Prop. 123 extension: The case for an education lobby initiative
The GOP school choice-higher distribution combo is blatantly unconstitutional.
State Sen. J.D. Mesnard is a bright fellow with an impressive record of conservative policy accomplishments. He was a chief architect of Arizona’s flat income tax and universal voucher program. He is also more philosophically grounded than most leaders in the state’s deracinated MAGA GOP.
So, it is at least a bit surprising that he hasn’t grasped the irony, and contradiction, in trying to combine, in one constitutional amendment, sanctuary for Arizona’s school choice options and a formula for state land trust distributions that violates school choice principles. And given the state Constitution’s separate amendment requirement, the legal futility of the effort.
In 2016, Arizona voters approved a constitutional amendment referred by the Legislature, Proposition 123, increasing the state trust distribution to schools.
Prop. 123 was designed to settle a court case over the state having skipped some inflation adjustments in the per pupil base level used to calculate state aid to public schools. The distribution was increased from 2.5% of the average principal value of the trust over the last five years, to 6.9% of the same five-year average. The increase was deemed to fulfill any required inflation adjustment from a previous ballot measure, Proposition 301 approved in 2000.
The increase was only for ten years, which expires this month. After that, the distribution drops back to 2.5%.
Everyone believes that a higher distribution is warranted. Another consensus is that a higher distribution should be new money, not continue to be used to backfill the inflation adjustment, which didn’t really increase available dollars for K-12 schools. Inflation adjustments will revert to being an obligation of general fund revenues, overwhelmingly sales and income taxes.
After that, consensus falls apart. And efforts to forge a consensus this legislative session have been abandoned.
Any change in the state trust distribution formula requires a constitutional amendment, which in turn requires a vote of the electorate. The legislative GOP position, led by Mesnard, is that the higher distribution should go entirely to teacher salaries. Of late, that is to be combined with some sort of constitutional status for school choice, including cross-border enrollment in district schools, charter schools, and the Empowerment Scholarship Account program. Republicans are fearful that, if Democrats gain control of the Legislature and the governorship, there will be rollbacks of existing school choice measures. And not without reason.
In the school choice model, state funds follow students to the educational environment they or their parents have chosen. Schools compete for students based upon how successfully they use those funds in creating their educational environment. Leaving schools free to decide how best to use resources is an essential element of a school choice model.
If there is to continue to be a higher distribution from the state trust, the formula most compatible with the school choice model would be to continue a per pupil allocation, just as new money rather than to fulfill the inflation obligation. Some schools might use the additional cash to increase teacher salaries to improve their faculties. Some might use it to improve their facilities. Some might use it for specialty curriculum or enrichment activities. Parents and students would decide which improvements create the educational environment they prefer.
Dictating that all schools use all the additional cash for teacher salaries, or dictating that it all be used for anything in particular, violates school choice principles. This circumscribes the ability of schools to make the resource allocation decisions they think optimize their educational offering.
Irrespective of the irony or contradiction, the combination of constitutional protections for school choice and changes in the state trust distribution blatantly violates the state constitutional provision governing amendments. And I say that as someone who would support some constitutional protection for school choice programs, including ESAs. The relevant passage states: “If more than one proposed amendment is submitted at any election, the proposed amendments shall be submitted in such a manner that the electors may vote for or against such proposed amendments separately.”
Over the course of time, the state Supreme Court has changed its interpretive rules about applying this provision to knock proposed constitutional amendments off the ballot. The current rule is a sort of logical nexus test. There is no logical nexus between providing constitutional sanctuary for school choice and changing the distribution formula for the state trust, particularly a change that violates school choice principles. Whether school choice should receive constitutional protection and the distribution formula for the state trust are clearly two separate issues. That they both relate to a broad category such as education has never been enough under any of the high court’s interpretive rules.
Despite changing interpretive rules, the court has been consistent over many decades about what the constitutional provision was intended to prevent: logrolling, or tying disparate provisions together so that people who might not like one provision will nevertheless vote for it because of favoring some other provision.
In an interview on Dennis Welch’s Politics Unplugged podcast, Mesnard repeatedly said that was precisely the reason for the combination: to induce those who don’t like school choice to nevertheless vote for it to give teachers a raise; and to induce those who don’t support more education spending to nevertheless vote for it to protect school choice. If legislative Republicans go forward with this combination and there is a constitutional challenge mounted, as there undoubtedly will be, the transcript of this interview should be sufficient to settle the matter.
Education lobby groups are mulling an initiative for the 2026 ballot to restore a higher distribution from the state trust. If the money could be raised to collect sufficient signatures, there is much to recommend such a course of action.
The ten-year average rate of return for the state trust has been 7.6%, well above Prop. 123’s 6.9% enhanced distribution. Moreover, the 6.9% is calculated against the five-year average principal amount, so the effective rate is even lower, creating an additional margin of safety. The trust’s principal is steadily growing from new land sales and leases.
If the education lobby proceeds, it should make the 6.9% distribution permanent law. Don’t create another artificial funding cliff. If the 6.9% distribution causes an erosion in principal at some point in time in the future, address it then.
Make the allocation to schools from the higher distribution on a per pupil basis, to be used as the schools think best. Honor the school choice principles GOP lawmakers want to violate.
If the education lobby goes the initiative route, it would enable it to get rid of some extraneous Prop. 123 provisions that endure even though the higher distribution is going away.
Those provisions allow the state to skip inflation adjustments and lower the base level under certain economic circumstances and based upon what percentage of total general fund spending the Department of Education constitutes. Allowing the inflation adjustment to be skipped in an economic downturn might be justified, but not failing to catch it up in an economic uptick.
And there is no logical basis for suspending the inflation adjustment based upon a percentage of the general fund budget irrespective of available revenues. The right-to-skip provision kicks in when DoE funding hits 49% of the general fund. Today, it is 47%, so this isn’t an academic concern.
If the education lobby can raise the dough to gather signatures to get something like that on the ballot, I don’t think much of a campaign would be needed to pass it. It would be mostly a continuation of the status quo. I don’t think the GOP school choice-higher distribution combo will pass legal muster to get to the ballot. And if it does, GOP legislators are highly underestimating the opposition to vouchers, even among center-right voters – which I say as a staunch voucher supporter. I think a clean extension would outpoll the GOP combo.
There’s roughly $300 million a year, and growing, in additional funding for public education on the table. Seizing it might very well require some initiative, and an initiative.
Reach Robb at robtrobb@gmail.com.