Proposition 1B - Education Funding ProtectionMay 1, 2009
What it does
Proposition 1B requires that K-14 education receive a $9.3 billion supplement over five to six years beginning in 2011-12 to compensate for recent and hotly disputed budget cuts. Waiting two years to receive the funds guarantees education interests the highest priority for payments from the rainy day fund set up by Prop. 1A. Proposition 1B only takes effect if Prop. 1A also passes.
Prop. 1B amends Prop. 98, part of the state Constitution, which was passed by voters in 1998 and modified in 1990. The goal of Prop. 98 was to stabilize funding for K-14 education (kindergarten through community college) at a high level.
However, Prop. 1B only settles the current dispute over which Prop. 98 test should be used. It doesn't simplify Prop. 98's convoluted procedures, nor clarify its language. Therefore, it's difficult to gauge Prop. 1Bs fiscal effects. The minimum guarantee for K-14 education changes each year, in large part due to changes in the state's economy and revenues. Revenue changes can be so volatile that they change the minimum guarantee by billions of dollars.
Because Prop. 1B's $9.3 billion educational payoff don't begin until 2011, the Legislative Analyst thinks that it could produce considerable savings for the state General Fund for the next two years. But once those payments begin, the K-14 educational base funding requirement is likely to be higher than under current law, potentially by billions of dollars each year.
Why it is on the ballot
Prop. 1B is part of the legislative deal between ideological opposites noted in SPUR’s analysis of Prop 1A. In order to pass Prop. 1A which caps state spending, fiscal conservatives had to neutralize the California Teachers Association which had defeated a prior spending cap. In order to get generous funding for education and for an extension of tax increases, social liberals had to get support from some fiscal conservatives. Thus, Prop. 1A holds the funding mechanism for Prop. 1B, and if either one fails education funding returns to the status quo.
- California education has been cut by more than $11 billion over the past two years. More than 27,000 teachers received layoff notices in March. If education continues to take 50 percent of the state budget cuts, it would be equivalent of laying off an additional 164,000 teachers. Prop. 1B starts the process of paying our schools and community colleges back as economic conditions improve.
- In recent years, different interpretations of ambiguities in Prop. 98 have led to wildly different opinions of how much the state owes K-14 education. Prop. 1B settles this dispute by giving education interests all the $9.3 billion they think they’re owed, even though they must wait two more years to get it.
- Prop. 1B asks the taxpayers to repay the education system for funding that it ought to forgo as part of the shared sacrifice in the budget package. Education should participate in the sacrifices that all sectors of government are experiencing. It is unfair to all the other people dependent on state government to single out education for such preferential treatment. Moreover, we should not bind the hands of future elected officials to determine the right priority for spending with what is, in effect, a huge set-aside for education in the future.
- Prop. 1B does nothing to settle future key interpretation disputes. The minimum guarantee for K-14 education changes each year in large part due to changes in the state’s economy and revenues. Revenue changes can be so volatile that they change the minimum guarantee by billions of dollars.
California’s education financing is so stunningly complex that two sets of analysts differ over whether $9.3 billion is even owed to schools! It’s even difficult to assess the facts: does California rank 47th in spending per student, or 25th? Education, which is 40 percent of the state budget, has clearly been hurt to some extent by the state’s revenue freefall, and is likely to suffer further. The Legislative Analyst can make a guess about Prop. 1B’s economic impact over the next few years, but the long-term picture is opaque. Prop. 1B is part of a necessary political compromise with unknown economic impacts that will likely have to be renegotiated as state revenues improve.
SPUR recommends a “Yes” vote on Proposition 1B.