroiled in litigation against the proposition and the state’s economy does not suffer from a “severe economic downturn,” K-12 schools will receive approximately $3.5 billion in additional funding over the next decade.

The state has not required districts to spend funds in any particular way, leaving each district the freedom to use money as it sees fit.

There will be no tax increases to fund the proposition except in districts where property taxes can be raised to support education funding.

The state will not be withdrawing from the state’s budget.

Both public schools and ?charter schools receive an equal proportion of the funds.

Cons

The proposed $3.5 billion is approximately $1 billion less than schools would be owed if the courts rule — for a third time — in favor of Arizona schools.

There are numerous ways in which funds may not reach schools, including ongoing litigation and an economic downturn.

The state has not required districts to spend funds in any particular way, leaving no guarantee that teachers will be paid more or schools will receive needed resources.

As current Arizona State Treasurer Jeff DeWit has stated, the proposition will result in numerous property tax increases. DeWit has also said the proposition would face lawsuits and could be ruled unconstitutional by the courts as he says it violates a congressional act that allowed Arizona to become a state.

Funds are drawn from the Permanent Land Endowment Trust Fund’s principle balance and not from the budget surplus that currently sits at approximately $600 million.

According to DeWit, there is upward of $3 billion sitting idle in the operations account — more money than in the state’s 104-year history, and $400 million more than it had this time last year.

Both public schools and ?charter schools receive an equal proportion of the funds despite different funding structures. Currently, charter schools are paid more per student than public schools.
There is no mechanism to guarantee that lawmakers will not de-fund public and charter education in other ways.

Districts may be encouraged not to pass budget overrides and tax increases to support schools because the issue of funding has been “fixed” by Prop 123.

Zachary Jernigan

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