Arizona GOP leaders: Reform K-12 education inflation funding

The state's top Republican lawmakers are angling to change the law setting inflation-funding payments that funnel millions of dollars a year to K-12 education, and their proposal could become a sticking point in education-funding negotiations between the Legislature and Gov. Doug Ducey.

Senate President Andy Biggs and Speaker of the House David Gowan are proposing to "reform" the inflation provision connected to Proposition 301, according to records obtained by The Arizona Republic. The amount of money schools get from the provisions changes year to year; this year, it totaled about $75 million.

The records, distributed to lawmakers during closed-door meetings earlier this month, paint a bleak picture of efforts to sustain those payments to schools. They say that without reforming the law, Arizona "lawmakers will be forced to cut essential services, such as public safety, healthcare, and child services."

The proposal, as Biggs described it to the Republic in August, would set yearly inflation increases in state aid at 1.6 percent -- lower than the voter-approved funding plan that requires the state to match inflation up to 2 percent.

In the K-12 funding "Briefings Summary Points," the lawmakers argue the provision "is misleadingly called an 'inflation' provision, but it drives much more funding than keeping pace with the cost of inflation." The lawmakers propose a reform that uses "economic triggers," but do not detail what those triggers would be or their impact.

The proposal would require voter approval and is part of lawmakers' plan to resolve a long-running education-funding lawsuit. Their plan would also tap state land trust funds, take money from the voter-approved First Things First program for early childhood education, and add another $175 million in state aid.

When asked if the governor would support such a plan, Ducey's spokesman Daniel Scarpinato said that the administration's focus is on Ducey's land-trust proposal and that he would not "talk about hypothetical ideas."

Scarpinato later added, "Governor Ducey is open to any idea that resolves the lawsuit and gets the land-trust dollars moving into our schools sooner rather than later."

Ducey has proposed boosting K-12 funding from the land trust’s permanent fund from 2.5 percent to 10 percent each year for the next five years. It would then drop to 5 percent and expire at the end of 2026. The Republican leadership's proposal did not detail by what percentage it would increase funding from the trust.

Treasurer Jeff DeWit has warned Ducey's proposal is too aggressive and would deplete the fund; Ducey disagrees.

The education-funding ideas come amid a high-stakes battle that stems from a 2010 lawsuit alleging the state shorted district and charter K-12 schools by not fully funding the voter-approved inflation formula during the Great Recession. A judge ruled last year that the Legislature must pay schools about $331 million a year in unpaid inflation. Republican legislative leadership is appealing the ruling, and so far the two sides have failed to reach a settlement agreement.

School officials also have argued the state owes an additional $1.3 billion in back payments. The court has not yet ruled on that request.

Democrats, who have criticized parts of the GOP plan and Ducey's proposal, are expected to unveil a competing education funding proposal Tuesday.

Chuck Essigs, the lobbyist for the Arizona Association of School Business Officials, said school leaders would likely fight any proposal that would reduce or eliminate the voter-approved inflation formula.

“It is one of our major objectives to protect that going forward,” he said. “Any time any proposal comes forward that doesn’t continue that voter-protection provision, that’s a non-starter for us.”

Essigs said that while the school tax voters passed as part of Proposition 301 ends in 2020, the portion of Prop. 301 that requires the Legislature to provide minimum inflation adjustments to schools each year does not expire unless voters adjust or repeal it.

“We’re looking at something that could affect schools 30 or 40 years from now,” he said. “If we don’t do the right thing, the teachers and the students coming long after us will be impacted.”

Essigs said he appreciates the recent interest in boosting education funding – from both sides of the aisle and Ducey.

“I’ve never seen attention being paid to the issue of adequately funding schools and trying to settle the lawsuit,” he said. “But it takes more than interest to solve this problem. It takes workable solutions.”

Essigs said any proposal from Ducey or the Legislature would not be a settlement unless the court or the schools in the lawsuit agree.

“They can pass 50 different pieces of funding,” he said. “But it would have to have the approval of the school organizations, or they would have to go back to court and show how this solves what the court said they had to do."

Rep. Bob Robson, R-Chandler, said he, too, appreciates the information from GOP leadership but would not say if he supported or opposed adjusting the inflation payments.

"It's healthy for leadership and Republicans to have a discussion about where education is going," he said. "I think it's an eye-opener. I think everybody -- including the education community -- recognizes that we have to find a real funding mechanism for K-12. We can't continue on the path we're on. It won't sustain itself."

Find the reporter on Twitter @yvonnewingett, or reach her at yvonne.wingett@arizonarepublic.com or 602-444-4712.