Understanding Arizona’s Proposition 123: Past, Present, and Future
Arizona’s Proposition 123 has played a substantial role in funding K–12 education since its passage in 2016. As the measure nears its expiration in June 2025, discussions about its renewal and potential reforms are at the forefront of state politics. This article delves into the history of Prop 123, its current status, and the proposed changes for 2025, focusing on the distribution of funds from the State Land Trust and the beneficiaries of these allocations.
In 2016, Arizona voters approved Proposition 123, a constitutional amendment that increased the annual distribution from the State Land Trust Permanent Fund to public K12 education from 2.5% to 6.9%, approximately $300 million per year. This was part of the resolution of a longstanding lawsuit alleging that the state had underfunded education between 2010 and 2013, by not accounting for inflation in the distribution formula. The voter approved measure authorized the state to draw an additional $3.5 billion over ten years from the trust, with the funds earmarked for public K–12 education. The State Land Trust Permanent Fund is a constitutionally established fund that supports public education in Arizona. The fund is primarily financed through revenue generated from the sale or lease of state trust land.
The increased distribution has helped allocate money to Arizona’s public K-12 education system, by providing a stable funding source without raising taxes. However, this arrangement expires at the end of June 2025, prompting lawmakers and stakeholders to consider its renewal and potential modifications.
Proposition 123 is scheduled to expire on June 30, 2025. Without renewal, the distribution from the State Land Trust Permanent Fund will revert to 2.5%, significantly reducing the annual funding available for K–12 education by about $300M per year. This reduction would place an increased burden on the state General Fund, potentially leading to budgetary constraints and a reliance on taxpayer dollars to fill the gap.
In 2025, various proposals have been introduced to renew and modify Proposition 123. Governor Hobbs’ plan seeks to maintain the distribution rate at 6.9%, with the funds allocated to flexible school funding and teacher pay. These allocations aim to address the teacher shortage through increased pay and provide districts additional money to use for issues that enhance overall educational quality without raising taxes.
Republican lawmakers have also proposed maintaining the distribution rate at 6.9%, with the funds exclusively dedicated to teacher pay raises. This approach focuses on increasing teacher salaries to attract and retain educators but does not address other aspects of school funding.
The current funds generated through Proposition 123 benefit various stakeholders within the education system:
- K–12 Public Schools: Receive the majority of the funding, which supports operational costs, educational programs, and infrastructure.
- Educators: Benefit from salary increases and professional development opportunities funded by the measure.
- Support Staff: Including custodians, bus drivers, and administrative personnel, who play a crucial role in the daily functioning of schools.
- Students: Experience improved educational outcomes due to enhanced resources, better-equipped facilities, and a more stable learning environment.
Proposition 123 has been instrumental in providing additional funding for Arizona’s public K-12 public schools, without raising taxes, contributing to improvements in education quality and teacher compensation. As the measure approaches its expiration, it is crucial for lawmakers to take action to continue supporting the state’s public K12 public education system. Since this is a voter approved measure, the legislature will need to send the proposal back to Arizona voters for their voice on the funding.
The outcome of these legislative efforts will significantly impact the trajectory of public education in Arizona, influencing the resources available to schools, the compensation of educators, and the overall educational experience of public-school students across the state.