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9th Circuit takes Ducey’s side in school fund case

A federal appeals court has overturned a ruling that could have affected the ability of Gov. Doug Ducey and future governors to tap a special education trust account to funnel more cash into schools.

Neil V. Wake

Neil V. Wake

In a unanimous decision Tuesday, a three-judge panel of the 9th Circuit Court of Appeals said District Court Judge Neil Wake, a President Bush appointee, never should have heard the complaint by Michael Pierce. He charged that Ducey had acted illegally in tapping the fund, created by Congress in 1912 when Arizona became a state, after voters approved Proposition 123 in 2016 without first getting congressional approval.

But the appellate judges, consisting of one President Trump appointee and two President Obama appointees, said in an unsigned opinion the only people who have standing to sue under the 1912 Enabling Act are those who actually have incurred an “injury in fact.” And Pierce conceded that his only injury is because he is a resident of Arizona and the state is harmed if more money is taken from the trust than Congress allowed.

That, the appellate judges, said, means Pierce had no standing to sue in the first place.

Doug Ducey

Doug Ducey

They acknowledged, as did Wake, that Ducey continues to distribute funds according to the terms of Proposition 123. But they pointed out that, in the interim — though not before voters approved the ballot measure — Congress altered the federal law to effectively and retroactively authorize what Ducey had done.

Finally, the appellate court said Wake never should have barred Ducey — or future governors — from again altering the distribution formula absent first getting congressional approval. They said that legal dispute is not “ripe for adjudication” because it is based on events that may or may not ever occur again.

Proposition 123 was Ducey’s plan to put more dollars into K-12 education without hiking taxes.

In essence, the governor asked voters to tap the special trust fund which consists of money earned from the sale or lease of the 10 million acres of land that the federal government gave Arizona as part of the Enabling Act. About eight million acres remain.

Under normal circumstances, the beneficiaries of the trust — in this case, public schools — would get a certain percentage of what is there.

Ducey’s proposal sought to more than triple the amount to funnel an extra $3.5 billion into schools for a 10-year period.

Pierce sued, contending that any change in the distribution required Congress to amend the Enabling Act. There also was the fact that, in boosting withdrawals through 2024, it would leave less in the trust at that point than if the formula were not changed.

Ducey disagreed. But he eventually did get congressional approval.

But Wake sided with Pierce, saying the governor was wrong to make the withdrawals first and then get the legal blessing of Congress.

Wake acknowledged that, at least as far as Proposition 123 is concerned, the matter now is moot, what with Congress ratifying the change. But the judge issued an order barring Ducey — or any other future governor — from making additional changes in the formula without going to Congress first.

What makes that particularly crucial is that the distribution formula automatically returns to pre-2016 levels after 2024. And that means a net reduction in state dollars for education unless the formula is again altered or some other source of cash is found.

Ducey, not wanting that restriction for any successor, then sought to void Wake’s ruling.

But the legal dispute also took on an unusual and unexpected personal turn as the governor lashed out at the judge on a personal level.

“Judge Wake puts on a robe in the morning and thinks he’s God,” the governor said at the time. “But he’s not.”

And it got even more personal.

“I want to tell you what everyone down at the courthouse needs to know,” Ducey said.

“It’s time for Judge Wake to retire,” the governor continued. “He’s an embarrassment to the legal community.”

As a sitting judge, Wake could not comment. But gubernatorial press aide Patrick Ptak said it was not unfair for Ducey to attack a judge who is legally precluded from responding to personal attacks.

Wake got to the federal bench in 2004 after being nominated by Republican President George W. Bush and with the recommendation of the state’s two GOP senators, John McCain and Jon Kyl.

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