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Arizona Governor Doug Ducey discusses education, economy, and other issues vital to the state.

TED SIMONS: Good evening, welcome to this special edition of "Arizona Horizon." I'm Ted Simons. Tonight we speak with governor Doug Ducey, who joins us to discuss education funding, economy, and a number of issues vital to the state. Here now from the governor's office in the executive tower, Arizona governor Doug Ducey.

DOUG DUCEY: How are you, Ted?

TED SIMONS: Doing very well. Good to see you again.

DOUG DUCEY: Good to see you. Thank you for coming to the governor's office.

TED SIMONS: Thank you for sitting down. We have a number of things to talk about. Education funding lawsuit, still fresh, still think this is good for Arizona?

DOUG DUCEY: Oh, I'm positive this is good for Arizona. This is something that we're very proud of. $3.5 billion in K-12 education over the next 10 years. The settlement of the lawsuit, addition to supplemental funds. The fact that we were able to get through a special session, and do it in a bipartisan way, and now headed to a special election. It is not done yet. We are going to have an election. Voters will have their say on May 17th. We are going to work very hard to have that happen and make that happen, but we feel good about where we are today.

TED SIMONS: Why using state trust land funds? Why is that a good idea?

DOUG DUCEY: It is a good idea for a number of reasons. First I want to say I have special thanks to president Andy Biggs and speaker David Gowan. There is no way we could have done this bipartisan resolution, that we could have settled a lawsuit without legislative leadership stepping up and collaborating on what we believe was a better idea. State land trust was a big part of this. In many ways, the linchpin, if you'll remember in 2009, the state was devastated financially. No dollars in the rainy day fund. Negative $730 million in our operating account. We were literally on a credit card from Bank of America to pay teachers, fill potholes, or provide any essential state service. You fast forward five years, and that land trust fund has gone from $2.69 billion to over $5 billion. The State's land trust is intended to benefit K-12 education. It will benefit K-12 education even more and it will protect the general fund. We think it is a good idea. The voters will have their say on May 17th.

TED SIMONS: Critics say it erodes the trust's obligation to future generations of kids. Is that valid?

DOUG DUCEY: I don't believe it is valid in the way it has been presented. I think there has been a lot of hyperbole around it. State land trust will be worth more 10 years from now than it is today. And like I said, that land trust is there to benefit K-12 education. So, through ongoing land sales, through appreciation, through proper investment in the market, and this is a job I had just not that long ago in terms of state treasure. To leave the trust better than you found it but be able to resolve the lawsuit and push billions of dollars into K-12 education when they need it, that is a good idea and it is a responsible idea.

TED SIMONS: You mentioned you being a treasurer. Current treasurer, past treasurer, both came out and said this is irresponsible. Treasurer Dewit says 6.8 billion less in 40 years, $76 billion less in 90 years if this kind of plan goes through. They point out as critics do this is meant to be a trust, a trust that is meant to go in perpetuity. And it is irresponsible to tap into this to any degree at least above a certain level. Do they have a point?

DOUG DUCEY: It is a trust. And it will go into perpetuity. As the treasurer that conducted the first-ever asset allocation study of the state's land trust and took it from the value of $2.6 billion to 5 plus billion, I knew there was a way, much like through proposition 118 which we passed in 2012, which protected the trust but ensured distributions to K-12 education. What we are doing is improving on that idea in the situation that our state is in right now and we're moving more dollars into K-12 education while protecting that trust into perpetuity. The legislature has voted on this. Voters will get the opportunity to vote for that. If opponents and naysayers want to make their case, best of luck.

TED SIMONS: You have been quoted as saying this is the most far-reaching, high-impact education funding bill in our state's history, and, yet, how can that be when this is money that should have gone to this, according to the Arizona state supreme court, should have gone to the schools all along?

