What is Proposition 123?
Proposition 123 is a referendum that will ask Arizona voters to increase K-12 school funding. If the Proposition is passed, it will infuse $3.5 billion over 10 years into the K-12 education system.
Where will the funding come from?
While a state general fund obligation will continue to be substantial, a majority of funding will come from the increased payout from the State Land Trust (from 2.5% to 6.9%) via Proposition 123. Also, an additional $625 million will be appropriated for K-12 education and come from the state’s general fund ($50 million for five years and $75 million for the next five years). The inflation requirement will continue beyond the ten-year funding deal that Prop. 123 provides.
How are schools planning to use the funding? Can I be involved in that process?
Many schools are developing their plans now for how they plan to use the funding. Many are planning to use the funds to support teachers. If you would like to be involved in this process, you can attend your local school board’s meetings where they will be discussing their proposed budgets.
When will schools receive funding?
If passed, schools will receive funding in June.
Are there restrictions on how schools can use the funding?
No. Locally elected school boards will decide how best to use the funding they receive. There are no strings attached to the funding.
Is there any difference in funding for public district schools or public charter schools?
No. There is no difference in the amount of funding that public district or charter schools will receive. They all receive the same amount per pupil that will be distributed through the funding formula.
Why is Proposition 123 an important question for Arizona voters to decide?
The passage of Proposition 123 will provide additional funding to support Arizona schools, which sustained the largest per pupil funding cuts among all states during the Great Recession. It is a first step towards a long-term, sustainable and dependable funding plan for K-12 education. It will settle the 5-year inflation funding lawsuit and will guarantee a significant dedicated funding source for annual inflation adjustments to school funding.
Will this solve Arizona’s education funding issues?
Proposition 123 is one step towards a long-term, sustainable and dependable funding plan that is needed for Arizona education from the early years through college and career. We believe that other steps in the future should include increasing teacher pay, updating and addressing the renewal of Proposition 301, restoring funding to our universities and community colleges, ensuring all children can read proficiently by the end of 3rd grade and restoring Career and Technical Education funding.
How did Arizona get into this situation?
Arizona voters passed Proposition 301 in 2000 that includes a 0.6 percent sales tax to support education. It also included a measure that requires inflation to be included in the budget each year. However, during the recession, inflation was not funded, which resulted in a lawsuit in 2010. After years of litigation, the parties reached a tentative agreement which was presented to legislators during a Special Legislative Session in October 2015. As a result of the Special Session, a referendum was passed to give voters the opportunity to choose whether or not to consider increasing the payout from the State Land Trust to assist in paying for inflation funding and to increase additional education funding from the general fund. This referendum is now known as Proposition 123.
What is the State Land Trust?
When Arizona became a state, Congress granted lands to the state that are managed for the purpose of generating revenue primarily for K-12 education. These lands serve as a long-term savings account for Arizona education. Since statehood, some of these lands have been sold and the proceeds placed into a fund. This fund is then invested in securities and bonds. (The value of the fund is currently estimated at $5.2 billion (growing from $1 billion in 1999) and the average return for the last ten years is 7.3%.)
Right now from this fund, 2.5% of total fund is given to K-12 education for classroom expenditures; Proposition 123 proposes to increase that to 6.9% for ten years to assist in paying for inflation adjustments. It is estimated with this additional draw, the value of the permanent fund will be over $6.1 billion in ten years – after Prop. 123 expires.
What happens if Proposition 123 is not passed?
If Proposition 123 is not passed, schools will not receive this funding in June and the inflation funding lawsuit will continue, likely for years, with an uncertain outcome.