HCR 2047
Initials CH Page 1 Caucus & COW
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
House: APPROP 9-7-1-0
HCR 2047: state land trust; permanent funds.
Sponsor: Representative Gress, LD 4
Caucus & COW
Overview
Continues the 6.9% annual distribution rate from the Permanent State School Fund in FYs
2026-2035 if approved by the voters and if the voters approve the statutory measure that
establishes a statewide program to increase the base salary of all eligible teachers above the
FY 2025 base salary.
History
The Arizona State Land Department (ASLD) manages approximately 9.2 million acres of
state trust lands for 13 beneficiaries designated by the Enabling Act (ASLD). A permanent
fund is established for each of the 13 beneficiaries, each of which consists of permanent and
expendable receipts. Permanent receipts are one-time revenues deposited into the
appropriate beneficiary's permanent fund. Expendable receipts are typically generated as
recurring revenue by ASLD and are distributed directly to beneficiaries. The State Treasurer
generates expendable receipts by investing monies in the permanent funds; these monies are
distributed monthly according to a distribution formula outlined in the Arizona Constitution
(JLBC). The largest beneficiary of state land trust monies is common (K-12) schools, with
distributions made to the Permanent State School Fund (Ariz. Const. art. 10, sec. 7).
Proposition 123 increases, for FYs 2016-2025, the annual distribution rate of the permanent
funds from 2.5% to 6.9% of the preceding five-year average monthly market values. The
increase in expendable earnings from the Permanent State School Fund that result in the
increased distribution rate that would otherwise go to the Classroom Site Fund (CSF) are
appropriated for basic state aid (including inflation adjustments). Beginning in FY 2026, each
permanent fund's annual distribution rate returns to 2.5%.
Proposition 123 also requires the Governor's Office of Strategic Planning and Budgeting
(OSPB) and the Joint Legislative Budget Committee (JLBC) directors to notify the executive
and legislative branches, by February 1 annually, that a reduction to the permanent fund's
annual distribution rate is necessary to preserve its capital if the preceding five-year average
monthly market values have decreased compared to the five-year average monthly market
values preceding those five years. After notification, the Legislature may, with the Governor's
approval, reduce the annual distribution rate for the next fiscal year to between 2.5% and
6.9% of the permanent fund's preceding five-year average monthly market values.
Provisions
1. Declares the provisions below are effective if the voters approve the statutory measure
that establishes a statewide program to increase the base salary of all eligible teachers
above the FY 2025 base salary.
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note HCR 2047
Initials CH Page 2 Caucus & COW
2. Adjusts, for FYs 2026-2035, the annual distribution rate for the Permanent State School
Fund from 2.5% to 6.9% of its average monthly market values for the preceding five years.
3. Mandates any increase in expendable earnings that results from a distribution rate of
more than 2.5% of the Permanent State School Fund's preceding five-year average
monthly market values and that would otherwise go to the CSF to be appropriated for the
statewide program to increase the base salary of all eligible teachers.
4. Decreases, beginning in FY 2036, the Permanent State School Fund's annual distribution
rate to 2.5% of its preceding five-year average monthly values.
5. Sets, beginning in FY 2026, each other permanent fund's annual distribution rate to 2.5%
of its preceding five-year average monthly market values.
6. Subjects the Permanent State School Fund's annual distribution rate for FYs 2026-2035
to the existing constitutional language that:
a) requires the OSPB and JLBC directors to jointly notify the executive and legislative
branches that a reduction to the Permanent State School Fund's annual distribution
rate is necessary to preserve its capital if the preceding five-year average monthly
market values have decreased compared to the five-year average monthly market
values preceding those five years; and
b) allows the Legislature, with the Governor's approval, to reduce the annual
distribution rate for the next fiscal year to between 2.5% and 6.9% of the preceding
five-year average monthly market values.
7. Directs the Secretary of State to submit this proposition to the voters at the next general
election.
8. Makes conforming changes.
Amendments
Committee on Appropriations
1. Reduces the Permanent State School Fund's distribution rate in FYs 2026-2035 from 6.9%
to 5.5%.