DOUG DUCEY: I think what's lost in that discussion is that the state ran out of money. There was not a dollar in the checking account or a dollar in the reserve fund. The legislature had to make tough decisions through this downturn, as did my predecessor. Now we are able to take a significant amount of money and put it into K-12 education. You are going to have hundreds of millions on an annual basis going into K-12 that weren't there last year. This is good public policy. And what it should result in is not just more spending, but better results for our kids, and better reward and retention for our teachers.

TED SIMONS: Indeed. But, again, why should voters okay a settlement to a lawsuit that was brought because the legislature didn't fund what the voters called for in the first place?

DOUG DUCEY: Because it is time to turn the page. It is time to put these dollars into K-12 education. We have a broad consensus and broad support when you see president Biggs and speaker Gowan along with the education community and education champions and a bipartisan coalition along with business leaders. Our kids have needs today. That is what this was doing, addressing the needs of today through a fashion that we could get done in a legislative format that we can take to the voters on May 17th.

TED SIMONS: Original plan, trust fund money, was for additional funding for education. This settles a lawsuit. What about the additional money for education? Still needed?

DOUG DUCEY: This does both. Not only settles the lawsuit, but it puts money into K-12 education this year and the year after that has not been there in the last several years.

TED SIMONS: It does both at the same time.

DOUG DUCEY: Does both at the same time. We're never going to check the box on K-12 education and say we're done with that. This is a state responsibility. This is something that was the animating issue of why I ran for office in addition to the economy. We will continue to focus on it. With the dollars going forward, first like I said and you will hear me say a lot more, we have to win on May 17th. But then it is getting dollars into the classroom, to the teachers in the most effective way so that we can take the excellence that we have in different pockets in the state of Arizona and see it happening in more places more often for our children.

TED SIMONS: Plan B if you don't win?

DOUG DUCEY: This is plan A, B, and C. And proposition one, two, three and it is going to be successful at the ballot box. We are going to put the full weight and shoulder of everyone in this community that wants to see more money into K-12 education and see this be successful.

TED SIMONS: Shouldn't there be a plan B, this is pretty important stuff?

DOUG DUCEY: This is high stakes. That's why we are going to win this campaign.

TED SIMONS: Is it -- you mentioned back when the legislature did not fund as the voters wanted them to, no money. There was just no money. They had no choice. They did have a choice. They could have raised taxes. They decided not to. Some people look at all of this that went on with the education funding lawsuit and saying this is a lot of drama when you could raise taxes slightly and take care of a lot of problems. Is it more important to you, and let's get into the economy a little bit here, when you are trying to attract business, retain business, is it more important to say we have a low tax base or we have a real commitment to education?

DOUG DUCEY: I don't think they're mutually exclusive. I think you can have both. That's what I want to have. I think we have one of the best states in the country to live, work, play, recreate, retire, visit, build a business, get an education, the growth we have had, population growth is the best leading indicator of an attractive place to live and economic opportunity we have here. We have three of the top 10 public high schools in the country. When I go back to the national governor's conference and we sit in a u-shaped table and point out the governor with the most high-quality public schools in the country, it's Arizona. What I want to do is more often on that. Worst thing you can do in a slow-growing economy is raise taxes on hard-working taxpayers. We want to make the state a better place to do business and improve our K-12 situation. That's what this special session gave Arizona the opportunity do. That's the opportunity that we will have later in 2016, and we can continue to pitch our state and you know we have evidence with companies like apple and UBer and LYFT and other success stories. Our economy starting to turn in the right direction. Not as quickly or as dramatically as we would like it, but it's something we are going to continue to focus on.

TED SIMONS: Arizona ranked at or near the bottom, per student state funding -- we're not at the bottom, I think now at 48, something along those lines. What kind of message is that sending?

DOUG DUCEY: Well, the message should be that we are leading the country in states that are putting new dollars into K-12 education. I think it is important that we don't make spending the measure of success. If that is what were the measure of success, Newark, New Jersey, Detriot, Chicago, Washington, D.C., would be the best schools in the country but they are not. They are among the worst. We want to do is take what works, results and outcomes for the kids, act, SAT scores, lower dropout rates, more kids matriculating to college, better equipped and prepared to go into the work force in careers. Those are the measures of success in K-12 education.

