Taxes – The Educated Guess

160-day minimum year coming

Call it a last-minute clarification or a June surprise, another piece of bad news: A trailer bill that the Legislature will vote on Wednesday permits districts to slash the school year by an additional three weeks for the next two years, if voters reject Gov. Brown’s tax increase in November. That’s twice what Gov. Jerry Brown seemed to suggest in the May budget revise when he proposed the elimination of 15 days divided over a two-year period. Instead, the Legislature is prepared to authorize a 160-day year, likely the lowest in the nation and far behind other advanced nations; nearly all states have a 180-day year, which California also required before 2010.

In one sense, nothing has changed. Brown hasn’t suggested less funding for schools than the $53.6 billion for 2012-13 that the Legislature approved in passing the budget last week. Districts will have to negotiate a shorter year with their unions; they can’t declare it unilaterally, and most districts won’t go that low.

But the language in AB 1476 (section 50, midway through a very long bill) is a stark message that a defeat of the tax increase will create more than a one-year revenue crisis for schools.

Brown basically spared K-12 schools cuts in this year’s state budget but is promising to slash school funding by $5.5 billion if voters reject the income tax/sales tax increase. That translates to $441 per student, about an 8.4 percent cut in funding. Eliminating 15 days out of a minimum 175 days would be an 8.6 percent cut in the calendar. So cutting 7.5 days each of the next two years would solve only half of the gap, leaving districts to make other cuts through layoffs, benefits, or non-pay areas.

Lowering the minimum year to 160 days now would be too late for those districts and unions that already have negotiated potential cuts. Sacramento City Unified teachers earlier this month approved a two-day furlough, plus an additional 10 days, lowering the school year to 168 days, if the tax initiative fails.

A Senate staff member said that the intent of the trailer bill language is to give districts more flexibility to cope with terrible choices. Most districts won’t go to a 160-day year, but it will be an option. Because districts must submit balanced budgets for two years beyond the current year, districts can negotiate with certainty for continued furloughs through 2013-14. The governor approved the trailer bill language, which clears up any ambiguous reading of his earlier proposals, the staff member said.

But Robert Miyashiro, vice president of the education consulting firm School Services of California, said that the Legislature shaped the budget the way it is, so it is disingenuous to say, It is out of our hands. Legislators strategically set it up to say the schools must take a big cut if the initiative flops.

A spokesman for the California Teachers Association said that the union had not read the trailer bill language and could not comment. The trailer bill also contains language permitting teachers and other school employees to accrue a full year of vesting for pensions if a district’s school year drops to as few as 160 days.

Leg erases Gov’s ed reforms

John Fensterwald co-authored this article.

The Legislature’s budget package is missing many of Gov. Brown’s controversial education initiatives. A joint Senate and Assembly plan outlined yesterday protects transitional kindergarten, the science mandate, and the AVID program, rejects the weighted student funding formula, and offers districts a choice in how they’re paid for state mandates.

“This budget protects and invests in public education this year, and increases Proposition 98 funding by $17 billion over the next four years,” said Assembly Speaker John A. Pérez during a press conference Wednesday morning with Senate President pro Tem Darrell Steinberg.

The overall budget plan that lawmakers will vote on this Friday would erase California’s $20 billion structural deficit, balance the budget for each of the next three years, and create a $2 billion reserve by fiscal year 2015-16, according to Pérez and Steinberg.

Spending for K-12 education would be $53.6 billion for the 2012-13 fiscal year. That’s about $1 billion more than the governor had anticipated. Because the budget assumes more revenue for education through the passage of Brown’s tax initiative in November, the state is obligated under Proposition 98 to start paying off the “maintenance factor,” the IOUs given to schools during bad times. But if the tax increase fails, the Legislature and governor are in accord on the need for cuts of $5.5 billion for K-12 schools and community colleges. That would translate to a K-12 cut of $450 per student.

About $2.9 billion of that would come from lowering the Prop 98 guarantee due to a drop in state revenues. The rest would be made up through shifting two expenses into Prop 98 that are currently funded outside the guarantee. Those are repayment of general obligation bonds for school construction and the Early Start early education program. (Go here to read more about that in an earlier TOPed article.)

In addition, the legislative package would include trailer bill language allowing K-12 schools to cut 15 additional days from the next two school years.

Weighty issue

The governor’s biggest loss, for now, is the weighted student funding formula. Lawmakers’ refusal to include it in the budget isn’t an outright rejection of the concept of a simpler, fairer finance system that sends more money to districts with high proportions of English learners and indigent students. And Brown is expected to bring up the issue again this summer. But many lawmakers felt that the governor was jamming them to accept sweeping changes without justifying the basis for his formula, while legislators from suburban districts called for restoring all of the money lost to cuts over the past four years before redistributing new money.

