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Judy Hedding

Election 2012: Arizona Proposition 118

By September 30, 2012

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Arizona Proposition 118
Update: This proposition failed.
In November 2012 voters in Arizona will address Proposition 118, entitled Establishment of Permanent Funds. It arises from the House of Representatives (HCR 2056) as a proposed Constitutional Amendment.

State trust lands produce revenue for AZ schools, colleges and prisons. If passed Proposition 118 would amend the Arizona Constitution to provide that for fiscal years 2012-2013 through 2020-2021, the amount of state trust land permanent funds provided to the various public institutions would be 2.5% of the average market values of the fund for the immediately preceding five calendar years. After fiscal year 2020-2021, the distribution formula would return to the current formula, average total rate of return for the previous five fiscal years, less percentage change in inflation, multiplied by the average market value over the previous five years.

Keep reading to see a synopsis of the pros and cons and find more information about this ballot measure.

Advocates of Proposition 118 say that:

  • The formula used to distribute earnings was critically flawed. Its complications have resulted in uneven and unpredictable outcomes - including a year when zero dollars were distributed for K-12 education. If left unchanged, this current formula would likely result in several additional years of zero dollar distributions. An endowment this large should never have years of zero dollars available to benefit Arizona's children and teachers.

  • Public education is by far the largest beneficiary of State Trust Land and the State Land Department manages 8.1 million acres of land on behalf of K-12 education, and the Permanent Land Endowment Trust fund is worth more than $3.5 billion. Earning money for Arizona's public schools is the primary mission of the Trust's management. In 2010 the State Land Department deposited $91.7 million in the Endowment. Because of the inadequacy of the current formula used to distribute earnings from the Endowment, K-12 education received no money in 2010. Prop 118 fixes that inadequate formula. Had the new formula been in place in 2010, public education would have received $48 million from the Permanent Land Endowment Trust Fund.

  • Under the current system, we feast when times are good, and starve when times are bad. The method proposed by Prop. 118 will allow the trust to grow substantially when times are good, leaving plenty of savings to help fund the school system through difficult economic times.

Opponents of Proposition 118 say that:

    No arguments against Prop 118 were submitted to the AZ Secretary of State.

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Note: pro and con arguments for the proposition were quoted or paraphrased from the official arguments. More arguments may have been submitted; I am presenting only a few that I believe will most help readers decide how to vote. You can find the entire wording of the ballot proposition, and all the pro and con arguments, in the official election pamphlet.

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