Arizona land revenue drives historic K-12 investment

Lynn Cordova, a public information officer for the department, said the boost in revenue followed “an increase in competitive [and] large-scale cash sale auctions.”

“Several process improvements increased efficiency in getting applications to auction and improved processes for revenue recognition," she added.

The governmental agency made over $706 million during 38 auctions.

Cordova told The Center Square via email that the department focuses “on land where [it] has been planned and/or zoned” due to it being “more valuable.”

“The department is seeing a trend of higher value land sales, but revenues can fluctuate due to a variety of factors. Some are largely out of the department’s control, like economic conditions,” she explained.

With the influx of revenue, $670.7 million went into the Permanent Land Endowment Trust Fund, which supports K-12 education in Arizona. In FY 2025, nearly $265 million was deposited into the trust fund.

Public schools across Arizona received $641.9 million from the fund in FY 2026.

State Treasurer Kimberly Yee said the land department is “managed by the land commissioner,” who reports to Democratic Gov. Katie Hobbs.

The commissioner will sell the land, and the proceeds from those sales are deposited to the state treasurer’s office, Yee said, adding that the treasurer’s responsibility is to invest the funds made from the land sales.

She told The Center Square that the invested funds go into the trust fund.

When Yee first came into the state treasurer’s office in 2023, she said, Arizona had an estimated $5 billion in the trust fund. She noted the fund now has over $11.5 billion in land value. 

Yee, the Republican candidate for Arizona’s superintendent of public instruction, noted that 93% of the money from the trust fund goes toward K-12 public education.

Every month, the Treasurer's Office distributes the money directly to each K-12 school in the state, she said.

The Arizona Department of Education does not have the authority to use money from the trust fund, Yee said.

According to Yee, Arizona needs the money to go to classrooms rather than school administrations.

These funds need to be spent “quickly, wisely and with great accountability to the taxpayers,” she said.

The state treasurer said there isn't enough transparency in how schools spend these funds. Arizona’s Legislature does not require a report about how “these dollars are spent,” Yee noted.

“The public deserves to know how the money flows,” she said.

When Arizona voters passed Proposition 123 in 2016, it temporarily boosted the annual payout from the trust fund to K-12 public schools from 2.5% to 6.9%.

Proposition 123 expired in 2025, and Arizona lawmakers are still determining its future.

Yee, who supports continuing Proposition 123, said the distribution rate should be between 4% and 4.5%, which she described as a typical range for an endowment fund.

She noted this percentage range “allows for regular and consistent funding for public schools.”

The Center Square reached out to Terry Leyba Ruiz, the Democratic candidate for Arizona superintendent, but did not receive a response by publication time. The winner of the Nov. 3 general election will succeed Tom Horne, the current superintendent of public instruction. Horne lost to Yee in the Republican primary on July 21.