Brown Asks for Tax-Hike Extension to Sustain CA School Budgets

Published February 16, 2011

California Gov. Jerry Brown (D) is asking voters to extend a sales- and income-tax increase for five years to help close a $25 billion state budget deficit this year and spare the state’s public schools from deep budget cuts. However, education policy analysts at Stanford and Pepperdine University dispute claims by Brown and Democratic legislators that K-12 funding could not endure more cuts. 

Under Brown’s proposal, elementary and secondary education expenditures would skirt the significant reductions other departments face. California’s constitution requires K-12 education receive at least 40 percent of general fund appropriations. Brown’s budget allocates just over 42 percent of the budget to schools.

‘Prepare for Defeat’
Brown’s plan would reduce the state’s annual K-12 spending of more than $50 billion by less than 1 percent. If voters reject the tax extension initiative in June, Brown will have to cut at least $2 billion more from the budget.

Brown won’t say what further cuts would be made if voters reject a tax extension. “If I tell them this is going to happen, some people might say I am putting a gun to their head,” Brown told reporters at a budget forum in January.

Bill Evers, an education research fellow at Stanford University’s Hoover Institution, says the major interest groups that backed the governor’s election campaign could not realistically expect a better deal.

“Brown’s budget is the best the public-school unions can hope for currently,” said Evers, who is a former U.S. assistant secretary of education. “His effort to sustain the status quo in school spending spares the school establishment from making hard choices and trying to get more student learning at lower cost.”

Evers predicts Brown will have a difficult time persuading citizens to vote for the higher taxes. “California voters want both liberal intentions and constraints on tax hikes,” he explained. “Public schools should prepare for defeat of the tax extension in the June election and, hence, spending cuts.”

District Expenditures Probed

Recent research suggests there may be room for cuts to K-12 spending without adversely affecting California classrooms.

Two studies by Pepperdine University’s Davenport Institute show state spending on primary and secondary education increased annually from Fiscal Year 2003-04 until FY 2007-08, and leveled off in FY 2008-09. The most recent study, released Jan. 31, found total school expenditures increased every fiscal year when capital expenditures were included in the calculations.

An earlier Davenport study, published in July, investigated 52 California school districts and found an adjusted 22 percent spending increase from 2003-04 to 2008-09, while the state budget deficit ballooned. Administrative expenditures grew more quickly than classroom-related spending, which fell from 50 percent to 48 percent of total operational spending over the five-year period.

Pepperdine researchers combed through raw data at the district level. “Instead of taking summary data, we actually get in there and look at accounting code data,” said Davenport Institute research director Steve Frates.

Lack of Transparency Cited

The earlier Davenport Institute study created controversy. An August memo released by the California education consulting firm Blattner and Associates faulted Frates and his team for not including shares of funds spent on facilities and maintenance, as well as counseling and instructional supervision, in the assessment of “direct support of classroom education.” The January study attempts to address that criticism.

Frates says any confusion that may arise from the interpretation of accounting codes points to a larger problem in the way California’s K-12 dollars are spent.

“The fact it took considerable effort to ferret these data out from the codes shows there’s a need for greater transparency,” he said. “It’s too opaque for the average citizen, or even a pretty conscientious citizen, to decipher.”

Lance Izumi, senior director of education studies at the Pacific Research Institute in Sacramento, says California’s complex school finance system makes it difficult to figure out what is being spent on what. “While per-pupil funding figures are reported in the news, the wide variety of pots of money that go into making up those figures are a mystery to the average person. Because of this lack of transparency, it is easy for bad policies to be adopted,” Izumi explained.

‘Backpack Budgeting’ Seen as Solution
As a key part of promoting more effective and productive education spending in California, Izumi recommends a system of “backpack budgeting” in which money follows individual students to the schools they choose.

“Parents would know exactly how much money was going to a school, and since the money would go to a single school, as opposed to a huge bureaucratic system, they would have the opportunity to keep better tabs on how and where the money was spent,” said Izumi. “Decentralization and parental empowerment would result in the transparency that we all want and all need.”

Lisa Snell, director of education and child welfare studies at the Los Angeles-based Reason Foundation, says a student-portable funding system would not only increase schools’ incentives to provide quality service but also help offset the effects of statewide cuts in K-12 expenditures.

“California could make this school financing change by restructuring existing resources and directing districts to link 70 to 80 percent of operating revenue to students,” she explained. “This would immediately increase school-level resources without increasing the California education budget.”

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute in Golden, Colorado.

Internet Info:
California’s Governor’s Proposed Budget, 2011-12:

Steven B. Frates and Michael A. Shires, Pepperdine University School of Public Policy, Davenport Institute, An Analysis of K-12 Expenditures in California: FY 2003-04 to FY 2008-09: