Financing Education in California: An Analysis of Proposition 30 and 55

Funding education in California has become incredibly important in a time of fluctuating budgets being passed by the state legislature. Schools across the state rely on state’s general fund to provide the necessary capital to pay for all facets of the educational process from kindergarten to post-secondary education. In times where additional education funds are needed, concerned citizens, politicians, and proponents of raising educational funds outside of the state legislatures budget have taken action by placing initiatives on the California state ballot with the goal of passing them. Proposition 30 and 55 are both measures passed by public ballot initiatives to provide additional educational funding in the state of California. Proposition 30 was voted on in the November 2012 election while Proposition 55 was voted on in the November 2016 election as a continuation of many aspects of Proposition 30. Each of these propositions were controversial since they both advocated to raise taxes on the wealthiest Californians. After long campaigns, each was passed as measures to raise six billion dollars to be directed towards funding K-12 schools and community colleges. In this discussion, there will be conversations regarding the summary of legislation in Proposition 55 and 30, an analysis for their relevance, their impact on financing schools in California, and relevant court challenges associated with each proposition.

Summary of Proposition 30

Proposition 30 is a sales and income tax initiative to raise educational funds for K-12 schools and community colleges voted on during the November 2012 election in California. It provides for temporary taxes to help fund education through additional funds until after the 2016-2017 fiscal year. The summary of the proposition includes the following:

  • An increase of sales and use tax by one-fourth of a cent for four years (Legislative Analyst’s Office, 2012).
  • Establish four high income tax brackets for incomes exceeding $250,000, $300,000, $500,000, and $1,000,000. This tax increase would be in place for seven years (Legislative Analyst’s Office, 2012).
    • Imposed a 10.3 percent tax rate on incomes $250,000 but less than $300,000; an increase of 10.3 percent on tax rates over the previous tax rate of 9.3 percent.
    • Imposed 11.3 percent tax rate of over $300,000 but less than $500,000; an increased tax rate of 21.5 percent over the previous tax rate of 9.3 percent.
    • Imposed 12.3 percent tax rate on incomes over $500,000 up to $1,000,000; an increase of 21.5 percent over the previous 9.3 tax rate.
    • Imposed a 13.3 percent tax rate on incomes of over $1,000,000; an increase of 29.13 percent over the previous tax rate of 10.3 percent (Legislative Analyst’s Office, 2012).
  • Allocates temporary tax revenues to K-12 schools (89%) and community colleges (11%) (Legislative Analyst’s Office, 2012).
  • Inhibits funds to be used for administrative costs but allowed for local school boards the discretion to decide how funds were spent (Legislative Analyst’s Office, 2012).
  • Guarantees the funding for public safety to be realigned from state to local governments (Legislative Analyst’s Office, 2012).

During the campaign, there were a number of proponents and opponents of Proposition 30. Proponents argued it provided necessary funds to ensure education in California would be sufficiently funded in a time where budget cuts in education were a concern. Also, additional tax funds could stabilize educational funding for the foreseeable future (Ballotpedia, 2012). Opponents argued the additional taxes were unnecessary since the legislature has proven to mismanage funds. In addition, opponents argued there needed to be reform regarding the states budget shortfalls (Ballotpedia, 2012).

Within the media, the major proponents of Proposition 30 were the Los Angeles Times and San Francisco Chronicle. The Los Angeles Times stated they supported Proposition 30 on the notion “California now spends less per student than all but three states after K-12 per-pupil spending remains $1,000 less than it was five years ago” (Los Angeles Times, 2012). The San Francisco Chronicle supported Proposition 30 because “it provides the necessary budget patch, especially with the Legislature’s Republicans unwilling to consider any tax increases.”

On the other hand, the major media opponents of Proposition 30 were the Orange County Register and the Press-Enterprise. The main argument the Orange County Register provided states how Sacramento is simply raising taxes because of their out of control spending instead of providing any real reform to the spending taking place in budgetary and tax legislation. Additionally, instead of taking on any sort of spending reform, politicians want to pass a patch to continue spending as usual (Orange County Register, 2012). The Press-Enterprise argued that Proposition 30 offered no real solutions to the budget shortfalls occurring in 2012. Rather, it provided a “tax increase without putting state finances on a sustainable course” (Press Enterprise, 2012).

Relevance of Proposition 30

Proposition 30 is relevant even after being passed in 2012 as a temporary spending measure. In 2016, Proposition 30 was replaced and extended through Proposition 55. As a result, six billion in funding is being raised by tax dollars to pay for K-12 education and community colleges throughout the state until 2030 (Budgetpedia, 2016).

Impact of Proposition 30

After being passed in 2012, Proposition injected six billion dollars into K-12 schools and community colleges. Initially, the six billion dollars would be sent to schools through the 2016 fiscal year. Of the six billion dollars, 89% would be sent to K-12 schools throughout the state and 11% would be given out to community colleges.  However, the language of Proposition 30 states it would have to be renewed to continue after the 2016 fiscal year. Therefore, in the future, Proposition 55 would be used as a measure to extend the educational funding far into the future.

