- Associated Press - Friday, May 13, 2016

PHOENIX (AP) - A plan that would pump $3.5 billion in new money into the state’s K-12 school system over 10 years using general fund and trust land cash is now in the hands of Arizona voters.

Proposition 123 on Tuesday’s special election ballot is designed to settle a long-running lawsuit. Schools sued over the Legislature’s failure to follow a voter-approved law and increase school funding each year to adjust for inflation.

The measure provides about 70 percent of what schools said they were owed and stops a court fight that has already dragged out for more than five years. The state Supreme Court found in favor of the schools, but lower courts were still working to determine the total owed when the deal was struck.

Gov. Doug Ducey, lawmakers and many education community leaders support the deal. Ducey says it gets money in the classroom right away, stops paying lawyers, and does it without raising taxes.

Opponents include state Treasurer Jeff DeWit, who argues it cuts into the principal of the land trust that is designed to benefit schools forever. The League of Women Voters also opposes the plan, saying it rewards the Legislature for breaking the law by not funding the schools as required. Some opponents also note years of tax cuts have undercut revenue that could fund schools and Ducey has pledged to continue tax cuts.

Proponents have nearly $4 million in funding and have flooded the airwaves with ads promoting the measure. Opponents have made no organized effort to runs ads, but social media is replete with postings against the plan.

Ducey is personally stumping for the measure. In an interview last month, he called critics ‘inaccurate.”

“This is a settlement,” Ducey said. “And this is a collaboration between legislative leadership, the education establishment and the governor’s office. And this is the best possible solution, and the maximum amount of dollars that are politically possible to move into our K-12 education system.”

Ducey said he has no Plan B if voters reject the trust land proposal at the polls.

If voters approve the constitutional amendment that verifies the agreement, public schools will almost immediately receive nearly $300 million. Slightly larger amounts will be distributed in each budget year through 2025.

The plan gets about 60 percent of its money, nearly $2.2 billion, by increasing distributions from the permanent land trust endowment from 2.5 percent to 6.9 percent a year. Ducey says the trust will still have more cash at the end of 10 years when new land sales are included, while DeWit said it will permanently cut future payouts by taking too much of the principal. The rest of the money, $1.3 billion, comes from normal state revenues.

Together that adds about $330 to the current $4,300 schools receive for each student from the state. That amount would increase every year under the inflation formula.

But there are also ‘triggers” in place that critics worry will let the Legislature stop the payments if the budget outlook sours. Those triggers hit in years with slow sales tax and job growth. Another trigger kicks in 2026 and allows outright cuts to school funding if the K-12 education budget tops 49 percent of the general fund spending.

Those and other aspects of the plan concern the League of Women Voters of Arizona.

“They’re not following the law, and they’ve come up with something that gets them out of following that law,” said Shirley Sandelands, the group’s president.

Voters mandated annual inflation-related increases in funding for schools as part of a 2000 law that raised sales taxes. Lawmakers quit providing the annual boosts in 2009 as state revenues were decimated by the recession. They began making them again three years ago.

In addition to failing to give the inflation adjustments, Arizona made many other severe cuts that left schools and parents reeling. According to a 2014 study by the Center for Budget and Policy Priorities, Arizona per-pupil spending fell more than 47 other states since 2008 and funding remains 17 percent below pre-recession levels.

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