Munger’s Tax Increase Doesn’t Add Up

MARCH 14, 2012

By WAYNE LUSVARDI

Molly Munger’s proposed $10 billion school tax for the Nov. 2012 ballot had to be designed by a billionaire.  It’s hard to know whether Munger designed the ballot initiative for the “Make a Wish Foundation” or for the California state government.

Munger is the daughter of Pasadena billionaire Charles Munger, who co-founded the investment firm of Hathaway-Berkshire with Warren Buffett.

Munger’s tax proposal would increase the entire existing $39.2 billion K-12 state education budget by a whopping 25.5 percent in a protracted economic recession.

It would raise income taxes as a proportion of the current state budget by an incredible 16.8 percent, possibly driving the wealthy out of the state.  And it would raise income taxes an astounding 7 percent per year for public schools after the economy recovered.

Additionally, the increase would fully plug the $4.5 billion annual gap in the California State Teacher Retirement System without any pension reform.  It still would increase K-12 school funding by $5.5 billion per year beyond that.

The tax increase would be untouchable except by voter alteration.  The state’s existing school funding for K-12 public schools could not be reduced to offset for this additional source of funding.  The Munger tax would be in addition to existing public school funding.

During the first four years of Munger’s tax initiative, 30 percent of the funds would go toward paying down the past state budget debt. Thereafter, 85 percent of the funding would go to K-12 public schools and 15 percent would go to child care programs. Munger is a member of the First Five Commission for child-care funding.

Would voters pass it without any accompanying pension reforms? That’s perhaps a bigger question than whether it would split the vote three ways on competing tax initiatives by the governor and unions.  According to a Public Policy Institute of California poll, a majority of voters say they want. The California State Teacher’s Retirement System is only 54 percent funded.  CalSTRS needs an additional $4.5 billion each year to be fully funded.  So even this initiative passed, only somewhat over half of Munger’s tax proposal would actually go to into funding schools during the first four years.

And if history is any indicator of future behavior, any new school revenues would just go into backfilling ancillary school personnel — called “categorical” employees, such as art teachers, janitors, administrators, bus drivers, etc. — rather than to core classroom teachers.

In those wealthy school districts that already passed school parcel taxes to make up for budget reductions, Munger’s tax could provide a double windfall. That is because local school parcel taxes are always in addition to state school revenues.

Munger Needs to Get Educated About School Finance 

Molly Munger is a graduate of Harvard Law School and a former federal prosecutor.  But she doesn’t seem to even have a sound knowledge of the finances of her local school district in Pasadena, where she pushed for a school parcel tax in 2010 called Measure CC.  Voters rejected it.

Munger, other donors and the Pasadena school district put about $1 million into the effort to pass the tax, purportedly to prevent teacher layoffs.  The Munger family donated $50,000.  The election cost the school district $500,000 in administration costs.

But no core classroom teachers were ever laid off even though voters rejected the tax.   And the $1 million spent on the election campaign could have been put toward helping fund classroom needs.

The Pasadena Star News reports that only 20 employees left the Pasadena Unified School District since 2010, and that was due to attrition (retirements and departures).  If Pasadena’s school parcel tax had passed, the school district would have reaped a $35 million windfall over 5 years while taxpayers were suffering through a deep economic recession.  The school district alleged it had an unmanageable $23 million budget shortfall.

Munger’s new state school tax ballot initiative is about as illogical as her support for an unneeded local school parcel tax in her hometown in 2010.

Urban Myths About School Finance 

Part of the problem with school tax proposals is school districts seem to always “cry wolf” about teacher lay-offs.  Such layoffs most often never seem to materialize even if the school tax proposals fail. It is difficult for taxpayers to tell if a school tax proposal is based on hysteria or facts.

The Pasadena Star News reports that the money from Munger’s state school tax “can’t be spent on salary and benefits.”  But there is no such provision in the wording of the initiative.  Since salaries and benefits are the largest share of the state public schools budget, such a provision would not make sense.

20 comments

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  1. JKEYES
    JKEYES 14 March, 2012, 08:35

    Munger is a liberal;nothing liberals do add up to help the working folks of California.

    Reply this comment
  2. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 March, 2012, 08:53

    No tax increase is going to fly, not as long as Clown refuses to address the pension and other structural issues, and even then it is going to be a hard sell.

