Credit: iStockphoto.com

Credit: iStockphoto.com

The parent activists who formed Educate Our State say it’s time for the state to stop robbing Peter to pay Paul. Peter, in their view, being the schools and the theft being billions in property taxes.

The San Francisco-based parent organization is circulating an initiative for the November ballot that it says would sever budget machinations that have contributed to school districts’ and community colleges’ financial distress since the Great Recession and leave them vulnerable when the next economic downturn comes.

The nine-page ballot measure, involving a constitutional amendment and four statutory changes, would delve into the complexities of the “triple flip” of 2004 and other clever financing moves that legislators invented while playing a shell game with shrinking public money. But the result of the initiative, “Protection of Local School Revenues Act of 2014,” would be simple: permanently return about $7 billion in property taxes that school districts would have had this year if then-Gov. Armold Schwarzenegger and the Legislature hadn’t shifted the money to cities and counties to cover, in turn, what the state owed to them. The ballot measure would prevent the state from tampering with school districts’ property taxes in the future. Voters already have given cities and counties that protection; they did that by passing Proposition 1A in 2004.

Schools and community colleges are funded through a combination of local property taxes and state taxes. This year, property taxes contributed 16.7 percent of revenue for K-12 and community colleges; that portion would have doubled, to 33.3 percent, if the state hadn’t redirected more than $7 billion owed to schools, according to calculations by Jennifer Bestor, an Educate Our State parent from Menlo Park with a background in finance, who has been deeply involved with the initiative.

The ballot measure wouldn’t increase money for schools and community colleges; that’s not the intent, Bestor said. Instead, the initiative would swap a volatile source of revenue currently coming to schools – state taxes – for property taxes, a more stable and reliable source that had previously belonged to the schools, she said.

Late payments to school districts illustrate why this is important, Bestor said. After state revenues plunged in 2008, the state responded by postponing payments of money owed to K-12 schools and community colleges to the following fiscal year. Known as deferrals, the late payments grew to nearly $10 billion in 2010-11, nearly a third of the state’s portion of school funding. Those districts that couldn’t borrow money from their county treasurer turned to other lenders and paid higher interest rates; districts in the worst financial shape, which couldn’t borrow, cut programs and jobs.

The districts most adversely affected by deferrals included districts in San Bernardino County and Ravenswood School District in East Palo Alto, which had the least property wealth per student and therefore relied on state revenue for most of their school funding. They also generally have high percentages of low-income children. Increasing districts’ reliance on state revenue to fund schools created more pain for schools, Bestor argues.

Gov. Jerry Brown is the first to acknowledge that deferrals, part of what he calls the state’s “wall of debt,” have harmed schools and community colleges. That’s why he is proposing to expedite ending late payments by paying off the last $6 billion in deferrals in the 2014-15 state budget. And, to deal with the volatility of state revenues, Brown wants the Legislature to create a bigger rainy day fund tied to fluctuations in capital gains revenue. He would add a second tier of protection within the rainy day fund to smooth out spending under Proposition 98, the formula that determines the annual level of school funding.

Bestor takes cold comfort in these measures. As Brown observed in his summary for the 2014-15 budget, since the Second World War, the state has seen an economic recession every five years, on average, and it’s been 4 ½ years since the last one, leaving schools vulnerable once again to manipulations of the Prop. 98 guarantee if revenues fall.

And a rainy day fund doesn’t address the issue at hand: “First, make us whole; give us our stable, reliable stream back, instead of protecting us from the volatile conditions we have been force-fed,” she said.

Stiff opposition from counties, cities

Screen Shot 2014-02-12 at 9.36.11 PMFor supporters of the initiative, the cause is just and the need self-evident. But qualifying for the November ballot by relying on parent volunteers to collect 1.3 million signatures at farmers markets and outside school property by mid-April will be challenging. (Signature gatherers can be spotted wearing Dr. Seuss red-and-white striped “Cat in the Hat” stovepipe hats.) And if the initiative does make the ballot, it will face formidable opposition from cities and counties, which already are complaining that Brown and the Legislature have cut social services severely and unloaded public safety responsibilities on them.

