The graph couldn’t be clearer – and those numbers haven’t changed much in the past two years.
The Acalanes Union High School District (AUHSD) is staring at significant budget cuts unless local taxpayers open up their wallets. Three nearby elementary school districts are caught in the same trap, and school districts around the state are struggling to pay teachers and limit class sizes.
At the same time, almost everyone agrees that educating children and giving them a chance to succeed is one of the most important things the state can do.
So how did we get here? Why can’t Miramonte keep class sizes down? Why is the Acalanes district considering firing all its librarians and cutting back on counselors?
What has gone wrong? How did we get here? And what has shaped California’s broken school funding system?
The roots of the problem extend back to the 1960s. At that time, California ranked in the top five states nationwide in per-pupil funding. But critics pointed to enormous disparities between wealthy communities and the rest of the state.
Because schools were mostly funded through local property taxes, the amount available to school districts depended on the local tax rate and assessed values – great for property-rich districts but harmful to communities with low property values and no major industries.
The 1971 California Supreme Court Serrano v. Priest decision ruled the system unconstitutional, forcing state legislators to magnify the state’s role in school funding. Senate Bill 90 (1972) increased state aid and equalized per pupil revenues across districts by augmenting property tax revenue with income taxes from the state General Fund.
Then came Proposition 13, a result of California’s unique system allowing voters to bypass the legislature and make important finance decisions through the initiative process.
Prop. 13 proponents made a compelling case to voters by pointing to how property tax adjustments based on rapidly rising home values forced low income and fixed income homeowners (largely seniors) out of their homes.
But what they didn’t highlight is that Prop. 13 also cut property taxes for commercial property owners. By capping property tax rates at 1% of assessed value, rolling back assessments to 1975 levels, and limiting annual assessment increases to 2% unless a property changed ownership, the measure immediately slashed local property taxes – the mainstay of school and local government financing – by almost 60%.
Few voters likely understand the impact Prop. 13 has had.
According to the Legislative Analyst’s Office, total revenues have dropped by more than $1 trillion since its passage. And because residential properties turn over far more frequently than commercial properties (and businesses can employ several schemes to change ownership without triggering reassessment), the property tax burden has shifted dramatically to homeowners.
Meanwhile, most schools are now forced to rely on state income tax revenues, which are far more volatile than property taxes, creating a feast-or-famine regime for school funding.
Prop. 13 hit school funding in other ways.
It set a requirement that both the legislature and local governments must have a two-thirds majority to increase taxes. That means that even if most voters agree to increased taxes for schools, a “no” vote by slightly less than 34% of voters can prevent it.
Over the years there have been several legislative and voter attempts to mitigate the damage to school budgets.
The legislature tried to protect districts by setting property tax distribution rates between school districts, cities, counties and special districts – but the rates they used were based on the uneven county-wide allocations in place before Prop. 13 was enacted. That flawed decision continues to impact school district budgets to this day.
In 1988, California voters who were fed up with a feast-or-famine school financing system passed Prop. 98, requiring that K-12 and community colleges get a constitutionally guaranteed annual share of at least 40% of the General Fund.
But instead of setting a minimum level, the guarantee quickly became seen by lawmakers as the maximum schools should get. And its complicated set of rules makes adjustments a legislative nightmare.
In 2012, voters passed Proposition 30, the last major effort to increase funding for K-12 and community colleges. It included a four-year, quarter-percent rise in the state sales tax, and an increase in income taxes on earnings above $250,000 (extended until 2030).
Yet all those good intentions have collided with a central truth: there simply isn’t enough money under the current system to adequately fund schools and address the state’s other funding priorities.
“The bottom line,” according to Erin Heys and Sarah Swanbeck of The Berkeley Institute For Young Americans, is that “such reforms have trapped the majority of education funding in a gridlock of the state’s General Fund with few, if any, options to raise new revenue for education when the economy is strong, or to address budgetary shortfalls when the entire state revenue system fluctuates during recessions.”
