Quite the hubbub has been made recently over the republican support of SCR1001 (and its companion bill HCR2024) the proposed, permanent 1 cent sales tax for education to be referred to the voters which, if passed, will amend Article IX of the AZ Constitution by adding a section 12.2.
In full disclosure as superintendent I recommended a similar idea, for a 4/10th cent increase, voter approved and protected extension of Prop 301, at an AZ Business and Education Coalition (ABEC) meeting in April, 2017. That was only AFTER I conducted about 40 “We are Listening” town hall meetings over 2 years all across the state during which the number one issue raised by John & Jane Q. Citizen – democrats and republicans alike – was increasing teacher pay and education funding. But that was also BEFORE the teacher strike and BEFORE the governor and the legislature committed the taxpayers to funding the 20/2020 plan for teacher raises which they assured us was fully fundable under currently available resources. I find it very ironic that the same republicans who two years ago pooh-poohed, ignored or disparaged my idea, are now the same republicans who are doing handsprings in support of SCR1001 and the 1 cent sales tax. But I digress.
For those unfamiliar, it is important to not only understand the history of Proposition 301 but also SB1390 signed into law in 2018 and now SCR1001 (Primary sponsor Sen. Allen R-LD6 and HCR2024 Rep. Udall R-LD25); which substantially changes education funding and how it impacts our school districts should SCR1001 be referred to and approved by the voters as currently written.
Proposition 301 is a voter approved 6/10th of a cent sales tax passed in November, 2000. The proposition not only designated the amount of the tax but also defined and therefore voter protected specifically for what the funding is to be appropriated and how districts are allowed to expend it. Without being extended the original Prop 301 tax and funding will sunset in 2021.
Last session the legislature passed and the governor signed into law SB1390, a 20 year extension of the Prop 301 sales tax at the original 6/10th of a cent. For the most part SB1390 leaves the original voter approved funding intact; with the exception of $68M currently appropriated to the School Facilities Board to pay the debt service will be appropriated to the “Classroom Site Fund.” SB1390 has been codified into and remains in ARS 42-5010.01 (the amount of the tax) and ARS 42-5029.02 (the distribution of the tax money). However, this is a legislative extension meaning what the legislature giveth, the legislature can taketh away (or increase) as the amount of the tax and the defined appropriations would no longer be voter protected when this extension takes effect in 2021.
Set aside for the moment the pro and con arguments of increasing the tax to a penny and that it is (allegedly) “…less than a half cent adjustment” (press release Chairman Kelli Ward, Republican Party of Arizona April 23, 2019). We are now being told that this “will reform AZ’s decades-old tax” (same GOP press release) meaning that SCR1001 is the intended extension of Prop 301. IF SCR1001 is the reauthorization and extension of the original Prop 301 (and making the huge assumption that ARS 42-5010.01 and 42-5029.02 will somehow be struck from statute) then there are very serious implications of the changes that will occur to K12 education funding. But then the devil is always in the detail isn’t it?
Currently education receives the benefit of virtually the entire Prop 301 funding in one way or another. Districts have built Prop 301 funding into their budgets for almost 20 years now, for such things as the mandated 5 additional instructional days per year and the “Classroom Site Fund” which supplements teachers’ salaries, funds teacher performance pay and class size reduction among other classroom funding. It also funds grants for School Resource Officers, character education and failing schools; the debt service for the School Facilities Board (SFB) which funds K12 school construction and maintenance and paying for a portion of the mandated state test so districts don’t have to – all specifically voter approved and protected. Universities and community colleges also receive a portion of Prop 301 funding.
All of this changes for K12 under SCR1001 (again with the assumption SB1390 does not remain in statute and SCR1001 IS the extension of Prop 301 as we are being told). While 3 “buckets” of funding are defined – “primary and secondary classroom education purposes;” for the universities “maintaining an in-state tuition rate…and for technology and research initiatives;”and the community colleges “trade and workforce development programs” – the specific “program appropriations for all three areas are “as provided by law” meaning, once again, what the legislature giveth, it can taketh away.
