On January 10th, the Governor announced his 2013-14 proposed budget which includes $138.6 billion in General Fund spending (a 4.5% increase from 2012-13) and which shows surpluses through 2016-17. The Governor’s office feels that due to improvements in the economy, prior year belt tightening, and the recent passage of Propositions 30 and 39, this financial forecasting is warranted. However, with the appearance of a balanced budget, there are still questions about the level at which the economy is recovering, the unfunded liabilities from future pension payouts, and ongoing education funding.
The passage of Proposition 30 this past November dubbed the “Schools and Local Public Safety Protection Act of 2012”, increases sales and use taxes along with increases in personal income taxes. The increase in sales and use tax will be in effect from 2013 through 2016 and the personal income tax will be in effect from 2013 through 2018. The funds generated from these tax increases are expected to play a large part in the balanced budget expectations, but because both tax increases are based on an improving economy, a “real” amount of this tax revenue will not be known for some time.
Back in October, 2012, I wrote about Propositions 30 and 38’s focus on educational funding and their lack of provision to protect the funds already going to schools. I pointed out in that article that the California Lottery was supposed to help fund education and now I am pointing out another financial guarantee for education, Proposition 98’s minimum funding for education.
In 1988, voters approved Proposition 98 which guaranteed a minimum funding level for California’s K-12 and community colleges. It was supposed to set a minimum level of annual funding for education and guaranteed funding amount increases by the growth in the economy as measured by per capita personal income. However, our state lawmakers were able to work their magic on Proposition 98 by “kicking the can down the road” by the required 2/3 vote and were able to defer about $10 billion between 2007-08 and 2011-12 fiscal years by borrowing from the so-called “guaranteed” funding. As a result of deferred funding, education in California has suffered by reduced days of instruction, teacher layoffs, and reducing or eliminating programs and maintenance. The Governor’s budget proposes that the deferrals will be eliminated by 2017-18. Should we hold our breath for that to happen?
I remain concerned about the California educational system in general and for our future generations and their ability to compete from an educational level. My concerns are based on multiple issues:
• With the aging “baby-boomers” in our educational system and with their eyes on retirement, looming unfunded pensions will have to be addressed sooner rather than later by hiding the debt in a bigger can to kick down the road.
• California has an overall state ranking in the bottom third of the nation when measured by educational policy and performance yet we plan to spend over $56 billion on education in the next fiscal year. How much will it take for us to reach the top third?
• The proposed budget suggests we spend $56 billion (40% of the proposed budget) on education. I have not heard or read of any initiative to validate that we are spending those funds efficiently or effectively.
• With the dissolution of Redevelopment Agencies, affordable housing has now become a larger local issue. We have retirees from the California educational system collecting pensions in excess of $200,000 per year yet we are looking for new methods of funding for affordable housing for our teachers, the ones who interact with our youth on a daily basis and one of the groups most in need of relief from our expensive housing market.
• The State was able to defer Proposition 98 “guaranteed” education funding. What is to prevent Sacramento from “kicking the can down the road” again?
I do believe that the proposed budget is attempting to address and fix the educational funding issues. The problem is that the “hole” has been growing in size for many years and will in all probability take many years to fill assuming a continuing and prosperous economy. I also realize that there are many holes to fill and simply deferring their solutions to future generations is inexcusable and embarrassing for our generation.
I would appreciate your comments on this and other issues by emailing me at email@example.com or by phone 650-573-7359.
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