Rick Simpson, the deputy chief of staff for Speaker Pérez, said that lawmakers wanted more assurances that the money under a weighted formula would actually reach targeted students. As part of his reform, Brown proposed giving districts total flexibility in deciding how the dollars would be spent. “If you’re going to deregulate the entire school finance system,” Simpson said, “and if you’re not going to regulate inputs, you ought to have an accountability system to make sure you get those positive outcomes. We have lots of disparate pieces that we refer to as accountability, but it’s not a system.”

High school science intact

Brown had proposed eliminating the mandate for more than two dozen K-12 programs, including (the most expensive) requiring schools to offer a second year of high school science. Dropping a mandate would mean that districts could continue offering a program by finding money in their existing budgets. Brown also proposed reimbursing districts a flat $28 per student for the remaining mandated programs.

Science teachers and the business community protested that the state shouldn’t retreat from its commitment to science education (see commentary on this page), and the Legislature agreed, keeping it and all of the current mandates intact. However, lawmakers didn’t increase the reimbursement rate either, so districts can expect to continue accumulating a big IOU for meeting the science mandate. The state has also gone to court, arguing that the $250 million cost on the books for offering a second year of science is way too high, based on a false assumption that high schools had to add a period to the day to accommodate it, according to Paul Golaszewski, an analyst with the Legislative Analyst’s Office.

Applying for a straight $28 per student would be the easiest, quickest way for districts to be reimbursed for mandated costs. However, the Legislature also would continue to allow districts to submit bills detailing the cost of complying with mandates – and hope that the state accepts the claims.

Starting early

The joint budget proposal allowed the early childhood education community to exhale a bit, by denying a number of significant cuts that the governor was seeking. He wanted to cut the reimbursement to preschool providers by 10 percent, raise the financial eligibility requirement, place a two-year cap on families receiving childcare services while attending a school or a job-training program, and eliminate full-day preschool starting next year.

“The Legislature has really stood up for young children,” said Scott Moore, Senior Policy Advisor at Preschool California. No one got away unscathed, however, and childcare will be taking a $50 million cut and losing 6,000 spaces for children in full-day state preschool, the childcare voucher program, and the infant-toddler child development program. That’s on top of a billion dollar reduction and 100,000 spaces lost since 2008. Still, said Moore, “it’s significantly less that we were fearing would be cut.”

Judge OKs Prop 98 shell game

A Superior Court judge last week lopped a limb off Proposition 98. Fans of Monty Python might have been amused; school districts will not be.

The three-paragraph ruling by San Francisco Superior Court Judge Harold Kahn simply reaffirmed a tentative ruling he issued in March. Back then he ruled that nothing prevents the governor and Legislature from shifting money out of the General Fund, even if that in turn leads to less funding for K-12 schools and community colleges under Proposition 98, the law setting minimum funding for schools.

The loss is significant. As part of the 2011-12 state budget, Gov. Jerry Brown transferred about $5 billion in sales tax and vehicle license fee revenues to a special fund as part of his shifting of state safety and social services to counties and cities. Had the money stayed in the General Fund, roughly 40 percent, or $2.1 billion, would have gone to the Proposition 98 guarantee.

The California School Boards Association, the Association of California School Administrators, and three school districts sued, claiming that was an illegal diversion of money owed schools. Their attorneys argued that voters passed Proposition 98 in 1988 to prevent manipulation of minimum dollars owed schools. Legislators could suspend the minimum obligation with a two-thirds vote, while acknowledging that the money owed had to be restored over time. They didn’t do this. Or, if they still wanted to set up a special fund outside of the General Fund, they could pay a higher percentage to schools of a diminished General Fund. Lawmakers didn’t do this either.

Kahn didn’t put enough in writing to fathom his thinking, but during oral arguments in March he implied that if drafters of Prop 98 had wanted to prevent the siphoning of money through special funds, they would have put it into the initiative. Lawyers for the plaintiffs argued that the intent of voters was clear: a minimum funding level that shouldn’t be tampered with.

ACSA and the CSBA haven’t decided whether to appeal Kahn’s ruling. Superior Court decisions are not cited by other courts as precedent-setting decisions, so there’s always a gamble going to the Court of Appeals. Meanwhile, Brown plans further tampering with Prop 98 if his tax initiative fails in November. He is proposing to stuff $2.6 billion in school construction bond payments, which had been funded as part of the non-Prop-98 part of the General Fund, into Prop 98. In effect, that would create a cut in funding for schools.

Though the circumstances are different, Kahn’s ruling will encourage these types of manipulations.

Parcel taxes beat the odds

Voters remain up in the air about passing a statewide tax to help schools, according to recent polls. But given a chance to support local schools exclusively, more than two-thirds of voters in nine school districts said yes – a wide enough margin to pass a parcel tax. Even the four parcel taxes that lost got over 60 percent support and would have passed had the threshold for passage been 55 percent – an idea that’s been kicking around for years but can’t get out of the Legislature for lack of Republican votes. *

Voters on Tuesday passed 23 of 34 school construction bond proposals. Source: Michael Coleman, League of California Cities. (click to enlarge) — Voters on Tuesday passed 23 of 34 school construction bond proposals. Source: Michael Coleman, League of California Cities. (Click to enlarge)

Also in Tuesday’s primary, voters in 23 K-12 districts passed nearly $2 billion worth of school construction bonds, a strong commitment in uncertain times. A piece of that money in some districts will go toward upgrading technology, critical as districts move toward implementing Common Core standards with digital textbooks and computer-administered assessments. Bond measures in an additional 11 districts were rejected, although a few came tantalizingly close to the 55 percent needed for approving school bonds.

For 2012, 13 of 18 parcel taxes have passed; that’s 72 percent, which is higher than the historical passage rate of 58 percent. Among the losers on Tuesday were a $54, four-year parcel tax in Santa Barbara, which would have replaced a $50 tax due to expire next year, and a parcel tax in West Contra Costa Unified based on a home’s size – 10.2 cents per square foot. But voters there can get another chance, if the school board is inclined, since the existing 7.2 cents per square foot won’t expire for two years.

Parcel taxes are one of the few ways that school districts can raise money. They’re predominately found in high-cost Northern California, especially the half-dozen counties in the Bay Area, with a smattering in wealthy districts around Los Angeles. Most parcel taxes are under $100, especially initial parcel taxes. The exceptions on Tuesday were an eight-year, $458 tax in Ross Valley School District in Marin County, replacing a $309 parcel tax, and a $123, eight-year tax for elementary and high schools in Santa Cruz; it passed with more than 80 percent of the vote.

Because of the passage of Proposition 13, parcel taxes cannot be based on a property’s value. Because McMansions, cottages, and office buildings are all charged the same, parcel taxes are regressive, unrelated to an ability to pay. So it’s ironic that both tax initiatives on the November ballot, which would raise money by raising the graduated income tax (Gov. Jerry Brown’s would also include a ¼ cent increase in the sales tax) are doing far worse than the parcel taxes and bond measures. Attorney Molly Munger’s Our Children, Our Future tax would send money directly to schools – essentially what parcel taxes do – though that feature is not widely known.

Voters favor local control with their money, which appears to be why parcel taxes, for all their faults and limited geographical range, continue to do well.

* Thanks to Mike McMahon, school consultant and trustee of the Alameda Unified School District, who tracks historic and current information on parcel taxes and other school data.

CA breaks another bad record

More California school districts than ever before are heading toward insolvency. The State Department of Education’s Second Interim Status Report for 2011-12, released yesterday, named 188 districts with serious financial problems; of those, 12 have negative certifications, meaning they won’t be able to meet payroll and other bills for this academic year.

California schools that may not be able to make ends meet. (source: State Dept. of Education) Click to enlarge — California schools that may not be able to make ends meet. (Source: State Dept. of Education) Click to enlarge.

It’s a steep increase over the first interim report, released last February, which we wrote about here. At that time, there were seven districts on the negative list and 120 in qualified status. With the increases, more than 2.6 million of California’s 6.2 million school children attend schools facing uncertain financial futures.

“This is the kind of record no one wants to set. Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools’ lights on, their bills paid, and their doors open,” said State Superintendent of Public Instruction Tom Torlakson in a written statement. “The deep cuts this budget crisis has forced — and the uncertainties about what lies ahead — are taking an unprecedented and unacceptable toll on our schools.”

Given the years of budget cuts to education, the new numbers didn’t come as a surprise to school finance officials, said Mike Hulsizer, head of governmental affairs for the Kern County Office of Education. But it will get worse if neither of the school tax initiatives passes next November. “There is no question that this understates the risk that districts are facing,” said Hulsizer, because many of the districts counted on funds from Gov. Jerry Brown’s tax increase in planning their 2012-13 budgets.

K-12 schools would receive an extra $2.8 billion if the initiative passes, but Brown is proposing cutting K-12 schools about $5 billion – $441 per student – midyear if it fails. Districts weren’t ordered to budget one way or another. Although some county superintendents wanted schools to budget for the worst-case scenario, others told school districts to plan either way, but make sure they have a Plan B in case of a negative vote at the ballot box. “The county’s position is that a district needs to be able to weather the trigger if it does happen,” said Santa Clara County Office of Education Superintendent Chuck Weis. “If a district is already on the edge, then plan for the worst.”

Joel Montero, CEO of the state’s Fiscal Crisis Management and Assistance Team (FCMAT), told a state Assembly committee two weeks ago that small and rural districts face the largest impact from another round of midyear cuts. “Small and tiny rural districts don’t really have an economy of scale,” said Montero. They don’t have enough money or students to absorb any additional losses, particularly when those losses come in the form of deferrals, the $9 billion-plus that the state owes to school districts.

