Wednesday, April 3, 2013

Prop 13 - So what's really going on?

My previous post had a lot of comments regarding taxes and Prop 13. I wanted to give space for a fuller conversation. I appreciate folks telling others to "talk to your legislator," but there has to be some more organized efforts going on then that, right?! Maybe this is a good place for people to share what they've been working on in their organizations, schools and community groups and to invite people to community meetings going on around this issue.

I used to work for an educational justice non-profit that advocated for adequate and equitable funding for schools.  The sentiment, at the time, was that Prop 13 was too big to take on. Is that still true? I hope not.

When current Assemblymember Phil Ting was running for SF Mayor a few years ago his whole platform seemed to be on Prop 13, it may have also been part of his platform for Assembly. He was promoting the closetheloophole.com website. But what is happening now? Does PPS do any work around this? Are any PTAs looking into this? What about other advocacy organizations in SF?  How about statewide or regional groups?

In case you don't know the basics about Prop 13, here are some basics.  Everything below is pulled directly from - http://closetheloophole.com/history
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Prop 13 Facts

When Proposition 13 passed in 1978 it was originally sold to voters as a protection for homeowners, helping ensure lower taxes for average Californians. But because of a tax loophole, commercial property can avoid reassessment - even though there's a change in ownership. The biggest beneficiaries of Prop 13 are large companies and corporate landowners who use tax loopholes to avoid paying property taxes. And because property taxes fund education and public services, California residents have been directly short-changed by the current system.

What is Prop 13?

When Prop 13 passed, it altered the way property values in California were assessed in five ways:
  1. It rolled back assessed property values to what they were worth in 1975.
  2. Property values cannot increase more than 2% per year.
  3. Property tax is capped at 1%.
  4. Property is only reassessed upon change of ownership or new construction.
  5. It mandated that all local and state taxes need a two-thirds majority vote.
Prop 13 triggered short-term tax breaks - but has had serious long-term consequences.

How Did Prop 13 Affect Taxpayers?

The passage of Prop 13 resulted in a devastating ripple effect of catastrophic consquences. By rolling back property taxes, revenue dropped nearly 60% and funding to county and city governments dramatically declined. County governments and our schools (especially!) had to rely on the state's general fund, correlating directly to a shift in power -- the state now had the authority to allocate local property tax.
So how did this affect you? While the state received a boom in property tax revenue, the general fund surplus increased, while local funding remained stagnant. And to cope with the steep decline in funding, cities and counties raised local fees and taxes -- ultimately raising your taxes. So homeowners thought they were paying less, but in fact they were paying more.

How Did Prop 13 Hurt Education?

According to the California Budget Project, “immediately prior to the passage of Proposition 13, local revenues provided nearly half (47.1 percent) of the funding for California’s public schools.” Today, with Prop 13 in place, our schools are forced to rely on Sacramento for most of their funding and our revenue-starved state has not kept up with its obligations.
California School Spending is at a Historic Low
Prop 13 has had a direct effect on reduced education funding. And in case you have any doubt, here are some figures on education in California today:
  • School spending in California is at a 40-year low.
  • Since 1981-1982 California has consistently spent less on education than the rest of the US. Today, we now spend about half as much as New York or New Jersey.
  • 16 of California’s largest school districts are reducing the number of school days this year because they can’t afford to stay open.
  • Per pupil property tax revenue reduced by more than half.
  • California now ranks 44th in per-pupil spending among all the states (2009-10).
  • California ranks 50th in the ratio of students to teachers (2009-10)
California’s educational system is in a race to the bottom. Isn’t it time we united to reform an obvious broken system?
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19 comments:

  1. Thanks for posting this. I appreciate your willingness to stay involved in the discussion about public school funding.

    Do you know if any of the people who represent San Francisco at the state level (other than Phil Ting) are in favor in of changes to Prop 13?

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  2. Check out Educate Our State:
    http://www.educateourstate.org/
    They are California parents working fixing state funding for public schools - including fixing prop 13. Started by 6 San Francisco Moms they have grown considerably- marshaling support for education ballot measures last big election, for instance!
    You can volunteer and there's a leadership call coming up soon.

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  3. The problem also is that the state formula doesn't consider cost of living, at all. Prop 13 should never have applied to business property and should have been means-tested so you only got a partial break if you are high income. We also pay our teachers low due to bloated administration costs. Please go to www.sfeducationfocus.blogspot.com to see a post about how little we pay our teachers compared to police here vs. in other cities, and how rich San Francisco is but how we choose not to put that money into our schools.

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  4. If you want to understand how Prop 13 affected school finance, here is a link that will provide accurate information in this regard:

    http://www.edsource.org/iss_fin_sys_history.html

    I appreciate the effort to inform readers on Prop 13, but this blog post does not do that. The blogger incorrectly characterizes the aftermath of Prop 13 when she states, " County governments and our schools (especially!) had to rely on the state's general fund, correlating directly to a shift in power -- the state now had the authority to allocate local property tax." This was not an inadvertent byproduct of Prop 13 as implied. The State Legislature dutifully created a state-controlled education finance system in order to comply with Serrano for the purpose of equal opportunity under law.

