The Farley Report from Phoenix #249: 4-20-16

The budget talks are still not bearing fruit, despite the hopes of many that we would adjourn soon and stop the damage to Arizona. I've heard the major sticking point in the budget talks here is the education current-year funding issue — Democrats and Republicans in the House and Democrats in the Senate want to eliminate or delay it, while the Senate Republican leadership wants to keep it in place for the upcoming fiscal year.

Right now school districts budget based on the previous year's enrollment. This new plan means that districts will be paid for the current year in October based on current-year enrollment, with no way to budget in advance. The computer systems developed to make this happen are not ready for prime time and have not yet been proven to work. And even if they did work, many districts in the state — especially those with shrinking enrollment — would see major cuts in funding, cuts that in some cases would amount to more money than they would receive if Prop 123 passes. This is important stuff, and it is confounding that we would make this move to cut our schools further.

Today would be a good time to call all Senate Republicans and ask that they include in the budget the elimination of the current year funding scheme. Here’s their contact info. 

Meanwhile I’m going to jump into the hornets’ nest and talk about Proposition 123. Spoiler alert: I’m voting yes. Find out why after the Farley Report pledge break…


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—>  Early ballots for Proposition 123 go out in a few days. I know that many of you are struggling with this. We all are to some degree. Good people — who know that adequately funding our public education system is our number-one issue — are voting differently from one another. 

It is a flawed plan, and I argued against many of the particulars on the Senate floor last October. Believe me, I know the problems — you can read all about them in past issues of the Farley Report. 

But I have to say it’s important not to over-sell those problems. I have read some assertions recently that are flat-out wrong. If you are going to vote No, I’m sure you want to make your decision based on the facts, not on hearsay. You are a dedicated Farley Report reader, after all.

To help contribute to the discussion, I’ll respond to some misunderstandings I’ve heard about Prop 123.

This is only a ruse to allow massive sales from the land trust to Gov. Ducey’s cronies.

First, let’s define what the land trust is. Put simply, it’s two things: 1) a portfolio of land given to us by the Federal Government in territorial days and managed by the State Land Department to gain money from sales and leases to support public schools (currently worth more than $70 billion), and 2) a Permanent Fund of money earned from those leases and sales that is being invested in equities and bonds to earn interest. The additional money proposed by 123 to be withdrawn for the next ten years is coming from the latter, not the land itself. Yes, land will be sold over the next ten years and that money will be placed in the Permanent Fund, but there is no assumption in the plan that there will be increases in the sales of that land, to cronies or anyone else. 

The land trust will be emptied by 123, and we will have eaten our seed corn.

Again we are not talking about the land trust itself, but the Permanent Fund. For context, in 2005, the balance of that fund was around $1.5 billion. By 2010, it was around $2.5 billion. Now, it is around $4.8 billion. If 123 passes, in 2025 it is projected to be $6.2 billion. If 123 fails, in 2025 it is projected to be $9 billion and schools will not have received $3.5 billion over that time. Yes, $6.2 billion is less than $9 billion, but it is not zero, and it does not amount to “eating the seed corn.” And one could legitimately make the argument that it is more important to boost funding to our schools over the next ten years (to make up for the cuts of the last eight) than to have a little more cushion in a bank account ten years from now, especially given the context that until recently, the fund balance was less than $1.5 billion. 

Those triggers mean that the money will never get spent on our schools anyway.

Yes, the triggers are bad, and should not be in this plan. But let’s look at them individually to see what risk they pose. 

1) The economic growth trigger: In times of economic downturn, defined as years in which both sales tax collection and and employment grow at a rate between 1 and 2%, the legislature can choose to suspend the inflation payments to schools for one year. If those growth measures are both below 1%, the legislature must suspend the inflation payments for one year. In both cases, once the economy recovers, the inflation payments to schools resume at the level at which they would rise if the payments had not been suspended. 

2) The 49% trigger: Starting in FY2026, the Legislature could choose to suspend the inflation funding for schools for the current year, and reduce it by inflation for the following year if K-12 funding represented more than 49% of overall general fund spending. If overall K-12 spending was more than 50% of overall general fund spending, the legislature could choose to suspend the inflation funding for schools for the current year, and twice that amount for the following year. Currently, K-12 is 42% of the overall general fund. 

These triggers are just plain stupid. There is absolutely no reason at all for the arbitrary 49% trigger. I tried to amend them out but my efforts were blocked by a party-line vote. But only one of them is mandatory — the economic growth trigger if both growth measures are less than 1%. The rest are voluntary. Which is a big problem if the anti-education current majority is still in charge. But with a new pro-public education majority in charge (hopefully as soon as November) the voluntary triggers will never be used. So with this in law, voters will actually have a new incentive to elect pro-public education candidates — they are the only protection against school cuts! The mandatory trigger, and the rest of the triggers, can also be eliminated by voters when we renew Prop 301, the education sales tax, before 2022. 

Look at the horrible people supporting 123 — Ducey-backing millionaires and Joe Arpaio!

Look at who else is supporting 123 — parents, teachers, and school board members whose advocacy forced Gov. Ducey and the legislative majority to consider a settlement after six years of fighting in the courts. Choosing which way to vote based on which supporters you like or don’t like is not a great way to make public policy. 

