Page 25 - The Edge - Winter 2016

EYE TO EYE: EVOLUTION OF THE SCHOOL because the base is what’s inflated, and the base they can count
on into perpetuity,” Adams said.
FINANCE DEAL Rather than let the seemingly intractable issue of base-level
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it aside and focus on issues that Adams described as “second-
“GOBS OF MONEY” tier” but still important in order to keep the momentum going.
The biggest of those was the Legislature’s concern over its ability
After the first meeting, subsequent negotiations were to manage the budget.
primarily conducted by staff. Ducey continued his discussions “From a tactical standpoint, what we were looking for was
with Biggs and Gowan, who in turn relayed information to any kind of momentum in these talks. I would refer to this as
the Republican lawmakers in their chambers, and Ducey the low-hanging fruit strategy, or maybe the lowest-hanging
occasionally dropped into the negotiation meetings to help fruit strategy, meaning what can you get agreement on? Can
smooth things along when his staff felt they needed a boost. you show some momentum? Can you show you can actually
Multiple participants said the biggest take-away from that work through some issues together before you get to the base?”
first meeting was that everyone learned exactly how far apart Adams said.
they were in terms of finding a resolution to the lawsuit. Adams
said no sticking point was greater than the issue of base-level THE ECONOMIC TRIGGER
funding, which lay at the heart of the current phase of the
lawsuit. After several meetings, Don Peters, the plaintiffs’ lead
The Arizona Supreme Court had already ruled that statutes attorney, agreed to the need for an economic trigger, which
passed under Proposition 301 in 2000 mandated that the Adams described as “the springboard to what would an
Legislature increase K-12 base-level funding for inflation every economic trigger look like.” The plaintiffs were adamant that
year. But the Supreme Court did not say where that base should it be structured in a way in which it could only be tripped
be set. The Legislature insisted that it get credit for going above by a genuine economic crisis, not by policy decisions at the
and beyond the minimum inflation requirement during the Legislature, such as reducing state revenue through tax cuts.
economic boom times prior to 2008, while the education groups “Both sides sort of fell on the terms ‘natural disaster’ in the
argued that the base should be reset, which would have required economy versus a man-made one,” Morrill said.
far more inflation funding. Lorenzo Romero, Ducey’s budget director, and JLBC Director
A district court judge sided with the education groups, ruling Richard Stavneak set out to find economic criteria for a trigger
that the Legislature pay about $330 million in fiscal year 2016. that both sides could agree to, which used growth in sales tax
Republican lawmakers appealed the decision and increased collections and employment as its benchmarks.
base-level funding by only the $74 million they said they owed. Once the two sides reached some agreement on the triggers,
“You had the adjustment for inflation, but what are you then came the time to settle the base-level funding question.
adjusting?” said AEA President Andrew Morrill. “We came down in really small increments. And they came
The Legislature also had a non-negotiable demand. It wanted up from nothing in really small increments,” said Chuck Essigs,
some kind of flexibility to manage the budget during fiscal AASBO’s government relations director.
crises. The budget cuts that triggered the lawsuit in 2010 were Adams said disagreements over base-level funding threatened
made in response to the unprecedented budget crisis Arizona to scuttle the negotiations at that point, about a week and a half
faced as a result of the Great Recession. GOP lawmakers wanted into the negotiations, and the Ninth Floor decided to halt the
to ensure that K-12 funding demands wouldn’t prevent them three-way meetings with the Legislature and school groups,
from managing K-12 spending during budget deficits. instead conducting “shuttle diplomacy,” with the Governor’s
“Certainly we believe on our side as a Legislature we have the Office meeting individually with both sides. While the Ducey
ability to appropriate. That’s our sovereign right. That’s in the administration continued those meetings, it was crafting a
Constitution,” Gowan said. “We went in with that belief.” proposal that Adams referred to as the “governor’s concept.”
The base was of critical importance because it would dictate That concept included the outlines of the final deal that
the size of future inflation payments. The plaintiffs wanted the the Legislature and education groups agreed to accept. It reset
base set as high as possible, Adams said, while GOP lawmakers base-level spending at about 70 percent of what the district
wanted it as low as possible to ensure maximum freedom for the court ordered. And for the economic triggers, it allowed the
Legislature to maneuver during fiscal crises. Legislature to temporarily suspend inflation payments for a year
Adams said the Legislature actually offered the schools more if transaction privilege tax and employment growth dropped
money than the trial court had ordered, on the condition that below 2 percent, and made a suspension mandatory if both of
the base not be reset. those figures dropped below 1 percent.
“The Legislature was willing to throw gobs of money, even “The triggers is what helped move us,” Gowan said of the
beyond the court judgment, in order to have a lower base. But Legislature’s willingness to accept the reset of base-level funding.
the plaintiffs were not willing to do that, even though there
was more money than what the court ordered settlement was
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