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Details emerge on K-12 settlement deal

By: Hank Stephenson October 26, 2015, 4:00 pm

 Details emerge on K-12 settlement deal

According to multiple sources briefed on the matter, the deal that Gov. Doug Ducey, legislative Republican leaders and school groups have reached to end a years-long lawsuit over education funding has five essential components:

-Resetting the K-12 base level funding.

-Modifying how much inflation money is paid each year.

-Implementing economic and budgetary triggers for when the inflation funding would be required.

-Implementing a version of Ducey’s proposal to increase school spending from the state land trust.

-A decade of spending largely focused on increasing teacher pay.

First, the plan would settle the lawsuit by paying out $249 million in the current fiscal year to rest the base level funding to $3,600. A court last year ruled the state owed $336 million to reset the base funding, and the Legislature this year made a partial payment of $74 million.

The deal would absolve lawmakers of the $1.3 billion that were illegally withheld from public schools between 2010 and 2013.

Second, the tentative deal would tweak the voter-approved law that requires annual inflation increases to schools of up to two percent by adding mechanisms to allow lawmakers some wiggle room in future economic downturns.

The triggers would exempt lawmakers from increasing funding for inflation if sales tax growth and employment growth are both less than one percent, and would give them the discretion to suspend increases if sales tax growth and employment growth are less than two percent.

The inflation funding requirement would also be suspended – and lawmakers would be allowed to cut education funding by same amount as the previous year’s inflation increase – if total K-12 general fund appropriations reaches 49 percent of the total general fund revenues. If K-12 appropriations reach 50 percent or more of revenues, lawmakers would be allowed to cut education funding by twice the previous year’s inflation increase.

Third, Ducey’s land trust plan would be modified to a flat 6.9 percent distribution for 10 years, as opposed to the governor’s original proposal of 10 percent for the first five years and 5 percent for the following five years. The plan would still pay out roughly $2.2 billion over the 10-year span.

Finally, the plan would commit lawmakers to additional general fund appropriations for education for the next 10 years. Under the settlement, lawmakers would agree to $50 million per year through 2020 and $75 million of additional funding from 2021 through 2026. That money would not be included in the annual calculations for inflation.

In return, plaintiffs in Cave Creek v. DeWit would agree to drop both the back payments and base funding reset portions of the lawsuit.