School funding: Arizona must get federal approval to take from land trust again

An Arizona superior court judge has put up a roadblock if Gov. Doug Ducey and state lawmakers, or their successors, seek to bolster education funding and avoid tax increases by pulling money from the state land trust.

The ruling comes after five years of legal back-and-forth, dueling court decisions and Congressional involvement over an issue that dates back to Arizona's establishment as a state. The governor is weighing an appeal, meaning a final outcome may still take more time to decide.

First, a bit of Arizona history: When the federal government granted Arizona statehood — via the 1910 Enabling Act — it set aside 10.9 million acres of land to fund public priorities including K-12 education. A percentage of the sale of land or income from its use, like from leases, was earmarked to pay for those priorities.

In 2016, following a state Supreme Court decision that found Arizona wasn't putting enough money into education, Ducey asked voters to allow him to draw a higher percentage from the land trust to help meet the shortfall.

That measure, Proposition 123, was approved by a razor-thin majority of voters. It has provided additional money for schools, but also has been entangled in a lawsuit since.

At issue in the civil lawsuit was whether Ducey had to seek Congressional approval to change the amount of money he could take from the trust. As the lawsuit was ongoing, Ducey retroactively got Congress's OK.

But Michael Pierce, who filed the lawsuit, and his legal team wanted a court to say whether future governors and legislators could duplicate Ducey's plan, and whether doing so would need Congress's approval. This latest court ruling found that they would. 

“The idea is to protect future generations and not let politicians get temporary popularity by cutting taxes and using the school trust fund to get by,” said Andrew S. Jacob, a Phoenix attorney who represented Pierce in the case. 

Judge: Repeat of funding move is likely

Maricopa County Superior Court Judge John Hannah, in his Monday ruling, wrote there was "little doubt" Ducey's administration got Congressional approval to avoid losing the lawsuit. And Hannah acknowledged a future-looking ruling was needed.

"The agreed-upon facts demonstrate a real possibility that the same thing will happen again," Hannah wrote.

"The facts here do not clearly show that Arizona state officials are unlikely to try again to change the distribution formula without Congressional consent. They show the opposite: that there probably will be another attempt to change the distribution formula, relatively soon; and that the effort probably will be undertaken without Congressional approval, unless there is a court order that says the Enabling Act requires consent."

Hannah wrote that, under Proposition 123, the amount drawn from the trust fund will revert to 2.5% in mid-2025. Currently 6.9% is taken from the fund. Because Ducey is term limited and must leave office in early 2023, it is likely that another effort to take the money would fall to his successor or else schools would see significant drop in funding.

The judge noted how difficult it is to raise taxes in Arizona, requiring a two-thirds vote of both chambers of the Legislature. As long as Republicans control the Legislature and Governor's Office, raising taxes is likely a political long-shot, too.

Ducey spokesperson C.J. Karamargin said the governor and his legal team were reviewing the ruling and deciding whether to appeal.

"Gov. Ducey does not want a future governor to be bound by judicial overreach, and in this case that seems to be what is going on," Karamargin said.

Reach reporter Stacey Barchenger at stacey.barchenger@gannett.com or 480-416-5669. Follow her on Twitter.

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