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K12NewsNetwork.com: Comparison of Three Tax Initiatives (Munger/Brown/Courage Campaign)

Provision Our Children Our Future(Munger/PTA)

Governor Brown’s Schools& Local Public Safety Act

Millionaires Tax to RestoreFunding for Education andEssential Services Act of 2012 (Courage Campaign)

1. What does the initiativeamend?

CA statute CA Constitution CA statute

2. Formula for raising

revenue?

$40,000 taxable income or less,

no taxes. On taxable income of $76,000, $438 in taxes. Ontaxable income of $1,000,000,$56,000 (?) in taxes. Maxed outat 2.2% for top earners. “Slidingscale,” see table from LAO Jan27, ‘12 report here

State sales tax +.5%;

1% on joint earners withtaxable income $500,000-$600,000;1.5% on joint earners withtaxable income $600,000-$1,000,000;2% taxable income$1,000,000+

Additional 3% on taxable

income of $1,000,000 or moreup to $2,000,000; additional5% on taxable income of $2,000,000 or more. No taxeson anyone else. LAO report notes possible discrepancy between income from stock or dividends vs. taxable income(pdf)

3. LAO analysis of anticipated revenue?

Jan 1, 2013 start date: $5 billionin FY 2013; $10-11 billion/year in first full FY (2014) & more

thereafter

$4.8 - $6.9 billion in FY 2013;anticipated similar amountsthrough 2017 (phase out of

temporary taxes will then =$3.1 -$3.4 billion)

$6-9.5 billion/year

4. What taxes increase? Taxable income only Sales tax, taxable income Taxable income only5. Duration? 12 years Sales tax, 4 years;

Income tax, 5 yearsIn perpetuity unless amendedby a 55% roll-call vote of theLegislature

6. Where does money go?General fund?

No, special trust account onlyfor purposes of the initiative



7. Is the Legislature able tospend or borrow moneyfrom the special account?

No. Both Leg & Governor cannot use initiative-raisedfunds to replace funds currentlyspent on K-12 education or early childcare

No. Both Leg & Governor cannot use initiative-raisedfunds to replace fundscurrently spent on K-12education or communitycolleges

No. Both Leg & Governor cannot use initiative-raisedfunds to replace fundscurrently spent on K-12education or communitycolleges

8. Uses of money raised? First 4 years: 30% pays (~$3billion) pays down servicing of education bonds. 60% per pupil($6 billion for 6.3 million CA K-12 students) to school sites.10% ($1 billion) to earlychildhood ed/childcare

All funds to K-12 schools andcommunity colleges. 89% toschool districts on a per-pupilbasis ($200 minimum), 11% tocommunity colleges on a per-pupil basis ($100 minimum).

60% to public education: 20%balance to K-12 (see higher edimpact below) [25% to directassistance for children &seniors; 10% Public Safety;4.9% to Roads &Transportation; .10% toadministrative costs]

9. Effect on higher ed?

(For higher ed tuitionreduction, see AssemblySpeaker Perez’s MiddleClass Scholarship Act)

Reduces the cost of servicingbond debt for communitycolleges, CSU, and UC.

Provides general purposefunding to community collegedistricts. New revenuesincrease the minimum fundingguarantee for CCs, but amountavailable to increase spendingdepends on the Legislature.

13.33% to CommunityColleges; 13.33% to UCs for higher ed direct instruction;13.33% to CSUs for directinstruction.

This chart developed by Cynthia Liu, K12NewsNetwork.com with information from the LAO, Molly Munger’spresentation & chart distributed to the California PTA on Feb. 6, 2012; and initiative text from the Courage Campaign’swebsite.

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http://lao.ca.gov/ballot/2011/110773.aspx


http://www.lao.ca.gov/ballot/2011/110783.pdf


http://www.asmdc.org/news-room/releases-a-statements/item/484-speaker-perez-middle-class-scholarship-act-can-cut-college-fees-by-2/3?lang=en





http://k12newsnetwork.com/












Provision Our Children Our Future Brown’s Schools & LocalPublic Safety Act

Courage CampaignMillionaire’s Tax

10. Effect on state deficit? Yield from the initiative will paydown education bond debt by$3.2-$3.7 billion/year for thefirst four years, thus enablingthe same amount of General

Fund monies to be spent onother public priorities. For all 12years, in years where therevenues grow faster than per capita personal income theexcess revenue will also go toservicing education bonds,possibly an addition hundredsof millions of dollars accordingto the LAO.

