The Farley Report from Phoenix #233: 11-12-15

As most of you know, the special session to settle the K-12 inflation funding lawsuit is over, and it is now up to us voters to decide whether this settlement proposal is fair to our schools. We will be asked in May to agree to an inadequate and possibly even dangerous plan that going forward only funds 72% of what voters previously approved (and a court ordered is owed to our schools) to pay for basic inflation costs, and only funds about half of the money stolen by the legislative majority in the past five years. 

The most compelling argument I have heard for voting yes on the upcoming Proposition 123 that contains this sketchy deal is that the current bunch in charge of our state government won’t ever offer anything better for our kids. Personally I think that is a better argument for why we should toss out the legislative majority in next November’s elections. 

I’ll lay out details on what this plan does and doesn’t do, using a format inspired by a visit to my office from Governor Ducey during the recent special session — his first meeting with me since his election, despite several previous attempts on my part to speak with him. 

After he swept in with a press gaggle and cameras rolling, I tried to engage him on the specific problems I have with different elements of his plan. He refused to address my points, instead simply reverting to rehearsed talking points. In the end, as he was shepherded out by his handlers, he told me that if I didn’t vote for his plan I don’t care about kids. I’m hoping that isn’t the Prop 123 campaign slogan, because I don’t think that will go over too well with voters.


So I’m going to structure this Report like a debate, using Governor Ducey’s own words as written in a press release from October 30 and a public email to his lists from November 1. Because it’s my newsletter, I will have a bit more space for my rebuttals that the Governor — as soon as he allows me space for rebuttal in his emails, I would be happy to revisit this policy. Pass the popcorn and read on…


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Governor Doug Ducey: “Who says you can't make government work?  We just did it here with the most far-reaching, high-impact education funding bill in our state's history. News like this is too good not to share, so spread the word by forwarding this message along!”

Senator Steve Farley: Thanks, Governor, I will spread the word! But I fail to see how a lawsuit settlement that would give our schools only 70% of what voters approved in Proposition 301 fifteen years ago is the most “far-reaching, high-impact education funding bill in our state’s history”.  

If you are talking about money, how about the one-cent sales tax enacted by your predecessor, Gov. Brewer? That brought in around $800 million a year in actual new money for K-12, not the circa $350 million a year in pre-existing education money that yours would offer. 

Or even closer to home, how about Prop 301 itself — it enacted a .6% sales tax for education, bringing in around $600 million a year. Your entire plan designates on average about $250 million a year less, from funds that are already designated for K-12 in the first place — the state land trust and the Prop 301 funds. Recycled money is not new money, particularly since you are skimming 30% off the top for your other stated priorities, like the new corporate tax cuts we will surely see in the upcoming session. 

I might agree with your “high-impact” claim if you are talking about the high negative impact that comes from the arbitrary “Aggregate Trigger” that you personally placed in the deal. That provision says that if K-12 spending ever exceeds 49% of the budget, the Legislature can suspend funding basic inflation and reduce their funding by the amount of inflation they received the previous year. If it exceeds 50%, the legislature can take away twice that amount. Forever.  

K-12 is currently at 42% of the budget. It is projected by the nonpartisan Joint Legislative Budget Committee to be at around 46% at the end of ten years, when this kicks in. If we decide to restore full-day Kindergarten at that time, that would put us over 49% right then, causing the cutbacks to kick in. 

I’ll quote conservative Republic columnist Bob Robb on this trigger: “I don’t have a defense for it. How much of the general fund is devoted to K-12 education is a policy choice independent of economic conditions. If there is to be a mandate, there doesn’t seem to be a basis for suspending it because of such a policy choice.” In other words, what besides ideology is the basis for refusing to allow K-12 to be more than half our budget? Education may be the most important thing we fund as a government. Why don’t private prisons have a percentage trigger? 