Overall, per the Los Angeles Daily News, Proposition 30 “stabilized school funding in California for the first time since the Great Recession began, allowing school districts to avert thousands of teacher layoffs” (Los Angeles Daily News, 2013). In addition, Proposition 30 was a measure used to help the California State legislature balance its budget without “slashing social programs” (Los Angeles Daily News, 2013). Thus, the initial impact of Proposition 30 was felt throughout the state. It helped school districts like Los Angeles Unified with their balance sheets, which allowed them to avoid teacher layoffs and provide much-needed services to the schools they serve (Los Angeles Daily News, 2013).

Summary of Proposition 55

Proposition 55 was a measure on the November 2016 California ballot that would continue the instituted tax rates of Proposition 30 through the year 2030. In this instance, Proposition 55 would make sure the tax revenues of Proposition 30 would not end after four years. The summary of Proposition 30 is the following:

  • Continued the tax rates instituted by Proposition 30; outlined above in Proposition 30; however, it does not extend the ¼ cent increase in sales tax in addition to only using half the revenue raised for K-12 education and community colleges (Legislative Analyst’s Office, 2016).
  • Extends for twelve years the personal tax increases enacted in 2012 for income earners of over $250,000 (Legislative Analyst’s Office, 2016).
  • Roughly half of the revenue raised will go to K-12 education and community colleges (Legislative Analyst’s Office, 2016).
  • 2 billion of the funds during certain years will be used for healthcare programs (i.e., Medi-cal) (Legislative Analyst’s Office, 2016).
  • Inhibits funds to be used for administrative costs but allowed for local school boards the discretion to decide how funds were spent (Legislative Analyst’s Office, 2016).

During the campaign, there were a number of proponents and opponents of Proposition 55. Proponents of Proposition 55 believed education and children are important to California’s future and the extension of tax revenues will help ensure viable funding to be provided to California’s schools (Ballotpedia, 2016). In addition, proponents felt Proposition 55 would allow for a safety net if budget cuts would occur again if another recession hits. Opponents of Proposition 55 state the tax increases only affect a small number of wealthy people. Also, opponents note that Proposition 55 maintains the status quo without any major budgetary reforms (Ballotpedia, 2016).

Within the media, the major proponents of Proposition 55 were the Sacramento Bee and Fresno Bee. The Sacramento Bee stated their support for Proposition 55 because funding is needed for education in the future as well as there may be signs from the legislature that they will want to “overhaul the state’s dysfunctional tax structure” (Sacramento Bee, 2016). In addition, the Fresno Bee announced their support for Proposition 55 because of the uncertainty of the California budget, which will ensure another income stream being available to prop up the public education system in California when another recession hits (Fresno Bee, 2016). Ultimately, proponents were able to campaign on the idea that education must be continued to be funded of revenue streams outside of the general fund to ensure education can be funded in times of budget uncertainty in the future.

On the other hand, opponents of Proposition 55 included the Los Angeles Times and San Diego Union-Tribune. The Los Angeles Times criticized Proposition 55 because of the ‘millionaire tax’ it embodies. The notion of a small group of people paying these taxes, which they argue will cause the “majority to lose its incentive to demand results” since they not feeling the brunt of the taxes (Los Angeles Times, 2018). Under a different argument, the San Diego Union-Tribune noted Proposition 55 does not cause any major reform in Sacramento, which allows for the status quo to maintain itself in the state capital. Also, the Tribune states “Sacramento has the interests of veteran teachers who are in the California Teachers Association and the California Federation of teachers that are valued far more than the interests of students, especially students who are minorities that live in the poorest communities” (San Diego Union-Tribune, 2016).

Relevance of Proposition 55

Proposition 55 is relevant because it is enacted until at least 2030. Taxes will be collected and injected into revenue streams for K-12 schools, community colleges, and California Medi-Cal healthcare system. In future elections, depending on the fiscal state of California, there will be arguments of whether these additional funds will be needed to fund education due to the increased funding provided in the state’s budget for education (Budget Act, 2017).

Impact of Proposition 55

The impacts of Proposition 55 relate to the ability to inject additional funding into California’s K-12 schools and community college system; approximately between $4 billion and 9 billion dollars each, depending on the health of the economy and stock market (Legislative Analyst’s Office, 2016). Additional funding provides a safety valve if a future fiscal crisis occurs. The increases reserves between $60 million and $1.5 billion dollars per year create a rainy day fund. In addition, between $0 and $2 billion dollars goes towards increased Medi-Cal funding, but it depends on the decisions and estimates provided by the Governor’s main budget advisor  (Legislative Analyst’s Office, 2016). One main caveat of these dollar amounts going to these particular areas involves how well the stock market and economy is doing in California. Only when the economy is doing well will there be the full estimated amounts of dollars going to education and healthcare. Therefore, year to year revenue raised will differ depending on those variables, which will provide education institutions with varying funds on a yearly basis.

Educators across the state of California discuss how the additional funds of Proposition 55 have helped school funding. According to the California Teachers Association, funding from Proposition 55 will provide “local school districts with the money they need to hire quality teachers and school employees, and to reduce class sizes for our students” (CTA, 2016). However, on the other hand, even with additional funds districts like San Marcos Unified, Poway Unified, and San Diego Unified are among many districts who are short on the funds they need. While each of these districts have differing financial pictures, they have all faced budget cuts.