    California started moving from a local to state-controlled education system between 1968 1978 when it instituted revenue limits with the passage of Prop 4 and SB90, anticipating the pending Serrano/ Priest decision. For the blogger to claim that local revenues dropped precipitously is to entirely misunderstand the social justice of revenue limits. The whole point of state control was to eliminate the advantage of high property tax districts and to equalize funding. It is true that Prop 13 resulted in lower property tax revenues and those loopholes should never have existed. But it is the Gann limits that have had a more direct impact on education. Even though sales and income tax paid for a higher portion of total education funding in the years following Prop 13, it was the Gann limits that prevented education from having a larger share of the budget, regardless of where the revenues where generated. Prop 98 went a long way to ameliorating that situation, but the decline of the golden state is the real culprit, the outrageously loopholes of Prop 13 notwithstanding.

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  5. Not to parse words, but I recall the equal treatment clause as the correct citation of the CSC in the case, not the equal opportunity clause. But you are spot in your assessment.

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  6. Bravo for posting this and continuing the discussion. Does anyone have experience with "Educate Our State"? There Prop 13 initiative looks good. Has anyone had a representative speak to their PTA or parents group? It seems if you were going to do some sort of letter writing campaign, this is an actual proposition you could support.

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    1. Thank you for asking these questions. These are the questions I have too.

      I know 9:04 and 9:22 might not believe in the analysis I posted (as copied and pasted from a website, as noted) and that is fine. I don't want to debate Prop 13 on the blog, I don't think it's going to go anywhere. But, I think there is a very obvious need for more funding for the schools and people ought to be talking about it face-to-face.

      I want to know what organizing is being done. Who is talking about this stuff and having real live conversations about policy changes? Who is moving this work forward? Sometimes websites can be just websites. Parents can fundraise for their individual public school, but what about the bigger picture? Or are folks just so focused on their school's immediate needs that there is no time to do this kind of work? Or do people think this kind of policy change is unnecessary?

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    2. Educate our State is actually doing tons of work on this issue. It's probably the easiest way to get directly involved. Was initially started by an ambitious group at Sherman, and quickly gained players from other schools as well. They're doing really good work and were very involved in the last election,

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  7. This is anonymous at 9:22. To be more clear, the blogger has it wrong in her analysis. Her attribution of all California's education woes to 13 is anecdotal at best and misleading at worst. There are numerous causes for the downturn in student achievement, not the least of which is the large increase in non-English speaking students in the last 40 years. We are tied for the highest collective taxes in the nation and property is at No. 15, in the top third. We have a $100B state budget. Roughly speaking, increasing education spending by 25% would require that we increase tax proceeds by $10B and spend every dollar of that on education. That would entail a 10% increase in taxes, a doubling and more or the state sales tax. Why does California need so much more money to do what other states can do for far less?

    Everyone looks for an easily understandable excuse for our problems. That doesn't mean it's the correct excuse. And FWIW, where is the data that demonstrates that greater spending correlates with greater student outcome?

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    1. You seem like you have not toured a public school lately where parents fund raise for basic supplies like books, paper towels, and science kits. It seems obvious that you need a basic amount of funding to provide quality education. Public schools used to have full time librarians, nurses, art teachers, PE teachers, and music teachers without any additional fund raising. We should easily be able to afford this level of education if we were able to do it to sixties and seventies. We should be funding the best education system possible as education is the core of our economic engine. And of course ELL are part of our economy and we need to educate them to so they will participate productively, too.

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  8. More immediate potential public ed funding impact: http://ow.ly/jMDup

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  9. Note-please don't just take this down because you disagree with it, that's censorship and immoral. You should allow people to post who agree and disagree with your point. Review the facts, let everyone state facts.

    1. Don is right, these two issues are falsely conflated all the time. Go to

    http://taxfoundation.org/article/state-and-local-tax-burdens-all-states-one-year-1977-2010

    California's overall tax burden, state and local all told, is 4th among 50 states. We're 49th in education funding. We have the money and we spend it like drunken sailors. Note, this is by %, not gross, so our cost of living isn't a part of this. Only New York, New Jersey and Connecticut tax their residents less than California. Only Mississippi spends less on schools. So every other state, and maybe you can make exceptions with DC, which isn't a state and gets federal money, Alaska, which has unique oil revenues, and Hawaii and Nevada which are in the unique position of being able to tax tourists, we choose to be stingier on education spending while blowing more money overall and taxing our residents more than all the other states. Yes, we have more than all the states except NY, NJ and CT even when considering Prop 13.

    There is a debate on this at www.sfeducationfocus.blogspot.com. It is interesting. We do pay our teachers less, even within the low education funding states. But Prop 13 has nada to do with it. Please stop flogging a dead horse. We made up for it by taxing more on everything else. We have the money. We overpay many government employees, have out of control pensions, and are extremely inefficient.

    You can't spend like drunken sailors and lecture people about funding their IRAs.

