 How
Proposition 76 Protects Education Funding
False claims from the opponents...
[by Anthony P. Archie] 11/3/05
Opponents
of Proposition 76 claim that education funding will significantly
decline if the measure passes on November 8. Though Prop
76 does make changes in education funding, it does not prevent
the annual increases in education spending. The measure even
encourages spending above the Prop 98 limit.
Approved
by voters in 1988, Prop 98 mandates that California adopt
yearly education spending increases. The increases must rise
with the levels of K-12 enrollment as measured by attendance
rates, and inflation as measured by per-capita personal income.
Contributor
Anthony
P. Archie
Anthony
P. Archie is a public policy fellow in Business and
Economic Studies. Prior to joining Pacific
Research Institute, Anthony earned his masters
degree in public policy from Pepperdine University,
specializing in economics and regional/local policy.
As part of his graduate work, he co-authored Crisis
in California: Reforming Workers’ Compensation,
a proposal that drew praise from an esteemed panel
of scholars and policy advisors. Mr. Archie has held
internships on Capitol Hill and in the State Assembly.
He received his B.A. in economics and political science
from Pepperdine University. [Archie index] |
Prop 76 would tweak Proposition 98 to allow for more flexibility
in years with a revenue downturn. It also dictates that any funds
allocated above the Prop 98 requirement in a given year be added
to the base sum in the funding calculation, thereby increasing
future education spending at a higher rate.
It is this rapid increase
in the size of the Prop 98 mandate that has left the state
prone to huge budget deficits since the
requirement locks in rigid spending formulas. Proposition 76
aims to override the formulas when revenues can’t support
them. It does so by eliminating provisions for the so-called “Test
3” and “maintenance” factors. “Test 3” is
the term for an optional lower-level funding calculation that
can be administered during years when revenues are down. The
maintenance factor is the difference between the Test 3 amount
and the regular Prop 98 funding level.
In poor revenue years, the legislature has implemented the Test
3 formula and used the maintenance factor for expenditures not
related to education. While this has bailed out the legislature
in rough years, state law stipulates that the maintenance factor
must be repaid in full at the regular funding level when the
revenue picture is brighter.
By eliminating the Test 3 and maintenance factor, the legislature
would no longer be obligated to restore the funding at prescribed
Prop 98 levels, freeing up the budget in fiscal emergencies.
This would help tie education spending in a given year to available
revenues, decreasing the incentive to borrow heavily or increase
taxes.
Prop 76 actually strengthens education funding in a number of
ways. By allowing for possible mid-year cuts, it will permit
the governor and legislature to deal with fiscal shortfalls before
they escalate into sizable deficits. California has experienced
continual deficits since 2001, which has led to a cumulative
debt of $25 billion. That sum must be paid off by future legislatures
from money that could have gone toward education.
Prop 76 repays California’s
current outstanding maintenance factor of $3.8 billion over
a 15-year period. This directly counters
the argument that the measure shorts schools by nearly $4 billion.
Prop 76 also states that any additional education funds allocated
over the Prop 98 minimum will not be counted within the base
for future funding calculations. This will permit a legislature
to provide more education funding in a given year without saddling
future budgets with additional mandates. It encourages over-appropriation
without penalizing legislators for doing so.
Opponents claim that Proposition 76 would reduce the guarantee
of Prop 98 in the long term. Practically the opposite is true.
While Prop 76 adds a slower growth provision, it still requires
education funding to rise annually. On November 8, California
voters should understand that, in the long term, Prop 76 actually
strengthens education funding. CRO
copyright
2005 Pacific Research Institute
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