Options for school districts that have run out of options. (Source: Leg. Analyst) Click to enlarge.

“So the decision that you have to make as a school district is whether or not you can afford to fund that deferral for the term and if you can’t then it becomes a cut for you in a way,” Montero explained to subcommittee members.

Five of the nine districts that received a negative certification fall into the small and/or rural category. The tiniest, La Grange Elementary School District in Stanislaus County, will be shutting down at the end of this school year and sending its six students to other districts.

Two of the districts, Vallejo City Unified and South Monterey Joint Union High School, have already been bailed out by the state and are under a state-appointed administrator. Linda Grundhoffer, the Chief Business Official in South Monterey – formerly King City Joint Union High School District – said ever since the district went under state control in 2009 the onslaught of budget cuts “are just making it harder for this district to recover.” The district is seeking to lower the interest rate on its state loan from 5.44 percent to 1 percent through legislation, but so far Senate bill 1240 and Assembly bill 1858 are on the suspense files in the appropriations committees of their respective houses.

In an unusual twist, this year’s negative list also contains a small but very wealthy district. At a little over $170,000, the median household income in the San Mateo County foothills community of Portola Valley is nearly three times the state average. But the district is now trying to stave off a state takeover after an audit found a shortfall of about $850,000 for this school year plus an additional half-million dollars allegedly misappropriated by the former superintendent, who’s already facing felony charges stemming from his tenure as chief financial officer in the neighboring Woodside Elementary District.

The list of districts on the negative and qualified lists may continue to set somber new records depending on what happens in November. “Second interim certifications are assuming a better budget environment than realistically may be there after November,” FCMAT’s Montero told TOPed. “Without that assumption, it is likely the numbers of qualified and negative districts would have been higher.”

CSBA: Vote for both tax plans

The state PTA backs the tax initiative financed by civil rights attorney Molly Munger; the California Teachers Association and the Association of California School Administrators endorsed the governor’s initiative. This week, the California School Boards Association decided to support both.

On Sunday, at the urging of CSBA’s board of directors, school board members in the Delegate Assembly voted 129-79 to encourage their constituents to vote for both tax proposals that will appear on the November ballot. They did so after an hour-and-a-half debate and after defeating, by voice vote, an amendment calling for CSBA to support only Munger’s “Our Children, Our Future” initiative. There was no motion to support only “The Schools and Local Public Protection Act of 2012,” which Gov. Jerry Brown and the California Federation of Teachers are sponsoring.

“We are facing a nuclear winter for funding for public education,” said CSBA Vice President Josephine Lucey, a school board member from Cupertino. “Districts cannot absorb more cuts and provide a decent education.” Delegates decided it was smartest to back both initiatives, Lucey said, after concluding, “Why should we be fodder for a fight” between the two tax campaigns or the anti-tax Howard Jarvis Taxpayers Association, which would play up its opposition to one of the tax plans.

Brown’s tax plan was favored by a slight majority, 54 percent, in a poll last month by the Public Policy Institute of California, while Munger’s drew only 40 percent support in that voter survey. But Munger’s plan would provide substantially more money for K-12 schools, so it came down to a difference between “the purists and the pragmatists,” said Frank Biehl, president of the East Side Union High School District school board and a delegate from Santa Clara County. “One side said Munger’s would bring more money for a longer time with more flexibility. The other side said, ‘It’s not going to pass so what difference doe it make?'”

Biehl, who plans to vote for both, said another factor was that the CSBA didn’t want to cut off dialogue with Brown, who has met with the board of directors and responded to their concerns, such as changing his plan for a weighted student formula.

Both initiatives are expected to qualify for the ballot. Brown’s tax plan would raise between $6.5 billion and $9 billion by raising the sales tax ¼ percent for four years and the personal income tax between 1 and 3 percent for seven years on those earning more than $250,000. But most of the money would go toward shoring up the General Fund, with $2.9 billion going toward Proposition 98 next year; Brown would commit that to repay part of $9 billion in deferrals, late payments to school districts.

Munger’s initiative would raise $5 billion in 2012-13 and then $10 billion for 11 years by raising the state’s progressive personal income tax less than a half-percent for lowest earners up to 2.2 percent for those earning more than $2.5 million. In the first three years, her plan would pay off $3 billion in state bonds, freeing up money for the General Fund, with the rest going toward K-12 schools and early childhood education. After that, all of the money would go directly to schools, on a per-student basis, and early childhood programs.

If, against the odds, Munger’s initiative won and the governor’s lost, the Legislature could undermine it by separately manipulating the General Fund to decrease Proposition 98 funding for education. Brown and lawmakers have become adept at that. There would be disputes if both initiatives passed. The one with the highest vote total would determine which clauses applied in areas of overlap (the rates on the personal income tax); the courts would likely be called on to sort through other issues.

