A picture, or at the very least, a starting point for Proposition 123 came into focus in the House Education Committee Tuesday, though not without red flags raised by Republicans, Democrats, education, tax and business groups alike.

Stakeholders have long met, though oftentimes siloed, to discuss what to do given Proposition 123’s lapse at the end of the fiscal year. 

A concrete plan, beyond a placeholder bill mirroring a proposal from last session, has continued to evade lawmakers and interested parties, until the introduction of three strike-everything amendments by Rep. Matt Gress, R-Scottsdale, on Tuesday, followed by mirror proposals by Sen. J.D. Mesnard, R-Chandler, set to start moving through the Senate Wednesday. 

Though Gress’s proposals passed committee, they did not proceed without resistance from Republican and Democratic lawmakers, concerns raised by the Arizona Tax Research Association, and a call for additional stakeholder input by Greater Phoenix Leadership. 

Under the proposal, schools would continue to receive a 6.9% distribution from the state land trust fund, but the monies would be put in a fund dedicated to increasing the salaries and salary schedule by approximately $4,200 for all eligible teachers. 

An eligible teacher must spend 75% of their time in the classroom, or 50% for special education educators, and have a positive performance evaluation. 

The fund would be administered by the Arizona Department of Education, and the draw from the state land trust, much like the current iteration of Prop. 123, would lapse in 10 years.

In introducing the package, Gress said he sought to put money directly in teacher’s pockets, bring the state above the national average for pay and starting pay and assist in recruiting and retaining educators in the face of 3,000 current teacher vacancies and 8,000 teachers eligible for retirement in the next 5 years. 

“I really think it will move the needle,” Gress said. 

But some lawmakers and the Arizona Tax Research Association raised some early sticking points. 

Rep. Justin Olson, R-Mesa, and a former analyst for the Tax Research Association, said he had “significant concerns.” He said he thought the 6.9% draw to be too high, especially given the creation of another fiscal cliff 10 years down the line. 

Though the legislature could backfill funds lost with the lapse of Prop. 123 at the end of FY2025, Olson said “had we been in a tighter budget situation, it could have created significant challenge.” 

He noted, too, the focus on funding per-teacher would lead to inequitable distribution of funds. Kevin McCarthy, president of the Arizona Tax Research Association, cautioned against another 10- year lapse. Though he acknowledged the state land trust has continued to outperform initial projections, McCarthy said lawmakers got lucky and warned against leaving predecessors to clean up a potential mess down the line. He instead recommended lawmakers temper the draw from the fund to 5% and make it a permanent fixture. 

As for the inequity, McCarthy said, per ATRA’s analysis, some districts with more teachers would see greater funding increases and therefore a greater disparity in per-pupil funding. 

Rep. Nancy Gutierrez, D-Tucson, said she appreciated the effort but noted the need for the involvement of education and business groups, and Democrats, in discussions. Rep. Stephanie Simacek, D-Phoenix, similarly hit on the lack of dialogue and said the bills, as drafted, have “not taken into account what our communities want or need.” 

Melissa Taylor, executive vice president of Greater Phoenix Leadership, said her organization, and the wider business community are supportive of Prop. 123 but again noted the need for more information on how the proposal will play out. 

A group of more than two dozen education and business groups signed onto a letter on Feb. 10  lauding Prop. 123’s “effectiveness over the last decade,” and the governor and Legislature’s work to backfill funds lost with the lapse of Prop. 123. 

“Additionally, we appreciate the ongoing dialogue with lawmakers and Gov. Hobbs. While we do not endorse a specific plan or proposal at this time, we strongly encourage collaboration to develop a solution that ensures sustained support for public K-12 education.” 

Gress said he did not believe the bills in committee today to be the final product. 

“Some of the stakeholders don’t like this idea, some really do,” Gress said. “There’s still much more work to do on a package as complex as this. Certainly, this is not the final version.” 

 Ironing out a deal continues to be a bit of a “painstaking” and “slow” process given the number of stakeholders, according to Mesnard. 

Mesnard said conversations have revolved around the distribution rate, fund allocation, duration of the proposal, election timing and whether to wrap in additional provisions ranging from school choice to the AEL. 

He said overall, the main thrust continues to be getting as many organizations and people on board as possible to ensure a smooth passage, especially after the initial Prop. 123 narrowly passed in 2016.

As for timing on election for the latest Prop. 123, one resolution by Gress proposes a special election sometime in 2025, though Gress told the Arizona Capitol Times  he would rather push for Prop. 123 to be on the November 2026 ballot to ensure greater turnout. 

Gress said he introduced a bill version of the legislation to keep lines of communications open with the governor’s office, with hopes of passing a statutory change with the governor’s signature. Gress said he hopes the governor views it as “an olive branch.”

All three bills, House Concurrent Resolutions 2020 and 2047 and House Bill 2185, passed out of committee, with six lawmakers voting in support, and two, Olson and Gutierrez, voting no. Four Democrats did not vote. 

The Senate versions of the Prop. 123 plan, Senate Concurrent Resolutions 1032 and 1015, and Senate Bill 1240 are to be heard in Senate Education Wednesday.