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  10. Only property taxes fund schools, not income taxes. Income taxes go to welfare, prisons, universities, hospitals. We have a lot of illegal immigrants who don't pay taxes, so this lowers the per pupil funding. If you considered per non-illegal immigrant pupil funding, we wouldn't be 49th. It adds to the pool of students but not taxes. That doesn't happen in Nebraska.

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    1. What is exactly is your point? We shouldn't educate children because they aren't here legally? If that is your point, then I have to disagree with it. Children that are here should be educated; their immigration status does not remove them from the future working population and we need to invest in all of the children in California. They all grow up to be adults and we need educated, functioning adults to keep our economy going. I can't imagine that anyone would feel that it would be ethical to exclude a child from getting an education due to their immigration status. The world is becoming smaller and smaller and I think we should be trying to educate more and more children, not less.

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    2. Income, sales tax and many other taxes are used to fund education out the State's general fund. It is true that revenue limit money tends to be a majority of property tax revenue. But that's far from the whole picture. I believe revenue limit is only an average of 22% of district budgets, if I remember correctly. I could check on that.

      All children should have an opportunity to a free public education. HOWEVER, the cost of educating undocumented persons is high and is a factor. It has contributed significantly to our education woes as a state both in terms of the additional challenges involved in educating immigrants and in terms of paying for it. But I do agree we must do it. However , most liberal minded persons believe that borders ought to be open and that we should do nothing to stop the problem that is bleeding the system.

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  11. I went to the close the loophole site and the stats are very telling. Thanks for posting this and the link to the site. No wonder people want to send their kids to private school. California is ranked below 40 on every stat on the site from per pupil funding to access to a librarian ( #50).

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  12. If you do so instead of fighting to fix public schools, you are adding to inequality based on the post above yours, not reducing it.

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  13. California, and San Francisco in particular, really choose to spend very little money on education compared to what we have. San Francisco convinces itself it needs to spend 9000 a citizen when most cities spend 3500 or less, even San Jose barely spends 5000 and has to deal with much more per capita in terms of roads and infrastructure as it's more spread out. We just couldn't exist without paying police an average salary of 123,000 plus overtime, double New York City, over double teachers, we just couldn't exist without 3 supervisor aides per supervisor, 44 six figure jobs vs. 11 part time jobs a generation ago with the same population. We just couldn't exist without putting 260 non-violent, non-serious, non-sexual offenders in jail for a year. We just couldn't exist without paying BART employees higher than other areas of similar size and wealth and let them miss every 8th day. The list goes on and on and on. We delude ourselves that we are in a budget struggle, but it's like a rich person talking about how tough it is to make ends meet. It's silly. We just don't prioritize education. Statewide it's a D, citywide it's an F. That's what happens when half of whites, who make most decisions, go private, and many don't have kids. We delude ourselves into thinking there's no money for the kids. We forget that even if we don't have kids, we were a kid and our social security will be dependent on today's kids. We need to wake up! Hello! This is our future we are talking about!

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  14. Another factor is that larger amounts of public funds have to be funneled into the underfunded teacher pension pot each year, which reduces classroom funding. This from SUNSHINE:

    "CalSTRS is the retirement fund for public school teachers in California. The average annual salary for teachers in 2010 was $64,156 and the average retirement benefit was $51,072 annually, more than the average salary for teachers in 28 states.
    According to a 2011 report California teachers receive on average $25,440 per year. In comparison, retired teachers in Texas receive an average of $18,372 a year.
    CalSTRS was dubbed a "high risk" problem for California by the state auditor in 2011. Without additional dollars from taxpayers, CalSTRS' assets "will be depleted in 30 years," the auditor's report says. CalSTRS is considered riskier than CalPERS because of a quirk in state law: CalPERS can impose higher taxpayer contributions, but CalSTRS must go to the Legislature for higher rates.
    At the end of the 2011 legislative session, leaders of CalSTRS opted to begin a lower-key, multiyear lobbying campaign to convince Gov. Jerry Brown and lawmakers to approve a gradual increase in state, community college and school district contributions for the retirement of 852,000 public school educators. Without a contributions boost CalSTRS faces a projected $56-billion funding gap and could run out of money in 32 or 33 years, according to Chief Executive Ehnes. The fund has only 71 percent of the money estimated to meet pension obligations, a drop from the 110 percent funding level it had at the beginning of the decade. Experts consider 80 percent to be the minimum secure level.
    The Legislative Analyst's Office announced California needs to pay an additional $4.5 billion a year for the next 30 years to bolster the teacher retirement fund. The report said if the state does not take action, the pension fund will run out of money by 2044. [41] The fund is facing a shortfall of $73 billion. [42] CalSTRS gets a combined $5.7 billion a year from the state, teachers and school districts. The LAO wants contributions to increase by a total of $4.5 billion a year, starting in 2014. [43] ABC reported combining the $4.5 billion with the current $1.4 billion annual contribution, the state would pay more for the pensions of retired K-12 teachers and community college instructors than it does for the entire University of California and California State University systems combined."

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