TED SIMONS: Joint legislative budget committee, JLBC says yes, there is a surplus, but structurally it's only about $50 million or so. They are saying be cautious. Watch what you are doing, legislature, not only in spending, when it comes to permanent changes, but in tax cuts as well. Your thoughts on that.

DOUG DUCEY: Well, first we look at this as a cash carry forward. We are putting ourselves in a position where we can make good decisions going forward and being responsible. We have $454 million in that rainy day fund and we are in a positive cash position where we can pay our bill on a year and monthly basis. I think we want to continue to improve not only K-12 education, but our tax goal. We are going to look for tax reforms and if you look what we did in the last session, the incremental reform on indexing the income tax to inflation so we protect hard-working taxpayers in a growing economy. These are the types of things we want to look to, how do we make our state a more attractive state, not only for the people already here, but businesses looking to invest and relocate.

TED SIMONS: Corporate tax cuts, another $60 million I think due this year. Good for corporations, no doubt about that. Some say it is not necessarily good for Arizona. How do you respond?

DOUG DUCEY: I would say it -- what's good for Arizona is that we can continue to make our case. Especially in other places like California that are going in the absolute wrong direction. They're pushing out producers, pushing out businesses, pushing out citizens. We want to be able to make the case much like states like Texas have been able to make for the past 10 years, that there is going to be political predictability here and we will have a better state next year and the year after than we did last year. I will not pull the rug out from underneath business people or citizens that want to come here so making it more attractive, reducing the burden while moving dollars in the K-12 education is a message that I can sell all over the country.

TED SIMONS: As far as the jobless rate, we are lagging behind the country. Lagging behind peer states in our region as far as median household income, still lagging behind the -- what's going on -- why are we not -- I mean, as opposed to rainy days like today, the weather is fantastic. You say people want to move here, and they do, why are we not an economic juggernaut?

DOUG DUCEY: Well, we have been, and the plan is to be an economic juggernaut going forward. We still have work to do. When the country is booming, Arizona does better. When the country has a downturn, because we're a growth state we take it on the chin -- we are seeing that we are starting to turn the corner. Now we believe it is time to turn the gas on and make our case in terms of growth with the business community and for the citizens that in the most mobile country in the world, in the past, have chosen Arizona. We think they're going to choose Arizona in the future.

TED SIMONS: Like a sling shot should move ahead quicker beyond the Colorado's, Utah's, Nevada's, and California's, as opposed to what is happening -- thank goodness for New Mexico, we seem to be doing better than them - we seem to be lagging behind some of these other states.

DOUG DUCEY: I think we are headed in the right direction. We want to go there more quickly, and the objective to accelerate it.

TED SIMONS: Satisfied with the changes in the Department of Child Safety.

DOUG DUCEY: No, I am not satisfied with the changes this is a very difficult situation. We have 17,000 kids in the care of the state. And I was thinking about this with my wife, Angela. It is hard enough to raise a kid with two parents. Can you imagine raising these kids when the parents have been disqualified from taking care of them and now they are in the care of the state? I think we're making good improvements in DCS. It is an agency that has been broken for a long time and removed from a larger agency. There is a lot of work and attention that is needed. The focus will be on permanence and safety for these kids and I believe we will have better news to report in the future, but this is something that we are focused on everyday in this administration.

TED SIMONS: Recent audit shows inconsistent cause to remove kids from home, lack of accountability, too many minds are made up prior to removal. And thus it is hindering the ability to improve practices at the -- it sounds like the director agrees with that, do you agree with that? Do you think that the director is doing a good job?

