The hard and wrong Prop. 123 renewal
GOP legislators support only half of the school choice equation.
The discussion about renewing Proposition 123 reveals the extent to which legislative Republicans actually support only half of the school choice equation. They support robust choice for parents and students. For schools? Not so much.
Prop. 123 was approved by voters in 2016. It increased the annual distribution to schools from the state land trust from 2.5% of its asset value to 6.9%. However, the increase was for only a decade, which expires this July.
There isn’t much of an argument against renewing an increased distribution. The ten-year average annual rate of return for the trust is running at 8.4%.
In these debates, critics of a larger distribution make the point that too high of a payout cheats future students. And that could be true. However, too low of a payout cheats existing students. And that’s what failing to renew the larger distribution and revert back to a 2.5% payout would do, in a big way.
The original Prop. 123 was negotiated to settle a lawsuit over the state skipping a few inflation adjustments to state aid to schools as required by a previously enacted referendum. The increased distribution from the land trust was allocated to schools basically based on student count, to be used as the schools thought best.
While some are still skittish about a 6.9% distribution, there appears to be universal agreement not to revert back to a 2.5% payout. The cleanest approach, given the track record, would be to make the 6.9% distribution permanent. The distribution amount is set in the state Constitution and therefore requires voter approval of any changes. If at some point in the future, a 6.9% distribution starts to chronically erode the trust’s principal, an unlikely prospect, a reduction could be referred to voters. That would be vastly preferable to setting up another ten-year funding cliff and another round of political maneuvering.
The cleanest approach would also distribute the money to schools the same way, based upon student count and to be used as the schools thought best. However, as much as the cleanest approach makes the most sense, and would be the easiest to sell to voters as just a continuation of the status quo, no one with an actual say in the matter is proposing it.
The proposal by GOP legislators is still a work in progress. However, the core objective is to require schools to use the increased distribution to augment teacher salaries. To effectuate that, they are concocting a complicated protocol to bifurcate teacher salaries between that portion supported by the increased trust distribution and that supported by other revenues. With a mandated teacher evaluation process tossed in.
Gov. Hobbs and some legislative Democrats have moved toward the GOP position, now also advocating that some of the increased distribution, but not all of it, be earmarked for teacher salaries, without the additional earmarks Hobbs had previously proposed.
To strengthen their position, GOP legislators are citing a study by the Auditor General that found that schools are spending only 53% of their revenues on classroom instruction. This evaluation is produced periodically, and Republicans have chronically mischaracterized and misused it to imply that teachers are being shortchanged by bloated administrative overhead.
In actuality, Arizona schools spend less, as a percentage of overall expenditures, on pure administration than the national average, as reported in the same study. Where Arizona spends more is on plant operations, food services, and transportation. Under federal and state law, those are mostly fixed costs.
Arizona also spends more than the national average, as a percentage of overall expenditures, on what is called student support, such things as nurses, counselors, and libraries. However, such expenditures represent less than 10% of the total. Trimming them and redirecting the money wouldn’t provide a noticeable bump in teacher pay.
What really stands out from the AG study is that, as a raw number rather than as a percentage of the whole, Arizona spends less than than the national average in nearly every category. The only categories in which we spend more than the national average are equipment and land and buildings. Overall, Arizona spends $4,428 less per pupil than the national average.
I’m not one who believes that more money is the key to better student outcomes. However, if Arizona’s pie is smaller than that of other states, it’s hardly a mathematical surprise that fixed costs and overhead will be a bigger slice of that smaller pie.
This is far from the first effort to earmark funds for teacher pay. Initially, part of the proceeds from the special sales tax for education was supposedly set aside for that. Former Gov. Doug Ducey and GOP legislators appropriated general fund monies supposedly to increase teacher pay by 20%.
Because money is fungible, this earmarking strategy underperforms. While average teacher pay has increased markedly, by 35% since 2017 when the general fund earmark was initiated, it hasn’t increased nearly as much as intended. Hence the complicated protocols proposed for a renewal of the increased distribution from the trust dedicated to teacher pay.
Under the school choice model, students and parents are free to decide which school to attend, and their share of public support for education flows to that school. However, schools are supposed to be free to compete for students based upon how they use those resources.
Given that teachers are the key component in student achievement, there should be upward pressure on teacher salaries in a competitive school choice system. However, schools might also want to compete on the basis of the quality of their facilities, their counselling capabilities, or the comprehensiveness of their libraries.
In the school choice equation, schools should be free to use their resources to produce the educational environment they want to offer, with success determined by the ability to attract students. Legislators who truly believe in a competitive school choice system shouldn’t be attempting to usurp or dictate those decisions.
Every session, there are numerous attempts by legislators to micromanage schools. This session, bills cover such details as cell phone use, internet safety, and referring to a certain body of water as the Gulf of America.
In addition to running afoul of the principles of school choice, this isn’t a role allotted to the Legislature by our system of government. The state Constitution says: “The general conduct and supervision of the public school system shall be vested in a state board of education, a state superintendent of public instruction, county school superintendents, and such governing boards for the state institutions as may be provided by law.”
Now, a few acknowledgements and some perspective. Arizona has one of the most robust systems of school choice in the country. Various GOP Legislatures and GOP governors deserve the credit for that.
Additionally, while current GOP legislators show strong support for only half of the school choice equation, Democrats in this state generally oppose the equation in totality. Somewhat surprisingly, Arizona doesn’t really have the constituency within Democratic circles that sees school choice as a civil rights issue, as exists in many other states.
The next step on a school choice agenda should be to move much closer to true backpack funding, where the same taxpayer resources are available to every child and flow to the school of their choice. There are huge disparities in per-pupil funding among our schools, particularly among district schools.
From every perspective, including the school choice equation, a clean and permanent renewal of Prop. 123 makes the most sense. It’s an indication of the sorry state of our politics that it isn’t even an option under consideration.
Reach Robb at robtrobb@gmail.com.