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1:50 PM Thu, Nov. 15th

Prop 123 money facing delays, court challenges

KUSD is hopes the Prop 123 money comes through soon so buses like these at the maintenance facility on MacDonald Avenue can get the repairs necessary to get them back on the  road. (AARON RICCA/Miner)

KUSD is hopes the Prop 123 money comes through soon so buses like these at the maintenance facility on MacDonald Avenue can get the repairs necessary to get them back on the road. (AARON RICCA/Miner)

KINGMAN-Proposition 123 results have been declared legitimate by the Arizona Secretary of State's office, but new roadblocks may delay or prevent the money from infiltrating Kingman schools.

The confusing and controversial measure narrowly passed-official results released last week show Prop. 123 won by less than 20,000 votes, or 1.8 percent statewide and passed by 10 percent (55 percent in favor, 44 percent opposed) in Mohave County.

The measure is expected to add $3.5 billion to public and charter K-12 schools over the next 10 years by drawing a higher percentage of revenues from the state trust fund. According to a 2015 U.S Census report, Arizona near the bottom of per-student spending.

Challenges to the measure have already surfaced.

Legalities and Lawsuits (Again)

According to Howard Fisher of Capitol Media Services, the state Board of Investment, headed by Proposition 123 foe Jeff DeWit, is raising new legal questions about whether it can give schools the extra money voters just approved.

In a letter Tuesday, DeWit, who as state treasurer is chairman of the board, is asking Attorney General Mark Brnovich whether the new formula for taking money out of the state land trust is legal. DeWit is repeating his contention that any change requires approval from Congress which provided Arizona with the land in the first place.

Both Gov. Doug Ducey and legislative leaders who supported the ballot measure have taken the position such consent is unnecessary.

But the request raises some new questions about not just the legality of the measure but the timing of the distribution-and even whether some public schools are eligible.

Brnovich does not have a lot of time to respond: The ballot measure specifically requires the treasurer to distribute a lump sum of nearly $260 million to schools by the end of June.

In his letter to Brnovich, DeWit points out that one lawsuit already has been filed in federal court seeking to have the increased funding declared illegal given the absence of congressional action. He wants advice on whether his office can withdraw the money and give it out while that lawsuit is pending.

Along the same lines, DeWit said board members want to know if they will be personally liable if they go ahead and distribute the money and a court later declares the move unlawful.

A May 24 Arizona Republic article by Mary Jo Pitzl stated education advocates pointed out that even with the $3.5 billion promised by Proposition 123 over the next decade, Arizona's schools need another $1.2 billion to restore cuts made since the recession.

Who gets what, if anything at all

Kingman Unified School District will receive a 2016 funding increase from Prop 123 of nearly approximately $1.4 million for its estimated 6,326 students.

KUSD Superintendent Roger Jacks said he would first like to use the money towards teacher and staff salary increases. Other uses down the line would include improvements for the aging bus fleet and security cameras at the elementary and middle schools.

"I want to help protect the students," he said. "Plus, our bell systems are out of date. We're always making repairs."

Additional money would supplement cash flow from the federal government to pay for salaries, maintenance and utilities. Jacks simplified school finances and government payments by likening it to having to stash money between paychecks.

"There are certain times of the year the district gets its money from the government. We have to have extra dollars on hand to pay bills in between those periods. Prop 123 will give us extra cash reserves."

Jacks also clarified that he is not exactly sure when the money will be flowing to the district-possibly in the next few weeks.

He couldn't say how he or KUSD staff voted, but clarified that he distributed plenty of information on the measure through a staff-wide email detailing the components of the proposition and encouraged people to look at the secretary of state's website for the exact wording of Prop 123.

Should KUSD get the extra money, administrators will create a budget plan for school board review and approval.

Kingman Academy of Learning has laid out budgets for its 1,300 students. The Academy received $8.4 million for the 2015-16 school year. They'll have roughly $8.6 million for 2016-17. They are slated to receive an additional payment from the state trust of $209,000 by June 30. The proposed yearly budget for 2016-17 if Proposition 123 holds - along with the $209,000 this summer - equates to roughly $8.7 million.

"We want to take that money now," said KAOL Business Manager Brownell Hamlyn. "We need it desperately."

"When we did our budget planning for next year, we did not include the money from Prop 123," said Superintendent Susan Chan. "We have budgeted very conservatively, holding down costs wherever possible."

"There are always extra things we could do with that money. We didn't even consider it in the budget process. I was concerned about something like this happening."

Brownell cited approximately $450,000 in transportation costs as a significant burden to the charter school. KUSD gets additional cash for those costs that include buses, fuel, insurance and maintenance.

"The first year charter schools existed, they got state money for transportation services, but the next year the state took that away."

Chan emphasized that the money should be spent on learning.

"Our people got salary raises this year. That money needs to go help the kids in the classroom in one way, shape or form."

Elections and lawsuits are pricey

The Arizona Secretary of State's Office stated that the state Legislature appropriated $9.3 million to pay for the special election. That money is distributed to Arizona's 15 counties by the Secretary of State's office. The counties will send in reimbursement requests in June; however, the hard and final numbers won't be available for a few months.

As far as how much the last lawsuits and present financial bungles will set the districts back is sketchy at best.

"It is hard for our office to narrow the number to the exact amount because we do not have that information. Our office manages the investments and cannot see line items from individual departments," said Sean Dollman, deputy treasurer of Administration for the Office of the State Treasurer.

In a report by the Arizona Tax Research Association (ATRA), the 2010 lawsuit was settled for roughly $259.3 million - not counting legal fees.

The Prop 123 portion of the special election cost taxpayers nearly $10 million. According to ATRA, there are communities within Arizona whose property tax will increase because of Prop 123. The future is unknown but Joint Legislative Budget Committee (JLBC) has stated that the Permanent Land Endowment Trust Fund will be approximately roughly $2.8 billion less now that Prop 123 has passed.

Alternate plans

The two Kingman school districts will still be able to operate normally should the extra money fail to deliver on time, but they will have to forgo any salary increases, facility and bus improvements or new technology purchases they hoped for.

Jacks reiterated that any extra money would plug holes in KUSD operations, but KUSD will have to deal with the cards at hand.

"Part of Prop 123 is that it would give us more of a cash reserve. But were looking to get the most out what money we have."

Chan stressed that in the end, the public pays one way or another, but her schools will continue to charge forward regardless of political and legal fisticuffs.

"The people this hurts the most are the students. Arizona's ability to attract high quality teachers is directly related to our ability to pay them well."

"We are good to go. We've had to work with what we have," Chan said. "The state needs to figure out a way to fund education adequately so students have an opportunity to receive the best education we can provide."