#jimbeall

My husband likes to say, “you get what you pay for” and, whether we are talking about the cute shoes that were SUCH a bargain and fall apart after three weeks, or about our public education system, he is largely correct.  Since the late 1970s, California has slid from the top to the bottom in the quality of our public education system, and the primary lever in this slide has been the decimation of public funding.  A look at the National Report Card (National Report Card on School Funding Fourth edition Sprint 2015; www.schoolfundingfairness.org.), which provides a set of indicators that provide a clear understanding of the fairness in each state’s school funding system, illuminates precisely why California will not fully close the opportunity gap state wide without a dramatic overhaul of the funding model.  

  Even before the Great Recession of the last decade, school funding in California was not sufficient to provide the resources all students need to flourish during their K-12 years, and to be prepared for college and the workforce. As the current (National Report Card) report documents, California, along with a number of other states, has yet to make progress in restoring cuts triggered by the recession, let alone meet our responsibility to fund at levels sufficient to ensure all students an equal opportunity to learn. This failure directly impacts local districts and schools as they struggle without the funds necessary to provide essential resources and meet student needs.

  Compounding the sluggishness of restoring funding is the adoption of the more challenging Common Core curriculum standards and assessments. These mandates come with added cost, from updating textbooks and technology, to providing professional development, to purchasing new standardized tests. States are under pressure to improve underperforming schools and implement new teacher evaluations, adding further stress on limited education budgets.

  What is fair school funding? In the (National Report Card) report, “fair” school funding is defined as a state finance system that ensures equal educational opportunity by providing a sufficient level of funding distributed to districts within the state to account for additional needs generated by student poverty*.  (*Between 2007 and 2012, the national school-age poverty rate grew from 16% to 21%.)

  However, while the distribution of funding to account for student need is crucial, the overall funding level in states is also a significant element to fair school funding. Without a sufficient base, even a progressively funded system (as I believe the Local Control Funding Formula mandated in California to be) will be unable to provide equitable educational opportunities.  For example, California spends $8,218 per pupil.  No matter how equitably we try to distribute those resources through the LCFF, we aren’t going to match the efforts of states such as New York, which leads the nation in per pupil spending at $18,507.  

  California is also in the bottom ten states in spending proportionate to the state GDP.  Combining the per pupil spending and the state’s spending on education in relation to the state’s economic productivity, we discover a sad ratio that offers a sense of the level of priority that state and local budgets assign to education.  California scores quite poorly in all measures except funding distribution.  Clearly, we understand the importance of equity at least in concept; now we need to fund our progressive system so it can actually have a measurable impact on student outcomes.    

  So if the solution is more robust funding, how do we get there?  In my view, the most powerful lever we have is a partial reform of Proposition 13.  As most Californians are well aware, Prop. 13 strictly limited property reassessment to changes of ownership, and capped annual increases in assessed value at 2%. These restrictions were meant to protect residential property owners at a time when home values in California were increasing rapidly.  It is likely that most voters did not realize that Prop. 13 applied the same protections to commercial property. Because commercial properties rarely change ownership, their taxes rarely go up. For the last 35 years this has led an increasing tax burden on individuals and homeowners.  When Prop. 13 passed, commercial property paid 40% of the property taxes in California and residential property paid 60%. Now, homeowners pay 75% and commercial properties only pay 25% of the property taxes in California.  Additionally, large corporations often exploit loopholes in Prop.13. One example is that commercial property owners may divide the purchase of a property among several parties in order to keep their ownership shares under 50%. By ensuring no one person or entity owns more than 50% of a property, no property tax reassessment is triggered, and existing property tax rates are maintained.  In order to address these deficits, California now has some of the highest sales and income taxes in the country. Sales taxes alone have increased by 27% since Prop.13 passed, and local governments are forced to introduce new bond measures and parcel taxes year after year just to make up for chronic budget shortfalls. All of these taxes disproportionately impact individuals and working families, and force schools and local governments to rely on much more volatile sources of revenue than the property tax.

  Happily, California Senators Loni Hancock & Holly Mitchell have recently introduced a bill to reform Prop 13: SCA 5, the Property Tax Fairness Amendment.  This reform would reassess non residential commercial properties at fair market rate while providing tax breaks for small businesses and keeping all protections for homeowners and renters. This amendment can bring back $9 billion dollars every year for schools and public services across the state, with, I am told, $526 million going to Santa Clara County.   (source: http://www.evolve-ca.org/our-plan/)

  Among other benefits, this plan will decrease the tax burden on working families and provide at least $9 billion more per year in revenue to schools and public services.  Prop. 13's commercial property loophole forces our state, county, and municipal governments to raise funds in other ways, particularly through income and sales taxes. Today, California has the highest income and sales tax in the country, and local governments regularly ask voters to pass regressive parcel taxes to fund vital public services.   We need a better plan.