Prop 123 set to expire after June with no renewal on the ballot

PHOENIX (AZFamily) — Arizona schools are facing another financial uncertainty, as a major source of funding for public schools is set to expire this summer.

Voters narrowly passed Proposition 123 in 2016, which increased the amount of state land trust money distributed to public schools over 10 years and is set to expire at the end of June.

“People’s fears are one of the reasons I think it’s better to act quickly than to take longer,” said State Superintendent of Public Instruction Tom Horne.

Both top Democrats and Republicans in Arizona have expressed a desire to renew Prop. 123, but they haven’t been able to bring it to the voters yet.

“We must address the impending expiration of Prop. 123, which provides critical funding for public schools and teachers. Renewing it is essential,” said Gov. Katie Hobbs during the State of the State speech two weeks ago.

The last scheduled election before Prop. 123 expires is in May.

The Arizona Secretary of State’s Office says counties need around five months’ notice to prepare for an election, while the Maricopa County Recorder’s Office says Maricopa County elections need 180 days’ notice, or six months. Both those deadlines have already passed for the May election.

If Prop. 123 does expire in June, the distributions from the state land trust will go from 6.9% down to 2.5%.

The 4.4% difference, more than $200 million annually, will still be paid to schools moving forward but will come from the state’s general fund, which is mostly paid for by taxpayers.

“We want to get it right. If it takes a little bit more time, then the important thing is for us to do this the right way,” said Sen. J.D. Mesnard, a Republican from Chandler.

On Tuesday, Mesnard introduced SCR 1015, which, if passed by the legislature, would put Prop. 123 on the ballot for voters.

Republicans at the Legislature say they want the next iteration of Prop. 123 to focus more on teacher pay, while Senate Democrats tell Arizona’s Family they are in favor of a clean continuation of Prop. 123, which left how the money would be spent up to the schools.

“We do want to make sure we get the resources into the classroom, and we know that teacher shortages and that teachers are leaving the profession, there’s definitely a crisis, and we think this could be an excellent tool to help with that crisis if it’s done right,” explained Mesnard.

Arizona Treasurer Kimberly Yee also weighed in on a possible extension of Prop 123, saying she recommends a 4% to 4.5% distribution rate moving forward, citing what she says will be increased market volatility for the foreseeable future and persistently higher inflation.

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