This chart by the Legislative Analyst's Office shows that over 30 years, the personal income tax, which drives state revenue, has been three times as volatile as revenue from the 1 percent tax on property. Property tax revenue tends to lag state economic trends by a year or two. Source: Understanding California's Property Taxes, by the LAO, November 2012.

This chart by the Legislative Analyst’s Office shows that over 30 years, the personal income tax, which drives state revenue, has been three times as volatile as revenue from the 1 percent tax on property. Property tax revenue tends to lag state economic trends by a year or two. Source: Understanding California’s Property Taxes, by the LAO, Nov. 2012.

The initiative would free up $6.8 billion in the General Fund but requires that the state backfill only $4.3 billion that cities and counties would lose in property taxes. That was the initial amount that was transferred to them in 2004. Since then, the revenue, tied to growth in assessed valuation, has grown by $2.5 billion, which the Legislature may or may not cover when the changes take effect.

“The Educate Our State initiative would impose a severe and immediate reduction to county and city property taxes of about $2.5 billion in 2015-16 and growing over time,” Matthew Cate, executive director of the California State Association of Counties, wrote in an email. “This means counties and cities across the state would have to reduce public services that rely on general purpose revenues, which essentially means public safety reductions. It is difficult to contemplate what a reduction of $2.5 billion in public safety services looks like in our communities, particularly when counties have assumed significant new responsibilities for incarcerating, supervising and rehabilitating new offender populations.”

Katherine Welch, a board member of Educate Our State, said that the organization will announce endorsers of the ballot measure on April 1. Meanwhile, it is asking school boards to back a resolution of support and let elected officials know they’re behind it.

John Fensterwald covers education policy. Contact him and follow him on Twitter @jfensterSign up here for a no-cost online subscription to EdSource Today for reports from the largest education reporting team in California.


Filed under: Featured, Initiatives, Parent Activism, Reporting & Analysis, School Finance, State and Federal Policies, State Budget · Tags: , , , , ,

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  1. Don says:

    Did you read the article upon which you’re commenting? Your comments have nothing to do with it.

    Paul hit the nail on the head when he said – Fundamentally, it’s time to stop pretending that property tax is a local source of revenue.

    Property taxes revenue, in the main, goes into the State’s GF and redistributed from there to the districts for a good reason – the opposite was inequitable and unconstitutional. Before, when a wealthy and a poor district wanted to raise property taxes to fund schools, the wealthy district could raise the same amount of money with far less of a tax increase. So poor districts had to pay more for the same appropriation. That had to stop because it deprived children of equal educational opportunity when some districts couldn’t afford to fund their children as well as others.

    1. Jennifer Bestor says:

      Well, no, Don. This is the myth that cities and counties have fed citizens, allowing those cities and counties to squirrel away the most stable, reliable, local funding stream for themselves.

      First, per the California Constitution, not a penny of property tax can leave the county in which it is paid. This is why, in making schools fund the Economic Recovery Bonds of 2004, the mechanism was for cities/counties to transfer sales taxes to the state, then schools to ‘compensate’ those cities/counties with educational property tax. The state could not force schools to transfer money to the state General Fund. But it could force them to pay other local entities within their counties.

      Second, the Serrano situation has formed a lovely smokescreen to pretend that the forced transfers of property taxes were ‘fair and equitable,’ while they’ve been anything but. If you’ll go to the EducateOurState initiative website and drill down on different counties, you’ll see that the school districts that have suffered most have been those with the least property tax, hence were already highly reliant on State Aid. Go look at Kings and Imperial Counties, for example, where over a third of ALL property tax was taken to fund the VLF Swap and Triple Flip — and the payback was in deferrals. Look at San Mateo, where basic-aid districts lost nothing — and revenue limit districts lost every penny of property tax, and were left with … deferrals. By saying, “take this property tax cup from my lips,” education has disdained wine in favor of egalitarian bilge water. And hurt the poorest children most.

      Third, the ability of the state to force local entities to compensate one another (cities to schools, schools to counties, etc.) was what led to Proposition 1A being passed in 2004, which stopped the state’s ability to redirect or reallocate property tax allocated to cities, counties, sewer district, flood districts, mosquito control districts, lighting districts, etc., etc. — leaving only school property taxes unprotected. Hence, within the long greedy arm of Sacramento.

