State of the State Budget2012-13

Governor’s January Proposal

Proposition 98The Constitutional Guarantee Compared to Actual

Funding

California Teachers Association

How We Got Here

California Teachers Association

It’s the Economy…• Housing Bubble Burst

• Financial Market Meltdown

• The Great Recession

• Sluggish state and national recovery

• Very slow job growth (public sector losses offset private sector gains)

California Teachers Association

It’s the Economy…

• The Economy is the sum total of human work– The organization of

money and resources in a country, region, or community

– Everyone participates in it

• The purpose of the economy is to meet the needs of people

California Teachers Association

…and the Economy is Political

Whose “needs” get met in the current economy?

The existing structure…..

•Enables a few to make lots more money

•Enables those few to pay less taxes

•Has not created, and in fact has reduced, the number of ‘middle class’ jobs (good wages and benefits)

•Has caused wages to stagnate

California Teachers Association

California Teachers Association

Corporate Profits, Personal Income & Median Wages

8California Teachers

Association

Who Pays Taxes in CA Has Changed Over Time

LAO, Historical State Revenues

California Teachers Association

Where is “Here”?

Overview of the

2012-13 State Education Budget

Governor’s Tax Initiative

• Increase income tax rates on wealthy (2012 - 2016)• 1% rate increase married incomes $500,000 -

$600,000• 1.5% rate increase incomes $601,000 - $1

million• 2% rate increase incomes over $1 million

• Increase the state’s sales tax rate by 0.5% points (2013 - 2016)

Mid-Year Cut TriggerIf the Governor’s Tax Initiative does not pass in

November 2012, the following education cuts will occur on January 1, 2013:

•$4.8 billion from K-14– $2.3 billion to not repay deferral – $2.6 billion real program cut (6% RL reduction or

$387/ADA – cost of about 3 weeks instruction)

•$200 million University of California

•$200 million California State University

How Do We Fix our Education Funding Problem?

Our Union’s Funding Goals for Education

• Adequate– Amount of per pupil funding needed to provide all

students the opportunity for academic success– CTA goal of the top quartile of the 50 states*

• Equitable– Promotes fairness by funding schools and

colleges to meet the individual needs of all students*

– CTA believes in compliance with the Serrano decision to achieve equalization of educational opportunities*

• Stable & Reliable– Avoid “bubbles and “crashes”

*California Teachers Association 2011-12 Organizational Handbook, Policies

Funding Initiate Criteria

• Based on tax fairness – a progressive tax system – to ensure everyone is paying their fair share and to and bring stability to our funding issues

• Include funding for Pre-K through higher education and other essential public services

• Generate at least $8 billion• Broad coalition support• Winnable

Beyond Proposition 98Although Proposition 98 has

established K-14 education funding as a priority in the state budget, it is

clearly not enough to fund an adequate education for California’s

children.

Proposition 98 does not include the CSU & UC systems, therefore

portions of higher education do not have a constitutional priority position

in the state budget.

Since Proposition 98, we’ve dropped from 30th to 47th in per pupil spending.

School Funding (2009 Averages)

Quality Counts 2012 & www.cde.ca.gov

How to Increase Funding

• Bigger piece of the pie - Improve the relative priority in the state budget – Proposition 98 (Been there, done that)– CSU & UC systems not included– Other important state programs, including social

services may be just as important for student success

• Grow the Pie– Expand the revenue base

• Economic development• Expanding who pays taxes or what items/services are taxed• Increase tax rates• Closing Loopholes

Economic Prosperity & Funding Education

• Prosperity for large corporations does not necessarily translate to prosperity for the vast majority of the people in America

• Economic Expansion is important and necessary and will ultimately increase public funds and by extension, school funding, but only if the economic expansion includes improvements for all (including working people) who pay taxes

• Education Funding is a key ingredient in improving education and thus the value of human capital which can help economic expansion

Check back for information about tax fairness and economic development in California and the how to fund schools beyond Proposition 98.

www.cbp.org California Budget Project

www.edsource.org EdSource

www.ppic.org Public Policy Institute of CA

www.caltaxreform.org CA Tax Reform Assn