An appeals court said a judge never should have heard a legal complaint against Gov. Doug Ducey for using a trust account to increase funding for public education.

 Cheryl Evans / The Arizona Republic

PHOENIX β€” A federal appeals court has overturned a ruling that could have affected the ability of Gov. Doug Ducey and future governors to tap a special education trust account to funnel more money into schools.

In a unanimous decision Tuesday, a three-judge panel of the 9th Circuit Court of Appeals said District Court Judge Neil Wake never should have heard the complaint by Michael Pierce. He charged that Ducey had acted illegally in tapping the fund, created by Congress in 1912 when Arizona became a state, after voters approved Proposition 123 in 2016 without first getting congressional approval.

But the appellate judges, in an unsigned opinion, said the only people who have standing to sue under the 1912 Enabling Act are those who actually have incurred an β€œinjury in fact.” And Pierce conceded that his only injury is because he is a resident of Arizona and the state is harmed if more money is taken from the trust than Congress allowed.

That, the appellate judges said, means Pierce had no standing to sue in the first place.

They acknowledged, as did Wake, that Ducey continues to distribute funds according to the terms of Proposition 123. But they pointed out that, in the interim though not before voters approved the ballot measure β€” Congress altered the federal law to effectively and retroactively authorize what Ducey had done.

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Finally, the appellate court said Wake never should have barred Ducey β€” or future governors β€” from again altering the distribution formula absent first getting congressional approval. They said that legal dispute is not β€œripe for adjudication” because it is based on events that may or may not ever occur again.

Prop. 123 was Ducey’s plan to put more dollars into K-12 education without hiking taxes.

In essence, the governor asked voters to tap the special trust fund that consists of money earned from the sale or lease of the 10 million acres of land the federal government gave Arizona as part of the Enabling Act. About eight million acres remain.

Under normal circumstances, the beneficiaries of the trust β€” in this case, public schools β€” would get a certain percentage of what is there.

Ducey’s proposal sought to more than triple the amount to funnel an extra $3.5 billion into schools for a 10-year period.

Pierce sued, contending that any change in the distribution required Congress to amend the Enabling Act. There also was the fact that, in boosting withdrawals through 2024, it would leave less in the trust at that point than if the formula were not changed.

Ducey disagreed. But he eventually did get congressional approval.

But Wake sided with Pierce, saying the governor was wrong to make the withdrawals first and then get the legal blessing of Congress.

Wake acknowledged that, at least as far as Prop. 123 is concerned, the matter now is moot, since Congress ratified the change.

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