Three local journalists will discuss the week’s big stories.
TED SIMONS: Coming up next on "Arizona Horizon's" Journalists' Roundtable, we'll discuss the legislatures agreement to settle an education funding lawsuit. This as current and former state treasurers warn that the agreement could result in another lawsuit. The Journalists' Roundtable is next on "Arizona Horizon."
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TED SIMONS: Good evening and welcome to "Arizona Horizon's" Journalists' Roundtable, I'm Ted Simons. Joining us tonight, Mary Jo Pitzl of "The Arizona Republic." Howard Fischer of Capitol Media Services. And Alia Rau of "The Arizona Republic." The state legislature today adjourned a special session after approving an education funding settlement. Mary Jo, describe the scene at the capitol the past few days.
MARY JO PITZL: Well, like a lot of legislative sessions, there's a fair amount of "hurry up and wait." But the public testimony committees, the appropriations committees, moved fairly quickly on Thursday morning, not so much the house, they spent four hours on it but people came in to talk and those hearings were done, and then there was a lot of waiting around while they worked on what we're told was a lot of technical verbiage to settle this K-12 lawsuit.
TED SIMONS: And give us a brief overview now of the K-12, operative word is brief because we've been talking about this for days.
HOWARD FISCHER: Essentially it's going to use state trust lands, $2.2 billion from the state trust when they insist will not hurt the corpus and the balance from some general fund money plus what had already been appropriated, the $74 million, a $3.5 billion package over ten years, more to the point, the lawsuit if voters approve this goes away and that's the end of that lawsuit until we hit the next one.
TED SIMONS: Explain the lawsuit.
HOWARD FISCHER: The lawsuit was the voters said in 2000, you will fund inflation up to 2% which they did up until 2008 and then in 2009 we didn't have the money and they gave all sorts of excuses and, of course, the schools sued and got a trial judge to rule yes, you are entitled to the money, yes, in fact, it should be $336 million going forward and there's still a case out there, was a case for the back money, which is another $1.3 billion. This resolves all of that. If again, the voters approve.
TED SIMONS: Why did the plaintiffs decide to go ahead and agree to less than what the courts said they were owed?
ALIA RAU: 72% and I think there's a few reasons. First of all Republican lawmakers were appealing it so you likely had two, three or more years in court fighting over it with no guarantee that you were still going to get the original amount of money the lower courts had said you would get. The schools need money now, things are getting more and more difficult. They feel like this gives them money relatively quickly, not until next year but relatively quickly and it guarantees this money for at least 10 years.
HOWARD FISCHER: That's the issue. That's the idea. That's the key, which is why the Democrats have expressed such concerns, for all the talk about we've got the guaranteed inflation built in, in economic lean times we can suspend the funding, although theoretically the formula will continue to build the base but after this expires in 2025, it says if education funding hits 49% of total state spending, we can suspend it and take back the prior year and if it hits 50% we take back twice the prior year's inflation funding.
TED SIMONS: Why those numbers? What's 49%? What's going on there?
MARY JO PITZL: Well, that's a little oblique. We don't know. But we do know that current school funding is 42% of the state budget, 49%'s not that far away but, you know, not to be too snarky but, you know, you look at half of the state budget and I think that just sort of causes alarm bells like we would spend half of the state budget just on K-12? We're not talking university, we're not talking about prisons, community colleges are pretty much out of the picture.
HOWARD FISCHER: But the problem becomes how that can be gamed and that's the fear. You've got a governor and some legislative leaders that are talking about other parts of the government, not corrections, of course. That's a whole different thing. They've been defunding the university system, lost $100 million off of that last year, and then you've got a governor who has promised to do a tax cut every year and drive the income tax rate down to as close to zero as possible. If you shrink the rest of, even if the state funding stays the same, eventually it will hit 49%. And that's the fear that you've got as one lawmaker called it a Trojan horse.
TED SIMONS: And with that idea, why again did -- the expediency, the factor here? I mean, those triggers are curious to say the least.