Relevant Challenges to Proposition 30 and 55

Outside of the 2012 and 2016 campaigns to pass Propositions 30 and 55, there has not been any notable legal battles to challenge the legality of these Propositions. Much of the battle took place on the campaign trail in 2012 and 2016. Throughout each campaign, millions of dollars were raised by proponents and opponents of each of these Propositions (Budgetpedia, 2016). However, after the elections, there has not been much opposition to Proposition 30 and 55. Any opposition towards increasing school funding has occurred in the California legislature. In the Budget Act of 2017,  it includes more funding for education. An opposition was shown when all Republicans in the California State Assembly voted against the 2017-2018 California budget or abstained from the vote (Budget Act, 2017). This demonstrates the minority party does not want to increase spending in California. Rather, they would like to reform the mismanagement of the budget instead of raising taxes and spending more money.

Conclusion

Propositions 30 and 55 were highly contested during each of their campaigns. The impacts of these Propositions in education have been noticed by educators. Proponents believe these funds are a great safety valve as well as additional funding for California’s K-12 schools and community colleges. Opponents feel like each of these Propositions were passed as a bandage to cover the budget mismanagement occurring at the state capital. Over the next few years, it will be interesting to see the long-term effects of Proposition 55 if a fiscal crisis occurs with the state budget as well as any future economic recessions. When and if these occur, it will be a great indicator of whether the Proposition can hold up California’s public education system in times of need.

References

California Senate Bill 86(2017), CA SB 86 https://legiscan.com/CA/rollcall/SB86/id/643396

California Teachers Association. (2016). Frequently asked questions on Proposition 55. California Teachers Association. Retrieved March 4, 2016 from https://www.cta.org/~/media/Documents/Campaign%2016/Prop%2055%20FAQ%20Updated%20CTA%2071116.ashx

Ballotpedia. (2012). California proposition 30, sales and income tax increase. Ballotpedia. Retrieved March 4th, 2018 from https://ballotpedia.org/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012)

Ballotpedia. (2016). California proposition 55, extension of proposition 30 tax income increase. Ballotpedia. Retrieved March 4th, 2018 from https://ballotpedia.org/California_Proposition_55,_Extension_of_the_Proposition_30_Income_Tax_Increase_(2016) 

Budget Act of 2017, Cal Assembl. AB-96 Budget Act of (2017-2018)

Legislative Analyst’s Office. (2016). Proposition 55: Tax extension to fund education and healthcare. Initiative constitutional amendment. Legislative Analyst’s Office. Retrieved March 4, 2018 from http://www.lao.ca.gov/Publications/Report/3765

Legislative Analyst’s Office. (2012). Proposition 30: Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment. Legislative Analyst’s Office.  Retrieved March 4, 2018, from http://www.lao.ca.gov/ballot/2012/30_11_2012.aspx

The Sacramento Bee Editorial (2016). Yes, on Proposition 55 tax, unenthusiastically. The Sacramento Bee. Retrieved March 4, 2018 from http://www.sacbee.com/opinion/editorials/article103787316.html

San Diego Union Tribune Editorial. (2016). Prop. 55: the three big reasons to vote no. San Diego Union Tribune. Retrieved March 4th, 2018 from http://www.sandiegouniontribune.com/opinion/sd-no-prop-55-flawed-status-quo-20160923-story.html

Los Angeles Times Editorial. (2016). Don’t tie California’s fate to wall street’s volatility. Vote no on Proposition 55. The Los Angeles Times.  Retrieved March 4th, 2018 from http://www.latimes.com/opinion/editorials/la-ed-end-proposition-55-20160930-snap-story.html

The Fresno Bee Editorial. (2016). Yes on Proposition 55 tax, but only because the alternative is worse. The Fresno Bee. Retrieved March 4th, 2018 from http://www.fresnobee.com/opinion/editorials/article103755531.html

Los Angeles Times (2012). Jerry Brown, tax realist. The Los Angeles Times. Retrieved March 4, 2018 from http://www.lao.ca.gov/ballot/2012/30_11_2012.aspx

San Francisco Chronicle (2012). Chronicle recommends: Editorial state propositions. Retrieved March 4, 2018 from https://www.sfgate.com/default/article/Editorial-Chronicle-recommends-3923462.php

Orange County Register Editorial. (2012). Editorial: No on Prop 30 & Prop 38 tax hikes. The Orange County Register. Retrieved March 4, 2018 from https://www.ocregister.com/2012/10/03/editorial-no-on-prop-30-prop-38-tax-hikes/

Press Enterprise Editorial.  (2012). No on 30 and 38. Retrieved March 4, 2018 from https://ballotpedia.org/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012)#cite_note-49
Los Angeles Daily Times Editorial. (2013, November 10). Proposition 30: A year later, California schools seeing benefits of tax measure. The Los Angeles Daily Times. .Retrieved March 4, 2018, from http://www.dailynews.com/social-affairs/20131110/proposition-30-a-year-later-california-schools-seeing-benefits-of-tax-measure

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