Credit: Alison Yin for EdSource
The article was updated Sept. 3 to add organizations in the Fair and Full Funding coalition.

The California School Boards Association is exploring whether to place a $15 billion tax for K-12 schools, early education and community colleges before voters, creating the possibility of dueling tax initiatives on the statewide ballot in November 2020.

Together with the Association of California School Administrators,  the California State PTA and the Community College League of California — its  partners so far — the school boards association has created a “Full and Fair Funding” election fund and website to solicit support. Assemblyman Kevin McCarty, D-Sacramento, who chairs the Assembly Budget Subcommittee on Education Finance, is shopping the idea around the Legislature to see if there’s enough support to ask legislators to put the tax proposal on next year’s ballot.

“We’re talking to anyone who will listen,” and that includes the administration of Gov. Gavin Newsom, said Dennis Meyers, assistant executive director for governmental relations for the California School Boards Association. “They know what we are doing.”

The association’s move coincides with the announcement this month by the organizers of another tax plan that they are rewriting their initiative, which already had qualified for the November 2020 ballot, to exempt more small businesses. The initiative from the Schools and Communities First Coalition would revise Proposition 13’s 40-year-old limits on property taxes to increase the take from business and commercial properties. Organizers say they will replace the text with the latest version once they’ve again collected the more than 1 million signatures needed to put the initiative on next year’s ballot — an expensive and possibly daunting challenge.

Their proposal for a “split-roll” tax would leave Prop. 13’s tax protections for residential property owners intact while raising an estimated $11 billion annually from business and commercial properties. About $4.5 billion 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 school boards’ proposal would bring in triple the amount of money for K-12 schools than the $4.5 billion estimated under the split-roll proposal. That will be tantalizing to education groups and the California Teachers Association, whose financial and organizing prowess the school boards and administrators would need to qualify the measure for the ballot.

But the CTA, the California State PTA, the California Federation of Teachers, United Teachers Los Angeles, individual school district boards and nonprofits such as Public Advocates and Californians for Justice already have joined dozens of housing, social justice and local government officials who have endorsed the split-roll initiative.

That could create a dilemma regarding whether to support either or both — or whether to actively discourage one initiative from moving ahead out of fear that two tax proposals on the same ballot would lower the chances that either would win.

“It is fair to say that the more confusion there is on a ballot and the more measures can be framed as competing, the more concern there would be about any of them passing,” said Micah Weinberg, CEO of the nonprofit civic leadership group California Forward. “Opponents often tie measures together to muddy the waters.”

One recent case in which similar measures didn’t result in both failing was in 2012, when, at Gov. Jerry Brown’s urging, voters approved Proposition 30, a temporary sales and income tax increase to raise money for education and the General Fund, over Proposition 38, a broader income tax increase exclusively for education. Prop. 38 was funded by philanthropist Molly Munger and had the backing of the state PTA.

For now, the CTA said there’s nothing to comment on, since there’s no concrete proposal from the school boards association. If there is a proposal, it will go before the CTA’s State Council, which meets in October, said Claudia Briggs, communications assistant manager for the California Teachers Association.

The jockeying over potentially dueling tax initiatives, plus a possible state bond for school construction, underscores the confidence among advocates that an expected high turnout in next year’s elections presents an opportunity to raise revenue for schools. The Democratic presidential primary is in March and the presidential election is set for November. Several recent polls of likely voters (see here and here) have reinforced the assumption of a strong support for more funding.

Newsom is the big unknown. He hasn’t stated his position on either tax or whether he might step forward with his own tax reform plan for next year. A spokesperson for Lenny Mendonca, Newsom’s chief economic and business adviser, declined to comment.

The school boards and school administrators chose the $15 billion target as roughly the amount in new revenue needed to raise K-12 per-student spending to the national average. It’s based on Education Week’s often-cited annual state rankings that factor in California’s overall high cost of living. The most recent ranking, based on 2015-16 data, placed California 38th among the states and Washington, D.C. While better than its ranking of 46th in 2013-14, it still was $2,475 per student below the national average. California also has ranked among the states that spend the lowest percentage of total taxable income on K-12 education.

However, based on rankings that don’t factor in regional costs, California spent only $58 below the national per-student average of $12,201 in 2016-17, according to the latest data from the U.S. Census Bureau.

The school boards and school administrators plan would increase taxes for corporations ­­earning more than $1 million by up to 5 percentage points and personal income taxes for those earning more than $1 million annually by 1.5 percentage points. The last state tax increase, which voters approved in 2016, also targeted the wealthiest 1 percent of earners, who alone provide more than half of state income tax revenue.

K-12 districts would get 89 percent of the $15 billion and community colleges the rest, the same ratio they get now, with additional money for early education, Meyers said. The Local Control Funding Formula, which factors in the percentage of low-income students, homeless students, English learners and foster youths, would determine roughly each district’s share, Meyers said.

