State Land Trust and Arizona Schools

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Dana Wolfe Naimark, president and CEO of the Children’s Action Alliance, will talk about what state land trust means for Arizona schools.

TED SIMONS: Arizona received over 9 million acres of land from the federal government upon statehood back in 1912. The land is held in trust with over 8 million acres designated to benefit K-12 education. There are plans to dip further into trust land revenue. Here to talk about the importance of the land trust to children and education is Dana Wolfe Naimark, President and CEO of the Children's Action Alliance. Good to see you again.

DANA WOLFE NAIMARK: Thank you.

TED SIMONS: Thank you for joining us. You did a recent report on state land trust funds for schools. Why?

DANA WOLFE NAIMARK: We are going to be doing a series of reports about education funding. As you know, education funding is front and center for our legislature, for parents, teachers, voters, around the state.

TED SIMONS: Do people understand how these trust-land funds work?

DANA WOLFE NAIMARK: It's incredibly complex. It took me a long time to understand it. There's really two parts of the land trust. One is managed by our state lands department and it's about leases on the land. The other one that's really on the table right now for discussion is called the permanent land trust.

TED SIMONS: And the lease, that's the expendable revenue correct? And the permanent, lawmakers are saying we're taking a certain percentage out now, let's take a bigger percentage.

DANA WOLFE NAIMARK: That's right. So that's funds that come from sales of state land. The funds are then managed by our state treasurer, invested by our state treasurer in trust. But some of those funds go out to schools and other beneficiaries each year. The amount is really dictated by our constitution where there's a formula that dictates the annual amount.

TED SIMONS: Right now it's 2.5%, correct?

DANA WOLFE NAIMARK: 2.5% over the average value of the trust over five years, correct.

TED SIMONS: The plan is to increase that to 10% for the first five years?

DANA WOLFE NAIMARK: That's the Governor's proposal. 10% for five years, then 5% for five years, then back to the current constitutional provision.

TED SIMONS: What are your thoughts on that idea?

DANA WOLFE NAIMARK: We really view it as borrowing from our future. It's like taking an early withdrawal from your 401-k fund, retirement fund, or college fund. You want it to be there for the future. You need a really good reason to take an early withdrawal. It's a loan from our future.

TED SIMONS: Yet those who support the move say there is a really good reason. The schools need that money and they need it now.

DANA WOLFE NAIMARK: School funding is absolutely insufficient today. What I worry about is what happens tomorrow. If we do this early withdrawal we have less money in the future from the land trust for schools. And what else is going to be happening for schools? The path that we're on now, we've had $400 million in tax cuts just since the great recession. That reduces funding for schools. We divert $100 million from public tax dollars to private schools. That reduces funding for public schools. We have a lot of formulas in state statute that we ignore, not just inflation but other formulas, as well. We're not doing repairs on our schools. I really question if we do this early withdrawal, what happens 10 years down the road.

TED SIMONS: The JLBC says the cost to the plan is $3 billion over that 10-year period. That's of course id over the 10-year period. The treasurer has gone way out there and obviously that money would increase as far as the loss.

DANA WOLFE NAIMARK: The money increases over time. But if I take an early withdrawal and especially if you dip into the corpus of the fund -- if you're taking out more than the earnings, which we could be under the Governor's proposal, you have less money in the future. Are we hurting tomorrow's students for the sake of what may be a crisis today, which may make sense but only if it's part of a bigger plan and we have something we're building to for the future.

TED SIMONS: For those who say the needs right now outweigh the future needs, you say?

DANA WOLFE NAIMARK: I say I'm worried about the future needs. We're on this path of reducing state revenues. It's not clear to me that we're going to have sufficient funding in the future. We have a governor who has vowed that he will not support a tax increase for public schools. We have a dedicated sales tax the voters passed in 2000 that expires in less than six years. When that expires we lose $500 million that we're getting today. I think the state land trust plan has to be part of a bigger proposal that really makes a commitment to sustainable funding.

TED SIMONS: When you say a bigger proposal that makes a commitment. What kind of commitment? What kind of bigger proposal?

DANA WOLFE NAIMARK: I think we need a commitment to resolve inflation lawsuits. A commitment for sustainable long term funding. What is that funding source going to look like in 10 years when the sales tax expires and when the land trust acceleration expires?

TED SIMONS: For those who say -- we have so many of these debates on "Arizona Horizon," it's constant. They say it's really not so much that not enough money is spent on schools, it's that it's being spent in the wrong place. Overloaded for districts and administration and not enough into the classrooms. We hear a lot of that, valid?

DANA WOLFE NAIMARK: Well, we have the third lowest administration spending per student in the country. It is not valid to say we are wasting money on administration. We are very worried about money in the classroom but the reason that's low is that overall funding is low. What we need to recognize is that there's funding spent outside of the classroom that absolutely supports teachers and students. Things like school buses and school lunches are kind of obvious, the air-conditioning. Things like reading coaches for teachers, special development for teachers, extracurricular activities. School counselors and nurses are not counted as classroom funding but, they make teachers' jobs work better and they help students.

TED SIMONS: Yet we hear all that and this plan, this idea of dipping into the trust and maybe the corpus as well here. $1.8 billion over the first five years. I think it averages what? $300 per student, something like that, added to what's already spent. They are saying that's nothing to sneeze at.

DANA WOLFE NAIMARK: It's certainly a big deal that Governor Ducey and our legislative leadership have stood up and said schools need more funding. I think that is very significant. I love the sense of urgency I'm hearing at the Capitol now. I just think we need a bigger plan. And by bigger, we need to have more funding sources than just the state land trust.

TED SIMONS: With that in mind, though, and keeping in mind the nature of the legislature and the Governor's Office. The Governor said he's not going to raise taxes. I don't see a lot of lawmakers at the Capitol getting all hot and bothered about raising taxes. If raising taxes is basically out of the question, maybe it shouldn't be, but out of the question with these folks. Do you jump on board because it's the best deal you can get?

DANA WOLFE NAIMARK: If it's part of something bigger. Our state fund revenues are growing right now. We have not heard a commitment from the governor of how they will invest those dollars in education. We have our rainy day fund, savings account. How will they invest those dollars in education? How will they support renewing or extending the current dedicated sales tax the voters passed? That's not a tax increase but if we lose that we're in bigger trouble than we are today.

TED SIMONS: This is a nice fine point but you want to see a more macro look.

DANA WOLFE NAIMARK: Absolutely.

TED SIMONS: Good to have you here. Thanks for joining us.

DANA WOLFE NAIMARK: Thank you, appreciate it.

Dana Wolfe Naimark: president and CEO of the Children's Action Alliance

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