It’s insanely annoying how so many California defenders simply ignore basic facts like Texas is creating more middle-class jobs or that Texas’ Latino and black students do better than California’s in K-12 test scores such as the NAEP.

But it’s also pretty telling that so many Californians who tout Texas don’t acknowledge that for lots and lots of people, California’s lifestyle is so vastly more appealing that they’d rather live in a condo here than a 2,800-foot ranch home there.

I’m in that camp. I reject the idea that Texas is some primitive backwater. But where I live in San Diego, the weather is going to be awesome 330 days a year, not 50 days a year. And if you’re a foodie, I know people tout Austin. It’s not Socal. The 20,000 square miles of California from San Bernardino to the coast to the Mexican border have a staggering variety of great ethnic food. The other I day I had sisig, a Filipino pork dish I didn’t know about until last year, and my life felt more complete. Move over, bacon.

A Texas city that seems modeled on … Irvine!

So any kind of CA vs. TX comparison that skips past the talking points is to be welcomed. Now Joe Mathews has just such a piece in which he writes about his road trip to Texas and how dazzled he was not by the state in general but by a suburb of Dallas that sounds like it was modeled on … Irvine!

Here’s Joe, relating his experience with the company-relocation recruiters of Frisco, Texas:

“What they talked about most was children — and their education.

“They told the story well. Frisco has one of the fastest growing school districts in the country, adding thousands of students every year. Today, nearly a third of residents are kids, and with good reason.

“Texas is full of giant high schools that produce huge football teams and bands. But Frisco, at considerable cost, has chosen to limit its high schools to no more than 2,100 students. The smaller school approach reflects a philosophy that every child in town should be ‘known by name and need.’ This strategy had worked. In a 2013 Dallas Morning News list of the best neighborhoods for public schools in the north Texas region, eight of the top 10 neighborhoods were in the Frisco school district.

“My recruiters emphasized the lengths to which Friscoans will go to support their schools. Voters just approved a $775 million school construction bond (a comparably sized bond in the Los Angeles Unified School District would be more than $20 billion). Despite public criticism of the bond as too big and risky, the measure passed with nearly 80 percent of the vote.

“… such family-centered investment didn’t stop with schools. Frisco has more than 40 park sites and is in the process of turning some of its most valuable land into a 380-acre centerpiece, Grand Park. There are all kinds of businesses and housing development — from gated communities to urban apartments. The town has so many athletics facilities for its people that I lost count.”

Actual reporting, not just blow-harding

Please read Joe’s entire piece here. It’s nice to see real reporting on the opinion pages.

Now maybe Dan Morain can fly to Germany and give a firsthand report on how a government’s overcommitment to green energy has gone haywire.

OK, OK — I won’t get my hopes up.

Hey, “California is back,” Brown keeps saying. The CA Dem party is meeting this weekend in Los Angeles. The theme:

“Let there be no doubt: California has turned the corner and that’s thanks to Jerry Brown,” said John Burton, Chairman of the California Democratic Party. “With the Governor leading the way, and a strong Democratic majority in the Legislature, Democrats balanced the state’s budget and ended the cuts to education. California is once more investing in its future instead of cutting our way to the bottom.”

Except the budget, as even Brown’s January proposal concedes, doesn’t include $4.5 billion needed to keep CalSTRS solvent.

Moreover, California’s unfunded pension debt for public workers remains at least $500 billion.

And recent U.S. Census Bureau data revealed that, when cost-of-living is take into account, California has the country’s highest poverty rate. Worse than Mississippi, Alabama and West Virginia.

A study last year revealed that California’s roads were 47th worst in the nation.

And California’s “skoole” kids continue to rank near the bottom on national tests.

Far from being “back,” California remains down and out.

If the state were a private-sector company, it long ago would have gone bankrupt, its officials out of work and possibly on the lam from the SEC for financial misfeasance and malfeasance.

But ours will get raises.

