DEPARTMENTS:
Abuses and Usurpations

By Michael Lynch and Blake Hurst

San Francisco's Chinese Wall When Saving Doesn't Pay

In 1866 California enacted a racist law allowing the state superintendent of education to withhold funding from, schools that enrolled Chinese children. More than a hundred years later, some schoolhouse doors are still closed to Chinese-American students in San Francisco, where ethnic quotas routinely deny them access to both neighborhood schools and the city's best high schools.

Fourteen-year-old Patrick Wong found this out when he was denied admission to three San Francisco high schools because they had already filled their quotas for students of Chinese descent. Patrick was rejected by prestigious Lowell High even though his grades and test scores were higher than those of some whites, Japanese, Koreans, Filipinos, American Indians, and "other non-whites" who gained admission. Patrick was also rejected from two other schools where Chinese-American students were capped out.

Whenever such quotas keep white children out of San Francisco's few good high schools, their parents can often afford to send them to private school. But like many Chinese-American parents, Patrick's mother, who was raising him alone, could not afford private tuition.

"Patrick's story is not atypical," says Amy Chang, a third-year law student and an activist in the city's Chinese community. "Sadly, it is the untold story of many children." Such incidents, she says, have finally inspired the community's leaders to file a class-action lawsuit charging the San Francisco Unified School District (S.F.U.S.D.) with racial discrimination. In the 1990s, San Francisco's Chinese-American children are finding their path to education blocked, not by segregationists in the George Wallace mold, but by the racial bean counters of modern liberalism.

Balkans by the Bay 

Since 1983, a sweeping, federally supervised consent decree has divided San Francisco's children into nine ethnic groups and set quotas on the ethnic composition of its schools. The decree requires every school in San Francisco to enroll students from at least four ethnic groups. More importantly, no ethnic group may constitute more than 40 percent of an open-enrollment school, such as highly selective Lowell High, or 45 percent of a neighborhood school.

Chinese Americans account for 27 percent of the district's students and 30 percent of all high-school students. Hence these rigid quotas result each year in Chinese students being "capped out" of as many as six of the district's high schools and numerous elementary and middle schools. These students are forced to attend school far from their homes or to forego the opportunities offered by academically challenging high schools like Lowell.

In response, Chinese parents have hired a lawyer and filed a lawsuit against the S.F.U.S.D. "The lawsuit is at the center of an important effort of our community to tell our children that they are important, that they are not to blame, and that we have laws and a constitution to protect individuals against racial discrimination," says Chang. "There are real victims here. To learn at a young age that you cannot achieve the fruits of your labor because of your race is devastating. A lot of the children I talk to wish that they were born something else." If the Chinese parents are successful, they will not only secure a better future for their children but may also set a legal precedent that will topple race-conscious education schemes in other cities.

A federal judge imposed the consent decree in 1983 in response to a lawsuit brought by the National Association for the Advancement of Colored People (NAACP). The civil-rights group alleged that the S.F.U.S.D. had long "engaged in discriminatory practices and maintained a segregated school system." No court ever determined the truth of this charge. The judge ruled that the case could proceed to trial on the grounds that the racial composition of the district's work force did not match that of the student body. Rather than defend itself in court, the district felt compelled to enter into a consent decree.

The decree's two goals were to "eliminate racial or ethnic segregation . . . in any S.F.U.S.D. school, program or classroom" and to "achieve academic excellence" throughout the school district, by which it meant raising the academic performance of black and Hispanic students.

What Quotas? 

Supporters of the consent decree dismiss the parents' complaints. "It doesn't set up racial quotas," states Dan Kelly, a member of the school board whose son attends a private high school. "It does limit the concentration of students at a given school." Thomas I. Atkins, the lead attorney for the NAACP, offers the standard, discredited liberal defense of quotas: They are necessary to achieve diversity, which in turn leads to academic excellence. "Every school must have no fewer than four of the nine major ethnic groups," says Atkins. "Is that a quota--who cares? . . . For those parents who are hung up at not being able to get their kids into Lowell, tough s - - t, that's my response."

