If K-12 Education Matters Most, Why Doesn’t California’s Budget Reflect This?

Tuesday, June 26, 2012

Polling data consistently shows that K-12 education is Californians’ highest state budget priority. Indeed, Gov. Jerry Brown plans to put those beliefs to the test with a $7 billion tax initiative on the November ballot aimed at plugging the state’s chronic budget problems. This initiative will hold education-funding hostage, threatening $5.5 billion in K-12 cuts if voters don’t approve the new taxes.

On top of the Brown tax initiative, a second income-tax measure on the November ballot – sponsored by Pasadena attorney Molly Munger – would provide $10 billion annually in new revenues for schools and preschool/early education programs. So voters will get to weigh in not once, but twice on how strongly they want to protect K-12 education.

While this year’s budget may prioritize K-12 education – on the condition that voters are willing to raise taxes – most past budgets have not. In fact, the budget that Gov. Brown presumably will sign into law this week basically leaves in place the damage done to school budgets over the last several years, and further back.

Here’s how that damage occurred.

When the recent recession hit, California dramatically cut school spending, relying on one-time federal stimulus funds to partially backfill the cuts. But those federal funds ran out and the state economy hadn’t recovered, so the cuts became permanent. At present, California schools’ general-purpose funding has been permanently cut 22%. Assuming the Governor’s initiative passes, this budget will continue the same low level of programmatic funding. While schools would not see additional revenues in 2012-13 if Brown’s initiative passes, they would see funding increases in 2013-14.

But should the governor’s initiative fails, schools get decimated – facing $5.5 billion in additional cuts. Part of the cuts would delay the timing of payments to schools, and part would reduce general purpose funding an additional 7%.

How will this impact locally? Some school districts will act conservatively, planning for the worst and make the staffing and budget cuts this summer. Other districts will hope for the best – and only face up to fiscal crisis after the initiative fails. Districts will have one new option – shortening the school year (the budget would allow 20 fewer days) if they can negotiate it with their unions. Expect a lot of management-union strife if the initiative fails. Also, expect some district bankruptcies.

Why Are New Revenues Needed for Schools? According to the recently released Education Week report Quality Counts, California ranks 47th in per-pupil education funding when funding is adjusted for regional cost. That’s $3,000 below the national average ($8,667 per pupil compared to $11,665) based on 2009 data. This translates to $18 billion below the national average – not an easy gap to close. California has seen per-pupil funding fall 10% ($832 per pupil) since 2009, so the funding gap is likely higher.

The consequence of this low funding? Many California districts have already reduced their school years by 5 days.  The Golden State has the second-highest classroom sizes in the nation (only Utah has larger) and has among the fewest adults in its schools (teachers, principals, administrators, nurses, librarian), not to mention a record number of districts in financial trouble.

And, if the two ballot measures fail, California schools will lose another $441 per pupil.

Unfortunately, You Get What You Pay For. California is one of the lowest-performing states in the country – mired in the bottom-five in math, reading and science. Thank goodness for Mississippi, or we’d be last in some grades and subjects. Some make excuses, blaming our low performance on the high rate of economically disadvantaged students and English learners in the state. And, certainly, the state’s education system is letting these students down. However, California’s poor performance is systematically hitting middle- and upper-income families’ children as well. For example, the kids of parents who’ve graduated from college rank 37th in science, 38th in math, and 39th in reading. These middle-income parents are the voters that the Gov. Brown is hoping will step up to vote for more resources for schools.

Money Alone Isn’t Enough. Research (Getting Down to Facts by Stanford/UC researchers, California’s Governor’s Committee on Education Excellence, RAND and others) is clear that the system needs many reforms, as well as significant additional resources to accompany those reforms. California needs to overhaul its finance, governance, and accountability systems and make major changes to teacher and administrator policies. On the policy front, there’s a possible reform compromise brewing. Gov. Brown wants to devolve budget decisions to the local level and overhaul the finance system. The State Senate leadership wants an accountability system that moves beyond test scores and values college and career readiness. Both parties seem ready to deal. But, with the current level of resources, it’s challenging for policymakers to focus on anything but the budget.

So, How Did School Funding Get So Bad?  It’s perplexing that school funding in California could be so low compared to the rest of the country given that:

  • Californians Make More Money. The Golden State currently ranks 10th in the nation in per-capita income.
  • Californians Pay Higher Taxes. Of the income Californians make, a higher proportion of it is spent on state and local government – 10.6% of personal income is paid in state and local taxes (6th highest in the nation).
  • K-12 Education Is California’s Largest Budget Item. In California’s 2011-12 budget, K-12 education amounted to just over 34% of state expenditures – the largest funding category.

So how can California’s income and taxes be high, yet K-12 spending is so far below the rest of the country?

The answer is a combination of demographics and priorities.

First, California is a relatively young state – and, as such, has a higher portion of its population in the K-12 age range (ages 5-18) compared to other states. Since the state has more kids per capita, the tax revenues don’t go as far as they would in a state with a smaller portion of the population in school. There’s not much that the state can do to change this factor.

Second, through several state ballot measure, California policymakers and voters have chosen to prioritize other parts of state and local government above K-12 education. For example, California is the second-highest state in per-capita spending for its corrections system and also second highest for police and fire. If, for example, California moved down to the national average in spending per capita for these two areas of state and local government, it would free up $11 billion that could be redirected to K-12 schools. California also ranks near the top in many areas of social service and health spending.

The Governor’s recent realignment effort (transferring inmates from expensive state prisons to local county jails) is a step in the right direction of generating correction savings. Still, there’s a lot more that the state could do – and the education community should play a role in helping state and local policymakers and voters see the need for constraints in spending in other areas.

There are several issues where decisions that are made this year will significantly impact whether more resources will be available for education in the future – even if the issues seem somewhat unrelated. For example, decisions made about high-speed rail, redevelopment agencies, “three strikes” sentencing reforms, and pension reforms all will have significant impact on the future of education funding.

While state and local government is not a zero sum game (as the Governor’s and other initiative proposals show), there is a need for spending constraint in other areas of the budget – if California is once again going to prioritize its schools like voters say they want.

Robert Manwaring served as Director of Policy for the Schwarzenegger Administration’s Committee on Education Excellence and was K-12 Education Director for the nonpartisan California Legislative Analyst’s Office.

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