ALIA RAU: They are and the argument is how often did we hit some of those triggers in terms of if the economy is rough they also don't have to pay in certain cases and they've kind of said well it's only happened one or two times over the past decade. I really think schools are up against the wall. They really, they need the funding, this is the way to get the funding and they say this is step one. That was their big argument this year and the Democrats, too, that this is step one, this only settles the lawsuit, now let's go forward and actually talk about education funding.
MARY JO PITZL: I think there's an interesting divide between the democratic lawmakers who have been the education champions. I mean, basically when it comes to public policy, especially funding policy and the education groups. The groups signed off. They said we need the money and you've got the Democrats saying why the heck would you do that? And I do think, I agree with Alia, it's mostly for expediency and most importantly the schools wanted to see the base funding amount for schools, they wanted that addressed, they wanted to get it as big as they could, 72% of what a court has said they were owed, that was the best they could do. That amount will be adjusted every year for inflation, except...
HOWARD FISCHER: And they get it to this year, if voters approve this on May 17, it goes into this year's budget. And they even put in a provision if you can't spend it in the next 30 days after that, we'll let you carry it forward. So it's the proverbial bird in the hand worth two in the bush.
TED SIMONS: I want to get to the particular specifics of the settlement, where exactly the money is coming from and where it's going to go, 60% of the funds are coming from the state land trust and this was something that the governor had proposed, obviously this is a little bit different than what the governor had propose. However, state Treasurer Jeff DeWit and former treasurer Dean Martin both very much against this and we talked to Martin down there at the capitol and he just says you're begging for another lawsuit. Here's former treasurer Dean Martin.
DEAN MARTIN: We need more money for education, we need to settle this lawsuit, but the way they're doing it is raiding Peter to pay Paul. This is money that was given to education 100 years ago. It's money that already goes to education and they're taking from this trust fund. It would be like stealing from the Social Security trust fund to pay Medicare, you couldn't do that. Why are we doing this here with education? If this had been in place when I was in treasurer and when the recession hit, we would have had to liquidate 7% of the trust at the bottom of the market. That would have had a 20% value impact on the trust. This is going to force the state to buy high and sell low. Kids of the next few years are going to get more money, but the kid that's in kindergarten or first grade or has yet to enter school, by the time they get -- that kindergartener is going to see a massive, hundreds of millions of dollars cut in education by the time they graduate. Before they graduate, while they're in high school. Why would you put in the Constitution a massive cut?
TED SIMONS: That's a conservative Republican raising some pretty salient points. What kind of attention did he get?
HOWARD FISCHER: Well, let's just say it kind of -- from the Republicans, his colleagues it was la, la, la, we don't want to hear this. They had made up their mind. They said we believe that it protects the corpus, the 6.9% is supposedly equal to what the earnings are and there's some provisions to say if the amount of earnings drops below a certain point there's a built-in trigger. Again losing money for schools. They're more interested in what is expedient? You talk about the schools doing what's expedient. The lawmakers want to do what's expedient. They did not want to raise taxes and more to the point, I think they wanted to preserve that money for something else. Now, Martin has a couple of points here. Number one do you have to go to Congress on this? The lawmakers will tell you we don't. I'm not sure I believe that. Number two becomes the question of you really are damaging the thing down the road. Jeff DeWit ran out some figures and said okay you can get $2.2 billion over the next 10 years. Then over the next 40 years after that, you will lose $6.8 billion for schools and if you extrapolate that over 90 years you're losing over $70 billion for schools. That becomes a real problem.
TED SIMONS: The idea that this undermines the original purpose of the trust, were lawmakers understanding that? Not raising taxes is almost the most important factor of the entire negotiation wasn't it?
ALIA RAU: Yeah, and it wasn't really mentioned but yeah, I mean I think Howie's example is good. They just kind of ignored it. They said okay look we've got legislative lawyers, they say we're fine, they say we would win any lawsuit, they have the birdie from the governor's office coming down saying you're fine, you would win any lawsuit, we're good, we don't agree, we don't think this will undermine the trust. We don't think this will be subject to federal lawsuits, let's get it done.
MARY JO PITZL: There were a lot of things that were on the table, but the one thing that was not was raising taxes and -- I mean, we weren't inside the room with the negotiations but that was acknowledged even by outside parties. The Democrats came forward last month with their own plan that said we've got a plan to fund education and settle this lawsuit without raising taxes. They just wanted to take it out of the general fund surplus that's been projected for this year and the next couple of years. But we have a governor who was elected partially on a platform of saying I'm not going to raise taxes.
