trust land proceeds and
income
SCR 1005 proposes a constitutional amendment that provides rental income from state lands shall be used only to supplement, and not supplant, state general fund appropriations for state aid to education. SCR 1005 also provides that from and after June 30, 2001, income from the permanent state school fund shall be apportioned for classroom site enhancements in addition to the amount of basic state aid paid from the state general fund.
Revenues earned from state trust land are classified as either permanent or expendable. Revenues derived from the sale of state trust land and the sale of natural products (such as sand, gravel, water and fuel wood) are deposited in the permanent trust fund and are invested by the State Treasurer in stocks bonds and interest-bearing securities. At the end of FY 2000, monies in the permanent fund totaled $1.01 billion. The investment income from the permanent fund and the income from leases are expendable revenues for use by the state trust land beneficiaries.
Laws 1998, 5th Special Session, Chapter 1 (Students FIRST) provided that from and after June 30, 1999 expendable revenues from the K-12 state trust land fund would be spent to 1) secure any state school facilities revenue bond debt service; 2) subject to legislative appropriation be used to fund new school facilities; and 3) fund basic state aid. Laws 2000, 5th Special Session, Chapter 1 (Education 2000) capped the amount of the fund that could be used to fund any of the three priorities above to the FY 2000-2001 level and provided that any expendable earnings that exceeded the FY 2000-2001 earnings would be placed in the classroom site fund.
SCR 1005 proposes constitutional amendments that would provide that no state trust land monies could be used to fund basic state aid and that the state trust land monies be apportioned for classroom site enhancements in addition to the amount of basic state aid paid from the state general fund. Since the state trust land endowment is part of Arizona’s Enabling Act, Congress would have to pass similar changes to Arizona’s Enabling Act in order for the provisions of SCR 1005 to become effective.
A JLBC fiscal note has been prepared on the Senate Engrossed version of SCR 1005. The estimated cost to the state general fund is $54.8 million in FY 2001-2002 and $56.0 million in FY 2002-2003. The fiscal impact results from shifting revenue currently budgeted for basic state aid to the Classroom Site Fund; therefore, increasing the impact to the state general fund to fully fund basic state aid.