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Propping up Schools 

Two tax measures would generate billions, but which promises more for local education?

Perhaps some -- OK, probably most -- of you are daunted by the task of studying up on the 11 statewide ballot propositions on the November ballot. You might even be considering the easy-weasel way out: Just vote for the prez and drop it in the box. We're certain that some of you, however, know exactly how you'll vote, at least on the measures that say "will increase taxes" -- open mouth gently, place tongue between lips, and blow. Maybe some of you are planning to vote "no" on everything simply to reject the idea of adding more laws and amendments to what is already the world's third longest constitution. "Where's our constitutional convention?!"

Ahem. The rest of you, you've got 11 props to deal with, everything from ending the death penalty to labeling GMOs. Robert Greene, with the Los Angeles Times, says Proposition 31 is the prop to watch: It would change the state's budget cycle from one-year to two-year, give local governments tons more control over how they spend their money and enforce state regulations -- and allow the governor to make emergency budget cuts. Greene suggests it would "force the Legislature to spend more time reviewing programs and less time passing bills." Some say it's contradictory and dangerous.

It's a biggun, and you should go bone up on it.

But even bigger might be Propositions 30 and 38 -- yep, the two tax-increase measures. They might be the most confusing pair of propositions on the ballot. They each propose to do the same thing -- raise billions for the state's education system -- but in radically different ways. Most startlingly, what happens with these propositions will determine whether or not Gov. Jerry Brown swings his mighty ax down to lop nearly $6 billion from the state budget, mostly from education. These, actually, might be the props to really watch.

 

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Proposition 30 is Gov. Brown's baby, and he's already written its measures into the 2012-2013 budget. It's backed largely by the two teachers unions, with most cash coming from the California Teachers Association, the biggest campaign donor in the state, and a slew of other big unions, private corporations and assorted others. It would raise personal income tax rates for seven years on incomes above $250,000, and would be retroactive to Jan. 1. Those earning $250,000-$300,000 would pay another 1 percent in taxes, $300,000-$500,000 earners would pay another 2 percent, and those making over $500,000 would pay another 3 percent. It also would raise the sales tax rate for four years, from 7.25 percent to 7.5 percent.

Proposition 38, created and mostly funded by Molly Munger, a civil rights attorney from Pasadena, is backed by the California Parent Teacher Association and a small number of individuals. It would raise personal income tax rates for 12 years on all incomes above $7,316, on a sliding scale starting at 0.4 percent more on the low end and going up to another 2.2 percent on incomes above $2.5 million.

Prop. 38 raises more money than Prop. 30, and over a longer period of time -- about $10 billion a year the first few years and possibly more each year after, compared to Prop. 30's roughly $6 billion a year for five years, and a little less in the years it's phased in and phased out.

Prop. 30 money would be funneled into a new account within the general fund, where it would be used to begin replenishing another, long-standing education system-devoted account from which the state has been borrowing for years to fund other programs.

Prop. 38 money mostly would go directly to K-12 schools and early education programs, with specific strings attached and a round of new reporting and budgeting requirements. None of it could be used to raise salaries or pensions, and only 1 percent of it could be used for administrative costs. In addition, through the end of 2016-17, 30 percent of the revenue would be used by the state to pay down debt on general obligation bonds, mainly ones used for schools' and universities' infrastructure improvements.

If Prop. 30 loses, Gov. Brown will cut $5.9 billion in spending from the 2012-13 budget, mostly from education but also from other programs, including city police departments, developmental services, parks, game wardens, flood control and fire management. That's the governor's "backup budget plan" -- or, as Sacramento Bee columnist Dan Walters calls it, that's "political extortion." But even Walters allows that the governor seems to have no option. The money isn't there. California's deficit reached $16 billion this year.

Well, heck -- why not vote for both of them and hope they both pass? Here's the catch: You can vote on both but you can't have both. If they both pass -- and they'd each need 50 percent of the ballots cast to do that -- the one with the most votes wins. That's probably why, as of last week's polls, Prop. 30 was still in front of Prop. 38 -- although neither was exactly in a winning position. And it's largely why some local education administrators seem to be leaning toward the one that prevents further, massive cuts.

 

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Behind Garry Eagles' desk inside the Humboldt County Office of Education on Myrtle Avenue, a painting of a soaring eagle hangs on the wall. Below it, two eagle sculptures spread their wings on either end of a long shelf -- gifts, Eagles said, hefting one of the sculptures gently. He looked slightly self-conscious only for a moment, then his face relaxed back into a kindly intensity. So, which proposition strikes his fancy?

"Neither one is very good," he said. "The Munger initiative does not do enough to shore up the general fund of the state of California, and the governor's initiative does not raise enough money to totally fix the problem."