Would districts be able to continue funding all the current Prop 301 expenditures in their budgets with the SCR1001 tax money? Yes, in theory, unless the legislature designates (mandates) different areas of expenditures “as provided by law.” At this point we have absolutely no indication whatsoever as to what the law will provide. Districts that receive grant money for SROs, character education, school improvement will have to fund those programs within their budget if their communities want them to continue.
Who is the big loser if SCR1001 becomes the sole replacement of Prop 301? K12 education – that’s who.
Under the voter approved Prop 301 83% of the tax money collected is allocated to funding K12 expenditures of some form. SCR1001 allocates K12 only 75% of the tax revenue and while actual dollars will increase – because Arizonans will be paying more taxes – the percent of the funding designated to K12 decreases by 8%. Prop 301 funding excluded from SCR1001 is the basic state aid which increases the school year from 175 to 180 days; school improvement funding to support failing schools; the SRO and character education grants, the funding for the state test and the SFB K12 debt service. All of these which are specifically indentified funding areas under the current Prop 301 may or may not become part of the big SCR1001 K12 bucket “as provided by law.” If all of these must be paid out of the designated 75% “primary and secondary classroom education” funding that decreases the amount available for the “Classroom Site Fund” by 25%. Which will bring the CSF down to 50% under SCR1001 from its current average of about 60% of the Prop 301 funding thereby; decreasing the funding available for districts to sustain current teacher salaries, performance pay and class size reductions.
Universities receive 12% funding for technology & research in Prop 301. Under SCR1001 this funding will be increased to 20% for technology and research AND in-state tuition. Will that be the funding (or free up other funds) for the new “non-resident, AZ high school graduate” tuition rate the legislature is attempting to put into statute? But again, I digress. The community college funding for “trade and workforce development” increases from 3% to 5%. Universities and community colleges are getting a bigger slice of a bigger pie and K12, the intended beneficiary of the original Prop 301 and its Classroom Site Fund, will receive a considerably smaller slice albeit of the bigger pie.
However this all becomes a moot issue IF SCR1001 rather than extending and replacing Prop 301, is in ADDITION to the SB1390 extension of Prop 301 already in statute. There is nothing I can find that strikes the language of ARS 42-5010.01 and 42-5029.02 should SCR1001 be passed by the voters. Rather the language states that it is “a separate rate increment in addition to the state transaction privilege tax rate…” not in lieu of the tax imposed in SB1390.
If both remain then “from and after June 30, 2021” AZ sales tax for education will increase from .6 of a cent to 1.6 cents. K12 education will still receive the original Prop 301 funding with a boost to the Classroom Site Fund AND (if the projects of over $1 BILLION of new funding are correct) an additional $750M +/- for “primary and secondary classroom education purposes as provided by law.” Universities is continue to received 12% ($77M in FY2018) for technology and research AND an additional 20% or $200 MILLION +/- from SCR1001 for an “in-state tuition rate” and technology and research. Likewise, community colleges will received the original 3% ($19M in FY2018) of Prop 301 AND an additional 5% or $50 MILLION boost from SCR1001 for the same “trade and workforce development programs” currently being funded.
The “$64,000 Questions” then become – Which and how much is it?
Does SCR1001 extend and replace Prop 301 (as advertised) and its voter protected, 20 years of imbedded funding with a lower percentage of a radically changed funding plan “as provided by law” leaving our districts to ongoing financial uncertainty and instability OR is SCR1001, as by all indications, in addition to the 2018 – SB1390 extension of Prop 301 already embedded in ARS 42.5010.01 and 42.5029.02? Will voters be asked to increase AZ’s education sales tax by .4 of a cent to a penny OR by a penny to 1.6 cents?
As a taxpayer/parent, school board member or as superintendent, I have never concerned myself with which side of the “raise/don’t raise taxes” argument the voters take. That is part of what is so great about America our God-given right to hold and defend our dissenting opinions – at least it used to be. However it has always been very important to me that people receive and base their opinions and their votes on accurate, factual information. In my opinion one can ask no more and should expect no less. Unfortunately over my decades of experience, in all of the above roles, I have found the education system to be, shall we say – challenged – at times to provide the truth, the whole truth and nothing but the truth when it comes to taxing initiatives. Sadly this also appears to be the case with SCR1001.
Let the voter beware.