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Competing proposals on how to fund AZ schools

Posted at 11:04 PM, Oct 04, 2015
Arizona's K-12 school funding crisis has gone from a top-tier political issue to an outright crisis in the past five months, as parents, teachers and school officials who long complained about lagging school funding were bolstered by reports showing the state is at the bottom of national rankings for school spending and teacher pay.
 
Tipping the issue into crisis mode was last month's failure of talks to settle a lawsuit filed by schools that said the Republican-controlled Legislature failed to provide yearly inflation boosts required under the state Constitution. The Supreme Court ruled in 2013 that the Legislature violated the law by not giving yearly increases during the Great Recession, and a trial court judge last year ordered immediate payments -- more than $330 million a year. The Legislature is appealing. 
 
The result is a series of proposals to boost funding from Gov. Doug Ducey, Republican legislative leaders, Democratic legislative leaders and Superintendent of Public Instruction Diane Douglas.
 
The plans advanced by Ducey and GOP lawmakers have the best chance of being adopted in some form, but the other plans muddy the waters by offering simpler proposals that get money into the classroom sooner. The governor and Republican leaders have been separately meeting with lawmakers to pitch their plans and garner support. 
 
A special legislative session is expected to be called to enact a plan as soon as a deal is struck. 
 
Schools will receive $3.9 billion in the current budget year from the state general fund, including $3.4 billion in basic school aid. Adding other state funds, local property taxes and federal money brings the total to just over $10 billion, according to the Joint Legislative Budget Committee. That equals about $9,000 for each of the state's 1.1 million K-12 public school students, nearly $400 per pupil less than was allocated in 2007. Adjusted for inflation, per student funding has dropped 18 percent from fiscal year 2007 though the 2016 budget year.
 
A look at the proposals now in play:
 
Governor Doug Ducey's land trust plan
The Republican governor has proposed tapping the principal in the state's permanent land trust endowment. Right now, the $5.1 billion trust fund provides about $70 million a year in K-12 school funding. His plan:
  • Adds more than $2.2 billion into schools over the next 10 years.
  • Boosts payouts from 2.5 percent of annual trust valuation per year to 10 percent of the trust's total value for five years, dropping to 5 percent for the next five years.
  • Puts between $320 million and $375 million a year in new funding into schools for five years.
  • Requires Legislative and voter approval of a constitutional amendment, and possible changes to federal law.
Republican legislative leadership plan 
House Speaker David Gowan and Senate President Andy Biggs are proposing four key ways to increase spending. Their plan:
  • Increases school funding by $5 billion over 10 years.
  • Boosts payout from the land trust by $170 million to $200 million a year, substantially less than governor's plan.
  • Continues $74 million in inflation funding provided this year and boosts it annually for inflation.
  • Adds $100 million in additional general funding, also inflation-adjusted.
  • Uses some tobacco tax money from the state early childhood education fund, First Things First.
  • Requires voter approval for the trust land and First Things First changes.
Democratic legislative leadership plan:
Democrats propose boosting school funding using part of the state's current $325 million surplus and capping a tax credit. Their plan:
  • Increases funding by $3.8 billion over 10 years.
  • Continues $74 million in extra inflation funding in current budget.
  • Adds $262 million in the current year and larger amounts in coming years using general fund surplus.
  • Freezes corporate private school donations to $50 million year, stopping an annual 20 percent increase.   
  • Allows additional money from a trust land proposal after new funding is in place.
Superintendent Diane Douglas' plan 
 Douglas' plan uses excess cash and land trust money. Her plan:
  •  Boosts school funding by $4 billion over 10 years.
  • Uses $400 million from general fund surplus and rainy day fund this year and next.   
  • Uses a combination of general fund money and trust land cash in subsequent years, if approved by voters.