    Reply this comment
  3. Kirk Seal
    Kirk Seal 14 March, 2012, 10:07

    I agree with your assessment of the Munger tax proposal but had a slight problem with the “crying wolf” statement. School districts have to send out notices by the 15th of March per edcode. Also we have to make these decision’s based on the state budget which as you know has been unpredictable at best. Typically school districts do not know exactly how much revenue they will have until the May revise.

    Reply this comment
  4. Beelzebub
    Beelzebub 14 March, 2012, 10:58

    I bet if she hadn’t been born with a silver spoon in her mouth she’d be stocking shelves at Walmart.

    Reply this comment
  5. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 March, 2012, 11:10

    I bet if she hadn’t been born with a silver spoon in her mouth she’d be stocking shelves at Walmart.

    I wonder why she, and others liek her, don’t include pension reform with the tax increases. Doesn’tmake sense at all.

    Reply this comment
  6. Sean Morham
    Sean Morham 14 March, 2012, 11:24

    She may be so out of touch with reality, that a $100k pension sounds to her like nickels and dimes,,,

    Reply this comment
  7. Beelzebub
    Beelzebub 14 March, 2012, 13:48

    “I wonder why she, and others liek her, don’t include pension reform with the tax increases. Doesn’tmake sense at all”

    Banksters and pension fund managers walk arm in arm. Go look at the background of the Board of Directors and the big pension fund managers. Look where they came from. You might find your answer there.

    Reply this comment
  8. Amazing
    Amazing 14 March, 2012, 14:39

    This author has not read the Our Children Our Future initiative. This initiative has NO provision for the state teachers retirement system. Munger is not a commissioner on the First 5 Commission. Other statements about the initiative are factually wrong. This kind of article brings a lack of credibility to Watchdog.

    Reply this comment
  9. Beelzebub
    Beelzebub 14 March, 2012, 19:13

    The latest news is that Clownboy is in panic mode because his tax proposal is losing support fast so he is going to rewrite the entire thing. Apparently he is going to lock arms with the teachers unions and merge proposals. Instead of a half percent increase in sales tax – it would only be a quarter percent. But he would raise the income taxes substantially on the rich, defined as those making over $250k. This means that there would only be two tax measures on the ballot – Munger’s and Clownboy/Teachers Union. Their thought process is that if there are 3 tax proposals on the ballot that all 3 would lose. But if it’s reduced to 2 tax proposals it strengthens their chances for passage. Let’s hope the voters of California are smarter than that.

    Reply this comment
  10. Rex The Wonder Dog!
    Rex The Wonder Dog! 14 March, 2012, 19:19

    Beelz, everywhere you look today the word is out on the out of control public salaries and pensions, and no one in the middle, much less the far right, will vote for a tax hike while those two issues remain unaddressed.

    I have said it a million times, the tax hikes are DOA, just like when Arnold tried to extend them. The public will not raise taxes while gov employees are becoming multi millionaires.

    So bottom line, I could care less on if one or all three tax hikes hit the ballot, or what they cover-they are DOA and there is NO DOUBT in my mind they will fail. DOA.

    Reply this comment
  11. Wayne Lusvardi
    Wayne Lusvardi 14 March, 2012, 20:43

    Dear Amazing

    Here is the link which CLEARLY shows the MOLLY MUNGER was appointed to First Five Committee

    http://www.ccfc.ca.gov/pdf/press/pr/MollyMungerAnnouc.pdf

    Munger’s tax proposal will retire DEBT during the first three years. Some of that debt presumably is the pension gap for Cal-STRS.

    I rest my case. What a crock of disinformation.

    WL

    Reply this comment
  12. Deb McCurdy
    Deb McCurdy 15 March, 2012, 15:55

    The Molly Munger/PTA initiative, “Our Children, Our Future”, is still the only one that funnels money directly to school sites and mandates parent and community input re how the money should be spent. It is based on a reasonable and fair sliding scale income tax for everyone.

    The money will be placed in a separate trust fund that can only be spent as authorized by the provisions of the Act. The Governor and Legislature are prohibited from using the money. It cannot be used to increase current teacher salaries, but can be used to hire additional teachers and staff, i.e., the arts, science, technology, engineering and math, smaller class sizes, counselors, librarians school nurses, and more.