Furthermore, because the package is going to the voters, this trigger will be placed in the state Constitution and can only be changed by voters, not by a future legislature. This is the Holy Grail of the corporate right wing — a constitutionally protected expenditure limit along the lines of TABOR that will keep our education investment last in the country as long as our state leadership doesn’t change.

That’s why I stated on the floor that it’s appropriate that this provision is called a “trigger” because the trigger is the part of a gun you pull what you want to shoot something. In this case, that something is public education. 

By the way, you included two other triggers in there that threaten to hurt kids, both of which will be constitutionally protected if we vote for Prop 123. Number 1: The inflation funding can be suspended in any year in which economic growth is between 1% and 2%. Number 2: It MUST be suspended if economic growth is less than 1%. I understand that this provides budget flexibility during economic downturns. 

But a student does not have the option of pausing his or her education for the three or four or five years of an economic downturn. Students will simply be forced to attend a school that no longer receives basic inflation funding, through no fault of their own. Why should we make our kids suffer and hurt their future prospects because of a global recession? Won’t our economy suffer in the long run if our kids don’t get the education they deserve, and our workforce is not qualified?

Governor Doug Ducey: “Provides relief from lawsuit abuse so funds go into classrooms, not attorneys' pockets.”

Senator Steve Farley: That “lawsuit abuse” was a suit brought by public representatives of the public schools whose money — provided by voters in Prop 301 — was being stolen by the legislative majority to be used instead for corporate tax cuts. That’s not abuse, that is what lawsuits are for — to right a wrong.

And those legislative attorneys are being paid for by taxpayer money to defend a whole lot of other unconstitutional bills enacted by the legislative majority. The way to stop our money from going into lawyers’ pockets to to force our legislative majority to obey the Constitution in the first place. 

Governor Doug Ducey: Maximizes the State Land Trust by drawing a modest amount as a shrewd investment in our kids.”

Senator Steve Farley: I heard the current treasurer, Jeff DeWit (a professional money manager) and former treasurer Dean Martin, both conservative Republicans, testify before the Senate Appropriations Committee that the 6.9% draw from our education land trust is unsustainable and could invite a federal judge to declare our management reckless and remove our ability it manage that trust. 

That land trust is going to our kids anyway. It is not new money. If we draw their money down at unsustainable levels, we leave less for future generations. If we use principal to pay for current expenses, instead of just interest — or better yet, the readily available surplus — then we are risking our future economic health by blowing it on a few more ineffective corporate tax cuts instead of investing it in our schools. 

And once your ten year plan is over, and the draw drops back down to 2.5%, if Prop 301 is not renewed our schools will be facing around a $1 billion annual fiscal chasm. What happens then? 

There was another simple option — pay for 100% of the settlement out of current ongoing surplus, and then enact a more reasonable, sustainable 3.75% draw in perpetuity to actually increase school funding, keep the trust healthy and avoid a fiscal cliff. Sadly, Democrats were not welcome at your table. 

Governor Doug Ducey: “With this permanent infusion of dollars into our schools that schools can spend as they see fit on their needs, educators will finally have the resources they have been asking for.”

Senator Steve Farley: Of course educators can spend these dollars as they see fit — it was their money in the first place, approved by voters 15 years ago and designed to pay for basic inflation on existing programs. Adding conditions and strings would have been outrageous legislative overreach and would not have settled the suit. 

Yes, educators have been asking for these resources (because voters already gave the resources to them and the legislative majority has refused to pay), but our schools need much more. How do school superintendents feel about this plan? The Arizona Capitol Times asked several in an article this week, and here is a selection of responses:

"There really isn’t a substantial amount of money [in this plan] that makes things better." 

“That $1 million we receive would be only a Band-Aid.”

"It could be of little significance."

"The district has taken a $9 million hit in lost inflation adjustments since 2010." 

"It doesn’t have a major impact, but I guess the silver lining is it could always be worse."

