The Prop 123 Debate: A Class of Its Own

By Jacinda Stephens.

In July 2020, a heated debate over Proposition 123 (“Prop 123”) came to a close when the Ninth Circuit overturned a U.S. District Court decision on the matter. A year earlier, in March 2019, the U.S. District Court for the District of Arizona held that Prop 123 was unconstitutional in Pierce v. Ducey. Michael Pierce, the plaintiff, sued Governor Ducey, the defendant, to stop the state from using Prop 123 to remove additional funds from Arizona State Trust land. The District Court judge ruled in Pierce’s favor, and held that Prop 123 was unconstitutional because it was a violation of the New Mexico-Arizona Enabling Act.

What is Prop 123?

“Inside My Classroom” by knittymarie is licensed under CC BY-SA 2.0

The basis of Prop 123 rests on the Territory of Arizona’s founding. In 1910, the Arizona-New Mexico Enabling Act authorized Arizona to become a state. As part of the Act, Congress created Arizona State Trust land to ensure that public schools would be adequately funded. This consisted of approximately 10 million acres of federal land to be held in trust for K-12 education. One of the Enabling Act’s requirements was that for any money to be spent from the fund, there needed to be congressional approval.

Prop 123 was a constitutional amendment spearheaded by Governor Ducey that increased the amount the state could take out of the trust by an additional 2 billion dollars. The bill would be in effect until 2026. The bill’s proponents saw it as a way to increase much-needed education funding without raising taxes for Arizona citizens. The bill’s opposition consisted of those who believed that bigger changes and more long-term solutions were necessary to solve Arizona’s education problems. In 2016, voters narrowly approved Prop 123 with a margin of 1.5%. In Pierce v. Ducey, Pierce challenged Prop 123 on the grounds that the state was using money from Arizona State Trust land to fund schools, and it had not sought congressional approval. Ducey’s counter-argument was that Prop 123 had voter support, and Congress had subsequently approved this amendment in 2018. Ultimately, District Court Judge Wake held that the “single provision about the withdrawals in the 2,400-page appropriations bill that likely went unnoticed” did not qualify as congressional approval.

The Ninth Circuit’s Ruling

After the District Court decision, the governor’s office appealed to the Ninth Circuit. The Ninth Circuit disagreed with the District Court’s ruling. Firstly, the court stated that Pierce did not have adequate standing to bring this claim. Generally speaking, one of the requirements that a plaintiff must show to have standing is that they have an “injury in fact,” meaning a concrete and particularized injury that actually exists and affects the plaintiff in a “personal and individual” way. Pierce’s alleged injury was his personal belief that Prop 123 violated federal law. The court did not view this as concrete or particularized enough to count as standing, as he did not have a “personal financial stake in the outcome.”

Secondly, two years after Pierce’s suit in the District Court, Congress approved Prop 123 in 2018. Therefore, the court held that the issue was moot, meaning that in the course of the suit, the controversy had been eliminated and the case should be dismissed. The court also briefly addressed whether, in the future, congressional approval needed to be sought before altering the amount of money to be taken out from Arizona State Trust land. The court did not decide this issue, as it determined that it was not its place to decide on future events that may not ever occur.

Educational Funding in Arizona

Although the Prop 123 issue seems to be resolved, the bigger issue of Arizona’s lack of adequate educational funding still exists. Currently, Arizona’s school funding system is ranked at the bottom of all 50 states. Compared to the rest of the country, Arizona spends an average of $5,477 less per pupil (with an adjusted rate based on regional cost differences). Arizona is also facing a chronic teacher shortage. Arizona’s teachers earn only 62% of what other employees with similar ages, qualifications, and work hours make at their nonteaching jobs. Prop 123’s expiration in 2026 means that the constitutional amendment was simply a temporary fix. And in less than a year, Prop 301 is set to expire, meaning a further 20% loss of state funding for Arizona’s K-12 schools.

So what are alternate funding solutions? One suggestion is to increase the amount of state revenue that is spent on public education. This could help to increase the average public school teacher’s salary, which would help attract more teachers with better qualifications. Another method is to change the school funding formula to take poverty levels into account. Most states have done this; in fact, Arizona is one of the only states that does not. Not accounting for poverty in education has a direct correlation with test results, as schools in the highest poverty districts scored the lowest in Math and English Language Arts proficiency tests. By considering economic status in the funding formula, these schools could develop initiatives such as Early Intervention Programs to improve test scores.

Regardless of Prop 123’s impact in the next few years, there is still a long way to go on the path to long-term education reform in Arizona.

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By Jacinda Stephens.

J.D. Candidate, 2022

Jacinda is a 2L Staff Writer from Walnut Creek, California. She earned her Bachelor of Arts from the University of Southern California with a degree in English in 2017. After graduating, Jacinda spent a year in Mongolia teaching AP English Literature and Math to middle and high school kids. During law school, Jacinda enjoyed externing with the Arizona Supreme Court Staff Attorney’s Office. Outside of school, she enjoys hiking, going to coffee shops, and binging Love Island episodes.

The opinions expressed herein are those of the individual contributors to the ASLJ Blog and should not be construed as the opinions of the Arizona State Law Journal or the Sandra Day O’Connor College of Law at Arizona State University.