      1. navigio says:

        To me, this post by Jennifer more plainly illustrates the issue than any other text or presentation I’ve seen to date.

        1. Floyd Thursby says:

          Jennifer/Katherine, can you answer my questions above as to what is possible? Do a few cities spend more than SF?

  2. Floyd Thursby says:

    Would this allow each district to fund it on property taxes rather than have their taxes put into a general pot and redistrubuted due to the lawsuit in the early ’70s and Prop 13? That would be great for San Francisco. We pay teachers 48.3% of what we pay police while San Diego pays 73.3%, due to the Serrano lawsuit, and we have fewer kids in public school as a percent, a rich tax base, but our schools are severly underfunded. This is because much of our property tax is redistributed to other districts and no account is taken for the higher standard of living in San Francisco. If this would overturn Serrano, I’m all for it, but I see it only mentioning events since 2004. Let a City use it’s property taxes for schools, great idea, fair. However, the argument before was that some areas are far richer than others. What would be the end result?

    1. Jennifer Bestor says:

      Floyd, no property taxes are put in a pot from San Francisco and redistributed anywhere other than … San Francisco! The fact that you pay police and fire much more relative to other cities, and teachers much less, has to do with AB8 — not Serrano. AB8 was the 1979 Legislative solution to Prop 13. It cut the proportion of property taxes going to schools across California from 53% (pre- and immediately post-Prop 13) to 39% — by telling cities and counties to top themselves up from the schools’ share of property taxes. Relatively expensive city/counties like SF, LA and Alameda dug deep into school property taxes, while less expensive city/counties like San Diego, San Mateo, and Santa Clara didn’t. In San Francisco, only 12.4% of your property taxes were directly allocated to your schools after AB8. (Compare that with the state’s 39% average.) Redevelopment then chipped away on both a state and local level, until the state went broke in the early 1990′s and had to claw everything back into county-wide Educational Revenue Augmentation Funds. These funds were used to backfill revenue limit districts in each county — but only within that county. So SF’s ERAF (21.6% of total property tax) was used to backfill SFUSD and CCSF — but nowhere else. (In San Mateo, for example, ERAF was collected throughout the county, then backfilled the schools in East Palo Alto, Redwood City, Daly City, Pacifica, etc. — but not the basic-aid schools in Woodside, Menlo Park, Portola Valley, etc.)

      1. Floyd Thursby says:

        Jennifer, is there anything San Francisco could do about this, or the State? Would it be legal for San Francisco to decide to put general fund money into their schools to supplement them, or would that be illegal? Or is it only legal if from a parcel tax? Does it lead to more money being available to San Francisco for everything else? Also, will the new system be better for San Francisco?

        Do you understand my complaint? A rich City with few children, well some balance should come from that. In SF, many go private, which hurts the public schools substantially, and many move as their kids get older which also hurts, not just by numbers, but because richer and whiter people tend to do these things much more and each one that leaves hurts those left behind by cutting what would be PTA donations, a good example, etc. It’s white flight plus private flight, a double whammy. If when some leave, the rest got more money, it could be a balance. Is there any way things could change so SF was able to get more due to this fact? It seems if these events hadn’t taken place, SF would have far more money per pupil. For instance, in NYC, they have over 50% more per pupil, and cops earn about a third less, it’s essentially reversed. In San Diego, cops make less by far, teachers make a little more, in absolute dollars, far more in real dollars including cost of living. What should be done about this?

        1. Paul says:

          Floyd, San Francisco is one of the rare California cities that *does* contribute general fund money to a school district. In 2004, San Francisco voters endorsed the existing practice by approving Proposition H, a City Charter amendment that created the Public Education Enrichment Fund. Way to go, San Francisco!

          Historically, City funding allowed SFUSD to pay teachers a bit more than other school districts in the immediate area (more than Oakland, exactly on par with San Leandro, and below Menlo Park, Pleasanton, etc.). Old versions of the teachers’ salary schedule used to show the portion underwritten by the City. Given that San Francisco is a very-high-cost city and that SFUSD has many low-performing, hard-to-staff schools, City funding certainly helps with teacher recruitment.

