UPDATED: Education deal could boost budget for Kingman schools

Fix for state school budget needs voter approval

Roger Jacks

Roger Jacks

PHOENIX (AP) - The Arizona Senate is set to debate and vote on a package of bills Friday designed to settle a lawsuit filed by schools that argued lawmakers violated the state Constitution by failing to provide annual inflation adjustments.

The scheduled action comes after the House voted to approve plan to pump $3.5 billion into the K-12 education system over 10 years late Thursday.

Senate Majority Leader Steve Yarbrough said he has the votes in hand to enact the measures.

Democratic efforts to amend the bills in the House, including removing language that will cap school future spending, were all rejected by majority Republicans.

The vote was unanimous on the bill that actually funded the plan, but broke along party-lines on the two other bills - one that sends the package to voters in May and another that taps state trust land cash to pay for more than half the proposal.

The action came after hopes for a fast-tracked special session of the Arizona Legislature were dashed when last-minute changes to the bills formalizing a school funding settlement delayed work for much of the day and the Senate went home for the night. Instead, the Senate plans to act Friday.

"The agreement we vote on today puts significantly more resources into K-12 education," Majority Leader Steve Montenegro said. "The legal issues remaining in the lawsuit could have taken months or even years to resolve."

The deal requires legislative and voter approval at a planned may 17 special election. The deal will closes out a lawsuit filed by schools after lawmakers stopped making required annual school inflation adjustments during the height of the Great Recession in 2009.

In addition to failing to give the inflation adjustments, Arizona made many other severe cuts that left schools and parents reeling. According to a 2014 study by the Center for Budget and Policy Priorities, Arizona per-pupil spending fell more than 47 other states since 2008 and funding remains 17 percent below pre-recession levels.

Gov. Doug Ducey called lawmakers into a special session on Wednesday. It is expected to conclude with the anticipated Senate passage.

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PHOENIX - A former state treasurer warned Arizona lawmakers Thursday that settling a school funding lawsuit by boosting withdrawals from the state's permanent land trust fund risks trading one suit for two because the principal of the $5.1 billion fund is at risk.

Former treasurer Dean Martin's testimony was backed up by current treasurer Jeff DeWit, who also opposes the current structure of the deal hammered out by Gov. Doug Ducey, Republican legislative leaders and schools that sued.

Martin told members of the Senate appropriations committee that he believed the state would be sued in federal court for tapping the principal of the fund and schools would be forced to renew their suit because they didn't get their promised money.

Comments Martin made about what he viewed as a done deal angered Senate President Andy Biggs, who ran to the hearing after Martin called it "theater" and said members had been threatened to vote for the proposal.

"What I just heard, a reference that you all have been threatened, you may have countered it, but it is ridiculous, it is scurrilous, and quite frankly below the respect I had for the former treasurer," a winded Biggs told the panel.

The exchange shows just how emotional the special session Ducey called Wednesday night could become.

Lawmakers were rushing to complete their work Thursday, but that was in doubt as the House appropriations committee heard hours of testimony that finally led to a party-line vote supported by Republicans and opposed by Democrats.

Senate committee members earlier approved the three bills, but floor debate remains in both chambers.

The $3.5 billion, 10-year deal requires legislative and voter approval. The Legislature's work is designed to enact the terms of the deal that closes out a lawsuit that began after the Legislature stopped making required annual school inflation adjustments during the height of the Great Recession in 2009.

Schools that sued the state say they are satisfied with the agreement in which they received about 70 percent of the cash they would have received if they had ultimately prevailed in the state Supreme Court.

Stacey Morley, government relations director for the Arizona Education Association, testified that her group would back the measure when voters are asked to approve it at a May 17 special election.

"There's not any way that we would negotiate a deal and then try to undermine it on the other side," Morley told senators. "That is not what we stand for."

Her group was one of the plaintiffs that sued in 2010 after lawmakers stopped making required annual inflation adjustments.

The settlement cash comes from $1.4 billion in general fund money and $2 billion from the land trust.

The deal tapping the state land trust requires voter approval, as does a change in mandatory inflation adjustments that lawmakers sought to give them wiggle room during a recession.

Because the three bills up for consideration represent a legal settlement that's been agreed to by schools, the Legislature and governor, there will be no amendments allowed.

"This is actually a ratification of the compromise of the lawsuit," Biggs told members Wednesday night. "So we're kind of bound by the parties that negotiated that."

The land trust component was proposed by Ducey in June as a separate way to get new money to schools.

Democrats say the state has surplus cash to settle the case without tapping the trust.

Local support

Ducey's proclamation comes with some caveats, but if the proposed plan goes through it would yield an extra $1.3 million for Kingman Unified School District this year.

One of the key facets is increasing the base level of funding per student per year by nearly $120, from $3,524 next year to $3,645. This would require an amendment to A.R.S. 15-901(B)(2) and tapping the Permanent Land Endowment Trust Fund and the General Fund for the money. All of that requires voter approval.

"I'm so happy he's having this session," said KUSD superintendent Roger Jacks, concerning Ducey's proclamation. "This is huge to all of our school districts."

The funding boost, which would be set and maintained through 2025, could impact the district as early as June of next year. However, the KUSD governing board will have to plan for the future without it due to the timing of the election and contract negotiations.

If the funding plan passes the state Legislature, a special election would be held in May at the earliest. KUSD will start budget workshops this month and have a nearly finalized budget by the time the election takes place.

"We have to start putting out contracts in April, and those salaries comprise 85 percent of our budget," said Jacks. "The thing that concerns us are the rising costs associated with that. Our benefits packages, medical and dental insurances, we're not exactly sure how much those are going to go up. We're trying to get those numbers now going into our budget workshops

"Is the $1.3 million going to cover all those expenses? I'm not sure. But for next year, we're going to have to go with a budget that doesn't include it."

Fortunately, the district wouldn't miss out on those funds in the short term. While this upcoming budget wouldn't have those funds available, the district would be able to roll over that money into the following year. That would help the district tremendously, and Jacks already said that "there will be plenty of needs for that funding."

"We're just happy they're looking at funding sources and coming up with ways to better fund our schools," he said.