Which school do you want to support?
As a result, student-teacher ratios in California are unusually high, which makes it even harder to address the considerable needs of California's students: More children in California live in poverty than in most states; many are learning English; and many have special education needs.
Because education funding depends heavily on income taxes paid by the top 1% of taxpayers, it tends to boom and bust with the stock market. Polls consistently show that majorities of Californians would support taxes for schools in their own community, but California's Proposition 13 makes it very difficult to pass local taxes.
These systemic challenges are not new, and there have been many attempts to address them. They fall into four categories:
Solutions have to start with an understanding of the problem. In about 2005, a coalition of education funders pooled their efforts to sponsor Getting Down to Facts, an ambitious research effort to give clear advice to the Education Excellence Committee, an expert panel appointed by then-governor Arnold Schwarzenegger to recommend changes consistent with the research. (Disclosure: Ed100 founder Jeff Camp served on this committee.)
Among its main recommendations, released in January 2008, the committee called for a thorough reinvention of California’s school funding system. It envisioned a model in which more money would go toward schools where more resources were needed to help students succeed. Much of this recommendation was accomplished in 2013 with passage of the Local Control Funding Formula (LCFF).
California schools are not within bake-sale distance of nationally normal funding
The committee also urged lawmakers to add several billion dollars to the state education budget. The opposite happened. When the “great recession” hit, K-12 funding was cut dramatically. Education budgets fell about 20% between 2008 and 2012. It took seven years for education funding to recover to its 2008 level, adjusted for inflation.
Polls assure us that, in principle, Californians want better-funded schools ... if they don't have to pay for them. For example, in 1988 voters passed Proposition 98, a measure that didn't increase taxes -- but required lawmakers to commit a greater portion of the state budget toward education.
At budget time, advocates for other causes (like social services or the environment) can be excused for regarding the education budget with a degree of envy. The budget process is zero-sum: there are winners and losers. Proposition 98 has often served as a powerful advantage for education advocates; if a draft budget fails to meet the minimum bar of the "Prop 98 guarantee" lawmakers can expect a stern conversation and the occasional threat of litigation.
Litigation (or the threat of it) over education budgets is not unique to California. Because education is a basic function of government, it tends to be mentioned in state constitutions. In some states, education advocates have successfully prompted increased spending through judicial pressure. Efforts to spur increased education spending (beyond the Prop 98 minumum) through education "equity and adequacy" litigation are common among the states, and in some places, notably New York, have spurred major increases in educational investment. Related cases have not been particularly fruitful in California. (See our blog for more.)
Litigation over the condition of education has not been entirely without effect, however. In 2004, California settled a class action case usually known as the Williams Case. The settlement established some minimum requirements and services that schools must provide, including up-to-date textbooks, qualified teachers, enough seats for students, and classrooms free of vermin.
In 2018 research into the practical meaning of an adequate education was included as a part of the Getting Down to Facts II project. A team of researchers led by Jennifer Imazeki concluded that in the 2016-17 school year "providing an adequate education would have required California to spend $22.1 billion more... almost a third more than that year’s spending levels."
Of course, education advocates cannot just rely on initiatives and litigation to make the case that public education deserves its share of the budget pie. After all, other functions of government need funding, too. The California Budget Challenge is an informative, playful, nonpartisan, nonprofit website that helps to make budget tradeoffs more concrete for voters in California. It feels a bit like a game, and works well as a group activity.
Occasionally, the solution is not zero-sum. In 2012, voters rescued schools from big cuts by passing Proposition 30, which raised taxes, though only on the state's wealthiest earners. The taxes were extended to 2030 when voters passed Prop 55 in 2016.
Survey results consistently show that Californians can be supportive when taxes are local, and in support of local schools. Solid majorities (roughly six in ten) say they would support a local tax to support schools in their community.
In this case, the will of the majority is not enough. By passing Proposition 13, in 1978 California voters amended the California constitution to make it very difficult to pass taxes. The theory is that voters, like Odysseus, should have the power to tie themselves to the mast to resist temptation. Prop 13 requires that local governments, including school districts, must get 2/3 voter approval to pass special taxes. Prop 13 also prohibited school districts from raising property taxes based on the value of property ("ad valorem" taxes), except for issuing General Obligation Bonds for facilities.
The main available instrument for local taxation is the "parcel tax," which has been ruled permissible because it is not "ad valorem." Parcel taxes are based on the existence of a parcel of property rather than on its value. Under the rules of Prop 13, a school district can propose a parcel tax and pass it with 2/3 of votes cast. It is very difficult to get 2/3 of voters to agree to anything, but some districts manage it. Lesson 8.10 goes into more detail about parcel taxes.
