Key Points: 

• Senate Republicans pass placeholder Proposition 123 through committee 

• Sponsor says ESA reform measure, governor’s proposal complicate conversation

• House Republicans fail to pass mirror legislation, no consensus on 123 plan

Senate Republicans’ placeholder Proposition 123 proposal made it through committee this week, though with no clear next steps and still with little consensus across chambers, lawmakers or stakeholders. 

Prop. 123 expired at the end of last fiscal year. 

The measure, spun from a settlement agreement between school districts and the state and passed by voters in 2016, drew 6.9% from the state land trust to fund the K-12 basic state aid formula in step with inflation.

Lawmakers have spent the last three sessions attempting to affix some new version of the money mechanism to the state land trust fund — with little luck.

Sen. J.D. Mesnard, R-Chandler, who has continued to take the lead on the Senate majority’s proposal, introduced and herded two bills through Senate Education on Feb. 18, simply to keep the conversation alive. 

“I have no idea what’s going to happen on Proposition 123, if anything,” Mesnard said. “I’m hopeful that we’ll get to something, but I admit to not knowing the future. However, this is the last committee, and so we’re going to keep them alive, we need to move them out.” 

Senate Concurrent Resolutions 1051 (Education funding; teacher compensation program), sponsored by Mesnard, allocates state land trust funds for an equal salary bump for all full-time teachers who meet or exceed performance standards. 

Senate Concurrent Resolution 1041 (Reporting; teacher salary increases; schools), sponsored by Sen. Jake Hoffman, R-Queen Creek, retains the 6.9% distribution rate, breaks down the per-pupil calculation and requires reporting from district and charter schools, the state treasurer and the auditor general. 

If passed, the measures would head to voters in the 2026 general election. 

The two bills reflect the same two proposals passed through committee last session.

Respective Senate and House committees advanced the legislation, but lawmakers’ plans to push floor amendments — rumored to include provisions to protect school choice and deregulate charter schools — ultimately failed. 

Mesnard said he has continued to have “limited” conversations about the measure’s future and noted two new factors adding new dimensions to the discussion. 

For one, the Arizona Education Association and Save Our Schools Arizona launched a ballot initiative to enact further regulations on the Empowerment Scholarship Account program. 

Under the Protect Education, Accountability Now Act, the ESA program would limit universal enrollment to families with an income under $150,000. 

The measure also requires fingerprint cards and registration for private school educators and tutors and directs any unspent funds back to the Classroom Site Fund to support public education, among other provisions to rein in the ESA program.

“The conversation for many of us was broad enough to encompass that educational freedom conversation,” Mesnard said. “So now that dynamic is out there. Whether that impacts (Proposition 123), that’s the main new variable.”

Mesnard also noted Gov. Katie Hobbs’ executive budget proposal includes a provision to shift operational funds for the Arizona State Land Department from the general fund to its own state land trust fund through Prop. 123. 

“I’m just acknowledging there’s a lot of factors now,” Mesnard said. “It was a hard but simpler conversation when we first started three years ago.” 

Meanwhile, the House failed to get the mirror Prop. 123 bills — House Concurrent Resolution 2050, sponsored by Rep. Lisa Fink, and House Concurrent Resolution 2049, sponsored by Rep. Alexander Kolodin, through committee by the deadline. 

Rep. Matt Gress, who initially led Prop. 123 in the House last session, also introduced House Concurrent Resolution 2008, which runs in the same vein. It similarly has not gone through committee. 

Gress previously said the House Republican caucus had yet to decide whether they wanted to pursue Prop. 123 at all. Gress, and the House majority spokesperson, did not respond to a request for comment. 

Though Republicans remain fixated on teacher salary raises, Democrats and the governor continue to push for a clean extension without any modification. Per Hobbs’ executive proposal, she wants to continue the 6.9% distribution rate and allocate funds to the base level and school facilities. 

In voting against the bill, Sen. Eva Diaz, D-Tolleson, said, “This is the same proposal we saw last year. There was no input from stakeholders, educators, or the business community.” 

The Arizona Education Association is not, and has not been a fan of the current proposal from Republicans. 

Marisol Garcia, president of AEA, said the current set-up of the proposal offers “no stability.” 

“This, once again, is tied to an evaluation. It then also gets approved by the Legislature every year, which means that as somebody who wants to buy a home or buy a car, I don’t know what my salary is year to year,” Garcia said. “And that already happens because of the state budget. This will amplify it and make it worse. It will do nothing for the teacher retention issue that the state is facing.” 

Garica added that, though she was hopeful for a broadly stakeholder-supported bill, she currently saw a lack of urgency in the Legislature. 

“We’re the ones kind of pushing and pushing and pushing up the hill. It has felt that way for three years,” Garcia said. “We’re losing qualified educators to other states and other professions, but the Legislature wants to play political games with this piece of legislation.”