K-12InflationFundingLawsuitUpdate.pdfVIP

K‐12?Inflation?Funding?Lawsuit?Update? ? NOTE:?Since?publication?of?this?document?on?July?11,?2014,?the?JLBC?Staff?has?published?updated?revenue?estimates. The?cost? estimates?of?the?litigation?itself?(see?table?1),?however,?remain?unchanged.??Please?see?the?July?Monthly?Fiscal?Highlights?for?an? update?on?how?the?updated?revenue?estimates?plus?these?K‐12?litigation?costs?would?affect?the?state’s?fiscal?condition.? ? The?Maricopa?Superior?Court?ruled?on?July?11,?2014?that?the?state?is?required?to?reset?the?K‐12?base?level?as?if?it? had?been?fully?inflated?every?year.??This?JLBC?Staff?Report?outlines?the?fiscal?implications?of?this?ruling.? ? Background??? ? In?Cave?Creek?v.?Ducey,?the?Arizona?Supreme?Court?ruled?in?September?2013?that?under?Proposition?301?(from? November?2000)?the?state?must?adjust?the?K‐12?“base?level”?annually?for?inflation.??The?base?level?serves?as?the? starting?point?for?computing?formula?funding?for?Arizona?public?schools?and?for?FY?2014?equaled?$3,327?per?pupil? (A.R.S.?§?15‐901B2).???If?always?inflated?under?Proposition?301,?it?instead?would?equal?$3,560?per?pupil?for?FY?2014,? or?$233?more?per?pupil.??In?its?September?2013?ruling,?the?Arizona?Supreme?Court?sent?the?case?back?to?Maricopa? Superior?Court?to?determine?the?state’s?financial?commitment?for?base?level?inflation?adjustments?not?made?in? recent?years.??In?such?years,?the?state?inflated?the?transportation?and?charter?school?“additional?assistance”? portions?of?the?K‐12?formula,?but?did?not?also?inflate?the?base?level.?? ? The?plaintiffs?are?seeking?funding?for?2?issues:??? ? 1)?? an?increase?in?the?base?level?to?$3,560?per?pupil?prior?to?any?additional?inflation?adjustment?being?made?for? FY?2015,?and? ? 2)?? $1.26?billion?in?back?payments?for?unfunded?inflation?since?FY?2009?to?be?paid?out?over?5?years?starting?in? FY?2015.?? ? In?July?2014,?the?Maricopa?C