In its press release on Sunday’s vote, CSBA made a strenuous case for more school funding while expressing little enthusiasm for Brown’s initiative. Quoting CSBA Executive Director Vernon Billy, it said, “CSBA opted for the dual endorsement because schools desperately need funding.” Yet, he and the CSBA leadership want to make it clear to the public that the governor’s initiative does not provide new funding for schools. Instead, it bolsters the General Fund with new revenue.

“‘Under the governor’s plan, schools would get back some of the billions of dollars that were redirected away from them and used to shore up the state’s funding gap in the last budgetary cycle. The governor’s initiative only restores some of the funds already owed to schools,’” Billy said.

LAO: No need for $5.5 billion cut

The Legislative Analyst’s Office is suggesting an alternative to the massive cut to K-12 schools and community colleges that Gov. Jerry Brown is proposing if his tax initiative fails in November. Instead of a real spending cut of $2.8 billion, or $415 per K-12 student, districts and community colleges would be cut $1 billion, or only $162 per K-12 student, under the LAO plan.

The LAO detailed its alternative in an analysis of Brown’s May budget revision, which the nonpartisan, independent agency released on Friday (see pages 21-22 in the pdf version). The difference is the size of the Proposition 98 spending obligation that is calculated for this year and next year, separate from the tax increase.

The LAO assumes a more conservative approach, which would leave the K-12 schools and community colleges with $1.7 billion less than the governor has calculated and that districts will argue they are owed; that’s the downside for districts. The paradoxical upside is that, without a higher Proposition 98 base, they would feel less pain if the tax increase failed. Since most school districts are budgeting assuming the worst case, they could plan now for a smaller cut in the LAO proposal.

Brown is also proposing a new, major manipulation of Proposition 98, with long-term implications to school funding, if the tax increase fails – a scheme that the LAO alternative would avoid.

For districts, it comes down to which bitter pill to swallow.

Proposition 98 was written so that schools receive significant increases when the economy is good and personal incomes throughout the state are rising. When the economy slows, IOUs to schools and community colleges accumulate; the sum is known as the maintenance factor, and, over the past four years, it’s become big – about $10 billion, or 20 percent of the Proposition 98 obligation (see this explanation).

The repayment of debt owed to schools is based on the change from year to year in state revenues. Usually, the change reflects an economic recovery. Not this year. Revenues have deteriorated, regardless of the projected increase from 2011-12 to 2012-13. The LAO argues that Brown is calculating the maintenance factor as if it were a good year, technically known as a Test 2 year under Prop 98. When it’s a bad year, known as Test 1, with K-12 and community colleges getting a set percentage of a shrunken budget – about 40 percent – there’s no obligation to calculate the maintenance factor at the expense of other parts of the budget, the LAO argues. (This point has never been litigated. But John Mockler, the author of Proposition 98 and and adviser to the California Teachers Association, says that the LAO is wrong: The law does not distinguish between Test 1 and Test 2 years in terms of repayment; nothing under the law lets the state off the hook.)

The $1.7 billion savings that the LAO envisions includes a $500 million maintenance factor repayment this year and $1.2 billion in 2012-13, under Brown’s budget. Brown is proposing to use a chunk of it to speed up repayment of deferrals, the chronically late state payments that have forced cash-strapped districts to borrow short-term money. Since Brown’s not proposing to increase programmatic spending for schools anyway, school operations won’t be affected next year by not receiving the maintenance factor, the LAO says. However, Brown and the Legislature will be able to spend the $1.7 billion on other areas of the state budget that are hurting.

Cramming more into Prop 98

Now shift to November. Brown is proposing to raise the sales tax 1/4 percentage point and the income tax on the wealthy between 1 and 3 percentage points, and he has built his budget assuming the increase would pass. If it fails, he would cut K-12 schools and community colleges $5.5 billion: 90 percent of the total $6.1 billion cut.

About half of the $5.5 billion cut would be the postponement of repaying deferrals. The LAO and Brown agree this would be necessary. But Brown would then cut $2.8 billion in real dollars to schools by further manipulating the Prop 98 formula. He would shift $2.8 billion of expenses that had been funded outside of Prop 98 into it, forcing a corresponding cut to per-student funding. The two expenses are repayment of state bonds for school construction ($2.6 billion) and the Early Start early education program ($238 million).

The tactic of moving items in and out of Prop 98 is called rebenching. There are two ways to do this, and Brown is using both as it suits him, a “heads I win, tails you (schools) lose” approach. As the LAO diplomatically notes, “Using different rebenching methods within the same budget plan (as well as changing rebenching methods across years) at least creates the perception that the state likely is selecting the method that always works to its maximum benefit.” (Go here for an explanation of a lawsuit brought by education groups against Brown over rebenching in last year’s budget.)