Eagles has worked in the California education system for 41 years, starting off as an instructional aide in Stockton. He moved to Humboldt County in 1979, and worked in the Eureka City School District until 2003, when he became the Humboldt County superintendent of schools. He oversees 31 school districts (plus the office of education), 87 schools and 18,000 students. He's watched enrollments decline in Humboldt and costs rise, but nothing beats the drastic reductions in funding that schools have suffered in recent years.

The problem, he said -- and the reason he thinks taxes should be raised, one way or the other -- is that since the recession began, the state has been borrowing from the K-12 system's designated general fund account -- called Proposition 98 funds -- and consistently delaying payment of the monies it does send their way, in order to pay for other programs.

"And so 2007, 2008, those were the last school years that were fully funded under Proposition 98," Eagles said.

Typically, about half the state general fund is spent on education, with K-12 typically getting about 40 percent and higher education 10 percent. These state dollars are mostly from the Prop. 98 fund, and they can make up 50 to 75 percent of K-12 schools budgets and about two-thirds of community college budgets.

Prop. 98 is the law passed in 1988 to provide a minimum threshold of education funding. There are three ways to calculate it, depending on how the economy's doing, but most of the time it's figured by multiplying the growth in K-12 attendance by the change in per capita personal income. Eagles said the state's been paying schools only about 78 cents on the dollar of Prop. 98 funds owed them, and then deferring as much as 30 percent of those payments, sometimes into the next fiscal year. The borrowing helps the state meet commitments to other programs on time, but it messes up schools' budgeting from year to year.

"So, on the state's books, they're 'balanced,'" Eagles said. "But what it means for my local districts is, I have less money to work with, and I have to keep more in the bank, because I've got to keep enough cash in order to make payroll. So it's a double whammy on school districts. Not only do they have to cut back because they're not getting as much total revenue from the state, they have to spend it slower, which means further reductions in their programs."

As a result, he said, Humboldt County schools have been underfunded by the state by about $20.8 million a year -- which, over five years, means a cumulative shortfall of $100 million dollars.

Since 2008-2009, Eagles said, Humboldt County schools overall have lost 100 teacher and 84 support staff positions. Maybe 12 percent of those losses could be attributed to enrollment declines. But the majority of them are because of the state funding shortfall, as well as the increasing cost of doing business: Salaries go up in stepped increments each year, health benefits have gone up 40 percent in the last five years, higher gasoline prices increase transportation costs.

Six local school districts -- Eureka City, Klamath-Trinity Joint Union, Loleta Elementary, Maple Creek, Scotia Elementary and South Bay -- won't be able to pay their bills over the next couple of years. Sure, some of their troubles might be from severely declining enrollments. But even more enrollment-stable ones, like Northern Humboldt Union High School District, have suffered.

Northern Humboldt oversees Arcata High, McKinleyville High, Tsurai High, Pacific Coast High (an alternative school) and Six Rivers Charter School. Kenny Richards, the district's superintendent for the past 14 years, said his district has felt the state funding shortfall. This year he figures his district is getting about $1,500 per average daily attendance less than it is owed by the state.

Among the changes that's led to: reducing the full-time district nurse to part time, increasing class sizes by one to two students and eliminating some courses including auto, woodworking and Spanish for native speakers. The district also has reduced equipment and supplies spending, closed a community day school for at-risk students that had an average daily attendance of 35, and eliminated an adult education program that served about 300 people.

"The first thing we cut was equipment, four years ago," Richards said. "We decided not to buy new computers. We cut supplemental materials, too --workbooks. But we did get a bond passed [Measure Q] and that's helped us bring back those new computers."

Dana Silvernale, who's on the Northern Humboldt school board, credits grants and local bond measures as well as Richards' management for keeping the district in relatively good shape.

"But even so, at the rate things are going, our reserve funds will be depleted by 2014," she said by phone last week.

It's a similar story for the community colleges, whose funds also are determined on a per-student basis. Colleges increase or reduce the number of course sections they can offer, depending on their annual per-student funding cap. The state has reduced community college funding by $809 million over the past three years, according to the California Community Colleges chancellor's office. As a result, enrollment funding is now capped at $4,565 per full-time equivalent student for the 2012-13 school year. Back in 2010-11, it was $5,209.

Lee Lindsey, vice president of administrative services at College of the Redwoods, says the state owes the college $5 million in cash deferrals of Prop. 98 funds. In just 2011-12, College of the Redwoods took a $1.2 million cut and lost funding for 276 students, he says. In 2009-10, the college offered 2,030 classes districtwide; in 2011-12, it offered 1,615. Among the classes cut were dance, aerobics, yoga, Pilates and women's self-defense. And there are longer wait lists to get into the remaining classes, with the longest for English and math.