By John Seiler

The state supposedly “balanced” its budget only with the Prop. 30 tax increase. Three California cities declared bankruptcy last year. Businesses keep streaming out to greener pastures. So what does the California Legislature do? Road trip!

Steven Greenhut writes in Bloomberg:

“the state Senate advanced an ill-defined new ‘bond’ plan to provide schools with a fresh source of cash.

“The Dropout Reduction and Workforce Development Bond Act of 2013 is based on social-impact bonds, a creative financing mechanism popularized first in the U.K. as part of the Conservative Party’s ‘Big Society’ effort to use market discipline to improve public services.

“Typically, financing for social-intervention projects is obtained from investors, not taxpayers, and government contracts with nonprofit institutions to do the work. Government gets to borrow money for social programs and shift the risks to investors, who get paid back only if the programs reach certain performance and cost-saving goals.

“But leave it to California’s dominant Democrats to turn a concept designed to apply some measurable standards to hard-to- measure social programs into a shameless effort to grab more money for existing government agencies.

“The legislation promises to ‘revolutionize public education’ by offering three tools. First, businesses can buy bonds ‘and earn a rate of return tied to performance measures.’ Second, those businesses receive tax credits for their investment. Third, the bill creates trust funds in every school district to collect those business investments and other funds to finance expanded career programs.”

Any business “investing” in such an idea should face a shareholder rebellion.

However, the obvious intent is to tie businesses into school financing, providing an incentive for them to support tax increases for schools.

But as with anything in any government budget nowadays, state or local, any new funds only would go to pay for the spiked pensions. This plan truly is “revolutionary” — as in the Bolshevik Revolution, Mao’s revolution, or Pol Pot’s revolution in Cambodia.

Read the rest of Greenhut’s article here.

The Los Angeles Times has printed an analysis piece on the insane borrowing by dozens of California school districts using “capital appreciation bonds” (CABs), which delay any repayment for 20 years and often cost 10 times or more the amount borrowed. It does a good job of explaining the bonds and the financial risk they pose. But it does a laughable job explaining why school districts are issuing them, accepting state Treasurer Bill Lockyer’s assertion that they were pushed into the deals by fast-talking bond salesmen:

“This is part of the ‘new’ Wall Street,” Lockyer said. “It has done this kind of thing on the private investor side for years, then the housing market and now its public entities.”

But school boards and district superintendents are not complete idiots, for the most part. There’s a reason they will accept such bad deals. It’s the same reason they use “construction” bonds to pay for everyday maintenance and short-lived electronics. It’s the same reason they try to charge fees for school supplies that the state Constitution says should be free. It’s the same reason they constantly raise funds with pressure tactics on parents of schoolchildren.

That reason: a commitment to pay practices that give automatic annual raises to most teachers, typically for 15 of their first 20 years on the job. Over time, this means employee compensation eats up nearly the entire operating budget — especially when the state economy is weak and revenue stops growing.

In San Diego Unified, employee compensation consumes 93 percent of the budget. The norm in many school districts is 90 percent. There’s not much left for anything else.

This isn’t a minor detail. It explains why CABs, which have been around for decades and were banned long ago by the state of Michigan, are suddenly popular. School districts are often extensions of the local teachers union, and local teachers want to get paid. If it means intergenerational fiscal child abuse, that doesn’t bug them a bit. Leave the bills for future generations to pay.

But the L.A. Times accepts the bamboozlement argument. In this case, it was the Times that was bamboozled.

By Steven Greenhut

SACRAMENTO — California’s public schools continue to lay off teachers, in a process that is as convoluted and illogical as one would expect in a bureaucratic system in which the needs of the students falls fairly low on the list of priorities. That’s my takeaway from a new report by the state’s Legislative Analyst’s Office detailing the teacher layoff process as districts struggle with declining revenue in the face of shrinking budgets.

