Arizona lawmakers want to raise teacher salaries without raising taxes

By Howard Fischer
Capitol Media Services
PHOENIX -- Two Republican lawmakers want voters to approve a plan to boost teacher salaries in Arizona by about $4,000 a year.
And they are doing it in a way that would not raise taxes.
The proposal by Sen. J.D. Mesnard and Rep. Matt Gress is built on the idea of extending Proposition 123. That 2015 ballot measure generated about $3.5 Billion for education over the decade by tapping into the earnings of the state land trust fund.
That measure self-destructs later this year. And lawmakers, in anticipation, already have set aside state tax dollars to make up for the soon-to-be-lost revenues.
But what that does, said Mesnard, is create an opportunity to extend the current trust fund withdrawals for another decade. And that he said, will provide enough to raise teacher salaries in Arizona above the national average.
Gov. Katie Hobbs has her own plan for extending Prop 123.
The governor, however, wants to take even more money out of the trust. And she wants to spread the wealth around for not just teacher salaries but also support staff, general school funding as well as cash for school capital and safety improvement.
But Mesnard and Gress may not need the governor's blessing: It is designed to go directly to voters, though there may need to be some cooperation with Hobbs to implement it if approved.
There is, however, a different sticking point.
State Treasurer Kimberly Yee, who administers the trust, contends that neither the GOP plan nor the one by Hobbs are "financially prudent.''
Yee acknowledged that similar dire predictions by predecessor Jeff DeWitt a decade ago failed to materialize. But she said that she remains doubtful that the rate of return on the trust proceeds can be maintained at that rate in the future.
The treasurer has no power to block the legislative proposal.
But her opposition could raise sufficient doubts that could defeat a vote on the plan at a yet-to-be-determined special election sometime later this year. And the original Proposition 123 barely skated by with a 51-49 margin despite bipartisan support.
Central to the issue is what Arizona pays its teachers.
Revenues from Proposition 123 helped boost average salaries from near the bottom. Lawmakers also approved a measure in 2018 to raise teacher pay by 20% by the 2020-2021 school year.
But a report by the state Auditor General at the end of that period found that average salaries were up just 16.5% over that period. And while the report cited various reasons, including more experienced -- and higher paid -- teachers leaving and being replaced by younger ones, it also was noted that nothing in that 2018 law actually required school districts to use the funds for teacher pay.
The most recent data from the National Education Association pegs average starting pay at $44,124 a year. That's good enough to rank Arizona as 21st.
That same report, however, puts average pay for all teachers at $60,275, a figure the NEA said ranks Arizona as 32nd.
A study last year by the state Department of Education found that a third of all Arizona teachers have four years or less of experience, with fewer than half having 10 or more years in the classroom. While the report cited factors like burnout and student behavior, salaries also ranked near the top.
That rate of people leaving the profession has an impact: Currently close to one out of every four classrooms in Arizona is not led by a certified teacher, with the gaps being filled with emergency certifications and "alternative pathways'' to teaching.
If the plan by Mesnard and Gress goes through, the average should increase to more than $64,000.
That would still fall short of the $69,597 national average cited by the NEA for the most recent year surveyed. Still, it would move Arizona ahead of the neighboring states of New Mexico, Nevada, Colorado and Utah; California by contrast, has the highest average pay now at more than $95,000.
It's all dependent on those trust funds.
The federal government gave Arizona 10 million acres of land when it became a state in 1912 with the restriction that it be held for the benefit of certain entities, primarily public schools. Close to 9.2 million acres remain, with more than $9 billion in the trust account from the sale and lease of those lands.
Until 2015, public schools got 2.5% of the value of their share of the trust annually, a figure designed to to ensure level distributions without endangering the principal. Proposition 123 boosted that to 6.9% for the next decade, generating about $3.5 billion.
But while teacher salaries and benefits were the primary goal of the funding, schools also were free to use it for supplies, technology, general operational costs and support for academic programs and student services.
With the expenses of the original Prop 123 now going to be absorbed into the general fund, Mesnard and Gress figure that provides an opportunity to continue the higher withdrawals from the trust -- but this time with more restrictions.
"We want to focus it on teachers, where there's a shortage, where there's a particular crisis,'' Mesnard said. He figures the difference between the 6.9% withdrawal and going back to 2.5% -- what would happen if there is no extension of Prop 123, would generate about $250 million.
"And our rough math is that you could do about a $4,000 raise for teachers, which is meaningful,'' Mesnard said.
That focus, he said, is important "because there was some disappointment with prior efforts to get raises to teachers.''
Mesnard said this isn't only about that promised 20% pay raise but goes all the way back to 2000 when voters increased the state sales tax from 5% to 5.6%. The measure said that 20% would be spent on a base increase in teacher pay, with 40% of the funds for performance pay and the balance for everything from class size reduction to dropout prevention.
But a report from the state Auditor General said that law did not define "teacher'' when it mandated salary increases. And it said more than half the districts had determined it also enabled them to use the dollars for counselors and librarians.
Mesnard said the new measure is crafted so that all the funds would go to teacher pay hikes.
Hobbs also figures she can raise teacher salaries. But her plan is based on increasing the annual withdrawal from the trust from the current 6.9% to 8.9% -- a level Yee has called "dangerous and unsustainable -- generating an average of $761 million a year over the proposition's life if voters approve.
Of that, about $347 million would go to "educator compensation.''
But, unlike what is in the Republican plan, she would not require schools to use all of it for salaries. Instead, it would be under the broader category of "compensation'' which also could include paying for health insurance or retirement.
Nor would it require that schools give all teachers the same amount. That would allow a district, for example, to decide to put all of the funds into raising salaries for beginning teachers.
And then there's funding for support staff like librarians, guidance counselors and even bus drivers. Gress said they were excluded from the GOP plan because the biggest shortage is in teachers.
All that -- including the spat over 6.9% versus 8.9% -- ignores Yee's continued objections.
She has acknowledged that the state did manage to deal with the 6.9% distribution rate without having to dip into the "corpus'' of the trust, the part that earns the interest. But Yee says a safe withdrawal going forward would be in the 4% to 5% range, saying that market volatility and possible inflation make that the safest bet.
Mesnard said he disagrees.
But he said there are "triggers'' in the proposal designed to track market trends. And if they predict that the 6.9% rate would cut into the trust, the funding could be scaled back.
No date has been set for a hearing on either SCR 1015 or HCR 2047, its mirror version in the House.
—--
On X, Bluesky and Threads: @azcapmedia