In addition, last year nine faculty members and 18 staff members took advantage of an early retirement program. Not all of those positions will be replaced, although Lindsey didn't give a figure.

"Each year we thin the soup," Lindsey said over the phone last week.

The California State University system also has been pinched -- by state cash deferrals and rising costs. In the last two years, the statewide university system has lost $750 million to $1.1. billion from state cash deferrals, said Rollin Richmond, president of Humboldt State University, last week.

Humboldt State's share of that loss was about $5 million, he said. Among the impacts, maintenance has been deferred on some of the 99-year-old university's buildings and, more disruptively, tuition was hiked 9.1 percent this fall. And although Humboldt State's enrollment has risen some in the past couple of years, to a current 8,000 students (7,300 full-time-equivalent ones), budget cuts do depress the number of students who could attend.

"We get a lot more qualified applicants than we're able to admit," said Richmond.

 

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Local administrators and educators don't seem impressed with Prop. 38, even if in the case of K-12 and preschool programs it would bring in significant new cash. Some of the measure's revenues would be used by the state to pay down debt on education bonds -- about $3 million right away specifically for community college and university infrastructure bonds; that's about all it would do for higher education.

They're more concerned about what they'd lose if Prop. 30 loses. Which is why, without actively coming out against Prop. 38 -- that could be impolitic -- they seem to be focusing more of their efforts on explaining Prop. 30, the governor's tax hike. Remaining neutral is clearly difficult. An e-mail sent to some faculty by a College of the Redwoods dean recently cautioned: "We have been advised by the Chancellor's Office that using class time (or dismissing class early and allowing students who wish to remain) to inform students about Prop. 30 crosses the line into inappropriate political advocacy."

Even Humboldt K-12 county superintendent Garry Eagles has to restrain himself. Eagles exudes that calm, friendly, straightforward confidence one hopes for in an educator, and he seems to have endless patience when it comes to talking about the complexities of the California budget and the current education funding propositions. But he admits that, as he's been analyzing and preparing info sheets on these measures, he petered out on his analysis of 38. No, he hasn't typed his 87 school's names into the Yes on 38's site's "benefits calculator" to see what each school supposedly would get if the measure passes.

"The governor's initiative doesn't take care of all of the deferrals, but it helps pay down a lot of what the state owes us," he said. "So while school districts won't see a lot of new money, they will get their money more on time, which means that services can begin to be restored."

It's true there would be no "new" money from Prop. 30 -- but less would be siphoned away or deferred. The revenue limit deficit -- what the state owes the county school system in deferred and unpaid Prop. 98 monies -- would still go up, by about $23.7 million, said Eagles. But he sees another, less direct benefit to the measure: Putting more money into the general fund -- and stopping the governor's trigger cuts -- could improve a student's life by funding social service programs.

"Education does not operate in isolation," Eagles said. "We can't just get funded and miraculously all of a sudden these kids are going to do well. If they haven't eaten well, if there's alcoholism, drug issues not being addressed, a parent out of work -- if all of those stressors at home aren't dealt with, you can't expect the child to come to school prepared to learn."

If the measure fails, the governor's "trigger cuts" would result in a $6.95 million reduction in state funds currently budgeted for the Humboldt County K-12 system. Each district is responding to that event in different ways. The Northern Humboldt Union High School District, for example, will shorten the school year by five days, which in turn would cut teachers' salaries by five days, said Superintendent Richards.

A few districts, meanwhile, are hoping to bolster their pinched coffers with more local funds. Arcata Elementary School District has two measures on the ballot. Measure E would levy a $49 per parcel tax on property owners (except those on SSI) for five years, with the money being used to pay for aides and music and art programs reduced by budget cuts. Measure F would authorize a $7 million bond to pay for updating sewage, plumbing and other infrastructure. The Fortuna High School District has a $10 million bond on the ballot that would pay for making the school's gym earthquake safe, among other upgrades.

 

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But say Prop. 38 does prevail. That would mean about $10 billion statewide annually, beginning in 2013-14, and possibly more in years after that until 2024. Sixty percent of that would go to K-12 schools through 2016-17 and 85 percent after that; 10 percent would go to preschools for the first four years and then 15 percent after that; and for four years, 30 percent of it would go toward paying off state debt.

Unlike current (and Prop. 30) state education funding, which is largely unrestricted but also susceptible to being "borrowed" by the state for other purposes, Prop. 38's school-dedicated revenues would go directly to each school in the state to be used for specific purposes.

The preschool funding would go toward expanding services and added reporting and assessments.

