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With $1 billion at stake for public schools, attorneys make final legal arguments

BAn attorney for state lawmakers made a last-ditch effort Friday to get a judge to reject a bid by schools for more than $1 billion in missed state aid, saying it’s the only fair thing to do.

Bill Richards acknowledged that the state Supreme Court ruled last year that legislators illegally ignored a voter-approved mandate to have state aid to schools keep pace with inflation.

But he told Maricopa County Judge Katherine Cooper lawmakers were acting under legal advice they thought was correct. More to the point, he said once they believed they could save the inflation funding — close to $300 million a year — they opted to spend the money on other priorities rather than cut spending elsewhere to fund inflation

“The taxpayers certainly paid the price,” he said. “They paid their share.”

And that, he said, makes it unfair to force taxpayers to now come up with additional cash.

Attorney Don Peters, who represents the school districts that sued, conceded that forcing the state to find $1 billion now might not be absolutely fair.

But he said it’s impossible for lawmakers to go back and undo the budgets they adopted in the last five years. So he said what Cooper has to do is find the best way to make things right for all — including the schools and their students who were denied money voters said they should have.

He compared it to someone who files suit after a relative is killed in an accident. Peters said the money doesn’t bring the relative back. But he said it’s the best a court can do under the circumstances.

Peters also rebuffed Richards’ argument to Cooper that it would be impossible for the state, already facing a $1 billion deficit next year, to come up with that much money now.

He cited testimony by David Jankofsky, a budget director under former Gov. Janet Napolitano, who provided a litany of possible options. These range from a small property tax and a temporary sales tax to delaying implementation of a series of tax cuts previously approved by the Legislature that are set to kick in during the next few years.

“We showed her there are ways to do this,” Peters said after the conclusion of the five-day hearing.

Cooper’s power, though, is limited to deciding what the state owes and directing lawmakers to find the cash. She cannot tell them how to do that.

Peters also rejected the contention by lawmakers that the current budget situation somehow legally relieves them from making good on the missed cash.

“If they can just say that ‘Money’s short, so we should be excused from doing this,’ they can say that in response to any court order that requires the expenditure of funds,” Peters said. “I don’t know why they would ever comply with another court order if they can keep their revenue levels low enough to say, ‘We’re broke.’ “

Cooper already has ordered the state to increase aid to public schools to where it would have been had lawmakers not ignored the inflation-funding mandate for four years. That immediately gave schools an extra $236 per student, at a cost of about $336 million.

The question of the missed funds, however, is a closer call.

There is no doubt but that the money should have been paid to the schools. But both Richards and Peters agree the legal question is not one of an unpaid debt but what is fair under the circumstances.

One element of that is whether the schools, which already have completed their budgets for the years of shorted aid, actually need the money now.

Richards said that the state has a system where schools that need money for construction or repairs can seek a grant.

He said officials from three school districts that testified all acknowledged that they had not been turned down when they made requests. And Richards said there also was no testimony that any of the districts had situations where the lack of funding made it impossible for them to meet the minimum academic standards set by the state.

But Peters pointed out that the 2000 voter-approved requirement directs lawmakers to boost aid based on inflation, not based on each school having to prove specific needs.

“In our view, it’s appropriate to do what the people directed and disburse the money,” he said.

Anyway, Peters said, the evidence presented to Cooper shows that any money she gives the schools can be put to “productive use.”

“There are accumulated facilities needs, textbooks that badly need to be replaced, schoolchildren that need computers they don’t have, staff that haven’t had raises in years that could use a one-time time salary increase,” he explained. “We think that we showed ample need.”

The decision Cooper has to make is not an all-or-nothing choice. That’s because this isn’t a debt in the traditional sense, but a question of “equity,” meaning what can she do that’s fair.

“That’s an inherently discretionary decision for the judge,” Peters said.

He said he made his best case for why the state should come up with the entire $1 billion.

“But in the end she can order some of the money paid, as opposed to all of it, she can order it spread over five years, seven years,” Peters said. “That’s her call.”

Cooper gave both sides three weeks to file legal papers telling her the points that should be in any final order.

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