Cal School Budget Deficit 840-Miles Long, But Only 6-Inches Deep

At a State Budget Forum held on Tuesday Dec. 14 in Los Angeles, Gov.-elect Jerry Brown and re-elected State Treasurer Bill Lockyer indicated that they are going to move quickly to significantly cut state funding for K-12 public schools given a “shocking” $28 billion state budget deficit, about $8 billion more than projected by the Legislative Analyst’s Office (Link).

This signals the next showdown over taxes in California is going to be at the local level as school districts are going to try and shift operating costs to local property taxpayers via a parcel tax.

Lockyer stated that unless one lived in Mendocino County “there is going to be cuts.” What Lockyer was referring to is that Mendocino County is the only county where the school districts mostly depend on local property taxes instead of state funding. In other words what Brown is indicating is that given the state’s dire budget circumstances he wants to shift maybe about 25% of school operating costs back onto local school districts via parcel taxes. This would be sort of like eliminating 25% of Prop 13.

Gov.-elect Jerry Brown said: “we’re living in fantasyland” when it comes to the budget deficit. Brown is apparently right as California public school budget deficitshave been offset by Federal Stimulus dollars since 2008. But there are no more Stimulus fantasy dollars. The reality that is dawning on politicians and school district officials is that the recession is not just another economic cycle but apparently a prolonged deflation.

Lockyer repeated Gov.-elect Jerry Brown’s budget mantra that communities are going to have to choose between “lower services or higher taxes.” But beyond all the hysteria reported in the media, are local school districts really unable to absorb more cuts when there are other unmentioned options?

Consider the following:

  1. By bumping the average class size from 21 to just 24 students some $6.8 billion could be saved, reflecting 19% of the entire K-12 state education budget allocation.
  2. The Legislative Analyst’s Office’s report of May 2010 recommended that further categorical school programs be deregulated which could protect funding for core teaching. In 2009, the Legislature passed Assembly Bill ABX-4-2 that deregulated 40 categorical programs allowing 18.355% of the unrestricted portion of local school budgets to be absorbed without cutting core teachers or programs. This resulted in a $4.529 billion reduction in the state budget for K-12 education (see here).
  3. The LAO study identified another 18 categorical programs that could be deregulated for a cost savings of $7.473 billion. The term “categorical” programs is a euphemism for non-essential jobs protected by politicians to buy votes by locking them into the funding formula for public schools.
  4. The total of just the above three items is $18.8 billion. In other words a whopping 42% of the $44.6 billion state K-12 education budget prior to 2010 was being spent on ancillary jobs programs and padded core classroom teacher jobs as a result of small class sizes.

    Those looking at a parcel tax fix to the problem are facing the fact that 89% of proposed school parcel taxes on the Nov. 2 ballot were defeated. Only Berkeley Unified and Fremont-Alameda Unified School Districts were able to pass parcel taxes. But only a $53 per parcel tax per year was passed in Alameda, not enough to meet the huge impending shortfall.

    The reality about parcel taxes is that from 2001 to 2009 only 83 school districts passed parcel taxes out of 132 parcel tax elections and 980 total school districts in California. 66 of those school districts were in northern California, mainly in small school districts located in wealthy communities. Only 7 parcel taxes have passed in southern California. The grand total of all parcel tax revenues in the state is reported to be about $250 million, or about a half-percent of the entire K-12 education budget for 2009.

    A parcel tax is a redundant property tax. However, unlike a property tax, which fluctuates on the assessed value of each property, a parcel tax is a flat tax that stays fixed no matter what if property values decline. Thus, parcel taxes are especially unpopular in a recession.

    Local school districts have had two years to prepare for the situation they are now facing and are probably unrealistic to see parcel taxes as a solution. Even if the voting threshold for parcel tax for school operating costs could magically be lowered from 66% to 55% as sought by public school activists, the amount of the tax burden that would have to be levied on each property (possibly $1,000 to $3,000 per year) would likely be unpopular in a recession; let alone it would probably take two years or more before such tax revenues could be realized.

    If voters also realize that most school districts can still operate core functions despite the additional impending cutbacks, parcel taxes will be even less popular. But the media continues to only report those voices claiming that further cutbacks would decimate public schools. They would decimate public schools, but mainly the ancillary programs such as money for K-3 class size reductions, after school programs, busing, child nutrition, adults in correctional facilities, and county oversight. This is the level of “services” that Gov.-elect Brown and Treasurer Bill Lockyer are apparently talking about being cut, not core educational services. What is not being reported is that school budget cuts would mainly be to “non-essential” school services.

    To get public schools out of a budget fantasyland, parents are going to have to sort out the media reported hysteria from the reality at hand. This is perhaps why parents are seeing the handwriting on the wall and are using the new state “trigger law” in Compton, California to demand that their children be moved into charter schools that are much cheaper to operate because they don’t have all those categorical programs.

    (Link)

    Bernie Rhinerson of the San Diego Unified School District was quoted in the L.A. Times: “We can’t take any more cuts. You really need to [look] elsewhere, we are at the cliff.” While that budget cliff may be as long as the 840-mile California coastline, it may be only a six inch deep step into a charter school.