Arizona's special election is set for May 17 and the biggest hot button issue on the ballot is Proposition 123.
Is it a sham or a solution for education funding in Arizona?
We are taking a hard look at the facts behind the plan, starting with exactly how our state ended up in this situation.
Arizonans are voting on Prop 123 because two votes that we cast in the past 18 years were ignored.
Then, when the Great Recession hit, the state budget was a wreck. The Republican-controlled Legislature made as if those two votes never happened and shorted the schools on inflation funding.
Eventually, the state's Supreme Court ruled that the Legislature broke the law. A judge said schools were owed $1.6 billion in back pay -- but no one knew where all that cash would come from.
Republican Doug Ducey took office as governor in 2015 with that $1.6 billion bill hanging over his head. He came up with Prop 123, a plan that would pull $2.2 billion from the state's Permanent Land Endowment Trust Fund over the next 10 years.
The fund’s main purpose is spinning off cash for Arizona schools. Ducey wanted to boost the fund’s distribution rate from 2.5 percent a year to 6.9 percent. The Legislature would also contribute $1.3 billion from the state's general fund, for a total of $3.5 billion over 10 years for Arizona schools.
The permanent land endowment trust fund started with two huge gifts of land from the federal government to Arizona.
The land as used to raise money to support various beneficiaries, the largest of which is known as common schools.
You'll find land from the trust all over the state – in the mountain areas and in the desert.
When the state sells pieces of its land, it converts it into cash. Their objective is to take the land and generate revenue so that beneficiaries have money.
The state land trust fund isn't like a 401-k or other retirement fund -- those funds are supposed to last till you die -- the land trust fund is supposed to last forever.
But they are alike in one way. People who manage money say you shouldn't touch the nest egg. And every one of the more than half-dozen financial pros we spoke to say they are very worried about the trust fund's nest egg.
As we take an in-depth look at Prop 123 and funding for Arizona's schools, one group who could be greatly impacted by this money is the state's teachers. Dennis Matthews, a sixth grade math teacher, and Perla Rodriguez, a band director, share some of the pros and cons of Prop 123 from a teacher's perspective.
A TV commercial and video posted by the Yes on Prop 123 campaign claim a “no” vote would cut hundreds of millions of dollars from schools.
Here’s what the video says:
"If we vote yes, schools will begin receiving hundreds of millions of dollars next month. If we vote no, our schools will be cut by hundreds of millions of dollars next month. It's that simple."
The reality:
A fact check shows it's not that simple. It’s a clever bit of copywriting suggesting schools will have to cut hundreds of millions of dollars. That’s not happening.
Here's what the claim is based on: The state and many school districts have put together two budgets for next year -- one budget if Prop 123 passes, another budget if it doesn't.
Under the state's “yes” budget, per-pupil spending would climb 6 percent next year with the new 123 money. Under the “no” budget, per-pupil spending would still increase -- but barely -- by 1 percent.
So those “hundreds of millions” in cuts are only paper cuts -- to budgets that exist only on paper.
There haven’t been any anti-Prop 123 advertisements on TV. The campaign has raised only $10,000, versus $4 million in the coffers of the Prop 123 campaign.
But you may have seen the ‘no’ campaign’s video online. The claim we’re looking at is about the so-called “triggers” in Prop 123.
Here’s what the video claims:
“There are so many triggers that pull money from education built into Prop 123: if we ever have a recession, a rise in unemployment or less tax revenue collected by the state.”
The reality:
This video is referring to the dollars that would cover the rising cost of inflation every year. It’s a little too quick on the trigger finger.
There are indeed triggers that would stop payments to schools, but those triggers aren't simply a drop in jobs.
Prop 123 says that if Arizona's jobs and sales tax revenue grow less than 2 percent a year, the inflation money may be suspended the next year. If jobs and sales tax money grow less than 1 percent a year, the inflation money must be suspended.
Over the past 25 years that 2 percent trigger would have happened once and the one percent trigger three times.
Strip away all the talk about funding for schools and Prop 123 is basically a lawsuit settlement that Arizona voters are being asked to approve. If voters reject that settlement, the lawsuit comes back to life.
Attorneys for the Legislature and the education groups that sued the state will head back to court and the case could drag on, according to Hunting, at the Morrison Institute.
Are there other sources of cash? The Legislature spent most of a surplus that might have helped. And new taxes are off the table for a governor who's pledged to cut taxes every year he's in office.
Arizona school districts are ready to be showered by more than $250 million -- the first installment of Prop 123 money. Many have made plans for the money in contingency budgets.
It’s important to know that there are no strings attached on how school districts spend the cash. Some plan to boost teacher salaries, for example, while others don't.
One wild card if there's a yes vote: The five-year legal fight over education funding would end but another one could just be starting.
State Treasurer Jeff DeWit has warned of a lawsuit over Prop 123 that could focus on the big boost in withdrawals from the land trust fund.