Of the amount that goes to K-12, 70 percent must be spent on per-pupil educational program grants, with higher amounts allotted to students in higher grades; 18 percent of the new-tax funds would go to low-income student grants, calculated on the number of students who qualify for a free meal; and 12 percent would go to training, technology and teaching materials.

Every school -- not just every district -- would have to prepare budgets detailing every expense. School boards would have to hold public hearings twice a year on how they propose to spend the money. And they'd have numerous other reporting requirements.

The Yes on 38 folks have developed a benefits calculator: Users type in a school's name to see what it would expect to get. Not all schools are in there, and it's unclear how the figures were derived. Nonethless, it projects that McKinleyville High would get nearly $600,000 in 2013-14, over $1 million in 2017-18 and $1.4 million in 2023-24. Eureka Senior High gets $1.45 million in 2013-14, all the way up to $3.4 million in the 12th year. Garfield Elementary: $47,000 the first year to $112,000 in the last year.

However, county superintendent Eagles said the layers of new bureaucracy the measure creates -- from mandated new programs to what he calls heavy reporting requirements -- would be hard for his rural schools to manage, especially since the measure doesn't allow the money to be spent on administration, salary raises or operational costs.

"Our school districts have cut central bureaucracy and support systems," Eagles said. "Very few of our libraries have librarians. We don't have level of school nurses we used to have."

And no matter how small the school -- or its district -- there's still a minimum level of operations that must be funded, and some operational costs are higher in rural areas. Prop. 38 won't help in those areas, he said. And, the monies might not actually go where they're intended in some cases, at least in Humboldt. The formula for determining how the 18 percent meant for low-income students is dispersed, for instance, would be based on the poverty rate of the community the school is in, not on the poverty rate of the students in the school, Eagles said. And in Humboldt, he said, some communities are wealthier than their students. Currently, districts get to fine-tune such earmarked funds and give them to the schools that need them. Under the Munger initiative, that wouldn't happen.

"There's very little recognition that it costs more to tend to rural schools," Eagles said. "A nurse here might visit 22 schools to get to 2,000 kids, whereas a nurse in an urban district might have 2,000 kids in one school. ... The Munger initiative is one-size-fits-all."

Now, if the base funding was restored, then the Munger initiative would make more sense, he said. "The governor wants to fund the cake," he said. "Munger wants to fund the frosting."

If Prop. 30 passes, College of the Redwoods' funding would increase by $222,720, said Vice President Lindsey. In addition, the state would pay the college $1 million of the $5 million it owes in late and deferred funding. The enrollment cap would increase by 49 full-time equivalent students.

If it fails, College of the Redwoods' funding cap would decrease by 346 full-time equivalent students and its funding would be slashed by about $1.6 million.

At Humboldt State University, the main thing that would happen if Prop. 30 passes is that trigger cuts as high as $5 million would be averted ($250 million for the university system overall). The systemwide 9 percent tuition hike -- $249 more a semester -- instituted this fall would be rescinded, and students would get refunds, said Richmond.

If the measure fails, the trigger cuts would happen. And, tuition would go up again, by 5 percent -- about $150 more a semester -- for undergraduates, raising the per-semester fee to $3,135.

Richmond said it's estimated that enrollment would drop by 20,000 among the 23 CSU campuses, and about 1,500 faculty and staff jobs might be cut. Humboldt State provost Bob Snyder said the university has enough one-time money to get through this school year. But it's hard to assess what will happen next year if the trigger cuts take place. Tuition increases likely won't offset the trigger cut -- but then what the exact cut will be and how many students the university will be able to enroll is not yet known.

 

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Richmond said, if he had his druthers, he'd "make education free all the way through university."

"It's for society's benefit," he said.

In fact, up until 1984, there was no per-unit fee to attend College of the Redwoods, said the college's director of communications and marketing, Paul DeMark. And even now its fees are among the cheapest in the nation.

But across higher education, costs have risen. Enrollments have been reduced. Tuition has soared. It's a far cry from the state's 1960s master plan for higher education, which guaranteed room in the two university systems for a percentage of the top high school graduates, and room for all in the community colleges.

"We're close to the point of abandoning that compact," Richmond said.

Superintendent Eagles said if someone had asked him to write a proposition to fund education, he would have made the tax increase permanent. "I wouldn't propose a short-term tax increase," he said. "That's just pushing the problem down the line."

But, actually, he wouldn't try to fix the problem with an initiative in the first place.

"I think our legislative leaders ought to be fixing these issues," he said. "The political gridlock in Sacramento is an embarrassment. These initiatives should not have to happen."

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Heidi Walters

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Heidi Walters has been a staff writer with the North Coast Journal since 2005.

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