          Jennifer, thank you for your thorough history of property tax allocation, post-Proposition 13. I’m a nerd who loves studying this stuff, and even I learned something new. While much has been written about the political aspects of Proposition 13, and while its direct provisions are well-known, Sacramento’s increasingly desperate efforts to back-fill the lost revenues in the years following implementation are largely forgotten.

          1. navigio says:

            Are PEEF funds really used to increase teacher salary? Or are they more used to cover other areas that free up money for the district to use as it pleases? Generally speaking, it would be useful to understand what restrictions exist to using non-education funding to for education (though given that cities and counties are already fighting this measure my guess is giving them just the freedom would not be sufficient).

            Floyd, there are two ways to bypass Serrano: parcel taxes and basic aid. But from a policy perspective, I think its a bad idea to focus on ways to increase the disparity in school funding. Perhaps introducing a cost of living metric to the funding system (ie, fund headcount rather than fixed cost) might help address it. But disparities in funding will always be attacked as inherently inequitable, at least from a policy perspective (basic aid and parcel taxes seem just fine–surprisingly–to most people).

            1. Manuel says:

              navigio, are you saying that Serrano is dead law? Are the parcel taxes collected by various districts actually bypassing Serrano? Is the same happening at basic aid districts?

              I am under the impression that Beverly Hills USD residents, for example, had to set up an educational foundation to supplement the Serrano-imposed limits, which may, in itself, be illegal. But then this means that their property taxes did not allow them to surpass the limits set by Serrano.

              OTOH, is there any enforcement of the Serrano decision other than having the state promulgate the Revenue Limit, now in its way out due to LCFF?

              1. navigio says:

                Serrano isn’t dead. It just only applies to communities without means or power. If you have those things you pretty much get to do what you want.

                Serrano applies to state aid. Basic aid districts don’t get state aid (except for a tiny default amount) and parcel taxes come after state aid calculations. Ironically, there is nothing prohibiting a basic aid district from having a parcel tax and/or educational foundation to supplement even the relatively insane amounts they (mostly) already get (and yes, some do that). So yes, the only enforcement of Serrano was the revenue limit (I think LCFF achieves something similar though, and I even think LCFF is a challenge by brown to affluent communities to raise even more money if they want to outdo the state–Cold War educational politics).

                Interestingly, a while back there was a discussion about trying to impose these limitations to money raised as well (eg redistribution of that money to schools that didn’t raise anything) but that didn’t go anywhere because the rich folk just threatened to stop contributing if that happened. So we still let the rich and powerful have their way. Where have you been?

              2. Don says:

                Manuel, This link should help to clarify your questions:

                http://www.ppic.org/content/pubs/report/R_913MWR.pdf

              3. Don says:

                http://www.ppic.org/content/pubs/report/R_913MWR.pdf

                This article will clarify the situation for you.

              4. Manuel says:

                Uh, sorry, navigio, I guess I just read the articles on Serrano wrong. I thought there was a constitutionally mandate for a free public education which is equal across the state.

                I never thought, stupid me, that Serrano simply sets a minimum in funding for the districts, and only if they are taking money from the state. But if their citizens elect to tax themselves more (in the form of parcel or other taxes), they are free to throw this yoke of oppression and give as much money as they want to their precious little darlings, while, of course, making sure that there are no schools in the wrong side of the tracks.

                My bad.

                I’ll try to make sure it doesn’t happen again…

                (So why did BHUSD set up that educational foundation while whining that they were not getting enough money? That web page is still active, I think.)

            2. Don says:

              PEEF is not intended for increasing teacher salaries. I believe you are referring to the Quality Teacher and Education Act of 2008 in SF which was designed in part to raise base salaries at hard-to staff schools.

              1. Leslie Ruben says:

                This is what I thought before, there is no enforcement prohibiting a school district from putting municipal funds into schools, as Beverly Hills did, or choosing to be a basic aid district, but many localities would rather not and have more money for their other pet projects and constituencies clamoring for funds. Is it possible to say San Francisco and other places (Monterey) could choose to put more money into schools, but choose not to?

