To understand Gov. Doug Duceyโs new proposal for increasing school funding, look at the knotty problem from his perspective.
He undoubtedly hates the stigma of leading what is now officially the state that funds public education at the lowest rate of all 50. He also seems to understand that we need to fund education better to improve Arizonaโs economic prospects.
But โ and this is the key โ he canโt raise taxes. Thatโs been his bedrock principle, his campaign promise, and the idea from which all other budget decisions flow. And business groups were starting to talk about a ballot issue to increase the sales tax for education.
So Duceyโs boxed himself in โ he knows we need to increase funding for education, but he canโt raise taxes to do it, even if we could afford the increase and his allies in business want it. Thatโs how we arrived at the intriguing idea Ducey unveiled Thursday.
โWe have all heard the call for more spending on public education, which is usually accompanied by a call for higher taxes,โ he said during a news conference at Central High School in Phoenix. โI donโt believe that raising taxes is wise or necessary in a tough economy when we have $5 billion sitting on the sidelines.โ
Then he laid out a plan to have the Legislature send to voters, in November 2016, a ballot issue that would allow the state to spend much more of the $5 billion state land trust on education for 10 years.
Taking increased chunks of the trust could work as a temporary, short- to-medium-term way to address the Legislatureโs embarrassing unwillingness to fund our kidsโ educations. But the ideaโs worthiness depends on crucial factors.
Financially wise? First, the idea must not deplete the land trust unwisely, as Ducey is saying it will not. Ann-Eve Pedersen, the Tucson public-education activist who led a campaign to extend a sales tax for education, likened spending the trust money to eating seed corn, arguing his plan means spending the trustโs principal, not just its interest.
But when I asked Tim Hogan, of the Arizona Center for Law in the Public Interest, about the planโs possible effects on the trust, he doubted this spending would harm it.
The key is that the trust, worth about $5 billion now, is made up of money from the sale and leasing of state lands, as well as interest from investing the proceeds of those sales, plus earnings from the reinvestment of unspent interest. When you consider both interest and reinvested money, we may not touch the principal under Duceyโs plan.
โAt 10 percent, I doubt that youโre eating up that excess earnings that youโve earned over time,โ Hogan said.
Fair distribution. So letโs assume that Duceyโs plan will not harm the trust, as he laid out Thursday. Perhaps the most important question, then, is how the money will be distributed. Ducey spoke of a broader โreformโ agenda while proposing this revenue source Thursday. He could try to tie the new money to a plan for rewarding higher-performing schools.
If so, the plan would quickly become polarizing, because it would play into Duceyโs agenda to reward elite charter schools, among other high-flyers, at the expense of the bulk of schools.
โEthically, we could do nothing but a broad, per-pupil distribution if youโre taking money from the trust fund,โ said Andrew Morrill, president of the Arizona Education Association.
That seemed to be what Ducey was proposing, but he has also formed a committee to reconsider the stateโs funding formula for education, so the two projects could become intermingled.
Supplement or supplant? Another big risk is that the Legislature will use the increased funding Ducey has proposed taking from the land trust as an excuse to reduce the money it spends on education from the stateโs general fund. Thatโs not what Ducey is proposing.
โThese are new dollars,โ he said. โNo smoke and mirrors. No bait and switch.โ
And yet, the Legislature can always find a way to either reduce general-fund spending on education =or phrase the ballot issue to give itself wiggle room. Only the governor could stop that from happening and ensure this is really additional money to the schools, using his power in budget negotiations and his veto if necessary.
Inflation funding. Finally, Ducey spoke out of both sides of his mouth Thursday when discussing how the plan would affect the pending lawsuit against the state for not having given required inflation increases in funding to the schools. A judge has ruled the state is $1.5 billion in arrears and owes an extra $300 million a year โ about the amount Duceyโs plan would raise.
Settlement talks are going on between the Legislature and school districts, but theyโre not getting much of anywhere, Morrill told me Thursday.
โIโm disappointed in the pace of the negotiations,โ he said. โItโs a lethargic response to the court order.โ
During his prepared remarks, Ducey said: โThese changes should provide a pathway for settlement of the ongoing litigation.โ But in answer to a question, he said, โThis will be additional dollars more than the settlement.โ
It must be the latter, or this proposal should not fly. If the school districts can use their leverage powerfully in the lawsuit, and also get fairly-distributed land-trust money, it would start to ease the schoolsโ pain.
It would also remove the stigma from the state, and, most importantly, give Arizona kids the start in life that they, and their state, need them to have.
Of course, we could have simply cut some of the stateโs big tax loopholes or raised the income or sales tax slightly to pay for our schools. Then weโd have a more permanent fix instead of this medium-term scheme.