By excluding the $1.7 billion maintenance factor and lowering the Prop 98 obligation for 2012-13, the LAO would not require as big a cut or the Prop 98 deception. (The LAO also recommends cutting $100 million in disputed money for the Quality Education Investment Act, a program for low-performing schools championed by the California Teachers Assn.)

All of this is dense stuff that is nearly indecipherable. It offers further evidence for the failure of how California finances state government and schools in particular.

But which method of calculating Prop 98 has consequences? On the one hand, it will determine whether districts get $1.7 billion owed them next year or later; on the other, it will determine whether, failing passage of a tax increase, schools face a cut of $415 or $162 per student; the $253 difference is equal to almost two weeks of school.

Watching California public schools sink — a preventable Titanic

One hundred years ago last month, the cry “women and children first” echoed on the decks of the ill-fated Titanic. A century later, the ship carrying California’s future is listing in the water. However, it seems that today no one is willing to make a sacrifice: It’s every man, woman, and child for himself or herself.

California was once the envy of the country — beautiful beaches, good jobs, a booming economy, and the promise of the best public education system, including top-notch, affordable state colleges and universities. However, the economic seas became rough in 2007 with the impact of the recession. In an effort to keep California afloat, our leaders in Sacramento — unable or unwilling to right the ship by raising revenue — scrambled for items to dump overboard. The value of education plummeted as other budget items were given priority, and education funding became the primary target for cuts, suffering a disproportionate loss of revenue. From 2007-08 to 2010-11, K-12 education funding sustained 54 percent of the loss of revenue, although it represented approximately 40 percent of the General Fund. In contrast, corrections sustained just a 4 percent loss, despite representing approximately 10 percent of the General Fund.

As the recession persists, the captain and crew – Gov. Brown and the legislators – decide what will be loaded into the lifeboats to survive, but there’s little evidence that the children are first. (Lucky for prisoners, federal law makes sure they are at the front of the line.) Instead, lawmakers and the governor are accusing each other of failing to save the children and the integrity of our state’s educational system Gov. Brown has proposed one solution to right the ship, but it requires the children to stay on board until the voters send help by passing his tax initiative. He seems to have overlooked the fact that children may go overboard before help can arrive — their schools must open months before the actual amount of education funding is determined.

The impact of the recession and the sinking of California are wreaking havoc on the schools, as has been documented this month by reports from both the Legislative Analyst’s Office and EdSource. School districts have been left scrambling, throwing items overboard or rearranging deck chairs in a futile attempt to balance their loads. Many districts are forced to borrow funds to keep schools open when the state sends IOUs, adding to their debt burden. Since 2008, more than 40,000 teachers, counselors, nurses, librarians, bus drivers, etc. have been lost, with an additional 20,000 teachers plus thousands more school employees currently in peril. While some education bargaining units are negotiating to save themselves and their students, others seem willing to let those in third class (lower seniority) and their schoolchildren sink with the ship to save their own skins.

Our schools need adequate funding to open their doors before the tax initiative-funded lifeboat can arrive. And the truth is that even if it passes, the initiative provides little more than current funding levels. Because of the uncertainty of the initiative’s passage, districts are compelled to budget with worst-case funding scenarios. As California continues to pitch in the seas of the recession, it is truly the children who will suffer the most severe, long-term damage. They’ll suffer larger classes, shorter school years, the loss of “less important” programs such as music and the arts, the disbanding of professional learning collaborations with the shuffling of remaining teachers, and so on, leaving 6.3 million schoolchildren with permanent gaps in their learning.

One hundred years ago, when the Titanic sank, the world was stunned and outraged that so many lives were lost, and new, preventative measures were instituted to save lives. Years later, we are watching another ship, the public school system in California, go under. Where are the safety measures today for the schoolchildren of our state? California was already 50^th in the nation for student-to-teacher ratio in 2008, and that was before education funding suffered $20 billion in losses. How much more water will we allow our schools to take on before we step in to do something? Will we be able to tell the children of California that we did everything to save them, or will we sit by idly, shrug our shoulders, and point our finger at someone else and say that it was his/her fault? Unlike the Titanic, we can stop this disaster. We must call out “children first” to save them and the future of our state.

Tamara Hurley is a California native, a product of the state’s public education system, and a 24-year resident of San Diego. Trained as a scientist, she has spent the past eight years volunteering on behalf of her children’s public schools, from the classroom to PTO and PTA boards as well as on district, community, and school site committees and site governance teams. Tamara is a board member of Educate Our State, a statewide, nonprofit, parent-led, grassroots organization fighting for high-quality public K-12 education in California.

Persuade, not threaten, me to vote for your initiative, Governor

A few Saturdays ago, my kids and I walked through a crowd of signature gatherers for ballot initiatives outside Trader Joe’s. Some of them all but tackled me as they pitched their proposals. All of them promised more money for education and a better future for my children. Unfortunately for the signature gatherers’ bottom line, I didn’t have time to stop. My children and their school had more immediate needs. We were on our way to a Dance-A-Thon, one of many “-thons” that California parents have organized to raise money for their schools.