The big issue, however, isn’t the arcane process for shedding teachers, but what the process says about the inefficient way that most Americans have decided to educate their kids. As the LAO reports, decisions about who stays and who goes are based on which teachers have showed up to work for the most years — i.e., seniority — rather than which ones are most effective and energetic. The hearing and appeals process, by which every laid-off teacher gets an automatic hearing, adds enormous costs to a system that always claims to lack enough resources.

The LAO report only looked at one small, technical aspect of the public-school behemoth, and it was meant to offer a little advice for tweaking the layoff process. It wasn’t meant to provide a thorough analysis of school systems. But in some ways, that’s what is so frightening about the report. Americans don’t think twice about the way schools are designed. Few things are more important than educating children, yet we accept this current system the way Soviet citizens accepted long bread lines. No doubt, auditors in that system issued reports discussing ways to shorten the lines.

‘Underfunded’?

Don’t include me in the chorus of those who claim that the schools are somehow “underfunded,” even as K-14 education consumes more than 40 percent of California’s general-fund budget — not to mention all the local bond measures and federal funding. School-district budget “cuts” usually refer to a reduced rate of spending growth, not actual cuts.

One of the nation’s worst-performing systems, Los Angeles Unified School District, yearly spends more than $29,000 per student, when all funding sources are included, according to a Cato Institute report. Its graduation rate of 40 percent is appalling.

LAUSD is particularly bad, but it isn’t run that differently than your average suburban district.

Consider the LAO’s chart of a declining teacher workforce over the past few years against this report in the Los Angeles Daily News from 2008: “[A] Daily News review of salaries and staffing shows LAUSD’s bureaucracy ballooned by nearly 20 percent from 2001 to 2007. Over the same period, 500 teaching positions were cut and enrollment dropped by 6 percent. The district has approximately 4,000 administrators, managers and other nonschool-based employees — not including clerks and office workers — whose average annual salary is about $95,000.”

Now consider this tidbit in June 2011 from the Sacramento Bee: “The number of educators receiving $100,000-plus annual pensions jumped 650 percent from 2005-11, going from 700 to 5,400, according to a Bee review of data from the California State Teachers’ Retirement System.”

Here’s a Los Angeles Times headline from October: “California teachers lack the resources and time to teach science.”

Is this an issue of money or spending priorities?

Instead of focusing on the little things, Californians ought to be thinking big thoughts about education. We can start by asking: Is the public education system one that best serves the students? The answer, even for people whose kids attend decent schools is, “Obviously not.”

There’s an endless call for reform. Some ideas are useful. For instance, tuition vouchers, which let people take a portion of their school tax dollars and spend them at the school of their choice, or charter schools, which are government-controlled schools freed from some of the government-imposed red tape, offer some hope because they provide some level of competition.

Thought Experiment

I’m not calling for specific reforms here but arguing, instead, for readers to conduct a thought experiment.

If we were tasked with providing an important service, how would we provide it? If, say, we were asked to create the best possible chain of restaurants to serve hungry customers, would we buy a huge building, hire scores of extremely well-paid administrators and then impose a tax on local residents to fund the chain? Would we let a board of directors, elected from the community, choose the décor, the menu and the locations?

Would we empower a union to make hiring decisions and allow it to grant tenure to waiters and kitchen help, so that we could not fire them even if they were lazy and incompetent? Would we pay the most money to people who worked there the longest rather than to those who were the best workers?

When customers complained that we served too much meat and not enough pizza, would we shrug and ask them to elect board members who preferred pepperoni to cheeseburgers?

Would we pass laws mandating that people who live in neighborhoods near our restaurants eat only there — allowing them to eat elsewhere only if they spend additional money or move to the neighborhood where the restaurant more closely meets their taste? Would we ignore the pleas of people who live near filthy restaurants that serve lousy food just because we live near one that at least keeps a clean kitchen and offers adequate meal choices?

Other observers have made similar analogies, and school officials always claim that schooling somehow is different. But it isn’t.

