A law that allows Arizona school districts to spend bond proceeds on projects not on the original program approved by voters was challenged as unconstitutional last week in oral arguments in a Maricopa County Superior Court.

The Phoenix-based Goldwater Institute filed a suit in April contending that the 2010 legislation violates the state constitution.

The new law allows districts with proceeds left over from bond elections more than nine years earlier to spend that money on any capital projects within the district.

The suit was filed on behalf of a resident of the Cave Creek Unified School District.

The district wants to use $13 million from a 2000 authorization of $41 million to expand a high school cafeteria and other improvements.

Work was halted on the project when the suit was filed.

The bond proceeds were to have been used for a new high school, but voters in the Phoenix suburb later rejected that plan.

Cave Creek USD did build several elementary and middle schools with the proceeds but was unable to spend the $13 million earmarked for the new high school.

In its suit, the Goldwater Institute said the law is unconstitutional because it alters a contract between the government and the taxpayers that approved the debt.

In its specific challenge, the lawsuit contends that the law violates the state’s constitutional prohibition against laws that do not apply equally to all of its citizens.

It argues that because a voter information brochure did not include school repairs on the project list, the money cannot be used for that purpose.

According to Christina Kohn, the lead attorney on the suit for the Goldwater Institute, the diversion law was a “special law,” and the requirements are too narrowly written so as to benefit only one district.

“If the purpose of the law is to help school districts with their financial troubles, then it’s impossibly limited,” she said during the oral arguments. “Every district is going through financial trouble.”

Kohn said about 3% of districts in the state currently meet the requirements of the law.

Don Peters, the attorney for the school district, said the nine-year limit on the elections would allow more districts to take advantage of the diversion opportunity.

In November, he said, districts that held successful bond elections in 2002 would be eligible.

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