The city is right to be concerned about the academic failures of its students. Like most government social-engineering projects, however, this one has failed miserably. Through fiat, the city's schools may have achieved ethnic diversity (at the expense of fairness). But Harvard education professor Gay Orfield, who helped design the consent decree, recently conducted a 10-year review and found that most African-American and Hispanic students "still face devastating levels of educational failure." In 1994, the average grade-point average of black students was 1.86; Hispanic students had an average g.p.a. of 2.04.

The consent decree had long been a subject of concern in the Chinese-American community. But it wasn't until 1992 that Chang took it upon herself to challenge the discrimination through the Chinese American Democratic Club (C.A.D.C.), the oldest Democratic Party club in San Francisco. The C.A.D.C. wrote a position paper, organized parents in the community, and lobbied the elected school board and the S.F.U.S.D.'s administrative bureaucracy.

It wasn't hard to find Chinese-American parents who were outraged about the quotas on their children. As one parent told the San Francisco Chronicle, "I am tired of the schools singling out Chinese. We've worked so hard to get good grades and now we can't go to a decent academic high school that is safe and will prepare us for a four-year university."

The C.A.D.C. took its case to the school district's administrators and every member of the school board. "Some of the school board members said 'the consent decree is law--if you don't like it, take us to court,' " says Roland Quan, a former president of the C.A.D.C. who has three children in public school. The position of the bureaucrats was the same. Recalls Quan, "The staff said that their hands were tied: 'If you don't like it, you will have to sue us.' "

The C.A.D.C. also tried to get a resolution of support from the central committee of San Francisco's Democratic Party, which has considerable influence in this overwhelmingly Democratic city. Although the resolution won the support of each of the minority Democratic clubs, the clubs run by white liberals didn't sign on to it, and it failed.

By 1993, it was clear that the parents wouldn't win by working within the system. So the C.A.D.C. set up the Asian American Legal Foundation and started preparing a lawsuit. The activists faced two challenges: They needed plaintiffs and they needed a lawyer. None of the Bay Area's most prestigious Asian lawyers was able or willing to take the case. Eventually the activists secured pro bono representation by local lawyer Dan Girard.

Young Victims 

"I think the most difficult thing was to find a plaintiff in the Chinese-American community because we are compromise-oriented," says Quan. The activists convinced some parents, however, that their participation would benefit the whole community. They were able to secure a representative class that included Patrick Wong and two other students:

* Brian Ho, a five-year-old who was denied admission to two schools in the Sunset District, where he lives, because Chinese students were already "capped out" at the 40 percent ceiling. He was forced to attend another elementary school in the notorious Haight-Ashbury District.

* Hillary Chen, an eight-year-old who was denied a transfer to two elementary schools in the Sunset District after her family moved there from the Richmond District. Capped out of her neighborhood schools, she was required to attend school in her old neighborhood.

On July 11, 1994, the plaintiffs filed their suit in federal district court. While Girard works for free, the defendants show up with at least 10 attorneys. Two are from the NAACP; under the consent decree, they may collectively bill the state more than $500 per hour for defending the status quo.

Federal judge William Orrick, a Carter appointee who has overseen the case from the beginning, has heard oral arguments and is expected to issue a ruling within a month. Regardless of what happens in this round, this case will likely reach higher courts. With a central tenet of liberal ideology on the line, the NAACP is sure to appeal an adverse ruling all the way to the U.S. Supreme Court. This strategy, however, carries great risk: Recent decisions such as Adarand v. Pena (1995) suggest that a majority of the current Court regards racial preferences by government as unconstitutional. So if the Court strikes down this discriminatory policy against Chinese-American students in San Francisco, the NAACP risks undermining similar racial-engineering schemes in school districts all over the country.

The plaintiffs are just as unlikely to give up before their case reaches the Supreme Court. "This lawsuit isn't about numbers," says Chang. "It is about the fundamental principle that each individual should be recognized as an individual and not be discriminated against because of race. This lawsuit is about telling our children that in America you can aspire to anything you want and can be judged as an individual free from racial discrimination."

