Hobbs releases Prop 123 renewal plan to provide raises for Arizona teachers

PHOENIX — Gov. Katie Hobbs on Tuesday released her plan to renew Prop 123, which would provide raises for Arizona teachers and other education funding past its 2025 expiration.

The plan would expand on current Prop 123 funding by extending the measure, which was approved by voters in 2016, by a decade. Distribution from the State Land Trust Permanent Fund — how Prop 123 is funded — would also increase under Hobbs’ plan.

“We have a once in a decade opportunity to invest in a public education system that gives every child the opportunity to succeed,” Hobbs said in a press release.

“We can increase compensation for educators and make schools safer for our kids, all without raising taxes on Arizonans.”

What are the details of Hobbs’ Prop 123 renewal plan?

Distribution would be increased to 8.9% under the Democrat’s proposal, up from 6.9%.

Here’s the breakdown of the funding:

• 2.5% of the distribution would continue general school funding (projected $257 million average over 10 years).
• 4.4% of the distribution would raise educator compensation (projected $347 million average over 10 years).
• 1.5% of the distribution would increase support staff compensation (projected $118 million average over 10 years).
• 0.5% of the distribution would invest in school capital for safety and security (Projected $39 million average over 10 years).

Hobbs said her plan would not require tax increases.

“The choice is clear,” Hobbs said. “My plan is a critical step toward ensuring every Arizona child can get a quality and safe public education while addressing our teacher shortage.”

Republican response to Hobbs’ Prop 123 plan

An extension of Prop 123 would need to make it on the 2024 general election ballot and be approved by voters.

Arizona Treasurer Kimberly Yee, a Republican, called Hobbs’ plan “dangerous and unsustainable.”

“It would break the bank,” Yee said in a statement. “Governor Hobbs wants to raid the land trust to cover for her mismanagement of the state budget and overzealous spending plans in an ever-increasing inflationary environment.

“That is irresponsible and doesn’t look out for the long-term vision of Arizona, and this land trust was put in place for our state’s future.”

The State Land Trust Corpus has grown to nearly $8 billion with an average 10-year annual return of 7.24%. Yee said that forecasters predict a 5.45% return on that over the next decade.

Yee recommends a 4-5% distribution.

“In short, this means an increase to 8.9% is unfeasible based on past performance,” Yee said.

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