TED SIMONS: Why wasn't that idea, just use the surplus, get it over with, move on? Why wasn't that more seriously considered?
HOWARD FISCHER: Two issues, it isn't sustainable. The Democrats ran out some numbers from the joint legislative budget committee saying at least $250 million a year is sustainable. Plus, if you stopped giving away corporate tax breaks for sending kids to private parochial schools, we can save a couple of million dollars there over the next 10 years. The other side of it I think is political. You want to give away tax breaks, if you believe in the laugher curve that the more we give away the richer we get, never mind it hasn't worked yet, you want that money there, you want to be able to do that. The governor wants to fulfill his promise of doing a tax cut every year.
MARY JO PITZL: Well, also in fairness there are other state needs besides K-12. I mean, the university took a big cut last time and they put out a press release on this agreement saying hey, nice work now look at us. We need money. The department of child safety put in a budget request, they're asking for $100 million more to do their job. We have 18,000 kids in the state who aren't living with their families. Something's got to be done about this. So there are other priorities pressing on the legislature, and yes, of course, we all expect a tax cut because again, Governor Ducey said he would introduce such legislation every year.
HOWARD FISCHER: We can solve part of this. You know what they're doing with schools with the 49% cap? Why don't we do the same sort of cap for the department of corrections and say when the department of corrections budget reaches 17% of the budget, we're just not going to do anything more, and then we could solve it.
TED SIMONS: Put that in the suggestion box. We'll check on that at a later date.
HOWARD FISCHER: I will.
TED SIMONS: You know, we're acting like things are figured out, everything's done, everything is moving. No. Voters have to approve two things regarding this and May now for the election?
ALIA RAU: May 17th and this is an all or nothing proposal. They have that worded in the legislation is basically here's this package, voters have this package to approve. If they don't approve it, the whole thing is dead. You get nothing and we start all over again.
TED SIMONS: Changes to the inflation funding is one aspect. Those will be on the same ballot proposal? Can you do that?
ALIA RAU: There's some discussion on that. There's a single item kind of rule that basically says you can only have an issue of one topic. They had that conversation during committee hearings this week and said well but the overarching topic is the same because one has to do with what you're doing with it and one has to do with where the money is coming from so they're the same thing in the same box.
HOWARD FISCHER: I know Paul Benders discussed this issue. The Supreme Court has changed the standard. It used to be that if you had two things on the ballot and you might want A. but not B. the Supreme Court would bounce that as violating a single subject. More recently they've said if it's part of an entire scheme we will accept it. Now, does this meet the test? I'm not sure anybody's going to sue over that.
TED SIMONS: So thoughts? Are voters going to look at this and say yes and if voters say no, is there a plan B. anywhere on the horizon?
ALIA RAU: I haven't heard anything about a plan B. I think in terms of going to voters it's going to be a tough sell. You have even a lot of Republicans kind of, you know, holding their nose and saying okay we'll vote for this, we don't really like it but it's the best thing we can do. Can you convince voters that take your medicine and this is what we need to do.
TED SIMONS: A full press aren't we?
MARY JO PITZL: A full press in support of this. You're going to see happy teachers and happy children and those voices out there saying it could kill the land trust, it could pull the plug on it. They're not going to be as robust. The governor promised a well funded campaign and you've got the education community at least the big players on board.
HOWARD FISCHER: And the fact is I talked to several Democrats, Eric Meyer, what do you tell your voters? And he said look, I think this is horrible, I'm hoping we can amend it in January, don't think that's going to happen but he said it's going to be real hard to tell anybody to vote no because it's the money they need.
TED SIMONS: Indeed, and if they do vote no if there is no plan B. anywhere around, you're kind of stuck in where you've been.
MARY JO PITZL: Plan B. if voters reject it was that you go back -- this thing ain't final, you go back to court and the appeals continue and I don't know maybe try another round of negotiations. And then it drags out for another couple of years.