Michael W. Lynch is the Washington editor of Reason magazine and a senior fellow at the Pacific Research Institute, in San Francisco.

When Saving Doesn't Pay 

By Blake Hurst 

My daughter Lee pays taxes at a higher marginal rate than Bill Gates. She's not a trial attorney, nor a surgeon, nor a recording star. Rather, she's an 18-year-old with a ponytail, a part-time job, and a 4-H project, and she's going to college in the fall. President Clinton wants to subsidize college for everybody with a brand-new $1,500 entitlement. But his proposal overlooks both a federal tax code and a college financial-aid system that harshly penalize kids who work hard and save enough money to pay their own way.

As we struggle through the financial-aid and income-tax maze, it has become clear that Lee's mother and I are lousy financial planners. It's not that we didn't have a plan. We started when Lee was eight and she raised and sold her first 4-H calf. Yes, people still do that. These 4-H projects teach responsibility: Lee has fed and watered her animals every day for the past 10 years. Future Farmers of America and 4-H have also taught Lee how to manage money and run her own business. We've made it clear to Lee since she was eight that any profits from her cattle-feeding would go toward her college education. Since then, Lee has started raising flowers, and with help from her parents and grandparents, both enterprises have been profitable. All profits not reinvested in the Lee Hurst microconglomerate have been used to purchase savings certificates at the local bank.

That was a mistake--because our tax code and the financial-aid system for today's scandalously overpriced colleges ensure that working and saving for college is a fool's game. Our first brush with this upside-down system of incentives was the financial-aid application. In calculating the amount that families should contribute from their savings to tuition, the aid formulas "tax" the savings of prospective students at 35 percent, or three times the rate that it penalizes the assets of their parents. Lee's savings certificates aren't enough to pay her way through college, but they do disqualify her from any means-tested aid. Had she done nothing to prepare for college expenses, we might have qualified for at least some help. But since she has spent time every day since she was eight saving up for college, she is on her own. Financial aid would have been a last resort for us, but the message to Lee is clear: Working and saving really don't reward you all that well.

If the financial-aid system is perverse, the way the IRS treats kids who work and save is even worse. The interest on Lee's savings qualifies as unearned income and so is taxed more heavily than regular income. As a farming family, we know that we are just a drought or a flood away from a year without any income. So it is especially galling that we are penalized for taking steps to guard Lee's future as a student from the vagaries of Mother Nature. And, as any parent who has fought battles over designer jeans and Friday-night pizza parties knows, a teenager finds saving money very difficult.

It has become even more difficult since Lee discovered the joys of driving. Her bill for car insurance would have paid for a year of college when I went to school, and the auto body shop we frequent has dedicated one bay to the seemingly full-time job of pounding out dents in our family car. But the standard deduction that shields the first dollars of wage income from taxes does not apply to "unearned" income earned by dependents, so the IRS takes a bite out of our college fund each year.

If that weren't bad enough, I spent a little time this year figuring out how the IRS would treat Lee if our parenting had been as unsuccessful as our financial planning. If Lee were an unwed mother and had the same income, she could avoid all income taxes by filing independently. She would also qualify for the Earned Income Tax Credit and would receive around $1,500 in cash from the federal government. Again, Lee is receiving the wrong signals about the value of working hard and doing the right thing.

Lee spent last summer raising 2,400 asters, fall blooming flowers grown in two-gallon pots. While her friends were going to the mall or the pool, she schlepped those asters onto our truck and delivered them to garden centers around the Midwest. When she writes her first check for tuition at the University of Missouri, she'll have a very concrete idea about the cost of her college education.

Before Congress and President Clinton expand student aid with a new entitlement for the middle class, perhaps they should change the present system to better reward those who work and save to pay their own way. When income taxes, Social Security taxes, and federal aid penalties are considered, Lee faces a marginal tax rate of around 65 percent (see inset). Eighteen-year-olds don't normally spend a lot of time calculating the value of work versus leisure. But when taxes are this high, a kid doesn't need a Ph.D. to question whether a paycheck is worth the effort. All in all, it's enough to make a girl quit her job and take up sunbathing.