Instead of tinkering around the edges and endlessly fighting for reforms that offer little hope of transforming the system, we need to redesign it from the ground up. Perhaps we should, in the words of the lateschool  reformer Marshall Fritz, “separate school and state” and allow the market to provide schools just as we allow it to provide food and other vital services.

Commentary

FEB. 7, 2012

By JOHN SEILER

I’m enjoying the tiff between Gov. Jerry Brown and the other tax-increase forces in the state, in particular activist lawyer Molly Munger and the California Teachers Association. As Dan Walters notes today, Brown’s $7 billion tax hike still wouldn’t prevent cuts to K-12 schools. Munger’s $10 billion would prevent the cuts.

Munger’s initiative would increase income taxes on everyone. That is, everyone who pays income taxes in the first place. About half of Californians don’t.

California already suffers the most regressive income tax in the country. The 9.3 percent current “top” rate digs in at about $55,000 of income. (Technically, there’s also a 1 percentage point additional insane tax on million-dollar incomes to fund state mental health programs.)

Munger’s tax increase would jump that middle-class tax rate up an average of 1 percentage point, for a total tax of 10.3 percent. I hope she qualifies the ballot measure and spends her entire fortune on promoting it. (Molly: Spend all your money on this. Do it for the children.)

There’s no way her tax will pass. And Brown’s tax increase will fail, too, as will the CTA’s tax increase.

Let’s put them all on the ballot. The teachers unions also should spend all their coffers trying to pass these tax increases. Indeed, they should borrow $100 million more to pass them. (Unions: Spend all your money on this. Do it for the children.)

People are starting to wake up to how crummy California’s schools really are. And pouring more money on them won’t improve anything.

Factory Schools

Some people even are realizing that the whole public school paradigm, of warehousing kids in buildings that resemble factories or even prisons, is something from the machine age of a century ago. You put raw materials (steel, plastic, children) into one end of the factory, and out of the other end off the assembly line rolls a “product” (a car, or a high-school graduate sufficiently indoctrinated).

Look at the picture at the top. It’s of Century High School in Santa Ana. And check out the aerial view at the right. It sure looks like a factory — or a prison. It’s sealed off from the surrounding neighborhood. The entrances and exits are closely controlled. It serves institutional food.

But this is the Internet Age, where everything is being dispersed into decentralized networks. As you read this, do you know where the data for CalWatchDog.com is comes from before it gets to your computer or smart phone or iPad? I sure don’t, even though I’m the managing editor. It could be in California, or another state, or another country, or all of them. The Internet is decentralized. “Packets” of information are shifted around depending on protocols that only the top nerds understand.

Now, consider the name of Munger’s tax-increase movement: “Our Children, Our Future.”

“Our” children? It’s like we’re in some 1930s Soviet collective, where everyone is making the same bolt for the same state-run factory.

No, they’re not “our” children, Molly. Children belong to their parents until the kids turn 18.

And by saying they’re “our” children, she’s still imposing the 1930s-style, top-down, factor/prison model of schooling.

What we need are decentralized, dispersed, networked schools — beginning with the ultimate decentralization, home schools.

Even the liberal Newsweek/Daily Beast magazine has figured this out. It writes, “When Tera and Eric Schreiber’s oldest child was about to start kindergarten, the couple toured the high-achieving public elementary school a block away from their home in an affluent Seattle neighborhood near the University of Washington. It was ‘a great neighborhood school,’ Tera says. They also applied to a private school, and Daisy was accepted. But in the end they chose a third path: no school at all.”

Yes! The best school is no school.

Doing Better

I’m going to live-blog Gov. Jerry Brown’s State-of-the-State address, at 10 am on Jan. 18, 2012. Assuming the technology works. You can watch his address online here.

Let’s blog!

9:43 am: A minister is leading a prayer. I thought the U.S. Supreme Court banned religion in government buildings in America? I guess it’s OK, though, because the minister attacked “individualism.” Translation: Stop opposing the tax increases Gov. Brown will be asking for!

