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Fact vs. Fiction: Arizona Invest in Ed Tax Increase

September 21, 2020

What’s the truth about Arizona Prop 208, the so-called “Invest in Ed” tax increase? In a recent debate, Goldwater Institute Director of Education Policy Matt Beienburg laid out the facts about the initiative, which would wreak havoc on Arizona’s economy. You can watch the debate here and read more about the truth behind Prop 208 below:

Fiction: Arizona Education funding has decreased for years. Prop 208 will put funds back into the classrooms.

  • Arizona—like the rest of the United States—has dramatically increased its K-12 funding over the years.
  • Spending on K-12 education in United States has more than doubled since 1970 (even adjusted for inflation), while our students’ academic outcomes have hardly budged.
  • K-12 students in Arizona now receive an average of $11,600 in funding per student, per year. Arizona students receive more funding per student than they did in 1980, 1990, 2000, or 2010 (again, even adjusted for inflation).

Fiction: Funds from Prop 208 will go directly to teachers and will address our teacher shortages.

  • Only 13 cents of every dollar from Prop 208 go to actual classroom teachers, while 75% of the money from Prop 208 will go to open-ended payroll increases.
  • In fact, just so its backers can say they’re funding teachers when they’re actually giving money to other staff, Prop 208 literally rewrites the definition of a teacher to include “any non-administrative personnel…who support student academic achievement.”
  • Moreover, Prop 208’s backers know they don’t plan to fund teachers because Arizonans already just did that, giving more than $650 million per year through the “20×2020” pay raise plan, which has given school districts enough money to give every (actual) teacher a 20% pay raise. That was enough to bring Arizona teacher salaries to the national median (and the 16th highest of any state when adjusting for costs of living). Prop 208, on the other hand, gives mere pennies of each dollar to actual classroom teachers.

Fiction: More money in K-12 education means better testing results.

  • Despite our public schools spending more than twice the amount per student per year than they did in 1970 (even adjusted for inflation), our district school students’ academic achievement has been completely flat. Scholars from Stanford and Harvard have found that our public schools have even failed to reduce the achievement gap for disadvantaged students despite massive spending increases.
  • The United States spends more money per student on K-12 education than almost any country on earth, and yet our students’ math scores are below average compared to other nations.
  • States like Rhode Island spend thousands of dollars more per student than Arizona, and yet their public school students perform substantially worse than Arizona’s on measures like 8th grade math proficiency.
  • Despite receiving thousands of dollars less in funding per student each year, charter schools in Arizona and across the nation have significantly increased student achievement more successfully than district schools. A 2020 Harvard study, for example, found that, nationally, charter student gains have far outpaced district schools, especially for low income and African American students, who picked up almost half a year’s worth of extra learning over their district peers.

Fiction: Prop 208 only taxes individuals, not small businesses, which will help our economy.

  • Prop 208 will directly raise taxes on thousands of Arizona tax filers, and 50% of those will be small business owners.
  • By nearly doubling Arizona’s top marginal tax rate (increasing it by 78%), Prop 208 will catapult Arizona among the 10 states with the highest top tax rate in the country. Arizona will have a higher top rate than every single southwestern and mountain west state except California, making Arizona unattractive to job creating entrepreneurs.
  • In doing so, Prop 208 will damage Arizona’s economy and cost 120,000 jobs (conservatively) over the next 10 years, along with over $2.4 billion in lost tax revenue for other services like the universities and child protective services.

Fiction: There are no studies that show that the top 1% earners will leave Arizona.

  • As the Arizona Tax Research Association has pointed out, “The leading peer-reviewed study in tax increases on high-income filers from [Stanford researchers] Varner and Young concludes that for every 10% rate increase, 1% of high income filers will move and another 1% who would have moved to Arizona will move elsewhere. The  proposed 78%  rate increase [under Prop 208] projects  to  flush 7.8%  of  high  income  filers  and  prevent  the same  number  of  high-income  migrants  from  moving  to  Arizona.”

Fiction: Prop 208 contains rigid accountability and oversight to prevent misspending.

  • Prop 208 will do nothing to rein in districts’ misspending. There is not a single accountability provision about school districts’ performance, improvement, or reform attached to Prop 208.  The only “accountability” is that schools promise they will spend all this new money on “non-administrative” personnel, while they can continue paying their executives and administrators using their other funds instead.
  • Prop 208 would do nothing to prevent the systematic waste and misspending going on throughout our public schools—which takes away millions from teachers, counselors and others every year. Just a few highlights:
  1. The superintendent of Mesa Public Schools (the largest school district in Arizona) resigned in 2019 after allegations of embezzlement and theft. State audits found the superintendent had illegally given hundreds of thousands of dollars in bonuses to district executives, and that Mesa’s executive pay had swelled more than a million dollars since 2015.
  2. The state Auditor General has found that Scottsdale Unified School District siphoned off millions of dollars a year to pay for empty or underused school building space: “Had Scottsdale USD maintained a similar amount of school building space per student as its peer districts averaged, it could have saved approximately $3.8  million,  monies  that  the  District  otherwise  potentially  could  have  spent  in  the classroom.” (That money would have been enough to give every district teacher a raise of nearly $3,000 dollars.)
  3. Tucson Unified School District spends almost $250 more on administration costs per student than a similarly sized district like Gilbert. With over 42,000 students at Tucson schools, that comes out to an extra $10 million spent per year on administrative bureaucracy that should be going to teachers, counselors, and other classroom related expenditures.

Fiction: Prop 208 will be voter protected, ensuring the funds are available to our teachers.

Prop 208 will permanently raise taxes without providing reliable funding for schools year to year. Its backers have called for stable, reliable funding for K-12, but the money available to schools from Prop 208 will seesaw up and down by up to 30% each year, because it comes entirely from high-income tax returns, perhaps the single most volatile funding source in the state, which routinely swings up and down by this magnitude.

Prop 208 will, however, permanently enshrine several damaging side-effects, like tying legislators’ hands during future recessions and forcing them to make budget reductions twice as steeply in other government services like child protective services and the universities when state revenues decline.

Elected lawmakers won’t even be able to fix technical errors in the bill (like the fact its drafters left out inflation protections that exist on all other income tax charges: this means more and more taxpayers—making less than $250,000 right now—will be pulled into this tax hike each year due to inflation, even without making more in real terms).

Read more about the truth behind Prop 208 here.



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