I attempted on the Senate floor to amend the settlement to include restoration of JTED career and technical education funds that were cut last year, devastating those vital programs in all our communities. These cuts must be rescinded in January as an emergency to avoid a death spiral. The amendment was defeated on partisan lines, but I received many public and private assurances from members of the majority that they made a mistake in voting for the cuts and would fix it in January. I hope you are on board with that, Governor. 

You must push forward to provide actual new money for our schools to hire and adequately pay teachers, restore JTED and CTE, fix broken classrooms, buy computers and textbooks, and provide our kids the education they deserve. 

If you don't, things won't get better for our children, our schools, and our economy. Please stop congratulating yourself and get to work.

Governor Doug Ducey: “Increases per-student funding to $3,600 each year. The trend line of funding for our schools has dramatically shifted upward, and that will make a meaningful difference in the everyday lives of our kids and teachers.”

Senator Steve Farley: I agree that the per-student funding would be increased to $3,600 per year. That is, increased from the current $3,427 per year. That is a small bump of $173 per student. 

You may recall we are, according to the US Census Bureau, currently in last place in the country in state support for K-12 education. That “dramatic upward shift” will squeak us past South Dakota into 49th. 

When I stated this fact on the floor during debate, Senate President Andy Biggs countered, “49th is not last.” 

Presumably that won’t be the campaign slogan for Prop 123, either. 

We’ve already heard what superintendents think about your assertion that this will make a “meaningful difference”. Actual meaningful differences require new money and new support.  

We are losing 44% of our new teachers after just two years, and many people are not considering teaching in the first place in part because the pay is so low — we are 42nd in the country in teacher pay. That costs money. 

Money for our computers, textbooks, and buildings have been slashed and not restored. That costs money. 

Our JTED/CTE programs that supply the trained workforce of the future are in a death spiral. That costs money. 

Not once have I heard you say that you will support additional education funding efforts beyond this settlement. 

Not once have I heard you even say you support the renewal of the .6% sales tax for education of Prop 301, which expires in 2021, leaving a fiscal cliff of around $600 million annually for our schools to deal with.  

Once I see you moving forward on education funding beyond using existing education funds to settle 70% of a lawsuit, I will be happy to work with you. Until that happens, this looks like a smokescreen allowing you to act as if you are supporting public education without actually having to do it. 

—> This settlement plan could have been paid for just with our surplus, leaving plenty of money left over for other priorities like JTED restoration, child safety, universities, transportation, and more. We have $450 million in the rainy day fund and another $650 million in cash surplus, $250 million of which (minimum) is considered ongoing revenues. Using only those ongoing revenues and the establishment of a cap on a corporate private school tax credit, we Democrats proposed to settle 100% of the lawsuit, not 72%, and we were willing to work with the Governor to move forward a more responsible version of his state land trust withdrawal. But we were not allowed at the table.  

Instead we are left with this. Proposition 123. I am not yet sure which way I will vote. If we are successful in removing the “aggregate trigger” in January, I will lean toward voting for it, despite the remaining flaws. If this trigger remains, I’m not sure I can in all good conscience condemn the kids and parents and teachers of ten years from now to the effects of that provision. 

Public education is the only proven way of reducing poverty, increasing jobs, and raising the standard of living for everyone. Regardless of whether we choose to support or oppose Proposition 123, it is not enough. We must continue to fight for our kids, our schools, and our future. Please help me in this fight for adequate school support in any way you can.

—> Finally today, another big picture item that affects us all. We hear a lot about the influence of the Koch Brothers on modern politics -- for instance Governor Ducey was recorded at one of their gatherings crediting his political career to their mentorship. But we don't often get details on how their dark money networks operate.

This new investigation in Politico lays out the details and shows how the Kochs may be establishing a third party funded by anonymous corporations and billionaires that only elects candidates dedicated to reducing corporate taxes and regulations, like our own Governor. Whether you see things from the right or the left, you're going to want to follow this story.

Thanks for your continuing faith in me as your Senator. 


Steve Farley

Senator, District 9, Tucson

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