9:45: Some mundane business of the Assembly.

10:02: The governor is late. Typical for this state.

10:03. One good thing. At least Arnold isn’t here conjuring up his fantasies about how everything is “fantastisch!” in “Kauliphornia!” even as he was destroying the state.

10:06: Assembly Speaker Perez says he’s appointing an escort for the governor. Six minutes late. Can’t he escort himself?

“Waiting for Jerry” sounds like a Hollywood flop, the kind of stinker they release in January because they know it’s no good.

Brown Arrives — Late

10:08: Enter Brown, to applause. The legislators are eager for him to call for increasing taxes so they can pay for the massive pensions of their string-pullers in the government-workers’ unions.

Brown’s wife is introduced to applause.

10:09. Lt. Gov. Newsom is introduced, to less applause, then Atty. Gen. Kamala Harris and the other state officers. Supreme Court justices.

10:11: Darrell Steinberg, president pro-tem of the Senate. Like Perez, he’s a union hack. He calls for “positive achievements.”

10:12: The Internet signal to Brown’s Web site went down. Brown’s office can’t even get a streaming video to work. I checked my computer. It’s fine.

Brown: “Increase Taxes”

10:16. Brown talking about shrinking a $20 billion structural deficit last year. Problem now 1/4 of last year: $5 billion.

Laments 4 Republican votes were lacking to put tax increase on the ballot in 2011.

“Again, I propose cuts and temporary taxes. Neither is popular, but both must be done.”

He talks about the economic problems in Europe. Which — he doesn’t say — were due to government profligacy like California’s.

He says he’s determined to go ahead with spending cuts and tax increases, which would be half of the tax increase (Arnold’s) in place in 2010.

Brown says, in the long term, more substantial tax reform is needed. But such reforms only happen during a crisis, like now.

Says California is not a “failed state.” Yes it is. His governorship is proof.

The recession was bad, he says, but economy now is growing. He doesn’t mention that the growth occurred after Arnold’s 2009 tax increases expired in 2011 — and were not re-imposed.

Dream Act Great

He lauds the Dream Act, which gave special subsidies from tax dollars to illegal alien students at California’s government universities and colleges. But if Brown and the Legislature don’t follow the law, why should we?

10:21: California has problems, but opportunity. He dreams: fix the delta, build high-speed rail (he’s stuck on that), reduce greenhouse gases, etc. He’s in full Moonbeam mode.

New GoBiz office promotes business. Another bureaucracy. But what’s really needed is cuts in taxes and regulations.

Our state keeps demanding more efficient energy. Actually, it’s the government forcing us.

Talks about climate change — disproved by the climategate scandal.

Talks about 33 percent mandate for renewable energy. But some estimates say that will double energy costs. Why should he care? He’s rich.

Green jobs, he says, are in their infancy, like computers were decades ago. Wrong.

AB 32 means California “stepped out” — yes, into lala land. It uses “market incentives” instead of mandates. Not for industries leaving the state because the “incentives” are just crony capitalism to fund hucksters like Al Gore.

10:25: High-Speed Rail new biz plan soon. Will start building the first phase. Obama behind it. “Without hesitation, I urge your approval,” he says. Good. This will become the poster boondoggle for the anti-tax increase forces in November.

If you believe CA is in decline, you’ll “shrink back from such an undertaking.” But, he insists, CA still is the “gold mountain” the Chinese immigrants called it in the 19th century.

“Critics of high-speed rail aboud.” Yes, because it’s a boondoggle.

I need a drink. Too bad I’m at work.

“The critics are… wrong now. We’re going to build the first phase” because its $2 billion cost is worth it, and will pay for itself. Moonbeam!

Water project. Dual goals: restoring Delta ecosystem, ensuring a reliable water supply. Great. But he’ll mess it up.