Organizers of the split-roll initiative characterize it as closing an $11 billion corporate loophole. Under Prop. 13, property taxes can rise only 1 percent annually, unless a sale leads to a reassessment setting a new and higher fair market value. Initiative backers argue that some large commercial and industrial owners have been sold without a reassessment because the sales were done through “shell corporations.” As a result, they assert, the burden for paying property taxes has shifted inequitably toward homeowners, whose properties have been reassessed more frequently on average since Prop. 13 was passed in 1978. A study in 2016 by the Legislative Analyst’s Office failed to find this pattern statewide.

The initiative would require all commercial and industrial properties to be reassessed every three years, generating additional revenue from higher fair market values. All business properties assessed at under $3 million would be exempt from higher taxes.

Two polls this year put support for a split-roll initiative in the mid-50s (54 percent of likely voters backed it in the Public Policy Institute of California poll and 55 percent of voters in a poll by the nonprofit PACE and USC). However, business groups are vowing to bankroll what could be an expensive effort to defeat it and are organizing already with FightforProp13.org, led by the California Business Roundtable, and Californians to Stop Higher Property Taxes, led by commercial real estate interests.

The school boards association commissioned a poll of its proposal, based on an earlier version that would have raised $11 billion in revenue. It found that 68 percent of voters supported the tax plan when read a description of how the money might be used to improve education. Negative messaging about the tax drove support down to 61 percent.

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  1. SD Parent 3 weeks ago3 weeks ago

    The LCAP process is undermined by collective bargaining, which occurs outside the LCAP and blocks revenue from supporting student needs. Until there is a meaningful process that provides for students needs over the desires of collective bargaining units, more money for TK-12 education will just result in higher pay for employees in TK-12 education with little regard for students. This has happened in multiple school districts in San Diego County, most notably Sweetwater … Read More

    The LCAP process is undermined by collective bargaining, which occurs outside the LCAP and blocks revenue from supporting student needs. Until there is a meaningful process that provides for students needs over the desires of collective bargaining units, more money for TK-12 education will just result in higher pay for employees in TK-12 education with little regard for students.

    This has happened in multiple school districts in San Diego County, most notably Sweetwater Union High School District, where student transportation was cut (forcing students to walk 3 miles each way) as a result of a $30 million budget hole created by employee raises. Similarly, San Diego Unified has cut or suspended promised student programs and services every year since 2008 under “budget constraints” such as rising pension costs. Yet, it has had sufficient funds to increase teacher pay–above Step & Column–by more than 11% between 2013 and 2018, with an additional 3.7% increase beginning on Jan 1, 2020 (with all other collective bargaining units using “me too” clauses in their contracts to negotiate pay increases as well).

    How will any measure to raise revenue for education convince taxpayers that the majority of the additional revenue will provide for additional resources for students and not primarily additional resources in the pockets of the adults who work in the schools and school districts? Perhaps it can be done by structuring the revenue distribution directly to schools on a per pupil basis…

  2. Jennifer Bestor 3 weeks ago3 weeks ago

    Under Proposition 13 a property's assessed value (and therefore its general tax lien) can increase up to 2% a year -- it's the tax rate that's capped at 1%. For education, the significant difference between the two versions of the split-roll initiative is that the new one would channel about half of its proceeds to schools and community colleges, vs. less than a third for the current version. By correctly citing "school entities," … Read More

    Under Proposition 13 a property’s assessed value (and therefore its general tax lien) can increase up to 2% a year — it’s the tax rate that’s capped at 1%.

    For education, the significant difference between the two versions of the split-roll initiative is that the new one would channel about half of its proceeds to schools and community colleges, vs. less than a third for the current version. By correctly citing “school entities,” a defined term in the Revenue & Taxation Code, it includes not just the 33% directly allocated to school and community college districts, but also the 3% that goes to County Offices of Education and, more importantly, the 17% share that goes into counties’ Educational Revenue Augmentation Funds.

  3. Todd Maddison 3 weeks ago3 weeks ago

    I think either measure on the ballot is going to have an uphill climb - and deservedly so. The public has a great reason to distrust the education industry to spend any new money on actual education – because the evidence shows that’s not what they do. In 2012 we were asked (in Prop 30) to raise taxes on ourselves to improve education. In 2016 we were asked to extend those taxes (in prop … Read More

    I think either measure on the ballot is going to have an uphill climb – and deservedly so.

    The public has a great reason to distrust the education industry to spend any new money on actual education – because the evidence shows that’s not what they do.

    In 2012 we were asked (in Prop 30) to raise taxes on ourselves to improve education. In 2016 we were asked to extend those taxes (in prop 55.)