    No more than 1% of money raised by the The Molly Munger PTA “Our Children, Our Future” initiative will go towards administrative costs — mandated. The initiative will raise $10 billion for schools per year for twelve years. Every child in the state will benefit. The money goes into a trust and does not pass through Sacramento. At this point in time, CA would need to spend an additional $60,000 a year, per classroom, just to catch up to the national average — that is a fact. CA has the highest ratios of students to teachers, students to counselors, students to administrator in the country — that is a fact. We are shortchanging all of our kids and have been for many years. PTA, the largest volunteer organization lobbying for children, supports “Our Children, Our Future”.

    PTA has been in the trenches advocating for kids — for free — for 115 years — my vote goes with them. ourchildrenourfuture2012.com

    Reply this comment
  13. queeg
    queeg 15 March, 2012, 17:00

    Calm down! This tax is “for the kids”.

    Gonna pass….get ready…higher everything after gas goes to five buckaroos too!

    Reply this comment
  14. Rex The Wonder Dog!
    Rex The Wonder Dog! 15 March, 2012, 20:21

    Deb McCurdy says:
    March 15, 2012 at 3:55 pm
    The Molly Munger/PTA initiative, “Our Children, Our Future”, is still the only one that funnels money directly to school sites and mandates parent and community input re how the money should be spent. It is based on a reasonable and fair sliding scale income tax for everyone.

    Deb is a PTA mouthpiece who has posted this exact cut and paste post all over the state within the last 6 hours.
    http://twitter.com/#!/mcdezpta

    Reply this comment
  15. Beelzebub
    Beelzebub 15 March, 2012, 22:57

    “PTA has been in the trenches advocating for kids — for free — for 115 years — my vote goes with them. ourchildrenourfuture2012.com”

    If PTA advocates for the kids then start by (1) purging the schools of illegal migrants who siphon $resources$ from our American-born children thereby stunting their intellectual growth potential and by (2) demanding that the schools terminate incompetent and lazy teachers who contribute to high dropout rates.

    No matter how much we give to the public schools education continues to worsen, Deb. K-12 is already getting 40% of the state budget. If the schools cannot provide adequate education with that massive motherload of taxpayer money then more money would not solve the problem.

    The real problem is the selfish and greedy bureaucrats who run and teach at the schools, Deb. Go fix them. We’re tired of throwing good money after bad.

    Reply this comment
  16. Deb McCurdy
    Deb McCurdy 25 March, 2012, 15:10

    Wayne, you state: “The tax increase would be untouchable except by voter alteration.”

    The “Our Children Our Future” initiative states in Section 2.17: “The initiative also builds in an extra layer of accountability by ending the tax after twelve years unless it is re-approved by the voters. That gives our schools enough time to show that the new funds have actually improved educational outcomes, while protecting taxpayers by eliminating the tax if voters decide they don’t want to keep it.”

    Reply this comment
  17. Deb McCurdy
    Deb McCurdy 25 March, 2012, 15:13

    @Rex, the Wonder Dog – Yes, that is correct. I am a mouthpiece for the PTA. Every Child, One Voice.

    Reply this comment
  18. Deb McCurdy
    Deb McCurdy 25 March, 2012, 15:39

    Wayne, you state: “And if history is any indicator of future behavior, any new school revenues would just go into backfilling ancillary school personnel – called “categorical” employees, such as art teachers . .”

    However, Art actually is part of the core curriculum. See: http://www.cde.ca.gov/ci/vp/

    Reply this comment
  19. Deb McCurdy
    Deb McCurdy 25 March, 2012, 15:43

    the actual language in the “Our Children, Our Future” initiative regarding what the money should be spent on:

    “e) “Educational program” means expenditures for the following purposes at a K-12 school site, approved at a public hearing by the governing board of the LEA with jurisdiction over the school, to improve the students’ academic performance, graduation rates, and vocational, career, college and life readiness:

    1. instruction in the arts, physical education, science, technology, engineering, mathematics, history, civics, financial literacy, English and foreign languages, and technical, vocational or career education; 2. smaller class sizes; 3. more counselors, librarians, school nurses and other support staff at the school site; 4. extended learning time through longer school days or longer school years, summer school, preschool, after school enrichment programs and tutoring; 5. additional social and academic support for English language learners, low income students and students with special needs; 6. alternative education models that build students’ capacity for critical thinking and creativity; and 7. more communication and engagement with parents as true partners with schools in helping all children succeed.

    Reply this comment
  20. Deb McCurdy
    Deb McCurdy 25 March, 2012, 15:46

    The above language can be found in Section 4 of the “Our Children, Our Future” Initiative

    Reply this comment

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