DOUG DUCEY: I think the director is fully committed. The director has my support. And the definition of a good job in this situation when you have these -- this amount of kids that are -- this vulnerable, how do you define success here? If you want to do better next year than you did last year, you want to do better tomorrow than you did the day before, and I do think we are in a situation where we have our state workers that either make a judgment call and pull a child out of a home to protect them, or if they make a mistake and were to leave the child there and something terrible was to happen, it is very much a no-win situation. We are working on consistency and training, but, Ted, these are very much judgment calls. We want to make the best calls we can to protect these kids.

TED SIMONS: Does DCS need more funds?

DOUG DUCEY: DCS, $847 million, something we protected through the past budget. We are reviewing all our agencies across the state government to see where more funds are needed and that's something we will be able to answer in this next budget session.

TED SIMONS: It has been reported that at least $4 million will go to DCS from temporary assistance for needy families program. 1,600 families 27 some odd kids affected here. Is this a good thing to cut back on those folks? These are people living in poverty.

DOUG DUCEY: What we want to do with our programs is think of the people that are in the programs -- we are not measuring the success of the programs by how full the roles are, but the opportunities we can provide people to be productive, to find employment, to get a job, and all of our agencies are on that posture from the department of economic security, department of child safety and we want to work with these programs so that we don't trap people into these safety nets but allow them to go to the private sector and have a better life than what they are having with government assistance.

TED SIMONS: Most states have a five-year cap on this particular program. Arizona's cap is one year. That's the toughest in the nation. Is that a good thing?

DOUG DUCEY: Well, what will be a good thing is if we can move people from the government program into employment. That will be a good thing. What we don't want them to be is be stuck on a role when they would rather be in a job. And that's what we are going to work hard to do.

TED SIMONS: Something that is making news here recently, planned parenthood dropped from the state employed charitable campaign -- your thoughts, do you think that is a good move?

DOUG DUCEY: The board that puts the charitable campaign together made that decision independently but I'm supportive of that decision.


DOUG DUCEY: I think planned parenthood is an organization that nationally has been doing some terrible things and they are not going to be supported through the state's charitable fund.

TED SIMONS: Kept on the list is Focus on the Family, that's a political organization as well. Kept on the list is the Alliance Defending Freedom an anti abortion group a political organization as well -- Clinton Foundation on the other hand dropped from the list because it was deemed too political. It looks from a distance as though conservative groups stay, not conservative groups go. And state workers are saying --

DOUG DUCEY: I think you would find a broad range of groups on this list, both conservative or liberal. That's not how these things are decided. It would be a matter of their policies. What percentage of the dollars are actually going to the charity. Those types of things. Those are the way the board makes the decision and I'm supportive of the board.

TED SIMONS: They should make the decisions as opposed to the employees with the option.

DOUG DUCEY: The board is put together in a formal way. This is how the decisions have been made and I'm supportive of the decisions that they have made here.

TED SIMONS: Many things that we have talked about --

DOUG DUCEY: And I also want to say no one is precluded from giving to any charity. It is how it is done through the state charitable fund.

TED SIMONS: Many things we have talked about so far have dealt with Arizona moving forward. Arizona's image, getting back on track, these sorts of things. You have talked about rebranding Arizona's image. Why is that necessary?

DOUG DUCEY: I think what I have talked about is promoting Arizona's image. We're sitting here in the governor's office, in the first 11 months, one of my fondest memories was in the Super Bowl, first month that we had, I saw the power we had to promote our state across the country, across the world, not only as a great place to live but to work and play. What we're doing is bringing all of the attributes of Arizona -- I come from the private sector and as a business person, what I wanted to do is bring things most positive about our state and get them in alignment. Whether talking about tourism, economic development, or anything across the board that people can be on the same page as to how they communicate about what a great place we have to live.

TED SIMONS: Image in a second. You mention the fact that you come from the private sector. I think during the debate I asked you specifically about this. You were campaigning on running this government as a business. Like a business. Similar to a business. Has that changed because, again, I think I mentioned at the time, running a business, that's profit, that is for profit, be all end all for the most part. Government is service, government is governance.

