School boards group committed to tax plan despite legislative setback

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Efforts to set ambitious targets for more K-12 funding and to ask voters to pass a higher income tax on the wealthy failed to make it out of the Legislature this month. But their backers are vowing to regroup and move forward in 2020.

Having failed to interest legislators in placing its $15 billion Full and Fair Funding initiative on next November’s ballot, the California School Boards Association says it and its partners will collect signatures and do it themselves. The initiative would increase funding for K-12, early education and community colleges by raising income taxes on corporations and individuals earning more than $1 million. The school boards association’s directors reaffirmed that decision over the weekend, said Troy Flint, senior director of communications.

“Since the judiciary and Legislature have declined to provide the resources needed for student success, the next step is an electoral remedy,” Flint said in a statement. “We’re confident that California voters will demonstrate their support for public schools, and we look forward to proving that at the ballot box.”

In a related development, the author of Assembly Bill 39, which would set a goal of raising California’s per-student funding to join the top-spending states, withdrew it shortly before likely final passage in the Legislature. Assemblyman Al Muratsuchi, D-Torrance, did so, he said, after high-level staff of Gov. Gavin Newsom assured him they would meet with him and other backers before the end of the year to discuss funding of education in 2020 and beyond.

“A better outcome than even passage of the bill would be for the governor to engage with me and stakeholders,” Muratsuchi said.

The immediate obstacle facing the school boards association and its partners — the Association of California School Administrators, the California State PTA and the Community College League of California — was to convince legislators that a union-backed initiative to raise businesses’ property taxes wouldn’t be harmed by putting a second big tax proposal on the November 2020 ballot.

That proved a hard sell. Over the past month, Muratsuchi and Assemblyman Kevin McCarty, D-Sacramento, talked up the idea of placing the school boards’ initiative before voters on the same ballot. But the idea died when the California Teachers Association, a supporter of the competing tax plan, didn’t commit to it. Also, the powerful Service Employees International Union-California reportedly discouraged lawmakers from signing on.

The CTA contributed $30 million to pass the last two state tax increases, Proposition 30 in 2012 and Proposition 55 in 2016. Without that level of support, the school boards association and other backers could struggle to find the $5 million or so to put the initiative on the ballot and then to pass it.

The education initiative would increase taxes for corporations ­­earning more than $1 million by up to 5 percent. Personal income taxes would be raised 2 percent for those earning more than $1 million annually and 3 percent for those earning more than $2 million.

The one tax initiative that likely will be on the ballot next year is the Schools and Communities First Coalition’s California Schools and Local Communities Funding Act. It would be the first big constitutional challenge to Proposition 13, the 40-year-old limitation on property taxes. The “split-roll” tax would preserve Prop. 13’s tight limits on residential property tax increases but raise an anticipated $11 billion more annually in taxes on business and commercial properties.

About $4.5 billion of the revenue would go to schools and community colleges and the rest to cities and counties, which provide the bulk of the state’s social services and health care.

The split-roll supporters, who include grassroots community organizations, county and city officials as well as the California Teachers Association and other unions, are again gathering signatures for an amended version of the initiative. They’re counting on a massive Democratic turnout in the November 2020 election to overcome an expensive opposition campaign by real estate and business interests. One group, Fight for Prop 13, is already publishing ads.

The school boards association said that its poll found more than 60 percent support for its own tax proposal, even after reading negative arguments that opponents would use against the measure, Flint said. However, support for its tax plan and the split-roll tax dropped significantly when respondents were asked if they would support either or both. Despite that, the association remains encouraged enough to move ahead, Flint said.

The school boards and school administrators chose a $15 billion tax increase because that’s roughly what would be needed to raise K-12 per-student spending to the national average. It’s based on Education Week’s annual state rankings that factor in California’s overall high cost of living. The rankings assign a letter grade to each state based on several measures. Using 2015-16 data, California placed 39th among the states and Washington, D.C. in per student spending — $2,475 per student below the national average of $12,756. Additional revenue from the initiative would go to community colleges and early education.

Big funding targets, big costs

Muratsuchi’s bill would set the aspirational goal of raising California’s per-student spending to that of the top 10 states (see chart) — a position California had before Prop. 13 capped school funding from property taxes, precipitating a long decline in K-12 funding.

Muratsuchi is borrowing from former Gov. Jerry Brown’s strategy in 2013 when the Legislature passed the Local Control Funding Formula. The funding formula set a uniform level of base funding by grade with supplemental money based on a district’s proportion of English learners and low-income, foster and homeless youths. Brown set a target level of base funding per student, adjusted yearly for inflation, with a goal of reaching it in eight years. He insisted that the Legislature make it a funding priority. Helped by state tax increases, it took only six years to reach the “full funding” target.

AB 39 would not set a timetable, nor would it provide any additional revenue. But it would focus the public’s attention on a per-student spending goal, tied to annual funding of the funding formula — and pressure the Legislature to reach it.

The bill calls for increasing the base funding level from $3,667 per student in elementary school to $5,179 in high school. An analysis by the Senate Appropriations Committee estimated the total cost, after adding other education expenses, at $36.1 billion.

Based on Education Week’s data, the latest available, adding that much extra funding in one fell swoop would have placed California somewhere in the middle of the top 10 — possibly between No. 6 New Hampshire ($16,347) and No. 7 New Jersey ($16,543) in 2015-16.

But, in reality, increasing the state’s ranking will always be a moving target; some big-spending states will spend less and some more over time, changing the differences between them and California. To narrow the gap, AB 39 proposed a “super COLA” — increasing annual spending at least 1 percentage point beyond inflation.

Muratsuchi’s bill probably would have reached Newsom’s desk. It passed the Assembly 74-0 and won unanimous support in the Senate Education and Appropriations committees. He pulled it before a full vote in the Senate.

He said that Newsom’s staff member, whom he wouldn’t name, didn’t threaten to veto the bill or ask him to shelve it. “I decided to seize the opportunity to engage rather than risk a veto,” he said. “My goal is to set funding targets and measure progress to get there.”

The Department of Finance and Newsom’s office declined to confirm that staff have agreed to meet with Muratsuchi.