Schools

10:29. Schools. “Have a profound effect on our future,” he said. A good reason to be a pessimist.

6 million students, 300,000 teachers (whose union owns him), “Some humility is called for.”

“Thoughts”: responsibilty must be clearly delineated between the various levels of power. Don’t concentrate decision making at the federal or state level. Too late, Jerry. The Feds run everything.

Will he mention the key “level of power”: parents? No, he doesn’t mention them. Parents are irrelevant to him.

Budget, he says, replaces categorical spending with “more authority to local school districts… create transparency… reduce bureaucracy.” Good luck on that one.

He says we need to “devote more tax dollars” to education. “Schools will be in a much stronger position.” No they won’t. The tax money will just go to pensions.

Too many tests, he said, with the results coming too slowly. Need fewer tests, with numbers available fast. Good luck on that one, too.

Wants more supervision of teaching.

Pensions

10:33: Pensions. “I put forth my 12-point proposal. Examine it. Improve it.” We did, here. His reform is pathetic.

He says it’s a real problem. “Three times as many are retiring as are entering the workforce.” He seems to be talking about retirement in general, not just government-worker retirements.

Prison alignment: We’re just beginning. Cooperation is remarkable. “But we have much to do.”

10:34: “The declinists of Calfironia are wrong. We’re on the move. We’re on the mend. Let’s get it done.”

For some reason that reminds me of Ringo’s comment in “A Hard Day’s Night”: “I’m not a mocker. I’m a rocker.”

Brown’s finished. Blessedly, a speech of only about half an hour.  About middling in effectiveness as these speeches go. He’s optimistic about the state. He’s pushing reforms. He wants a lot more of your tax money. He’s still Moonbeam dreaming of a future of bullet trains and renewable energy.

But his dream is California’s nightmare.

By WAYNE LUSVARDI

In California, all good ideas for school reform seem to end up in the corner wearing a dunce cap.

Back on May 3, I reported on promising development in state Assembly Bill 18, a proposal by Assemblywoman Julia Brownley (D-Santa Monica) to shift from school funding formulas full of political pork and earmarks to deregulation and block grants.  For all his talk of returning funding decision making back to the local level, Gov. Jerry Brown has apparently caved in to union interests and allowed the union-run state legislature to kill AB 18.

Columnist Dan Walters reported that Brownley has put AB 18 on indefinite hold after the teachers and school-employee unions exerted their influence on the proposal to shift at least $7.5 billion of the state’s $35 billion budget for public schools into a block grant.

A block grant is a pot of money without political mandates or special categories of employees that require funding.  In other words, a block grant is a potential antidote to political pork and earmarks.  It returns funding decisions to the local level and makes them more transparent to public scrutiny.

Funding ‘Broken’

The impartial State Legislative Analyst’s Office has called “broken” the current system of  “categorical funding.” Categorical funding is a term meaning the mandating of funding for certain non-core teacher jobs, such as bus drivers, music teachers, administrative aids, etc.  Stated differently, AB 18 would not affect funding for any core teachers but would only affect ancillary support staff.

But unions don’t want “jobs programs” cut even if they don’t affect teacher-student ratios and protect their salaries.  Such categorical jobs buy votes, patronage and political contributions.

The California Teacher’s Association (CTA) pushed for putting AB 18 on ice even though Gov. Brown and Assemblywoman Brownley covertly maneuvered an 11:59 p.m. rider to the recently approved state budget that mandates no core teacher layoffs.  The unions have solidified their hold on the State Capital, despite the recommendations of the Legislative Analyst’s Office and other good government recommendations to reform the “categorical” funding system for public schools.

Neither did Gov. Brown issue any statement in opposition to this move or exercise his line-item veto powers.

By WAYNE LUSVARDI

A demogogue is a leader who obtains power by means of impassioned appeals to the emotions and prejudices of the populace. And a demographer is someone who studies the characteristics of human populations, such as size, growth, density, distribution, and vital statistics.

