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Public school business officials drop out of funding lawsuit

Gov. Doug Ducey, flanked by education officials and legislative leaders, announces his plan to put $100 million into additional assistance for districts in the 2019 budget. (Photo by Rachel Leingang, Arizona Capitol Times)

In this Jan. 9, 2018 photo, Gov. Doug Ducey, flanked by education officials and legislative leaders, announces his plan to put $100 million into additional assistance for districts in the 2019 budget. (Photo by Rachel Leingang, Arizona Capitol Times)

A major group of education professionals decided Wednesday it is no longer interested in suing the state over funding questions.

The board of the Arizona Association of School Business Officials voted to withdraw as a plaintiff in the case asking a judge to rule that the state is not meeting its constitutional obligations to properly fund school construction. The move comes a day after Gov. Doug Ducey offered a plan to restore at least some of the dollars that have been cut from state aid to public schools.

In a prepared statement, the board said it does not question that a “critical” need remains for capital funding dollars.

“Moreover, AASBO does not debate the fact that there are responsibilities our state leaders must abide by and solutions that need to be found to address these responsibilities,” it says.

But the board concluded that the governor’s plan, if enacted, “brings immediate relief to our school districts versus waiting for the outcome of the lawsuit.”

The action does not end the lawsuit. Several plaintiffs remain, including the Arizona School Boards Association, the Arizona Education Association, the Crane, Elfrida and Glendale elementary school districts and the Chino Valley Unified School District.

Maricopa County Superior Court Judge Daniel Martin is set to hear arguments on Friday.

But the move undermines what had been a united front by various education groups, all of whom contend that the state, in making a series of spending cuts through the last decade totaling more than $1 billion, acted illegally.

On Tuesday, Ducey announced a plan to eventually restore full funding for the “district additional assistance” account to bring it back to the $371 million that it should be in state law. This account provides cash for things like textbooks, computers, school buses and some capital funding.

The governor also proposes to put $88 million into the budget for new school construction and $35.2 million to augment the funds available to schools for repairs.

That package, though short of what the lawsuit contends schools need and are owed, was enough to convince the business officials to drop out of the lawsuit.

“We believe that this is a sign of good faith to the governor for a plan that we believe has a high degree of success and validity,” the statement reads.

The business officials concede that even if Ducey gets lawmakers to approve what he wants, that doesn’t resolve all of the financial problems facing the schools. But they said it opens a dialog with the governor they hope “will yield other fruitful discussions.”

At issue in the lawsuit is the obligation of the state to build new schools as needed and ensure there are the funds to keep them repaired rather than shift the burden to local taxpayers. Three separate prior Arizona Supreme Court rulings have affirmed that legal responsibility.

Tim Hogan, one of the attorneys in the lawsuit, puts current obligations at close to $300 million a year; with prior years’ shortfalls, he said the lost dollars now total about $2 billion.

Ducey has defended the cuts as necessary given the state’s finances. And even at Tuesday’s announcement, he said that it will take time for the economy to recover so the state can put more dollars into K-12 education.

But Hogan suggested that problem is the state’s own making. He noted the Republican-controlled Legislature voted in 2011, in the middle of the recession, to cut corporate tax rates by close to 30 percent and set up a system under which some multi-state corporations owe no income taxes at all.

The result is that corporate tax collections, which were $663 million in 2015, are projected to drop to $263 million by 2020.

While pulling out of the lawsuit, the business officials acknowledged other funding issues remain.

One of those is the future of the 0.6-cent sales tax for education approved by voters in 2000. This will self-destruct in 2021 — along with the $600 million a year it raises — unless there is a move to put the issue back on the ballot.

But that is just part of the issue. There is strong support from education interests and some elements of the business community — and just as strong opposition from Ducey — to expand the levy to a penny or more to generate needed revenues.

Arizona remains at or near the bottom of per-student funding among all the states. And figures by legislative budget analysts show that, on an inflation-adjusted basis, Arizona is spending less per student now than it did a decade ago.

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