GOP lawmakers push new Arizona education-funding plan

As settlement talks in the lawsuit over education funding reached an impasse Tuesday, Republican legislative leaders quickly unveiled a proposal they say would give schools an additional $500 million a year over 10 years.

The plan would require legislative approval and two votes by the public. And educators who filed the lawsuit and Democratic lawmakers, who would vote on the GOP leaders’ plan, were already criticizing it.

The Arizona Court of Appeals on Tuesday afternoon restarted legal proceedings in the 2010 lawsuit that alleged the state shorted district and charter K-12 schools by not fully funding a voter-approved inflation formula during the Great Recession. The case had been on hold for seven months while the parties tried to work out a deal.

Tuesday, the two sides admitted defeat.

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“Both sides worked really hard to solve the issue,” said Senate President Andy Biggs, R-Gilbert.

The Court of Appeals announcement means the Legislature again owes schools — effective immediately — an extra $331 million a year. But the Legislature is appealing that order and has requested the court delay ordering payments until the appeal is resolved.

School officials also have argued the state owes an additional $1.3 billion in back payments; the court has not yet ruled on that request.

Minutes after the court order was issued, Biggs and House Speaker David Gowan announced their education-funding proposal. Because of a gag order from the court, they declined to say whether the plan had been part of the failed negotiations.

Biggs said the proposal is “tangential to the lawsuit.”

“What we are trying to do is move forward a proposal that we think really provides significant short- and long-term K-12 funding increases,” he said. “On average, it would mean $500 million a year for a 10-year period ... and would not require an increase in taxes.”

Their proposal includes:

- Taking some money from the state’s First Things First program, which gets about $125 million a year from the tobacco settlement for early-childhood-education programs. This change would require voter approval.

- Continuing the additional $74 million a year the Legislature approved for schools for the current fiscal year, plus an annual 1.6 percent for inflation.

- Adding another $100 million a year, plus annual increases of 1.6 percent for inflation. This money would come from higher-than-anticipated revenue last fiscal year.

- Boosting annual funding from the state land-trust’s permanent fund. The majority of proceeds already go to K-12 public schools. A change in the annual amount would require voter approval; some say it could also require congressional approval.

The state budget signed March 12 allocates more than $3.8 billion of the general fund to the Department of Education.

Gov. Doug Ducey has proposed boosting K-12 funding from the land trust’s permanent fund from 2.5 percent to 10 percent each year for the next five years. It would then drop to 5 percent and expire at the end of 2026.

Biggs said the Legislature planned to “adopt and adapt” Ducey’s proposal, but declined to say whether they would change it. Some, including state Treasurer Jeff DeWit, have warned that amount could deplete the fund, which is supposed to benefit schools in perpetuity.

“There are some technical issues that have to be worked out,” Biggs said. “We would work on that with the Governor’s Office.”

The next legislative session doesn’t begin until January, and the next regularly scheduled statewide election where ballot measures are considered isn’t until November 2016. However, the governor and Legislature could hold a special session and call a special election sooner.

Biggs said they were still undecided on whether there would be a special session.

Biggs said he had briefed Ducey on the plan. Only the governor can call a special session.

“I’m really excited with the idea of working with the executive branch on what I would consider a really bold and innovative proposal,” Biggs said.

Ducey did not weigh in on lawmakers’ four-pronged funding proposal, and his spokesman Daniel Scarpinato did not immediately return a call for comment.

Ducey in his January State of the State address called on lawmakers to settle the lawsuit.

In a statement Tuesday, Ducey said he was disappointed negotiations had failed. “Now, I look forward to working with the Legislature to do everything we can to put more money in our classrooms, and to make sure our students and teachers have the resources they need,” he said.

Sen. John Kavanagh, R-Fountain Hills, who serves on the Senate Appropriations Committee, said the proposal has a long way to go.

He said it’s too early to gauge where his GOP colleagues stand on the legislative funding plan, including a provision that would tap a budget surplus. Many lawmakers have balked at spending the money, cautioning the surplus may be temporary, if not illusory.

While Republican lawmakers were briefed throughout the day on the proposal, Democratic lawmakers said the first they had heard of it was a news release sent out late Tuesday that included few details.

House Minority Leader Eric Meyer, D-Paradise Valley, said he was frustrated Republican leaders continue to refuse to pay the $331 million ordered by the court.

“They are denying what the voters approved and the courts have said they need to pay,” he said. “And then they are using smoke and mirrors to say, ‘We are really working on this.’ ”

Meyer said two of the pools of money being proposed — the land trust and First Things First — is not new money but money already earmarked for education. And the inflation limits on the other two pots of money, he said, would give schools less than what voters had approved. He said the higher-than-expected revenue the state ended the fiscal year with is enough to pay for the lawsuit immediately.

“Republican leaders are playing games while the money is sitting in the bank,” he said. “The dollars are there.”

Chuck Essigs, director of governmental relations with the Arizona Association of School Business Officials, said the Legislature will have a hard time convincing voters to take money from First Things First and early-childhood education.

“Most people have great support for the idea of taking children while they are still in that early growth stage and doing whatever you can to help them be better prepared to start school,” he said.

He also said cappinginflation at 1.6 percent on the new funding would again violate the voter-approved Proposition 301.

“Their items just don’t add up to what schools and students need, and it would not be keeping the faith with the voters,” he said. “This is a very important fight. I guess we will have to continue it.”

Republic reporters Yvonne Wingett Sanchez and Mary Jo Pitzl contributed to this article.