8.4 Local Funding and Parcel Taxes
In the abstract, there is consistent, strong support in California for public school funding. The Public Policy Institute of California (PPIC) has tracked public opinion regarding education funding for years. These surveys consistently find that there is no major area of funding that California voters say they care about more.
Support in principle, however, does not translate into actual political will to fund California’s schools through state taxes. About six in ten California voters favor raising income taxes to pay for public schools… but only if the taxes will be levied on the wealthy. At least six in ten say they would oppose taxes if they affect overall taxpayers. The surveys also show that most Californians are blissfully clueless about the big picture. “Just one in four… know that both student test scores and spending per pupil are below average compared to other states.”
The survey results show much more positive attitudes when taxes are local, in support of local schools. Solid majorities (roughly six in ten) say they would support a local parcel tax to support schools in their community. In this case, however, the will of the majority is not enough: in 1978 California’s voters passed Proposition 13, which amended the California constitution so that it requires a 2/3 vote to pass any tax measure.
When times are tough, communities don’t just rail at Sacramento’s intractability. People who care pull together to raise whatever money they can for their students, an amount that can vary from tamale sales to million-dollar funding drives. Increasingly, schools are working to make a significant annual donation to the school an expectation of parents.
Voluntary donations cannot match the funding power of a tax. Some of the wealthiest schools and school districts have established foundations to support the schools, but even in those rare places donations can cover at most the cost of one or two salaries per school.
In order to avoid major cuts, a small but increasing number of districts turned to parcel taxes, despite the considerable difficulty of mustering a 2/3 vote to pass them.
Proposition 13 made it illegal for school districts to raise property taxes based on the value of property (“ad valorem” taxes), but left the window open a crack: parcel taxes are levied on the basis of ownership of a parcel of land, independent of its value. This is clearly a work-around solution; the value of a parcel can vary substantially, but the tax generally does not, which makes it regressive by its very definition. Some districts have added provisions to their parcel tax measures that causes taxes to vary, but usually this is used to avoid taxing parcels owned by senior citizens who might otherwise vote no.
Relatively few districts have attempted to pass a parcel tax because the 2/3 vote requirement is so difficult to achieve. Two “yes” votes are needed to counteract every “no” vote. Even in the peak year of 2008-09, the districts that passed such a tax represented only 5% of the student population of California. In the economic downturn of the 2010 election, virtually all such measures failed.
Based on thirty years of California history, it is safe to say that the political will to support schools is strongest at the local level and weakest at the state level. The only sustainable way to reverse California’s downward drift in education investment is to allow local political will to be expressed.
If the passage rate for local parcel taxes for schools were simply lowered, many communities would pass them. PPIC polls suggest Californians routinely divide about evenly on the question of making it easier to pass these taxes. Proposition 39 reduced the pass threshold to 55% for facilities bonds, and if the PPIC poll is accurate the same could potentially be done for parcel taxes. One reason for reticence is concern for equity: if it were easier for communities to solve their own school funding needs, higher-income communities would certainly do so, but lower-income communities would be at a disadvantage.
The challenge ahead for California education funding is to empower local school funding, but do so in a way that directly addresses the issue of equity. In 2008, the Governor’s Committee on Education Excellence proposed a way to square this circle in Appendix E of its report: create a state “variable matching fund” for local school aid. In this proposal, communities would be allowed to levy taxes on themselves in support of their schools. If the local tax measure meets certain requirements, the taxes raised locally would be matched by state funds allocated with a high priority from the general fund. The amount of state funds provided would vary according to the assessed property value per student in the district. High-wealth communities would not receive matching funds from the state, but low-wealth communities would receive matching funds in order to ensure equitable funding. This approach would preserve equity in effective local funding power, as state matching funds would augment local revenues in inverse relationship to local assessed property values.
Unfortunately, consideration of this proposal was substantially dropped when the bottom fell out of the market in 2008. It is a solid proposal, and should be picked up again.