        2. Paul says:

          Leslie, yes, any city can contribute revenue to a school district. San Francisco has both a parcel tax (relatively common in school districts with a high-income demographic) and an outright transfer from the City’s general fund to San Francisco Unified School District (very uncommon).

          If the City of Monterey wanted to bolster school funding, there would be two major problems:

          1. City-school district boundary mismatch: The Monterey Peninsula Unified School District covers the cities of Monterey, Seaside and Marina.

          2. Demographic mismatch: The City of Monterey has a homogeneous, high-income population, whereas the rest of MPUSD serves a low-income, ethnically diverse population. MPUSD’s only high-performing schools, Marshall, Monte Vista (reopened after Bay View closed), Colton and, to a lesser extent, Monterey High, are in the city proper.

          It is doubtful that funds could be earmarked only for City of Monterey schools, and any attempt to do that would very rightfully be perceived as elitist.

          Pajaro Valley Unified is another cloven district, with a pocket of prosperity and academic success in Aptos and poverty and academic unsuccess everywhere else.

          It’s surprising to me that we have simply come to accept such vast differences.

          1. Floyd Thursby says:

            So Paul, you are saying if San Francisco wanted, it could choose to put say, $200 million more into schools a year if it could reduce it’s expenses for say, jails, police (we have nearly twice as many police per capita as Oakland and under a third the crime rate of Oakland, much in my view for victimless crimes), supervisor’s assistance, fire, homeless budget, free sex changes for anyone on Healthy San Francisco (our version of Obamacare, may become unneeded if this is national), airport security/maintenance, etc? Are you saying it is within the purview of SF to choose to do so, if it wishes?

            Also, do some other Cities do this? Manteca, San Diego, Pleasanton? How many? Or is it absolutely required that it be from a parcel tax? Can it be from the cigarette, sales, hotel, and all other taxes? If we found ways to cut the rest of the budget, could SF’s supervisors choose to put it into the schools even though they don’t run SFUSD, an elected school board does?

            I know it would be surprising, unprecedented, rare, etc, but just verifying it is possible?

            1. Leslie Ruben says:

              Could be done yes, purely a matter of choice. I’m surprised San Francisco would overspend so much on police, thought it was more of a progressive place, certainly has that rep.

              1. navigio says:

                Apologies for the skepticism but every time there is a ballot measure for a parcel tax someone seems to say that it’s illegal for cities to give directly to school districts. Is that just part of the normal obfuscation that happens during our political process? I’ve noticed that in cities where his is done it’s usually done in the name of something else, like the city paying to have access to the campuses or other school properties for events and such. I guess even then that could be a way to justify something from a political standpoint even though it would be within the purview of the city to do so without hat justification. On the other hand, it could actually be illegal. In either case, someone is not telling the truth. Do we know who that is? :-)

            2. Paul says:

              Floyd, without wanting to agree with your particular money-saving suggestions for San Francisco,* yes, nothing prevents a city from contributing revenue to a school district. That’s what the PEEF in San Francisco entails. Navigio, if you look up its history, you’ll see that discretionary contributions were made long before voters set aside a specific share of City revenue by passing the PEEF ballot measure.

              * There may be a misunderstanding about San Francisco’s decision to cover sex reassignment in its health plans for public workers and for the poor. First, statistically, the percentage of patients with gender identity differences is infinitessimal. Few patients = little money, especially in the context of a huge medical care budget. Second, sex reassignment is probably cheaper than the ongoing medical and social services — and the potential social costs, such as suicide — for a person who is forced to live in a body that doesn’t match his or her gender. Think for a second. Who would voluntarily choose to go through all of the stages and upheavals of sex reassignment?

              Interestingly, years before I started teaching, when I worked in a federally-owned research facility, I had a colleague who went through a sex reassignment. It was paid for in large part by insurance (Prudential HiCare, for those who remember how health insurance plans worked before HMOs). We all needed clearances for our work, and she was required to undergo a psychological evaluation to keep hers. The federal government psychologist’s conclusion? That she was happy and well-adjusted in her new body. If it saves so much as one person from addiction, chronic loneliness, or suicide, coverage of sex reassignment is worth it to me. I have paid for private health insurance for over 15 years — something very few Californians can say — and I’d be pleased to contribute a premium increase for this purpose.