TED SIMONS: All right, so that is settled. Other stories kind of, yes. Settled with an asterisk there. But other stories just continue moving on including the corporation commission. And now, we've got checks and balances, this watchdog group, funded by solar interests, we're not sure who, they're filing suit against the attorney general's office and the corporation commission.
HOWARD FISCHER: This comes down to the fact that Bob Stump had an iPhone 3 that he used during the elections and we know that there's a log that says he had these conversations, texts with the head of a dark money group, someone from APS and with the two Republicans running for that corporation commission. Try to find out what's on the phone oh, Stump says I've disposed of that, I have a new iPhone 5. The corporation commission took that iPhone 5, said we're not sure there's any messages on here, the A.G. took it over. And is examining it, but it's been a couple of months. And I think that the concern of Scott Peterson and his group is that somehow, this is going to be buried. Well, we did find out, though, is they've actually been able to dig up messages, thousands of messages, probably going back to this period and we may actually get to find out something that Stump thought was long gone, what did he tell them?
TED SIMONS: And the idea as Howie mentioned threw away the phone, deleted messages from the phone. Lawsuit also mentioned these are public records. He did not preserve and protect public records, correct?
ALIA RAU: State law is pretty clear, it doesn't matter what kind of device, if you're tweeting, it doesn't matter if it's e-mail, if it's, you know, voice mail. You are required as a public official to protect these public documents and yeah, they don't seem to have done that.
MARY JO PITZL: I think that this sort of shines a spotlight on perhaps -- and I expect to see legislation that will start to address how do you preserve and archive all this data that we really now all generate digitally? It doesn't start with a piece of paper and a type writer.
HOWARD FISCHER: This is a situation where the law is catching up with the technology. The corporation commission installed some software that essentially every night is going to back up each commissioner's cell phone onto the state server. That doesn't help us for what happened in 2014, but again, as Mary Jo says we've got a problem here. This is a public records law that was written in the days when public records were on pieces of paper.
TED SIMONS: And the aforementioned logs include communications with candidates at the time, who are now commissioners at the time, with an APS executive, with the advisors, he was a very communicative fellow.
ALIA RAU: There were 30 or 40 texts back and forth from each of these groups. It was not a small number.
HOWARD FISCHER: He was arranging dinner, didn't you hear the explanation from Mr. Stump? He was arranging dinner.
MARY JO PITZL: I thought it was the opera.
TED SIMONS: I was a night at the opera. Green McCarthy-ism and a waste of resources says commissioner Stump.
HOWARD FISCHER: That's missing the point. Look, Bob Stump certainly thinks the solar group is after him and certainly they are, just because you're paranoid doesn't mean they're not out to get you. This is a public records case. This is not a question of whether they're out to get Bob Stump. It's like saying if I file a public records request of the governor's office, it doesn't mean I'm out to get the governor. Those are public records and I am entitled to them.
TED SIMONS: Is there a sense that the general public -- the corporation commission for years has been thought of being a great place to do a lot of stuff and no one pays attention. Is there a sense that folks are paying attention to this or is this flying under the radar?
MARY JO PITZL: It's largely under the radar at this point but just wait. We've got an election season coming up, we've got some contested seats and Stump is term limited so there's a vacancy on the corporation commission and this will play heavily in those races.
HOWARD FISCHER: And there's a parallel. Does Susan Bitter Smith have a conflict? She was lobbying for COX, well, I'm lobbying for the cable side and not the phone side. People are paying attention, and I think the issue of dark money got a lot of attention. I went back and I looked today, the amount of money spent just on the governor's race last year, there was more dark money spent than spent by the candidates and people are starting to pay attention.
TED SIMONS: Get used to that I would imagine. The board of education voted to change common core and a lot of folks got very excited about this but really this was kind of a technicality and not much more, correct?
ALIA RAU: It was very much a technicality. Basically, it says that we are not going to be bound by your exact common core rules so it's kind of like saying let's throw the name out the window, but we're going to keep the book. They didn't change any of the actual common core standards. Now, they're looking at that and they may down the line but at this point, you still have the common core book in your hand, you just have the title gone.
TED SIMONS: Yet Diane Douglas, the superintendent of public instruction called it a great victory for the people of Arizona.
