The State of Education
Last Monday, May 14th, Governor Jerry Brown of California released the state's revised budget for the 2012-13 fiscal year (FY). The original budget projected a deficit of $9.2 Billion; the revised estimate pushed the gap to $15.7 Billion. The announcement came as something of a shock: a larger deficit was anticipated, but not the magnitude in the revision.
In part, the deteriorating fiscal situation reflects the weakness of the California economy. Housing prices remain depressed and job growth anemic. Continued weakness in employment translates into lower personal income and sales tax revenue for the state. The two account for almost 86 percent of California's projected revenues in the coming fiscal year. Relative to FY 2011-12, the budget assumes a better than 6 percent increase in income and sales tax revenues. Any future shortfall obviously will exacerbate the shortfall.
If the state's revenue issues are cyclical, then its expenditure issues are structural — and, largely problems of its own doing. Public school funding, in particular, has long been a contentious political issue in California. It is as well a problem which has defied a solution. Until a fix acceptable to all involved is adopted, K-12 financing will continue to consume a disproportionate share of general fund expenditures, squeezing other initiatives (higher education) in the process.
The 1971 ruling in the Serrano v. Priest case sparked the state's growing involvement in the financing of public education. The Serrano decision effectively invalidated the traditional local, property tax based funding of K-12 public education. The ruling compelled politicians in Sacramento, the state capitol, to become more actively engaged in funding primary and secondary education. Over the next forty years, the state has tried with limited success to satisfy the several constituencies (from parents, to teachers, to home owners and local officials) with a stake in the matter. Just as it seems a viable, long-term solution presents itself, one of the parties involved causes the deal to unravel.
Assembly Bill 65 (1977) was the first deal to be undone. No sooner was the law enacted then property owners vetoed the solution by passing Proposition 13 (also known as, the People's Initiative to Limit Property Taxation). Ten years later the passage of Proposition 98 (the Classroom Instructional Improvement and Accountability Act) in 1988 further muddled the problem. Proposition 98 amended the California constitution to provide for minimum state funding requirements for public education. California must devote at least 39 percent of its general fund expenditures to K-12 public education. Not only has failed to resolve the problem but has created new, more vexatious complications. Proposition 98 has diminished enthusiasm for supporting the state's university system. It also provides an excuse for local municipalities to avoid paying their fair share and to lessen their incentive to deal decisively with their own financial issues. As a result California now ranks 29th in spending per public school student.
It is said if you wish to view the future, visit California. If in the post-war world the state is the vanguard, it is simply because California enjoys an educated populace with the skills to solve the problems to unlock tomorrow's promise. For this progress (and the ensuing prosperity) Californians owe a debt of gratitude to Pat Brown, the father of Jerry Brown, the current governor. It was during the former's tenure as governor in 1960 that the "Master Plan" to expand the state's investment in higher education was adopted. His vision was to create a public system of higher education to become the envy of the world. In this Pat Brown succeeded.
It remains uncertain whether his successors will rise to meet the current challenge. Tough choices are needed. But if decisions are pushed further into the future, California's golden age may draw to a close.
Comparative state spending on public higher education obtained from the Census Bureau. All states shown except for CO which was excluded as an outlier. Spending change shown in real terms adjusted by the change in the Consumer Price Index over the period studied.
CA annual state expenditure data obtained from the Legislative Analyst's Office.
(Sources: CA Legislative Analyst's Office; Census Bureau; Bureau of Labor Statistics; AIFS estimates.)
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