It’s hard not to smile when you see a hundred kids dancing the Electric Slide. They’re so happy and innocent, they make you happy, too. But after an afternoon of dancing, they started getting tired and I started wondering, “Why are our children dancing non-stop for four hours to raise a couple of hundred bucks to offset the impact of the state budget deficit? How did we get into this mess and how are we going to get out of it?”

I probably wasn’t the only parent having those thoughts. I’m sure I wasn’t the only parent who’d been hit up that morning to support an education ballot initiative. The promise of the ballot initiatives is pretty tempting for public school parents who have seen the impact of budget cuts, dipped into their pockets to pay for after-school programs, and devoted an increasing amount of family time to fundraising. After a while, you’ll sign on to anything or support anyone who promises to stop the pain. That’s what Governor Brown is counting on when his tax initiative is up for a vote in November.

Still, like many Californians, the closer it gets to November, the more I’ll be thinking about that vote and what it means – just as I thought long and hard before voting in 2010 for Jerry Brown.

More than anything, I want to know whether the funding will benefit my children’s high-poverty school. I want to know that the money will be targeted to restore all the supports and services that have been eliminated over the last five years. I’d like to hear whether the governor has a positive vision for improving California’s education system and closing achievement and opportunity gaps. I want to know if he truly cares about making sure all kids have great schools and effective teachers. I want to hear whether he understands the hopes and dreams of the parents and youth living in a majority-minority state and an increasingly globalized world.

In all of these areas, I’m not getting many answers from our governor. When he ran in 2010, I read his education plan and believed his promises to use his long experience to bridge the partisan divide, fix California’s budget deficit, and end the use of budget gimmicks. Now, after seeing him fail to cross the partisan divide or fix the budget crisis, and watching him propose a set of budgets that include some of the worst gimmicks in state history, I’m not as trusting.

This lack of trust seems warranted even when the governor appears to be doing the right thing. For example, his weighted student formula (WSF) proposal would send education funding to school districts based on student need and fix longstanding inequities between rich and poor districts. This could be beneficial for high-need schools. Yet, the governor and his advisers have failed to include basic principles of financial transparency, accountability, and school-level authority on how the dollars are spent. In practice, this means that state dollars will flow to school districts with few assurances on how they will be spent at the school level or fix funding inequities between rich and poor schools. The governor won’t even fully implement the WSF model unless his ballot initiative passes and the state has paid off other funding owed to school districts.

And that brings me back to the signature gatherers. Supporters of the governor’s initiative portray it as a way to increase education funding. But when I try to figure out how this initiative is going to benefit my children’s school, I can’t tell. The only thing I have to go by is the governor’s budget, which projects over $5 billion in cuts to schools if I don’t vote for his initiative.

Now, the billions in cuts to schools terrify me, but a couple of things disturb me about this approach. First, the governor has failed to provide any positive reason or offer any educational vision that would move me, as a parent, to want to vote for his initiative. Instead, he is essentially telling me and every other parent in California, “I will cut your child’s school funding if you don’t vote for my initiative.” Now, I’ve heard that the governor is delivering similar strong messages of pain to any major interest group that doesn’t back his initiative or shows interest in an alternative initiative being promoted by the philanthropist and civil rights activist Molly Munger. And maybe this will work for him. But telling me that you’re going to punish my children, their classmates, and our school if I don’t support your initiative doesn’t really work for me.

In contrast, Munger provides a real vision for educational improvement. Her proposal sends the money directly to schools with additional dollars to high-need students. It requires financial transparency and stakeholder involvement in decision-making at the school level. It asks for shared sacrifice from all taxpayers. And it can tell me exactly how much additional money our Oakland school will receive in the coming years. These are the very elements that Brown’s weighted student formula proposal and ballot initiative don’t include. For parents focused on their kids and schools and advocates focused on equity, it is an attractive approach. Now that it is going to be on the ballot in November, perhaps our governor should spend less time fighting it, and more time learning from it. That would be in his best interest and certainly in the best interests of the state he was elected to govern.

Arun Ramanathan is executive director of The Education Trust-West, a statewide education advocacy organization. He has served as a district administrator, research director, teacher, paraprofessional, and VISTA volunteer in California, New England, and Appalachia. He has a doctorate in educational administration and policy from the Harvard Graduate School of Education. His wife is a teacher and reading specialist and they have a child in preschool and another in a Spanish immersion elementary school in Oakland Unified.

A lot hangs on Prop 98 ruling

The onus was on the attorney for education groups suing the state: convince a skeptical Superior Court judge that the governor and Legislature violated voters’ will and the minimum school funding requirement under Proposition 98 by diverting billions in tax revenue from the General Fund last year.