Thus, to coin a phrase, a  “demogogue-grapher” is someone who studies human population with his emotions and a political agenda.

Such must be the case of USC Professor of Demography Dowell Myers, interviewed by columnist and Proposition 13 hater Steve Lopez in the May 31 issue of the Los Angeles Times, “Debunking the Myth of Prop. 13”.

According to Myers, the decline in the number of families and children at the bottom of the population pyramid means that, in the future, there will be a surplus of family housing and the price will drop out of the bottom of single family residential housing.  Thus Myers asserts that Prop. 13 is “toast” because, according to him, it only works in a constantly rising real estate market.

Myers may be a competent demographer, but he is out of his league when he starts claiming that Prop. 13 is “toast” in a falling real estate market. To the contrary, Prop. 13 has “saved” California’s property tax base for public services and schools from ruination and saved politicians from political instability and being thrown out of office.  How so you say?

How Prop. 13 Really Works

Under Prop. 13, the current value of a building goes up and down as the properties are sold, not as the market goes up or down. Without Prop. 13, as the value goes up, the reassessments would drive up the costs of taxes.

For example, without Prop. 13, the state gets used to the new amount of higher taxes and pays 10 new teachers’ salaries with the money. When the market goes down, the building value goes down and the owner gets another reassessment. Tax receipts decrease, and the government no longer has the tax money to pay for 10 teachers. It can only pay for five teachers’ salaries. An artificial “shortage” of five teachers is created.

On the other hand, with Prop. 13 in effect, the current value of a building goes up by 2 percent annually in rising markets as long as the ownership does not change. The state pays for three teachers’ salaries with the money. The amount gradually increases, but is fairly constant.

When the market goes down, the building value goes down and the owner gets another reassessment. The taxes decrease and the government no longer has the tax money to pay for three teachers. It can only pay for two teachers. A “shortage” of one teacher is created. This may be much more easily handled than a five-teacher “shortage.”

The difference is this: In the first case, without Prop. 13, the state government spent the higher amount and expected it. When the market downturn came around, there was a huge deficit.

But in the second case, with Prop. 13 in effect, the government does not experience a severe shortage. This second way is the way to more stable government funding — that is, not getting rid of Prop 13 or raising taxes through the roof by a split commercial-residential property tax roll.

By and large, the California newspaper media and academia are so biased against Prop 13 that they have failed to understand this simple concept.

The Real Problem

The problem in California is not Prop. 13, but capital gains taxes on real estate, which has one of the highest tax rates in the nation. California experienced a boom in capital gains taxes from 2003 to 2007 due to the Real Estate Bubble created by unions and public pension funds trying to puff up the real estate market to plug a huge funding gap in public pensions.

Under Proposition 98, 40 percent of the state budget must go to K-14 public schools. The problem was that, during the Real Estate Bubble, the public schools hired too many temporary teachers and ancillary personnel instead of socking the money away for when the inevitable bust in the Real Estate Bubble occurred. Now the schools are claiming they suffer deep budget cuts they cannot absorb.

The reality is that public schools must adjust back to 2001 budget levels.  If anything, Prop. 98 should be reformed, not Prop. 13.

Prop. 13 “saved” California’s public schools from ruination.  Prop. 13 is not “toast.” Instead, let’s raise a toast to Prop. 13.

By WAYNE LUSVARDI

In a February report, the Legislative Analyst’s Office charged that “virtually every aspect of K-14 (public school) mandate finance system is broken.” The report was titled, “Education Mandates: Overhauling a Broken System.”

The LAO report emphatically stated that if a mandated service does not serve a fundamental purpose, “the mandate should be eliminated.”  The LAO’s package of suggested reforms would relieve schools districts and junior colleges of “hundreds of unnecessary activities that provide little value to students,” thus reducing the state’s annual obligations by more than $350 million.