MARY JO PITZL: Yes, because it at least facially looks like you were getting rid of common core. I think it was a 5-2 or 6-2 vote with President Greg Miller voting against it saying this is just -- because he saw what this would do. He's a big staunch common core supporter and he saw how this could be perceived as tossing the thing out but it doesn't. Common core has been in our schools for a while, and it's going to continue.
TED SIMONS: He called it reckless I believe was his description of the vote. Before we go, long-time legislature Jack Brown died at the age of 86, very nice man, was on the show numerous times, just a very pleasant individual to deal with. Was he like that in dealing with lawmakers?
HOWARD FISCHER: He was, which is the Democrats -- I don't know how well Democrats ever did in the house, but Jack had a way when he was leading there to get along with folks. It's that sort of rural aw shucks, you know, I'm from the mountain country thing, I'm riding in on my horse. And he had a way of saying look folks let's just all calm down, let's see what we can get done, he worked very well across the aisle. He knew the language of the Republicans because rural dems are fairly conservative as it is, and he managed I think to get a certain amount done because he didn't care whether it was the Democrats', you know, ego involved.
TED SIMONS: Kind of the last of a breed in terms of a conservative Democrat.
MARY JO PITZL: Yeah. As soon as he retired, I think it was after 2010, that seat was -- it changed hands and became a Republican seat. But he was able to hold it because of how rural Democrats can be rather conservative and he was well liked, not only down at the capitol but also in his district. He served 17 terms over 46 years. Had a little break in there, went between the house and the Senate, sort of surpassed the whole term limits issue and was able to move from one chamber to the other.
HOWARD FISCHER: And what's really unfortunate is the lack of that history now. I see over and over again, lawmakers trying the same failed policies that they enacted then had to repeal then reenacted because we don't have that historical memory down there and it is sort of sad that with term limits we've decided well I'm sorry you've been here long enough, you know, this is -- term limits were passed to be aimed at Congress and then the federal court said we can't do it to Congress so now we've done it to our legislatures.
TED SIMONS: A consensus builder, someone who can get both sides to listen to him, is that a dying breed or are there folks capable of doing that?
ALIA RAU: There hasn't been a lot of interest in doing that over the past few years. You know, I don't know if -- I think with this, I think Governor Ducey would say he did it with the education plan. I think you've got both sides saying he's the one that kind of came in and got the groups back together and started having conversations.
TED SIMONS: But when you talk about across the aisle, there were three Democrats and these are the three Democrats that most Democrats look at and say are you really a Democrat?
MARY JO PITZL: Well right but I think how I read it is that he got the education groups to agree to this and they are traditional democratic constituency and they were all singing his praises today.
TED SIMONS: So we've got 30 seconds left here. Back to the original topic. A big win for Governor Ducey?
HOWARD FISCHER: Certainly, he came out and led the parade. I think you can say it is. Nobody was talking trust land until he brought it up. Nobody thought much about the trust until he brought it up. Is it legal? Getting back to where we started, I don't know. But I think he's going to claim a lot of victory on it and, in fact, a lot of the education folks who went up to the microphone said we're going to give the governor a lot of credit because the negotiations had stalled and he got it back together.
TED SIMONS: Big win for the governor?
ALIA RAU: Seems to be. We'll see come election time.
TED SIMONS: I was going to say, all things could change.
ALIA RAU: Yeah.
TED SIMONS: Good stuff thank you all for being here. We appreciate it. Monday on "Arizona Horizon," we'll discuss a new book that promises a roadmap to better health. And we'll hear about some homes in Scottsdale that are going green. That's Monday at 5:30 and 10:00 on "Arizona Horizon." Tuesday, a look at the Arizona court awards. Wednesday, the constitutional accuracy of statements made by presidential candidates. Thursday, meet a bicyclist who pedaled across the country after a hip replacement. And Friday, it's another edition of the Journalists' Roundtable. That is it for now, I'm Ted Simons, thank you so much for joining us, you have a great weekend.
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In this segment:
Mary Jo Pitzl: The Arizona Republic; Howard Fischer: Capitol Media Services; Alia Rau: The Arizona Republic
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