              1. Don says:

                Paul,

                Yes, a city can elect to support schools as you said before..”outright transfer from the City’s general fund to San Francisco Unified School District (is)(very uncommon),”

                but most elected city officials are not in the business of transferring the wealth of one governmental entity to another unless they’re constitutional obligated to do so, as with PEEF. The City has a charter and the District has a charter and, as two separate entities with separate funding streams, they tend not to overlap. Floyd seems to think that this is a common practice, but in fact it is very rare as you said. And this phenomenon appears in SF for a couple of reasons. San Francisco has the unusual advantage in this regard of being a city and county. I think many local taxpayers would go ballistic if their elected officials gave away revenue to adjacent counties. But SF and SFUSD have a uniquely homogeneous political landscape that allows for many socially-conscious programs like PEEF and public support for public schools. (The relatively small public school population also contributes to taxpayer support that proportionally, is a good deal.) It is ironic that Floyd wants to unravel some of these programs when it is that very consciousness that makes PEEF possible in the first place. This is nothing more than “my program is more important than yours) For my own part, as a person who does not share the ultra-liberal values of the majority of my feel San Franciscans, I agree that SF spends way too much on many very questionable social services. For example, its efforts to feed and house the homeless, while commendable on some levels, makes San Francisco a magnet for the homelessness around the country and causes an excessive burden for this locality that is, in effect, a national problem.

              2. navigio says:

                thanks paul (and don) so i guess it means the parcel tax media campaigns are lying about that particular restriction. it would be nice to have a reference to law where this is allowed (though perhaps the simple lack of restriction is what allows it).

              3. Floyd Thursby says:

                Paul, I wouldn’t oppose this if it were statewide or limited to long-term San Franciscans. My concern is that you could see people move to San Francisco to get this, where it becomes a magnet. We have that with the homeless. We pay way more than our fair share to the homeless of the state as many from the suburbs move here due to generous tourists and commuters and locals, better social services and a mild climate. We used to give more cash aid but this has stopped. We should only have to pay our fair share of the homeless budget, sure we should have shelters and job training and psychological help, but one City shouldn’t have to pay for a whole state. Added to this is the fact that San Francisco doesn’t differentiate between legal and illegal immigrants and is a sanctuary city, so someone could move here from say, the Filipines or Columbia while illegal, overstay their visa, get on healthy San Francisco and get an operation at taxpayer expense which in their country would cost ten years of the average person’s income. If you could limit it to those who either graduated from a San Francisco high school or worked and paid taxes for ten years, and you’ll have to be legal to work, I’d be for it. If you say give us your tired and poor immigrants yearning to change gender and we’ll pay for it even if they move here illegally, and to the suburbs give us your tired and poor homeless and we’ll pay for it, it’s an unfair burden for one small city of fewer than a million people to pay for.

                We can’t educate our children as well as a result. In San Diego, teachers earn 73.3% what police do. In San Francisco, 48.4%. We can’t get as high quality teachers paying so little. Granted there are many issues with seniority/tenure protecting bad teachers that must be changed, maybe as a condition, but pay is too low. The teachers should ideally live here.

                If we took the excess money from the homeless budget and also didn’t have to spend so much on healthy SF because of the new affordable care act, and saved on other budgets and put it towards the schools, we could have a much better funded school system which would help the poor escape poverty so that in a generation, there are no poor San Franciscans. We can eliminate poverty with great education, tutoring, etc.

                We need to conceptualize money spent on homeless who just moved to SF and saw it for the first time as a homeless person as money that is being taken from young and innocent and disadvantaged children, mostly poor and nonwhite. I believe we could turn America around by prioritizing education.

              4. navigio says:

                The cost of keeping homeless people alive is not what is prohibiting us from properly funding education.

              5. Paul says:

                Navigio, I’m looking for a law that spells out what municipal governments are allowed to spend money on, and I wonder whether a reader with more legal knowledge than I could help out.

                The state constitution forbids “gifts of public funds” to private entities and use of public funds to support/oppose ballot measures, but it doesn’t otherwise seem to limit uses of public funds.

                It might be the absence of a restriction that allows San Francisco to contribute to its school district, or there might be a state law that permits municipal spending “in any manner which is not in conflict with” municipal government purposes (cf. Ed Code 35160 and 35160.1, which give school districts this authority).