“There will be no such thing as a minimum guarantee if the state can manipulate it for political purposes,” attorney Deborah Caplan told San Francisco County Superior Court Judge Harold Kahn on Wednesday.

Judge Kahn issued this one paragraph preliminary ruling on Tuesday then entertained 90 minutes of testimony on Wednesday. — Judge Kahn issued this one-paragraph preliminary ruling on Tuesday then entertained 90 minutes of testimony on Wednesday. Click to read.

In a one-paragraph preliminary ruling the day before, Kahn wrote that nothing in the wording of Proposition 98 precluded the Legislature from shifting $5 billion in sales tax and vehicle license fee revenue to a separate account reimbursing counties for taking on some state responsibilities – even though the move shorted K-12 schools and community colleges about $2 billion. That would have been their share under Prop 98, had the $5 billion remained in the General Fund.

But Kahn did give Caplan the bulk of a 90-minute hearing, extending through the lunch hour Wednesday, to make her case, and, notwithstanding his vigorous questioning, left open the possibility that she may have changed his mind. Kahn is expected to issue his final ruling within 30 days.

The case, brought by the California School Boards Association, Association of California School Administrators, and three school districts, has significant potential implications – immediate and long-term – for Prop 98, the initiative that voters passed in 1988 requiring that roughly 40 percent of the General Fund go toward schools and community colleges. With a victory, the governor and Legislature could create special funds at will to ignore voters’ stated priorities by reducing the General Fund and guarantee for schools. And Brown could use a win in this case to support his call for $5 billion in cuts to K-12 schools and community colleges if his proposed tax initiative fails in November. In that case, Brown is proposing a different manipulation: shifting $2.4 billion in school construction bond payments from the non-Prop 98 portion of the General Fund into Prop 98 – essentially a school funding cut.

Obligation to suspend or ‘rebench’

The plaintiffs don’t dispute the governor’s and Legislature’s ability to fund schools less than the constitutional guarantee. But Prop 98 requires a two-thirds vote to do so and prescribes how the money owed to schools will be paid back.* In this case, the Legislature simply ignored the constitutional obligation to suspend Prop 98 (Republicans, jamming Democrats, made it clear they wouldn’t vote for suspension).

The plaintiffs also don’t deny that the governor and Legislature can shift money out of the General Fund or create special accounts. But ever since the passage of Prop 98, the Legislature has recalibrated the General Fund – “rebenching” in Prop 98 lingo – to make sure that Prop 98 wasn’t affected. This was the first time that reconfiguring wasn’t done, Caplan said.

The state’s position, which Kahn adopted in his ruling, was that rebenching is not in the language of Prop 98 and was not mentioned in the initiative’s ballot literature. If the Legislature has adopted rebenching by statute, it can undo it by statute if it chooses.

“Voters could have applied Proposition 98 to all revenues in the state, but they said only the General Fund,” Deputy State Attorney General Daniel Powell told the court. Shifting sales tax revenue to the counties for realignment of services was a valid purpose, not a manipulation, he said.

As Kahn asked Caplan, “If the voters or drafters of 98 wished to avoid evasions or manipulations of the General Fund, couldn’t they have put in language to state that? There is no such language there.”

But Caplan said what voters wanted was clear from the language of Prop 98 and the ballot arguments. Voters were promised that Prop 98 would take the politics out of financing decisions; the term minimum funding guarantee itself “is inconsistent with allowing the state to manipulate it at will.” Otherwise, there would be “no integrity” to the initiative, she said.

Furthermore, the Legislature demonstrated that it understood Prop 98’s intent in adopting rebenching as implementation legislation soon after voters passed the initiative. “The state has rebenched many times over the years and honored the principle repeatedly, sometimes to the state’s benefit,” Caplan said, but also to protect education funding levels.

Abe Hajela, an attorney with School Innovations & Advocacy who has been part of the plantiffs’ team, told me that it is unreasonable to expect voters to anticipate all efforts to undermine an initiative, then write them into the Constitution. That’s the purpose of implementation legislation.

The sales tax diversion was part of a deal that Brown cut with the California Teachers Association to pass the budget last year. But the statutory wording reflected CTA’s and legislators’ ambivalence. It said that passage of a tax initiative by November 2012 would make the sales tax shift to counties permanent but that schools would be made whole with the additional revenue. If the initiative failed, schools would be paid back what was diverted over four years.

But that was then. Brown is now reneging on that promise and is proposing to cut K-12 and community colleges further if the tax proposal fails. That’s all the more reason, the ed groups argue, that the constitutional guarantee must be protected.

* Update: It would be more accurate for me to say that the law prescribes how funding levels will eventually be restored if the Legislature suspends Prop 98. The dollars lost in a suspended year are not paid back. For the Legislative Analyst’s Prop 98 primer explaining this, go here.