A Charles Koch Foundation-funded study at Arizona State University has concluded that the state is keeping $5.2 billion in funding in a land-trust endowment and should designate a larger percentage for education each year.
According to Mary Jo Pitzl’s article in The Arizona Republic, “[Gov.] Ducey in June proposed the state increase the annual distribution of 2.5 percent of the endowment’s net value to 10 percent for five years, then drop back to 5 percent for the following five years.” Essentially, this means that rather than leave the money in the endowment to accrue value, Ducey wants to invest in Arizona’s education now, benefitting the current generation.
In classic Arizona fashion, however, not enough legislators are sending their support for the measure to be placed on the ballot this March. Instead, critics are arguing that the percentage either should increase, but by less than 10 percent, or shouldn’t increase at all.
But, based on the assumption of better economic conditions and higher income in the future, it is predicted that Arizona will still be able to maintain a significant balance in the endowment, even if Ducey’s proposal passed without alterations. A 10 percent increase in funds to education would be risky, some critics say, but there is no reason not to raise the withdrawal by at least several percentage points.
Arizona, according to a study done by the Arizona Association of School Business Officials, spent less money in 2014 on students than any other state in the country. In terms of quality, Arizona has ranked No. 47 in the country two years in a row, receiving a D+ grade.
Our state’s spending per student is atrocious both in K-12 and our university system. Over the course of a year, Arizona spends about $8,800 per student. In contrast, Massachusetts, ranked No. 1 for education quality, devotes over $16,400 to each student per year and has 6 percent higher graduation rates. And, with more money invested, quality goes up; Kansas, with $11,472 per student, is ranked No. 20 for quality.
Unfortunately, it is unlikely that Arizona children will receive a good deal regardless of whether the trust fund payouts are increased. The Koch brothers are notorious for fueling money into studies that will promote their interests, and this study suggesting the depletion of the state’s land trusts fits in line with their goals.
The study relies on one fundamental assumption: that the state’s economic future is promising. As some have argued, however, Arizona is not in such an optimistic position. Our economy is still rebounding, wages are low and poverty rates are fourth highest in the country at 19 percent. This means that, if money is removed from the land trust now, future generations under worse economic conditions would suffer in the future.
If that assumption is not met, it makes little sense to withdraw such large percentages of the land trust over the course of the next years. Instead, it looks more like a ploy on behalf of the Koch brothers to defund public education in Arizona and buy public lands once the state begins to liquidate to cover its bases.
The truth is, contrary to what Ducey has said, it is not possible to invest in education both now and in the future without raising taxes. The 10 percent withdrawal plan might help now but it has few long-terms benefits. Frankly, the fact that the Koch brothers support the study should be enough to raise a red flag.
Instead of continuing to search for loopholes and quick-fixes, a legitimate investment needs to be made in Arizona’s future through tax increases to help pay for education. Despite its appeal on the surface, voters should think carefully and critically at the measure to remove money from the land trust before agreeing to support it.
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