    Since 2012, overall state spending per ADA has risen tremendously. According to the California Department of Education (CDE), per ADA spending has risen from $8,382 in 2012 to $12,068 in 2018.

    That’s a 43.97% increase, for an average of 6.26% per year. During a time when inflation has averaged 1.50% per year (per US CPI), and wage growth (according to Social Security records) has averaged 2.57%.

    Meaning revenue in to the districts has exceed inflation by over 4 times and exceeded the wage growth – of taxpayers who are paying the bills – by over two times.

    And, what have we gotten for it? Certainly no improvement in the quality of education, as measured by the CA school dashboard metrics, among other things.

    And we see district after district is now in financial distress, many in danger of being taken over by the county or state.

    Where did the money go?

    That part is easy. We hear about the growth in pension costs pretty frequently these days, everyone reading this should be familiar with that. The money we voted to give “to improve education” is going instead to improve the retirement of teachers who are no longer teaching.

    The money is also going to pad the salaries of existing education staff. I have not done an analysis of the state as a whole, but I have analyzed various districts around the state and see one common thread – raises to existing staff that mirrors the rise in revenue, raises that are often many times the rate of taxpayers in that district.

    And current pay rates that put most in the education industry far above the pay rates they would make in comparable jobs in private industry.

    Using the public pay data available on Transparent California, just as an example, in my home district, Oceanside Unified, since 2012 they have given themselves raises at a rate of 5.49% per year. San Diego county’s wage growth as a whole has averaged 1.97% in this time.

    Administrators have a median pay of $114,979/year, not counting the cost of benefits (which we know adds almost 30% to this number).

    Teachers now have a median pay of $87,849/year. The county average for comparably educated residents (per the US Census Bureau) is $69,669/year, meaning the average teacher makes $18,180 (or 26.10%) more per year than they would with the same education elsewhere.

    Since 2012, Oceanside Unified has gotten about $23M/year in extra funding (“EPA” funds, from Prop 30). They have now increased their pay and benefits expense to the point they are spending twice that on increased pay and benefits. Not only has every single dollar gone to paying themselves, but they’re farther in the hole beyond that.

    And they’re not unique – every single district I’ve looked at has very similar numbers.

    The data is clear. Unless you don’t believe the statistics from the US Bureau of Labor Statistics, the US Census Bureau, the Social Security Administration, and records obtained legally through the Public Records Act by Transparent California, it’s obvious that the last time around the education industry took the money we thought we were going to give them to decrease class sizes, improve facilities, buy technology, expand arts and sciences, provide more supplies, etc, etc – and used it to simply pay themselves more money.

    So…. why would anyone in their right mind think the answer is to give them more money – again?

    What if we say “no” and demand that they use the money we’ve already given them properly first?

    Replies

    • Ann 3 weeks ago3 weeks ago

      Everything you pose is correct. The question is will the media allow this information to be presented to the voting public. This publication, simply a mouthpiece for the education establishment (take a look at their Board of Directors), certainly can’t be counted on. California is sorely in need of at least one alternative news/ editorial outlet.

    • John Fensterwald 3 weeks ago3 weeks ago

      Todd: I would be cautious to use data from one district, Oceanside Unified, to draw conclusions on how money has been spent in districts statewide. I agree that it is too difficult to determine how new money has been spent under LCFF because of the difficulty in comparing spending among districts. And, as SD Parent notes, bargaining decisions are made outside of LCFF. However, the law requires that services and programs be increased proportionately to the … Read More

      Todd:

      I would be cautious to use data from one district, Oceanside Unified, to draw conclusions on how money has been spent in districts statewide. I agree that it is too difficult to determine how new money has been spent under LCFF because of the difficulty in comparing spending among districts. And, as SD Parent notes, bargaining decisions are made outside of LCFF. However, the law requires that services and programs be increased proportionately to the increase in money allotted for low-income students, English learners, homeless students and foster youths under the formula.

      Two studies that looked at the question you asked — Are raises consuming supplemental and concentration dollars under LCFF? — found that they were not. Most of the money was spent hiring additional staff, not salary raises. I refer to studies by Edunomics Lab at Georgetown University and the recent study by the Public Policy Institute of California.

      They’re not concluding that the additional money has been used effectively in most districts, nor would I. The PPIC study’s finding that schools with the lowest income students are being taught disproportionately by novice teachers points to a major failure of the Legislature and school boards, through bargaining, to confront that issue. The fault does not lie with LCFF per se.

      I also agree that rising pension costs to districts should be viewed as part of overall compensation. We have written extensively about the impact of pension costs on school spending. A good place to start for a crash course is our EdSource video. You can see it here.

      • John Fensterwald 3 weeks ago3 weeks ago

        Todd: Regarding Oceanside, it would seem that bus service for low-income families – a justifiable use under the formula – should not be sacrificed for other general purposes.