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Does the governor’s tax initiative guarantee more money for schools? The answer is yes, but probably not as much as you think.
Gov. Jerry Brown stood outside Perkins Elementary School in Barrio Logan last week and stumped for Proposition 30, the measure he says will save California’s schools from decimation.
“The message is: It’s money into the schools, or money out of the schools, this is third grade arithmetic,” the governor said.
Prop. 30 has been touted as the be-all, end-all education initiative. Brown and his allies at California’s teachers unions have spent many weeks and tens of millions of dollars persuading voters to pass the measure in order to keep the state’s education system from falling apart.
But dig deeper and it soon becomes clear that Prop. 30 is far from the no-brainer Brown has described. It’s much more complicated than third-grade arithmetic.
Education finance expert Ron Bennett called Prop. 30 “the most complicated proposition I have ever read.” He should know. He’s been following this stuff for decades.
There are many arcane details surrounding Prop. 30, but here are some bottom lines:
Bottom Line 1: If Prop. 30 Doesn’t Pass, Local Kids Get Three Weeks Less School
Perhaps the one thing Prop. 30 does for schools that is easy to understand: It prevents a massive mid-year education cut.
If it were up to the governor, this would be the only thing voters would focus on when considering Prop. 30.
Brown wants voters to see the proposition as a way to avoid massive cuts to education spending. The state budget slashes state education funding by almost $6 billion this year if the proposition doesn’t pass.
San Diego Unified has vowed to cut the school year by three weeks if that happens.
Viewed from this angle, Prop. 30 doesn’t guarantee more money for schools in the short-term, but it does guarantee that they won’t suffer huge cuts.
Bottom line: In San Diego, Prop. 30 guarantees that students will have a full school year this year.
Bottom Line 2: Prop. 30 Increases Education Funding
It’s impossible to understand how education funding will change if Prop. 30 passes without understanding a little bit about the guarantee laid down by Proposition 98.
Prop. 98 guarantees that a certain percentage — basically 40 to 55 percent — of the state’s general fund (or working budget) has to be spent on education each year.
Prop. 30 will add more money into the state’s general fund.
Bottom line: About 40 to 55 percent of the new money raised by the proposition will be spent on education.
Bottom Line 3: All The New Money Goes to Education, But Other Education Funding Drops
The backers of Prop. 30 have tried very hard to make it look like all the new money the governor’s taxes will raise will end up in classrooms.
Indeed, the proposition creates something called the Education Protection Account, into which all the new tax revenue will flow.
All of that new money, in that account, will be spent on education.
But here’s the rub.
All the new revenue, estimated at about $6 billion a year, will also be counted toward the Prop. 98 guarantee.
In other words, because all this new money is coming in, the state won’t be required to pay as much into education out of the rest of its general fund budget and can instead spend that money on other things. The amount of money that’s paid into education from the rest of the general fund will shrink.
There will be more money in the budget overall, however. And that’s why education funding will see a net increase if Prop. 30 passes.
But spending won’t increase by the full $6 billion Prop. 30 will generate in new taxes.
The Department of Finance has come up with an estimate: Education funding will increase in the 2012-2013 year by about $2.9 billion if Prop. 30 passes — well short of the total amount of new revenue the state will bring in.
Bottom line: Just because the new money goes into a designated account doesn’t mean that overall education spending increases by that amount.
Bottom Line 4: Paying Off Debt = Education Funding Stays Flat
Even with more money flowing into the state budget from the new taxes imposed by Prop. 30, California’s schools won’t see an immediate benefit.
That’s because for years the state has been chronically underfunding schools. It’s been writing billions of dollars in IOUs to school districts. Take a couple of minutes to read this story and you’ll see just how serious an issue this is.
The state is currently about $10 billion behind in its payments to schools.
If Prop. 30 passes, the first thing the governor wants to do is pay off some of these past-due bills, which are known as “deferrals.”
This year, the governor has pledged about $2.4 billion of the new revenue toward paying down the deferrals. Subtract that from the $2.9 billion the new taxes are estimated to bring in and you’re left with about $500 million, a pittance in state budget terms.
That’s not to say school districts won’t benefit from the state paying off its IOUs.
Phil Stover, deputy superintendent for business at San Diego Unified School District, said the district will save each year because it won’t have to borrow as much money in short-term loans to keep cash flowing into its coffers.
“We won’t see any new money until the 2013-14 school year, but Proposition 30 will make our cash flow a lot more stable and predictable, which will really help us as managers of the district’s money,” Stover said.
In the 2013-14 school year, the new taxes will again bring in billions more in new revenue. The state legislature will then have to decide whether to use the new cash to pay down more of the IOUs it owes schools or whether instead to send schools more money.
Bottom line: Schools will only get about $500 million in new money this year.
Correction: The original version of this post stated that education funding would receive $50 million in the 2012–2013 school year. The correct amount is $500 million. We regret the error.
Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at firstname.lastname@example.org or 619.550.5670.
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Disclosure: Voice of San Diego members and supporters may be mentioned or have a stake in the stories we cover. For a complete list of our contributors, click here.