The LAO added that the current system of funding mandates for K-14 public schools can have higher costs than anticipated. Reimbursement rates can reward inefficiency and ignore effectiveness.  And recent court rulings are likely to make containing costs even more difficult.  The LAO recommended establishing the following criteria for school-funding mandates:

1.  It must result in a “true” mandated new program or increased level of service rather than redundant or unnecessary programs;

2.  It must serve a statewide interest (not a politicized interest);

3.  It must produce results consistent with legislative intent (and not get diverted into “mission creep”);

4.  It must prove that the mandate cannot be achieved through a less-costly alternative.

In apparent response to the LAO’s report, State Assemblywoman Julia Brownley, D-Santa Monica, chairwoman of the Education Committee, has floated a draft bill. AB 18 would reform K-12 school funding formulas by replacing the existing earmark system with block grants.

What is at issue is not the layoffs of core teachers or how much administrative overhead a school district has. Rather, the issue is how many ancillary or even unnecessary services a school district can fund with reduced revenues.

Background – Deregulation Under ABX4 2

Following the recommendation of the Legislative Analyst’s Office, in 2009 the State Assembly passed ABX4 2, which deregulated $4.5 billion in categories of earmarks in the state budget.  Collapsing funding categories allowed about a 15 percent reduction in K-12 public school funding without having to lay off core teachers.

The LAO recommended another round of funding simplification, including allowing modest increases in class sizes by collapsing 43 additional categorical programs totaling $7.4 billion into four block grants:

1. Base Block Grant;
2. Special Education;
3. Opportunity to Learn (for disadvantaged students);
4. Instructional Improvement.

A “block grant” is a grant of funds for discretionary use. It allows schools to decide how the money should be spent within a broad category of funds.

By contrast, “earmarks” are politically protected narrow categories of funds or job descriptions often meant to buy political patronage and votes. Block grants are a way of saying to school districts that they have to select what programs and jobs they want to fund. In a time of austerity, that means they can’t pig out at the cafeteria of possible programs and fund them all.

For example, a school district could choose to fully fund “vocational education” but curtail “personnel development” within the “Instructional Improvement” funding block.  But it could not choose to eliminate funding for “Special Education,” which would be a separate block of funding.  Nor could extra funding for disadvantaged students be eliminated, contrary to hysteria often spread by school districts, school financial consultants and newspapers.

Under the Base Block Grant, however, funding could not be eliminated or reduced for what is called “Incentive Funding” authorized by the voters in 1983 under AB 813. Incentive Funding provided an additional $1.4 billion for a K-12 public school slush fund, approximately equating to $226 per student.  This is a protected “carve out” that is enshrined in the California Constitution.

Block grants with firewalls between them allow special funding for agreed upon priorities for the education of children to continue. But the block grants relax funding mandates for ancillary job categories and programs.

Block grants, where the funding decisions are diverted to the local level, are hated by local boards of education because special interests will descend on them rather than on far-removed state legislators. State legislators hate them because, where there is little payoff, they can’t buy votes or receive political donations from powerful unions.

AB 18 – Block Grants or Continued Earmarks?

Assemblywoman Brownley’s AB 18 is apparently an attempt to respond to the recommendations of the LAO to deregulate school funding mandates by using block grants. Brownley’s proposed bill apparently follows the LAO’s 2009 recommendation to collapse existing funding mandates into four block grants.

Brownley’s bill is expected to meet stiff resistance from unions. The unions hold that school districts should not have the flexibility to prioritize funding that would result in fewer teachers should class sizes be increased moderately (from 21 to 24 student per classroom); or should adult education be reduced.

Michael Kirst, president of the State Board of Education, has proposed an alternative system based on weighting, which is already part of Brownley’s Target Pupil Equity Block Grant.  Kirst is apparently pushing for legislative protection of more funding categories and Brownley for fewer.

AB 18 is a work in progress and should be watched by all those interested in reforming the education mandate system and saving costs.