Tea Party of Scottsdale, AZ
Our mission is to attract, educate, organize, and mobilize our fellow citizens to secure public policy consistent with our three core values: Personal Freedom, Economic Freedom and a Debt-Free Future



Propositions 123 & 124 May 17, 2016 - Doug's Notes


This is an attempt to deal with a badly underfunded ($12.7 bil liabilities vs $6.2 bil assets) pension plan for police and firefighters. The main purpose of Prop 124 is to modify the Cost Of Living Adjustments (which have averaged 4% compounded over the last 20 years) to track with inflation with a cap of 2%. The bill also helps to reduce pension spiking by reducing the pensionable salary maximum down from $200k to $110k.
The legislation to put this on the ballot passed the Arizona Senate 29-0, and passed the House 49-10.
Sen John Kavanagh is in favor although he wishes it would go farther.
Representative Jay Lawrence is in favor.
Representative Michelle Ugenti is in favor.
The police and firefighter unions are in favor.


Before Arizona became a state, Congress set aside nearly 11 million acres of land for the state to fund various programs, mainly K-12 education. Over the subsequent years, Arizona has sold about 2 million of these acres and used the proceeds to create the State Land Trust Fund. The Fund currently has over $5 billion which is invested in various income producing assets including stocks and bonds. The Trust continues to sell portions of the remaining 9 million acres, generating an average of $131 million for each of the last five years. The remaining acres are valued at about $70 billion. The fund is intended to last in perpetuity, meaning that only investment returns are to be spent. The principal is not to be invaded. 

We voters passed a proposition in 2012 mandating that the Trust pay 
out 2½% of the five year average value of the fund each year. Almost all of this payment goes to K-12 education. Proposition 123 changes this percentage to 6.9% for the next 10 years. It then reverts back to a lower amount.
There are restrictive triggers to reduce the payment percentage if market values go down enough to impair the safety of the fund.

Proponents of Prop 123 offer the following arguments:
1. It injects an additional $3.5 billion into classroom spending over the next 10 years.
2. It does not raise taxes.
3. Future generations of students are protected.
4. Quality teachers will stay in Arizona.
5. The current funding lawsuit against Arizona will be ended.

Opponents say:
1. It does not provide $3.5 bill, but $2.2 bil. The remaining $1.3 bill comes from the general fund.
2. The money will be parceled out to school districts and charter schools with no restrictions on where or how the money can be spent. The funds could (and certainly some will) go to teachers. However, district officials could choose to spend the money on busses or other non-classroom needs which they deem more urgent. For example, Scottsdale School District has proposed using 35% of the $5 mil it expects to receive in 2016 for “Capital funds for curriculum, facilities & tech.” For 2017, the tentative projection is almost 100% salaries
3. Spending trust principal today means that future revenue will be lower forever. All Prop 123 does is kick the can down the road for another 10 years.
4. By invading principal today, the proposition reduces money available to future generations.
5. What will happen in 10 years when the funding formula reverts to
  2 ½%?

Do you like this post?

Showing 4 reactions

posted about this on Facebook 2016-04-24 18:19:59 -0600
Propositions 123 & 124 May 17, 2016 - Doug's Notes
posted about this on Facebook 2016-04-24 18:19:56 -0600
Propositions 123 & 124 May 17, 2016 - Doug's Notes
@TPScottsdale tweeted link to this page. 2016-04-24 18:19:50 -0600
published this page in Scottsdale City Council & DDC 2016-04-24 18:19:44 -0600