School Funding

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A judge has ruled that the state must immediately pay schools $137 million for money lost during the Great Recession due to inflation. Howard Fischer of Capitol Media Services talks about the ruling.

Ted Simons: Good evening, and welcome to "Arizona Horizon," I'm Ted Simons. A judge ruled today that the State must immediately pay Arizona schools $317 million as a first payment to make up for over a billion dollars frozen by the legislature during the recession. Howard Fischer of "Capitol Media Services" is covering the story. Howie, good to have you here. This is a little bit complicated. We've talked about it before but basically what the judge said is, my earlier decision, do it now.

Howard Fischer: Do it now. The state had come in and asked for a delay. The back story on this is Arizona voters in 2000 said, we're going to increase our sales tax by .6 of a percent%, and we want to have you adjust state aid to inflation every year, 2%, whichever is less. Until 2000 comes along, the state's economy goes in the tank. They say, we really can't afford that. And it continues in 10, 11, 12 and the School Districts sued. Wait a second; what the voters said is what the voters meant. There were arguments, well, you can't really force us, and it doesn't mean anything, what the voters said. Send it back to the judge. Here's the amount of money. The State said, we're not quite ready for that yet. The judge said no, the kids need the money, it's time.

Ted Simons: This is serious buckage, $317 million, incrementally up from there, well over a billion dollars here. Are we even at the back payment? This is to get everything up to where it should have been, you still have the four years when you didn't do anything.

Howard Fischer: Just to be where you should have been if you rebase it, so to speak. $317 million, about $230 per student. Then 323 the next year and the year after that, and on and on and on. That doesn't count the part the judge is going to hear in October. While they were messing around at the capitol, about $1.3 billion that should have been paid for schools was not.

The state is saying, we can't do it now. We're behind in books and repairs and fixtures and we can use the money. So we're talking some major payout here, and the issue is where's the money. Now, this year's not a problem. We've got about $450 million in the rainy day fund, we can clearly deal with that. Next year they were counting on that 450 to balance next year's budget. You say 300 and some million out of that, and add another $320 million next year, we're back in the hole.

Ted Simons: And what is the timetable there? There has to be an appeal. The Governor said this would be devastating to the state of Arizona, having all that money going to education. Be that as it may, fact is as far as the budget is concerned, it is devastating. This turns things upside down.

Howard Fischer: It definitely does. But the question becomes why. Very clearly some of the folks are saying, number one, you have an obligation. Raise taxes. That's a little difficult in Arizona, you need a two third vote of the House and Senate. Last time we had a tax increase it was temporary and the voters did it. Number two, cut some of the tax rates. We have cut corporate taxes by 30%, accelerated depression, a whole series of business tax breaks under the premise we're going to cut our way out of the recession. Well, I've looked at the jobs figures and that may not be working. The question is, should we maybe reconsider those.

Ted Simons: I know some lawmakers are probably wondering, should we reconsider an appeal, considering you better get a handle on this relatively soon. You can fast-track it to the courts and hope, but you've got to come up with the numbers and balance the stuff soon.

Howard Fischer: Somehow there's this idea if -- it's like I have a 2-year-old grandchild. She didn't understand tomorrow. She understands now. At the risk of equating 90 lawmakers with my 2-year-old grandchild, if we don't have to do it now, it doesn't count, and maybe it's someone else's problem down the road.

Ted Simons: There had been efforts by the education community to work something out with the legislature, were there not? How far did they go?

Howard Fischer: There was an offer on the table saying look, let's just rebase the state aid, the $317 million we're talking about and we will forego that $1.3 billion. The legislature said no, we think we can kill the whole thing. You can see how well that worked out. The lawyers are going to sit down for both sides and figure out what's the risk. The judge will say in October you don't deserve the $1.3 billion, to the state, you do deserve it.

Ted Simons: And again, how do you appeal what is basically a failure to honor a ballot measure? The voters made it quite clear they wanted X. The legislature did Y. How do you appeal that?

Howard Fischer: There were two theories to that. Number one is the argument that somehow the words don't quite mean -- you put three attorneys in a room and I'll give you six opinions. The other is a more interesting constitutional question. Can the courts order the legislature to do anything? Courts cannot order a tax to be imposed. Assumption is the legislature will follow what the courts want. I don't think anybody want that constitutional crisis. But there are options, 20 years ago for example, when the Supreme Court found the funding unconstitutional, they said if you don't do it we will cut Allstate aid to schools and we'll find another way of doing it. There are always options out there.

Ted Simons: And there is a governor's race. Real quickly, this is going to fall into the lap of some lucky new governor, isn't it?

Howard Fischer: I think a lot of them are wondering do I really want this gig.

Ted Simons: Howie, good to have you here. Thanks for joining us.

Howard Fischer:Journalist, Capitol Media Services;

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