Prop 123 will just create another lawsuit for violating federal law.  

Treasurer Jeff DeWit (who is also the Arizona campaign chair for Donald Trump) has claimed that he may file suit to challenge 123 since he believes it would violate the federal Arizona Territorial Enabling Act that governs the land trust. However, former Congressman John Shadegg (who enacted changes in that act in the late 1990s and knows it well) said that in his opinion the language he pushed through at that time allows for further land trust distribution changes by Arizona without going back to Congress. And he also said that if a congressional amendment is needed, “it would be passed without a struggle.” 

A defeat of Prop 123 will just throw it back to trial, and the State Supreme Court will rule in favor of the schools.

Yes, the State Supreme Court already ruled that Prop 301 said the Legislature must fund inflation, then they sent it back to a lower court to decide on the amount. After the legislative majority had fought for five years using taxpayer money on pricey attorneys to do so. Then they refused to settle until teachers, students, parents, and pro-public education legislators cranked up the activism and forced them to reach a deal. 

In the meantime, Gov. Ducey has already appointed an anti-public education lawyer from the Goldwater Institute to the State Supreme Court. And his bill to pack the court for political reasons, HB2537, is now ready for final floor action in the Senate. That bill would allow the Governor to appoint two more anti-public education judges to what would become a seven-member Court, up from the current five. 

If 123 fails, the legislative majority would continue their appeal as long as it takes, using that taxpayer money they can’t seem to stop spending on pricey lawyers. Even if this newly conservative State Supreme Court ruled against them again, they would take it all the way to the U.S. Supreme Court, likely taking another six to eight years more in the process — six to eight years of no raises for teachers on top of the last six to eight years with no raises. Would there be a public education system left to defend? Who would be left to teach our kids?

We should teach Ducey and the legislative majority a lesson. If we vote no, they will shamefully admit they were wrong and decide to spend the current surplus on education after all. They will give up their addiction to corporate tax cuts. 

I can certainly understand the desire to “teach Ducey and the legislative majority a lesson”. Their record on public education is reprehensible. But who will really pay the price if this goes down? 

Gov. Ducey and the legislative leaders will just say that they tried their hardest, but the people don’t want to fund public education. And they will use that “lesson” to further justify their attacks on the system — eliminating desegregation funds, instituting a statewide private school voucher system, and pushing current-year funding. And they will continue to push corporate tax cuts that will reduce the money available for schools. Nothing about the defeat of 123 will change their behavior — the only way to change their minds is to change their bodies in November and elect a new majority.

The real victims will be teachers, schools, and our kids, who will otherwise get the new money starting in June. I do not want our teachers — our best hope for a bright future for our kids and economy — to feel that we are choosing to not support them so that we can make a political point, as tempting as that point may be. 

I understand the issues and the context.  I’m voting Yes. 

Despite the flaws, it is the best deal the current majority is willing to do, and it is a first step to stop the bleeding as we move beyond Prop 123 to return our education system to full health. 

Teachers who have not had a raise in as long as eight years, 44% of whom leave within the first two years of their hire because of the low pay and lack of support, will be getting raises starting in June according to contracts that are already being negotiated. New teachers will be hired in some districts. Real progress will come from the average of $350 million a year in money going into our classrooms. 

Let me emphasize. This is just the start. The only way for us to move beyond this start is to elect a different majority in November. 

Luckily, this is just the year to do that. The electorate is motivated and will turn out in large numbers in this Presidential year, there are excellent candidates running in key districts, and they will have the support they need to win. If we elect four new Democratic senators, there will be a different majority in the Senate. If we elect seven new Democratic representatives, there will be a different majority in the House. And that will mean a new majority for true investment in public education, which is something that voters of all parties will endorse. 

A victory for even a flawed 123 will not hurt that goal. The campaign to renew the education sales tax in Prop 301 will start right away, with the momentum that would come from a successful statewide vote for education funding. A legislative majority would be the primary focus in November, and success in that endeavor would mean restoration of funds for building renewal, computers and textbooks, all-day Kindergarten, and much more to finally move us out of last place in the country and into a future of hope and prosperity for all Arizonans. 

55% of Arizona babies born last year were born into poverty. Quality public education is the best tool we have yet found to lift people from poverty. We need to take the first step in Prop 123, then the next step of a new majority in November to start us on the path to building the public schools we all deserve.  Whether you choose to join me in voting Yes, or if you choose to vote No, I respect your decision. I only ask that we unite in November to solve this problem for the sake of our state once and for all by electing a new majority. Are you with me? 

—> If you’d like to talk with me in person about my position on 123 and hear a panel discuss the facts and the choices, I will be speaking this Sunday on Tucson’s Northwest Side. Note the time change:

Sunday, April 24, 12:15 p.m.
Mountain Vista Unitarian Universalist Church
3601 W. Cromwell Dr.
Tucson, AZ 85741
Sponsored by:  Pima County Interfaith Council and Unitarian Universalist Church

Thanks for your continuing faith in me as your Senator. 


Steve Farley

Senator, District 9, Tucson

If you like my representation and want to keep me in office, CONTRIBUTE TODAY!