AZ Prop 123 Kicks Can Down Road

Arizona Proposition 123 will take principal from the State Land Trust and give it to the schools, now, seriously depleting the future earning of the State Land Trust. Then what?  Maybe, give funds from the State’s general fund surplus to meet the court order and seriously step up the building up of the State Land Trust principal.  This takes pressure off the general fund in the future as the State Land Trust grows and spins off more earnings for the schools.

AZ State Land Map

I thought our Governor was a businessman, but now it seems that he has moved to politician and forgotten his business acumen.

THE PROBLEM:  The State needs to provide replacement of prior year diverted funding for the schools per the Arizona Supreme Court.  In the infinite wisdom of our Governor, we decide to strip the Arizona Educational State Land Trust of principal.  This Trust exists to fund statewide education with earnings from its principal.  Duh!  If you strip principal, future earning will be substantially less and will offer less for education, requiring more sharing from the State’s general fund – a vicious cycle.

THE PROVERBIAL CAN IS BEING KICKED DOWN THE ROAD, as is customary for politicians to do to move the problem to the future.  In fact, nothing is being solved, just shifted.  The problem is actually being made worse with this solution.

The core of the problem is not the AZ Supreme Court’s order to provide replacement funding for the schools.  The problem’s core is the State Land Trust people.  The Statehood Enabling ACT gave the State enormous swaths of land to be sold with the funds from sale or lease being placed in a trust of which the earnings would be used to fund education.  The real problem is the speed with which this trust land is sold or leased.   The rate of development of sale funds placed in the monetary trust for schools is abysmal.  The land is not being utilized properly.

Simple facts:

  • Trust land set aside in 1912, Statehood – 11,000,000 acres
  • Trust land sold since Enabling Act and Statehood – 2,000,000 acres
  • Trust land still under management – 9,000,000 acres
  • Years it took to sell 2,000,000 acres – 104 years
  • Rate at which trust land was sold since 1912 – 19,231 acres per year
  • Based on sale rate, all State Trust land will be turned into funds for the monetary trust for schools by the year 2,484!

Can we afford to wait over 400 years?

It appears that the State land trust people seem to have settled into the managing of dirt and not making due speed necessary on the sale or lease of the land and conversion of this dirt into funds for the monetary trust earnings for the benefit of schools.  Managing dirt appears to be a job lifetime expectancy effort.  The figures tell the story.  In 104 years they could only sell or lease 18% of the land.  Was this rate of sale anticipated when the Trust was established in the Enabling Act?  Possible new uses for the land include: massive solar, and/or wind production, mining, timber development along with the existing commercial and residential building.  Or elicit other creative solutions.

Seems like a new approach to land sale or lease is needed to help solve the budget and the education funding issue in this state.  Kids don’t benefit from dirt.  Even though it appreciates, but can’t be utilized for the kids.  Only trust fund earnings go directly to the kids.  Dirt has no immediate earnings.

What to do: make the review and possible “realignment” and improvement of State Trust land management and sale / lease, part of any agreement with Governor Ducey and the Court. Or one time sell off a designated amount of State Land via auction at a discount and use those sale funds to meet the Court’s order.

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