Republicans split on Prop 123 school funding extension proposals as deadline approaches

A major public school funding plan is set to expire in less than two weeks, but Arizona lawmakers have yet to figure out a solution — and public education advocates are unhappy with the current proposal that GOP lawmakers are pushing. 

At the end of this month, Proposition 123 comes to an end, dramatically shrinking the $300 million in annual revenue shared among the state’s K-12 public schools. 

The easiest way to ensure that funding is preserved is for lawmakers to ask voters to extend it at the next election. But Republicans, who control the legislature and have the final say over what shows up on the ballot, can’t agree on how much should be set aside for schools — and whether the funding extension should be used to enshrine other conservative priorities in the Arizona Constitution. 

How it started: Republicans grapple with funding public schools

The money Prop. 123 sets aside for public schools every year is sourced from the state’s land trust, a portfolio of land given to Arizona by the federal government to benefit public entities, including schools. In 2016, lawmakers sent the proposition to voters to settle a lawsuit launched by multiple school districts accusing the state of failing to abide by a previous voter-approved measure passed in 2000 that directed Arizona to increase public school funding every year to help schools keep pace with inflation. 

When voters narrowly said yes to Prop. 123 in a special spring election, the rate at which revenue from the state land trust was distributed to schools increased from 2.5% to 6.9%. That rate will revert back to 2.5% at the end of June, costing Arizona’s public schools more than $200 million. 

But schools won’t feel the strain just yet: The state’s general fund will bridge the gap while lawmakers argue over what to send to the ballot.

The road to renewing the funding plan has been long and fraught with intraparty conflict and public criticism. Last year, a bid to rewrite Prop. 123 to give some Arizona teachers a $4,000 pay raise fell apart, disliked by Republicans, Democrats and public education advocates alike. Last month, a behind-the-scenes effort to gain Republican support by attaching protections for charter schools, open enrollment, homeschooling and Arizona’s controversial Empowerment Scholarship Account program to a potential extension also evaporated. 

How it’s going: educators raise concerns about restrictions 

The latest attempt to ensure public schools can continue to rely on the revenue stream drew a tepid reception during a Tuesday afternoon legislative hearing. 

With lawmakers looking to wrap up their work in the next few days — a state budget must be passed by June 30 or Arizona’s state government will be forced to shut down with no funding in place for the new fiscal year — Republican leadership in the state House of Representatives rammed through a proposal to extend Prop. 123 rife with restrictions and overshadowed by admissions that GOP wish list items may be added later. 

The eleventh-hour submission would restore the 6.9% distribution rate — much to the dismay of Democrats, who had backed Gov. Katie Hobbs’ push last year for an increase to 8.9% — while at the same time strictly reserving the money for only full-time teachers who meet or exceed their yearly performance reviews. Under the previous funding plan, schools were free to spend the money as needed.

Educators and supporters of public schools were unimpressed by the plan, criticizing it for leaving out critical school staff members and ignoring the realities of teaching. Marisol Garcia, the president of the Arizona Education Association, the state’s largest teacher’s union, urged lawmakers on the House Appropriations Committee to reconsider limiting pay raises to certified teachers. Support staff like bus drivers, crossing guards, nurses and librarians are becoming increasingly hard to hire, she said, but they’re an essential part of student’s daily lives. 

“What does an experience look like for our students when they walk onto our campus? Who’s the first person they see?” Garcia asked. “It’s usually somebody coordinating recess or somebody crossing the street. The next few people they see is somebody in the cafeteria. What is their experience walking in the hallways? That they are clean and safe. That they have access to a clean and safe bathroom. If they fall and hurt themselves, there’s a nurse there. If they’re late, they see an attendance clerk. All of these people are not certified (teachers), but there’s no way that Arizona schools work without some of them.” 

Amanda Lugo showed up to the committee hearing with her son, Kaiden, who is disabled, to speak out against the exclusion of paraprofessionals, who often work under full-time teachers and with special needs students. Lugo is currently employed as one and Kaiden has thrived at school with their help. 

The Prop. 123 renewal includes special education teachers who work full days or take on a full class load in its definition of people who are eligible for salary increases, but paraprofessionals are not certificated, often don’t work full days and they sometimes focus on one student. 

Lugo denounced the move to leave paraprofessionals out of the pay boost, saying their work ensuring student success shouldn’t be ignored. 