                In any case, it is fascinating to read San Francisco’s City Charter. The current charter is linked from the City’s Web site, and the relevant sections are 16.123 (PEEF and prior history) and 9.113.5 (rainy day reserve). Discoveries:

                - PEEF and pre-PEEF contributions are fundamentally discretionary and come directly from the general fund.
                - In-kind contributions (city services) are recognized.
                - The school district also has access to the City’s rainy day reserve, especially for the purpose of preventing teacher layoffs.

                There is a very constructive pooling of city and school district revenue-raising authority in San Francisco.

    2. Katherine says:

      Floyd -This has nothing to do with Serrano – and it hurts the poorest districts the most. San Francisco has one of the lowest property tax allocations for schools in the state -34% (see here: http://www.yesforeducation.org/#!san-francisco/cupb) and only 18% gets to schools because of the diversion. San Francisco property taxes are spent in SF -just not much on schools. The problem is with San Francisco on this one. Help fix it.

      1. Floyd Thursby says:

        Katherine, when you say the problem is with San Francisco on this one, my question is, how could we fix it? If we chose to raise that percentage would it just be distributed statewide, in which case we’d only get about 1 45th of it? Or maybe less if it’s based on pupils in public schools? Does the Board of Supervisors, Mayor, or Board of Education have any power over this? Could they make it so the average pupil received $12,000 instead of $9800 if they chose to do so? If so, how? I’ve been told it’s set in stone and that the Mayor, Board of Ed and Board of Supervisors could do nothing except pass a parcel tax, and are by law not allowed to allocate money from the hotel tax, airport tax, property tax, sales tax or any other source to the schools. However, others have told me Manteca, Pleasanton and San Diego do exactly that, so I’ve heard both sides.

        Could we make it $15,000 or 20? To me, based on the wealth and the expense of private school, we’d have to to provied true equal opportunity.

        The problem with a parcel tax is it is unfair to the middle to lower middle income homeowners. To make a real difference, you’d have to make it $500 a home. They already charge a couple-hundred by parcel tax. $500 added to a home of $3-5 million in Pacific Heights isn’t much of an imposition, but $500 added to a $500,000 home in Bayview or a $650-700,000 home in Excelsior for a family that is struggling mightily to afford their property taxes may be devastating. To say, we’ll charge 0.025% to make our schools better would probably pass, but the parcel is so regressive and hurts the poor so much, it never will, so we stick with subpar funding.

        Please explain, what powers to we have as San Franciscans? Or would it only be able to be passed at the state level?

        I understand this isn’t directly related to the article or to the new funding system, but it is a question I have. When Sacramento sets our funding amount, is there nothing a locality can do to increase it?

      2. Floyd Thursby says:

        Jennifer, can you read the two questions I put above and answer them?

  3. Hope Salzer says:

    This initiative has multiple benefits:

    1) Improving transparency of property tax spending may promote more-informed decision-making.

    2) Giving equal protection to each recipient of property tax funding is only fair.

    3) Ensuring that State General Funds (not the school’s county property tax funds) pay for state priorities that are not school-related is a no-brainer. How else will county taxpayers have a clear picture of how their property taxes are spent?

    4) Preventing the State to siphoning off the stable property tax shares of only the poorest 90% of school districts, leaving the wealthiest 10% of school districts untouched (again, without broad public understanding) is certainly a step in the right direction for social justice as well.

    It’s quite surprising to learn that the State has been pilfering money from stable county education funds for 10 years without properly disclosing it. Property taxes collected within each county and allocated to schools are intended for distribution and use in that county for public education. County taxpayers should insist that their property taxes are spent only within their county as they were prior to 2004 when the State started leaking them away. They should also insist that the County provide an accurate reporting of how, where, and for what their property taxes are actually spent.

    The argument against this initiative is not very robust. Cities and counties will not be harmed at all unless the State takes the billions returned to the General Fund and squanders it rather than delivering it where it has been needed and well-spent. It will be up to cities and counties to convince state legislators that their spending priorities are justified. At least there will be (hopefully) better public dialogue and disclosure about where our tax money is being spent and what are the most vital spending priorities in our State.

