Ariz. Governor Signs Deal to Settle K-12 Suit

Special election set for voters to sign off

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Arizona Gov. Doug Ducey has signed legislation intended to pump $3.5 billion into K-12 education over the next decade to settle a long-running lawsuit stemming from the state's decision to raid school spending during the Great Recession.

The deal still requires voter approval in a May 17 special election. Ducey said he will campaign to build public support.

Calling it a victory for Arizona schoolchildren, the Republican governor approved the legislation after it was passed Oct. 30 during a special legislative session that featured several emotionally charged exchanges over how to properly pay for public schools.

Recession-Era Cuts

Arizona is one of the most striking examples of states still dealing with the fallout from their decisions to slash education spending when the recession ravaged budgets during the last decade.

A voter-approved referendum in Arizona has long required lawmakers to provide annual inflation-based increases to K-12 education, but the legislature quit making the payments when the recession hit and decimated the housing and construction industries that had been the linchpin of the state economy.

Schools sued over the loss of the inflation funding, and the five-year legal case wound its way through the courts.

Schools say they are satisfied with the agreement, in which they are to receive about 70 percent of the cash they would have gotten if they had ultimately prevailed in the state supreme court.

The settlement cash would come from $1.4 billion in general fund money and $2 billion in state land trust proceeds.

"Together we're sending a strong message about the value of public education in our state," Ducey said before signing the bill as lawmakers, educators, and other supporters looked on. "To our teachers—we know your worth... With this plan, you'll have the resources you've been asking for."

Schools will receive $3.9 billion in the current budget year from the state general fund, including $3.4 billion in basic school aid. The bills approved Oct. 30 would add about $300 million a year to that total.

Democratic efforts to amend the bills in the Senate and the House, including removing language that will cap future school spending and changing how the plan was funded, were rejected by majority Republicans.

Ducey's first-year budget left K-12 funding flat, and he and fellow Republicans faced vocal pressure in recent months from parents and voters who are becoming increasingly frustrated over education spending. A 2014 study by the Center for Budget and Policy Priorities found that Arizona's per-student spending had fallen more than that of 47 other states since 2008, and funding remains 17 percent below pre-recession levels. The state is ranked 50th in per-student state funding for K-12 schools, according to U.S. Census Bureau figures from 2013.

Other states are dealing with similar situations.

In Washington state, the highest court ruled in 2012 that state funding for education was not adequate, and lawmakers there have been scrambling to come up with a solution ever since.

In August, state justices began fining the Washington legislature $100,000 a day. They said even though lawmakers had increased K-12 spending, they still weren't setting aside enough money to educate the state's 1 million schoolchildren—something they are required to do under the state constitution.

Washington state lawmakers have pledged to address the issue when the legislature convenes in January.

Funding Source

In Arizona, the deal would increase withdrawals from the state's $5 billion permanent land trust from 2.5 percent a year to nearly 7 percent.

The land trust component that Ducey proposed in June as a separate way to get new money to schools became a key funding source for the settlement, providing 60 percent of the cash. The remaining $1.4 billion would come from the general fund.

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Senate President Andy Biggs, a Republican, chided those who criticized the plan as insufficient.

"The reality is this is a sunny day, a day to be grateful to be an Arizonan," he said.

School officials and Democratic lawmakers said the money marks a good start but much more needs to be done. They noted elections next month in which many school districts will ask voters to approve new bonds and budget-limit overrides.

Vol. 35, Issue 12, Page 18

Published in Print: November 11, 2015, as Arizona Governor Signs Deal to Settle K-12 Funding Suit
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