“These roles are not optional,” she said. “The things that I have done for my students and continue to do for my students are not optional — they are essential for the success of our teachers, they are essential for the success of our students in special education environments.”

Rebecca Beebe, a lobbyist for the Arizona School Administrators Association, pointed out that the proposal threatens to punish new teachers and fails to distinguish between them and their more experienced counterparts. The extension explicitly mandates that pay increases be allocated equally to all eligible teachers, and hinges that eligibility on a teacher’s performance in their yearly evaluations. Teachers who are rated “developing” or “ineffective,” the two lowest of four classifications, would miss out on the pay boost. 

And, Garcia added, because the proposal relies on the outcome of performance evaluations, the wage increase acts more as a potential bonus than an incentive to stay in the profession or sign onto a new teaching contract. That, she said, likely means it won’t help mitigate the state’s prolonged teacher retention crisis. In September of last year, a month into the academic year, more than 2,000 teacher positions remained vacant or filled by an instructor who didn’t meet standard teaching requirements. 

“We view it as a bonus,” Garcia said. “My concern is that this will not necessarily move the needle as needed than if it went directly to salary.” 

Lawmakers balk at future amendments

While Tuesday’s version didn’t include any reference to GOP school-choice darlings like the previous, stalled iteration did, the proposal’s sponsor wouldn’t rule out adding them in later. Rep. Walt Blackman, a Republican from Snowflake, who voted in favor of the renewal warned that his support could turn into opposition if the plan is amended to deregulate charter or private schools when it next goes before the full House. 

Republicans have long fended off Democratic efforts to tighten oversight of charter schools and the state’s private school voucher program. Last month’s bid to resolve the Prop. 123 issue reportedly sought to enshrine them in the state Constitution, effectively preempting future attempts at regulation. 

Blackman said he is concerned with deregulation that results in special needs students being turned away. He noted that in rural districts like his, there are few options left if schools are allowed to refuse applications. Under current state law, public and charter schools are prohibited from turning away or limiting the number of special needs students they enroll, but school vouchers don’t include the same protections. 

“I want to make it very, very clear,” Blackman said. “If there are any deregulations placed as amendments on anything to do with not holding charter schools, private schools to the same standards as our public schools, I will be a no on this bill.”

In his concluding remarks, Rep. David Livingston, R-Peoria, said that there’s still time to make changes to the referral and that he would support a move to deregulate charter schools or protect school vouchers. He added that more legislation is needed to encourage private schools and charter schools to set up in rural districts, and said he would be willing to address the issue in the proposal. 

“Parents matter. Parents’ choice, parents’ options matter,” he said. “If they want to choose K-12, if they want to go to a charter, if they want to homeschool, if they want ESAs, more for all of those.” 

For Rep. Justin Olson, R-Mesa, the problem with the referral that might cause him to flip his vote later is its distribution rate. The 6.9% rate, he said, might prove to be unsustainable in the future. 

A similar concern was raised last year by Arizona Treasurer Kimberly Yee, who oversees the state land trust. Yee advocated for a 4% to 5% distribution rate, but that idea was panned by both lawmakers and Hobbs, who pointed to the trust’s continued growth as proof that it could reliably sustain at least a 6.9% rate. 

When Prop. 123 was sent to voters in 2016, the trust was projected to increase to $6.2 billion over the next decade. As of last month, that expectation was outstripped, with a value at $8.68 billion. Nevertheless, the referral allows the legislature to reduce the distribution rate if necessary with a three-fourths supermajority vote from each chamber.

The prospect of Republican holdouts may doom the referral’s future. While Republicans hold majorities in the state House and Senate, the party can’t count on a buffer from across the aisle. Democrats appear unanimously opposed to the proposal.  

Ultimately, the proposed extension of Prop. 123 was passed out of the committee along party lines, with only Republicans in support. One Republican, Rep. Matt Gress, was absent. 

The Phoenix Republican has been at the forefront of the effort to renew Prop. 123 for the past two years and was part of last month’s attempt to enshrine school choice initiatives in the state Constitution as a way to garner GOP support. The proposal Gress drafted this year was set to be considered by the full state House of Representatives just hours before the new version was  approved by the Appropriations Committee, but that plan was scrapped without explanation. It’s unclear whether the latest iteration will supplant it, or if the two will be weighed separately.