The Center Supports Proposition 123
We’ve been getting a lot of questions lately about whether the Center supports Proposition 123. The answer is yes and here’s why.
We represent the school organizations and school districts in the inflation funding litigation and participated in the settlement resulting in Proposition 123. Proposition 123 will put a lot of desperately needed money into schools immediately. It will provide over $300 million a year to public schools over the next ten years funded in most part by larger withdrawals from Arizona State Land Trust Fund.
The Trust Fund was established to support public education and that is what this money is going to be spent for. It has more than enough money in it today to absorb the payments over the next ten years. In fact, after the end of ten years, it is expected that the Trust Fund will have $6 billion - - even more money than it does today - - and will continue to grow at that point. We don’t see any point in amassing a huge balance in the Trust Fund when public schools desperately need the money right now.
At the end of the ten year period, the legislature will still be required to provide annual inflation funding, it just won’t be able to use the Trust Fund. Instead, it will have to provide those payments from the general fund.
While the litigation has resulted in favorable rulings, contrary to what some have said, the courts have not yet ordered the state to pay any particular sum of money. We would still need to litigate this case for another two to three years before we get to that point. That’s why we settled for most of the funding now as opposed to an uncertain outcome years down the road.
If you have any questions about any of this, feel free to call Tim Hogan at 602-258-8850.
PLAINTIFFS SETTLE SCHOOL INFLATION FUNDING CASE
On October 30, Governor Ducey signed legislation enacted by the legislature in special session that settles the school inflation funding case so long as it is approved by voters next May 17.
Don Peters and the Center represent the Plaintiffs in the lawsuit. The Plaintiffs include the Arizona School Boards Association, the Arizona Education Association, the Arizona Association of School Business Officials and school districts and individuals. The lawsuit began in 2010 contending that the legislature had failed to appropriately fund inflation for public schools as required by Proposition 301 which was approved by voters in 2000. In 2013, the Arizona Supreme Court determined that the legislature must comply with Proposition 301 and remanded the case to the trial court to determine exactly what that meant. In September 2014, the trial court entered judgment for the Plaintiffs on the base level amount that should be reset and funded going forward. The legislature appealed that judgment. The trial court has yet to issue a decision on the amount of back pay, if any, that was owed to the school districts for the years that inflation funding was not paid.
The settlement provides over $300 million each year over the next ten years for a total of $3.5 billion. The settlement agreed to by the Plaintiffs and the legislature resets the base level for future funding to 72% of where the Plaintiffs think it should have been and additionally provides $625 million in additional funding to school districts and charter schools over the next ten years. The inflation funding requirement is permanent and extends indefinitely beyond the ten years.
A majority of the funding for the settlement will come from the state land trust. This is a trust fund that consists of proceeds from the sale of lands deeded to the state when it entered the Union in 1912 as well as earnings from those proceeds that have accumulated over time. Currently, the balance in the fund is approximately $5 billion and it is distributed at the rate of 2.5% of the previous five year average balance. The settlement that was approved will increase that distribution for ten years to 6.9% after which it will revert to the current 2.5%. Without the settlement, it is estimated that the trust fund balance would be approximately $9 billion in ten years. With the settlement, it is expected that the balance will be reduced to about $6 billion.
The settlement requires voter approval because it changes certain portions of the Arizona Constitution regarding not only the inflation requirement but also the distribution of the state school land trust. There will be special election on May 17, 2016 at which voters will be asked to approve or reject the settlement.
While the settlement does not represent the full amount that we could have achieved under a “best case scenario” had we continued litigation in court, it represents over 90% of the full inflation funding that would otherwise have been paid to public schools over the next ten years. Given the potential for delay by several years to the conclusion of the litigation and the uncertainty associated with the ultimate outcome, the Plaintiffs determined that it was important to get substantial funding into Arizona schools now as opposed to waiting for an uncertain outcome later.
Court of Appeals Reinstates ACC's approval of trash burning plant as "renewable resource"
In a disappointing decision published on July 23, 2015, the Arizona Court of Appeals reversed the superior court's decision that had struck down the Arizona Corporation Commission's decision to approve a trash burning facility as a renewable energy source as arbitrary and capricious. Even though the Commission's decision was not supported by a single expert--including the Commission's own expert!--the Court of Appeals held that the lower court should have affirmed it because of the deferential standard applicable to Commission decisions. The Center will likely petition the Supreme Court for review.