Prop 123: Mismanagement of funds leads to Arizona losing billions

Arizona has lost billions of dollars in education funding due to mismanagement of its State Land Trust under Prop 123. That’s according to a new report that points to valuable land going unused.

Common Sense Institute Arizona, a nonpartisan research organization, released a report highlighting the lack of revenue being generated by the trust. According to the report, the federal government set aside an estimated 11 million acres of land for Arizona to use when it became a state in 1912. The federal government required Arizona to “hold” the land “on behalf of certain beneficiaries”.

Out of the program’s 11 million acres, 8-9 million are held for the benefit of Arizona’s K-12 education system, the report noted. The money Arizona collects from the land trust must be deposited into the Permanent Land Endowment Trust Fund. Arizona has retained 85% of the original land, which was intended to help fund K-12 education, according to the report.

Lorenzo Romero, Education & Economic Development Fellow at the Common Sense Institute of Arizona, joined “Arizona Horizon” to discuss what this means and how it will affect Arizonans in the long run.

“Other states when they got lands after entering the union as a state, they immediately sold off their lands. We didn’t… we have this standard in which when we sell land, we have to sell at the highest and best use. It’s the most restrictive standard in U.S. history,” Romero said.

Arizona and New Mexico have the same standard. As Romero points out though, it is a subjective standard. “at the very bottom of that standard it has to be fair market standard.” This is done by appraisal but in many cases, they’re trying to sell land above fair market appraisal and the result is Arizona has only sold 1 million acres of land. “The detriment truly is to k-12 education”