PHOENIX — Gov. Doug Ducey acted illegally in pushing his 2016 plan to take money for K-12 education out of a trust account without first getting congressional approval, a federal judge has ruled.
In a sharply worded ruling, U.S. District Court Judge Neil Wake said Ducey crafted a plan to take more than $2 billion out of the school trust fund over a decade to make up for the fact that the state had ignored voter-mandated requirements to properly fund schools. That plan became Proposition 123 that voters approved in 2016.
But Wake said the state did not first obtain congressional approval for the shift.
That, he argued, is necessary because the federal Enabling Act that made Arizona (and New Mexico) into a state in 1912 gave it lands to hold in trust for schools.
More to the point, that law allows the state to use only the interest off the money earned. The idea was to preserve the body of the trust — and the interest that would earn — for future generations.
But Wake said Prop. 123, crafted by Ducey as a method to settle a lengthy lawsuit over school funding, clearly ran afoul of that law.
Strictly speaking, the ruling does not stop the Prop. 123 funding given the subsequent — and belated — congressional approval.
But Wake said there are still legal questions about an even earlier move, in 2012, to change the trust fund distribution without getting federal OK.
Potentially more significant, the judge said the state is likely to repeat the maneuver in 2025 when Prop. 123 dollars run out. This ruling prevents the state from doing that without first getting congressional approval.
The ruling drew derision from gubernatorial press aide Patrick Ptak who called it "incoherent'' and "poorly reasoned.''
"Rarely before have we seen such a blatant disregard of facts, precedent and common sense to push forward an agenda of one biased, activist judge,'' he wrote.
But Wake said it is Ducey who played fast and loose with the law.
He pointed out that the governor did not seek the required congressional approval to raid the trust fund until after the 2016 vote — and after the lawsuit was filed. That led to a provision being inserted into a 2,400-page federal appropriations act effectively ratifying the maneuver.
The governor's attorneys argued that the act of Congress made the lawsuit moot.
Wake, however, was not impressed, saying that Ducey resisted for two years getting the necessary congressional approval. It wasn't until the judge was ready to issue an earlier ruling that the governor acted.
And even then, Wake said, the governor insisted such approval wasn't necessary — and that it was Congress acting on its own.
"The governor's assertion that he somehow was not involved is disingenuous,'' the judge wrote. "The court is not fooled.''
And the bottom line, Wake said, is the state acted both in 2012 and 2016 to take additional funds out of the trust account without first getting congressional approval.
"The state and its officers took those monies illegally and spent them,'' he wrote.
In some ways the ruling should come as no surprise.
Jeff DeWit, who was state treasurer in 2016, told lawmakers they cannot legally do what the governor was proposing. They chose to ignore his advice.