DOUG DUCEY: I think if we check the tape, it would say that I wanted to bring business-like principles to government. That is the idea of working with the people inside the government, setting goals, living within your means, balancing a budget. Determining what results you want. Results like putting more money into K-12 education to provide better outcomes, tightening the belt of the state. Working with legislative leadership so that we put together a budget process that we get done first before we move to legislation. Actually having a government that works at the speed of business. We had a short session, very transparent session last time. We will continue to do those types of things and I will continue to communicate not only with community leaders but legislative leaders and we have been able to get rid of agencies that are redundant. We have been able to reduce what is not necessary while making it more effective and efficient. To me those are the business-like principles that government can use at all levels from the local level to the state level and we certainly see it at the federal level.

TED SIMONS: Back to the branding aspect of all of this. I see headlines that suggest that Arizona's legislature is fighting education funding, that a deal has been put in place to restore money that should have gone to -- these sorts of things, it is one thing to brand Arizona as X, Y, and Z, but how do you get past -- I think we have got a little past the late night talk show humor, but still some of those headlines --

DOUG DUCEY: I think you're talking about things that are years in the past. Let's give our legislature credit for what they did just this last week, came in to special session and in a bipartisan way voted to put $3.5 billion, millions and billions of dollars into K-12 education. That speaks to education's priority in this state, and it also speaks to the focus of elected leaders and what they want to do in public office. This was public servants solving a big problem and it is something that we should feel very good about. Something that I feel very good about and I think it is a great foundation for what's next in our state.

TED SIMONS: But in terms of getting cuts restored to education, whether it is K-12 -- haven't got to university funding yet -- those things are still out there. Those cuts still exist.

DOUG DUCEY: Let's be accurate. K-12 was protected in the past budget. We had a billion dollar deficit to take care of but K-12, DCS, they were protected. Going forward there will be additional funds if we have success on May 17 with prop one, two, three at the ballot and that is what we are going to be focused on. We are not here to litigate everything that happened over the past 10 decades. I have just been here 10 months.

TED SIMONS: Right - I'm getting back to the image of Arizona I'm not going to the last legislative session, I'm going to cuts since the recession started, and still need to be restored. Lots of groups out there. Social service groups, education, they're still waiting for this.

DOUG DUCEY: We're in a much better position today than a year ago and I would like to be in a better position a year from now. We will be thoughtful, responsible in how we handle the budget process. When you want to talk about our reputation, think of the Super Bowl. Think of the Phoenix open. Think of the growth that we have had as a state. Think of the apple deal, what we have done with Uber, successes that we have in our past. We have a lot to be proud of in this state. I want to see us lead with our best foot forward. I want that to be the culture of our state. Believe me, we're on the ninth floor here in the governor's office. You can walk the hallways and talk to policy advisors and we have a real grip on every shortcoming and every need we have in the state and government and we're working on it every day. When we are talking about what we are doing going forward, we want to lead with our strengths and there are many strengths here. We wouldn't have the population growth we have had over the past three decades if it wasn't a great place to be.

TED SIMONS: Last question, you've been in office close to a year now. Is it what you expected? Is this what you wanted when you ran for this office?

DOUG DUCEY: I would say in many ways it is what I expected. I mean if you want to come in and bring private sector knowledge and be a public servant, a citizen leader, the way I have been able to lean on that experience, the relationships I have in the business community, philanthropic community, as well as making new relationships with legislative leadership and other influencers, decision makers, thought leaders in the state, I think we're off to a good start but in many ways Ted we are just getting started.

TED SIMONS: It's good to see you, thank you so much for joining us. That is it for now. I'm Ted Simons. Thank you so much for joining us on this special edition of "Arizona Horizon." You have a great evening.

"Arizona Horizon" is made possible by contributions from the friends of eight, members of your Arizona PBS station. Thank you.

Doug Ducey:Arizona Governor

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