California School Spending: Winning the Race to the Bottom?

January 31, 2011

California schools are falling behind the rest of the nation, according to data recently released by the National Education Association. As a result of past cuts, California’s K-12 education spending dropped by more than $1,000 per student (10.2 percent) between 2008-09 and 2010-11 at the same time that US per student spending increased by nearly $550 (5.0 percent). This year, California ranks 47th in the nation in per pupil spending compared to ranking 35th in 2008-09.

Governor Brown’s Proposed 2011-12 Budget essentially “flat funds” K-12 education. However, the Governor’s funding level assumes that voters and lawmakers approve the Governor’s tax plan. Without the revenues raised by the Governor’s tax plan, the Proposition 98 minimum funding guarantee would fall by $2 billion in 2011-12 – equivalent to approximately $300 per K-12 student. If the Legislature and voters reject the Governor’s proposed tax plan and lawmakers chose to make up for lost revenues with across-the-board cuts, the reduction to K-12 education would be approximately $5.6 billion – more than $930 per student. Absent additional revenues, California could fall further toward the bottom in per student spending.

– Jonathan Kaplan

The State of the State

January 31, 2011

The state of the state leaves room for improvement, in light of a $26.4 billion budget shortfall and unemployment that continues on the high side of 12 percent. I’ll be on Capital Public Radio at 5:00 p.m. this evening offering commentary on the Governor’s state of the state.

– Jean Ross

Shining a Light on CalWORKs

January 27, 2011

The Legislature is contemplating tough choices to help bring the state’s budget into balance. On the table are deep cuts that would drop more than 230,000 low-income children from CalWORKs, the state’s highly successful welfare-to-work program. Our new chartbook shows that most CalWORKs recipients are children. In addition, CalWORKs funding makes up only about 3 percent of the state budget, substantially less than in the mid-1990s. Budgets are about values and choices. As the Legislature seeks a balanced approach to closing the budget gap, we hope policymakers will adopt budget “solutions” that leave the state’s safety net intact and avoid putting 230,000 of the state’s children at risk of homelessness.

– Scott Graves

What Does the Research Say About Redevelopment?

January 21, 2011

The debate over Governor Brown’s proposal to eliminate redevelopment agencies (RDAs) is heating up. To help inform the debate, we pulled together a “quick and dirty” review of independent research on redevelopment – often referred to as “tax-increment financing” (TIF). This preliminary overview of the research, which we will continue to add to over the next few days, points to two general conclusions:

  • First, it’s unclear whether TIF boosts property values and results in increased property tax revenues. While the research finds mixed results, the most comprehensive independent study of California’s RDAs, conducted by the Public Policy Institute of California (PPIC), found that redevelopment activities in most RDAs studied failed to generate enough growth in property values to account for the tax increment revenues diverted to redevelopment. The PPIC study concluded that “the existing tax increment system is not an effective way to finance redevelopment. Few projects generate enough increase in assessed value to account for their share of these revenues.”
  • Second, some academic research finds evidence that TIF projects simply shift economic activity within municipalities rather than creating additional economic activity. For example, one study suggests that when employment increases in TIF project areas, it decreases in other parts of the city, which could mean that TIF projects draw jobs from elsewhere in the city, rather than generating new jobs.

The findings of this body of research are echoed in the Legislative Analyst’s Office’s recent review of the economic literature, which concludes, “there is no reliable evidence that redevelopment projects attract businesses to the state or increase overall economic development in California. The presence of a redevelopment area might shift development from one location to another, but does not significantly increase economic activity statewide.”

– Alissa Anderson

Proposed Spending Reductions Target Health and Human Services Programs

January 18, 2011

As promised, we’re digging deeper into the Governor’s Proposed 2011-12 spending plan. As we noted last week, the proposed spending reductions would have a disproportionate impact on health and human services programs. In fact, over half (52.8 percent) the combined total of 2010-11 and 2011-12 spending reductions affect health and human services programs. In contrast, these programs accounted for 30.4 percent of budgeted 2010-11 General Fund spending.

CalWORKs, the state’s highly successful welfare-to-work program, would be cut by $1.5 billion, a reduction of more than a quarter. Proposed policy changes include an unprecedented 13 percent reduction in cash aid payments. In their analysis of the budget, the Legislative Analyst’s Office notes that, “the state has never reduced grants by more than 6 percent before” and that grants “would be the lowest level in decades relative to the FPL.” The Governor would also use $947 million of federal TANF funds to support the Cal Grants program, which provides student financial aid. These costs were previously paid out of the state’s General Fund. The proposed shift would leave families with fewer dollars to make ends meet and diminished access to job training and other services aimed at helping them move from welfare to work.

Last week, we lauded the Governor’s proposals for striking a balance between spending reductions and revenue increases. Unfortunately, the proposed spending cuts are far less balanced, leaving hundreds of thousands of Californians to face a precarious future in the still tumultuous waters of a struggling economy.

– Jean Ross


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