  4. Paul says:

    Fundamentally, it’s time to stop pretending that property tax is a local source of revenue. One could argue that parcel taxes, VLF add-ons, and local sales taxes are. But for many decades now, the base property tax rate (1%), the cap on annual property tax increases (2% of that amount), and the (re)distribution of property tax revenues have been determined at the state level.

    I suppose that the point about the comparative volatility of the state income tax (due, I assume, to the fact that unlike the federal government, California taxes most capital gains, and does so at normal tax rates) makes sense. In the end, though, property tax and income tax are both just sources of *state* revenue, with artificial (Prop. 1A, 98, etc.) controls on their use.

    1. navigio says:

      but the fact is, most people still pretend. and their beliefs about funding ‘realities’ (especially for schools) is dependent on the perceptions that these taxes are inherently local. (in fact, i even hear the staunchest anti-tax people concede local education is something they’re (relatively) happy to see those local dollars be used for. others justifying the demand for transparency on the connection between this local source and the local service schools provide). However, in reality, counties and cities flat out lie when it comes to indicating what portions of local taxes actually end up going to education. so not only will people simply never ‘stop pretending’, they are even being fed a lie that flat-out contradicts any reason to stop pretending. maybe we can just as easily stop pretending that obstructing children’s educational potential is something we can magically make up for later on down the road when they are adults…

  5. Kim Haselhoff says:

    Schools need more groups like Educate Our State to stand up for students when things like the “triple flip” happen. We cannot keep balancing the state’s budget disasters on the backs of our children simply because they don’t have special interest groups looking out for them like everyone else.

  6. navigio says:

    So let me get this straight. Cities and counties are complaining that they would lose $2B so instead they want schools to lose $10B? Kids, schmids I guess..

  7. April Lopez Raffel says:

    We want the cities and counties to have their funds, but they cannot do what they are doing now, pretend that money is going to schools while taking property taxes that are destined for children.  We have seen the heavy price children pay – and they cannot just make up those years of education they lost; they are lost forever. We want the public to know that the $$ is in the general fund – but why should they be allowed to take it from kids?

  8. April Lopez Raffel says:

    At this year’s Legisiative Conference in Sacramento the TOP priorities of the PTA was adequate education funding is a key State challenge that deserves a long-term solution and early childhood education: A big deal for little children – a high return on investment. One area they were speaking about was expanding the transitional kindergarten to four year olds. Investment in the earlier years would save billions of dollars in the long run by reducing the extra costs of juvenenile crime, special education and grade retention. Let’s start by adhering to what our state constitution says and make education aTOP priority and stabilize the school revenues. Our schools’ local property taxes need protection and this initiative will ensure that protection.

  9. We simply want to secure the portion of property taxes that they are saying is going to public education, similar to the what the cities and counties got out of prop 1A. You might not have to spend so much on “responsibilities for incarcerating, supervising and rehabilitating new offender populations” if we spent more on education.

  10. Katherine says:

    ““This means counties and cities across the state would have to reduce public services that rely on general purpose revenues”…mmm…just like school children did the last 10 years while counties and cities took $7 BILLION PER YEAR that should have gone to educating our children. Children cannot miraculously make up those lost years of education; they are lost forever. And that extra $2.5 Billion they say they are ‘losing’ – today that money is largely being reported as going to schools! There is NO transparency.

    Cities and counties are more than able to get it – they are wealthy and well funded special interests – but school children have no voice. If the parent voice had been in the room ten years ago – this fiscally irresponsibly decision would not have gone through. While everyone feasted on the schools’ share of property taxes, the poorest children were left starving in the back yard, while eyes were averted. If the new funding formula is to succeed, we need transparency not just of the allocation, but of the funding stream. This is revenue neutral, again, and the initiative is not asking for that (extra, largely unreported amount that cities and counties are taking) $2.5 billion for schools,it is just saying it has to be transparent.

    Everyone wants to pretend money is going to schools: Let’s be clear that we are at or near the bottom in per pupil funding, but not in ANY other public service. We are asking for the SAME protection that worked so well for cities and counties the last ten years, NOTHING more. And the constitution demands it.