In any major conversation about education funding, the elephant in the room is Proposition 13, which we discuss in another lesson. Multiple efforts to amend this crucial measure have gone nowhere. It remains popular, especially among Californians who have owned property long enough for it to have gained in value. The Silicon Valley Community Foundation commissioned a major review of Prop 13 in 2013 to explain the issues and challenges. It seems likely that at some point new changes to California's property taxes will again be proposed, but then again it has seemed that way for a long time.
Any time there is a hint of a possibility of a chance for change in the 2/3 rule, it is a big deal. For example, a 2017 California Supreme Court ruling in a case about medical marijuana dispensaries appeared to suggest some wiggle room. If a measure originates as a citizen initiative, the ruling suggested, a majority should suffice to pass it.
California's funding for education is dramatically lower than other states, as described in Lessons 8.1 and 8.2. Big gaps require big solutions, but how big is big? For example, $1 billion sounds like a lot of money, right?
$1 billion is equivalent to $120-160 per student
In the context of a system with 6.2 million K-12 public school students, every $1 billion is equivalent to $160 per student ($120 per student for K-14 programs). This rule of thumb can help put things in perspective. Sure, a billion is a big number in the abstract, but California's funding gap per student is many billions short of adequate.
Policy Options for More Education Funding
Require the regular reassessment of commercial property at fair market value while leaving in place existing protections for residential property. A version of this idea is expected to appear on the ballot in 2020. It should raise $11 billion for the general fund and $4.5 billion K-14 education.
Reassess the taxable value of very high-value property. As Warren Buffet famously pointed out, Prop 13’s annual 1 percent cap on property taxes and 2 percent annual limit on increases in reassessed value provide a much greater tax break to the wealthy than to low- and moderate-income homeowners. ($5 billion to general fund; $2 billion for K-14 education)
Bump the annual 1 percent cap on property taxes up by 0.1 percent, with the additional funds dedicated to education. This proposal was included in the recommendations of Governor Schwarzenegger’s Committee on Education Excellence. ($5-$7 billion to K-14 education)
Reinstitute the 2 percent Vehicle License Fee that existed from 1948-98, dedicating everyone’s extra payment to education. ($6-8 billion overall; $2.5-3.5 billion to K-14 education)
Create a tax on services, which now make up about 80 percent of California’s economy. California is one of a handful of states that does not include some type of business and personal services. Like property taxes, a services tax is less volatile than income taxes. Legislators are beginning to introduce proposals in this area. (After sales tax offset, $7 billion to general fund; $3 billion to K-14 education)
Tax the extraction of oil. California is the only major oil-producing state that lacks this tax. ($2 billion directly to K-14 education)
Restore the ability of school boards to institute general taxes with a simple majority, like cities and counties. This would require a constitutional amendment and a mechanism to ensure the state compensates poorer districts that lack the capacity and resources of wealthier ones. Permitting local jurisdictions to raise new revenues outside Prop 98 is probably a key component of the long-term school funding solution. ($12-15 billion for K-12 education).
Restore estate taxes. In the early 2000’s California stopped collecting its own revenue from an estate tax. Some lawmakers have proposed re-imposing a California estate tax consistent with pre-tax reform federal rules ($5 billion to general fund; $2 billion to K-14 education).
When all else fails, school communities scramble to get what they need.
Voluntary donations cannot match the funding power of a tax.
Let's start with the obvious. When times are tough and school funding suffers, people who care and are able will do what they can. This happens all over California, but unequally. Some wealthier communities (which under LCFF receive significantly less funding than those with large numbers of low-income families) can raise hundreds of dollars per student -- sometimes more -- through voluntary giving. Some schools hold elaborate auctions. Some cut to the chase with "check writing campaigns." Others hold a wide variety of fundraising events.
How much is a "normal" amount of fundraising for a school? No one really knows.
Data about local donations to school-related nonprofit organizations are not collected or reported in a consistent way. It is quite literally impossible to know how much is raised and how the funds are used. Some schools and school districts have established local education foundations. Others depend on their local PTAs and other parent organizations to provide money for everything from field trips to extra staff to extra stuff. But even in the wealthiest communities, donations cover at most the cost of a few salaries per school.
California schools are not within bake-sale distance of nationally normal funding. Voluntary donations cannot match the funding power of a tax. But under current California law, communities have few options for taxing themselves to support their schools. The next lesson will examine the options in a bit more depth.
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