Judge rules state owes schools $316 million - Ahwatukee Foothills News: Valley And State

Judge rules state owes schools $316 million

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Posted: Saturday, July 12, 2014 8:45 am

Rejecting arguments the state cannot afford it, a judge has ordered Gov. Jan Brewer and the Republican-controlled Legislature to come up with an extra $316 million immediately — and potentially $2.9 billion over five years — to make up for aid to schools they illegally withheld.

In an order released Friday, Maricopa County Superior Court Judge Katherine Cooper said a 2000 voter-approved measure requires the state to increase aid to public schools each year to compensate for inflation. That did not happen for several years.

The ruling came despite efforts by Bill Richards, the attorney for the state, to convince Cooper that she should not force the lawmakers and the governor to cough up extra funds.

He argued that in some years prior to the budget cuts of 2009, schools actually got a bigger increase in state aid than legally necessary. Richards said that means schools really aren't owed anything now — or certainly a lot less.

But Cooper called such arguments “disingenuous.” And the judge flat-out rejected the contention the state simply cannot afford the increased aid.

“Cost does not defeat jurisdiction,” she wrote. “As a practical matter, if it did, the courts could never order anyone to do anything that costs money.”

“This is a real fiscal crisis,” said Rep. John Kavanagh, R-Fountain Hills, who chairs the House Appropriations Committee. He said the ruling means at least $190 million in immediate cuts to other parts of the state budget — and possibly as much a $1.8 billion if retroactive payments are ordered.

Brewer also blasted the ruling.

“Left to stand, this judicially imposed spending will have a disastrous impact on our state's public safety and vulnerable populations since funding for the court mandate must come at the expenses of these vitally important programs,” the governor said in a prepared statement.

Andrew Morrill, president of the Arizona Education Association, said the ruling “ensures that future generations of Arizona's children will be guaranteed the education funding voters approved when they passed Proposition 301 in 2000.” And Tim Ogle, executive director of the Arizona School Boards Association, said the order will “provide necessary relief to schools that have experienced some of the most extreme budget cuts in the nation over the past five years.”

How that will happen, though, remains murky.

Brewer said a court should not substitute its judgment for that of the legislators.

“Courts spend money in a vacuum while elected executive and legislative officials must balance spending within the confines of budget realities,” she said.

Cooper, however, said she is not spelling out how the funds should be obtained, whether through higher taxes or cutting other state programs.

“This court cannot (and will not) tell the Legislature or treasurer how to fund the adjustments, past or future,” she wrote. The judge said, though, that does not make her ruling meaningless.

“The court assumes that the Legislature will do what the law requires to enable the state to comply with the Supreme Court decision,” Cooper said.

Anyway, she noted, it was the Legislature itself — with the blessing of then-Gov. Jane Hull — that crafted the issue and put it to voters in 2000.

“It is not for this court to say how a judgment is satisfied, nor question the practicality or wisdom of the law that the Legislature wrote and voters enacted,” Cooper said.

“Obviously, we will be making the payments,'' Kavanagh said. And it's certainly going to have a negative impact on all other areas of government.”

There is another option: Higher taxes. But Kavanagh noted that requires approval by two-thirds of both the House and Senate.

“I don't see that happening,” he said. “I see some real belt-tightening if, in the end, this ruling stays as is.”

Kavanagh said if retroactive payments are ordered, “I have no idea what's going to happen.”

Cooper's ruling, unless overturned, means an immediate increase in state aid to schools to what it would have been had the governor and lawmakers not ignored the law in the first place. That carries an estimated $316 million price tag and, according to Morrill, will boost per-pupil funding this year by about $279, to about $3,652.

But Cooper said she's willing to hear arguments by the state it should not have to come up with the $1.3 billion districts should have received — but did not — in prior years. All totaled, back funds plus the court-ordered reset of state aid would total $2.9 billion over five years.

The 2000 ballot measure boosted the state's 5 percent sales tax by six-tenths of a cent through June 30, 2021. It also requires the Legislature to forever increase funding for schools by 2 percent or the change in the gross domestic price deflator, whichever is less.

But faced with a budget shortfall, lawmakers and the governor stopped providing the inflation funding beginning with the 2009-2010 school year. They only partially funded it for last school year before finally getting back on track for the coming school year — at a lower starting point.

School districts sued. Last year the Arizona Supreme Court ruled that the state had violated the 2000 law, sending the case to Cooper to determine how much the schools are owed.

Richards tried to convince Cooper nothing is owed or, if it is, it is nowhere as much as demanded.

For example, he said the judge should simply base state aid for last year at what it was the prior year: $3,268 per pupil, plus inflation.

Cooper refused, noting that $3,268 figure was less than it would have been had Brewer and lawmakers complied with the law all along.

Don Peters, attorney for the schools, said the real figure for 2012-2013 should have been $3,497. That figure, properly adjusted for inflation, brings it up to the $3,560 for last year that Cooper ordered, at an immediate cost of $316 million; the $3,652 figure cited by Morrill would apply to the current year.

Cooper said anything short of that ignores the will of the voters that schools be protected against inflation.

“That protection disappears if the base level is not adjusted consistently and cumulatively,” the judge wrote. “The goal is to ensure that school districts receive the full purchasing value of their funding to pay recurring overhead such as teacher salaries.”

That still leaves the question of whether the state will have to find what should have been given to schools in prior years but was not. Cooper said there may be a reason to forgive that debt.

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