The new funds going toschools & community collegescan be used to increase Prop98 minimum guarantee & tomeet the State’s minimum

guarantee obligation currentlypaid for out of the GeneralFund.

No repayment of bond debtincurred prior to or after thepassage of this measure.

11. What else does theinitiative do?

Nothing. “Realignment”: shifts stateresponsibility for state

programs (public safety, adultoffender, parole, court security,mental health, child welfare,adult protective services,substance abuse programs) tolocal governments.Permanently shifts $5.5 billionin sales tax and VLF revenuesto local government to offsetthe cost of these programs;excludes these revenues fromminimum funding guarantee

for schools & CCs.

Restoration of fundingsuspended or abandoned as of

Jan 1, 2008 in (a) The K-12public education system;(b) Higher education, includingCalifornia CommunityColleges, the California StateUniversity, and the Universityof California;(c) Critical services to seniors,children and the disabled; (d)Public safety services; and (e)Maintenance of local roadsand bridges.

(Children & Seniors, Roads,and Public Safety fundsallocated by city/county basedon %age of state population.)

12. Effect on/amountsraised for K-12 schools?

60% of available revenues (~$6billion) to K-12 schools in thefirst 4 years. 85% of availablerevenue to schools in theremaining 8 years.

89% of tax increases will go toK-12 schools starting in thefirst year, i.e., $4.3 - $6.1billion in FY2013, slightly morein the next 3 years, via theLAO analysis.

20% of tax increases will go toK-12 schools starting in thefirst year (or, approximately$1.5 - $1.9 billion/year)

13. How is money

allocated, K-12?

3 kinds of per pupil grants: 1)

70% educational programgrants, 2) 12% for training/tech/teaching materials,3) 18% for low-incomestudents.

Per pupil to each school

district or eligible governingbody.

Per pupil to each school

district or eligible governingbody.


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14. What K-12 schools areeligible to receive funds?

All K-12 public schools,including school districts,charters, county offices of education, & schools for specialneeds children.

Public school districts, countyoffices of education, andcharters.

Public school districts, countyoffice of education, statespecial school, or direct-funded charter school.

15. Who decides how themoney is spent?

The school board or governingbody at a public hearing.

The school board or governingbody at a public hearing.

No mention.

16. How does oversight onspending funds raised bythe initiative work? Sitebudgets, public explanationof improvement of studentoutcomes, independentaudits?

For each school site: schoolboards must seek input fromparents, school staff, & thecommunity before spending the$. School boards must generateschool site budgets showinghow funds are spent for eachschool site; publicly explain howspending decisions will improvestudent outcomes; independentaudits required.

No requirement for public/parental/staff input intoschool board decisions. Onlyindependent audits arerequired.

State Controller disbursesfunds to localities; will maintainand publish accounting of proposed use of funds,conduct random independentfinancial audits.

17. Penalties for misallocating funds?

Amends penal code to make ita felony for misallocation of funds, provides for penalties.

Authorizes unspecified civil or criminal penalties for misuse of funds.

Funds found to be used inimpermissible ways will beclawed back and returned tothe overall trust fund for re-allocation. Amends penal codeto make it a felony for misallocation of funds.

18. Permissible areas of spending K-12?

Money must be used to improvestudent academic performance,graduation rates,vocational/career/college/lifereadiness through: smaller class sizes, math/English,instruction in arts, STEM,history, civics, financial literacy,foreign languages,vocational/career education,more counselors, librarians,school nurses, school sitesupport staff, longer schooldays/years, summer school,preschool, after schoolenrichment, tutoring, support for ELL,/low-incomestudents/special needs,programs to strengthen criticalthinking & creativity, programsto deepen parental involvement.

Provides general purposefunding to public schools to“ensure that public educationis not harmed in the process of providing critical protection tolocal Public Safety Services.”

Determined by district or localeducation agency.

19. Impermissible areas of spending K-12?

No more than 1% onadministrative costs; no moneymay be spent to increase

No funds for salaries or benefits of administrators or administrative costs.

No funds for salaries or benefits of administrators or administrative costs.


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salaries or benefits of schoolpersonnel.

Specifically disallows UCRegents/Provosts salaries. Nomoney for capital outlays(school construction).

20. Effect onECE/childcare?

For the first 4 years, allocates$1.1-$1.3 billion annually, thenlarger amounts in the next 8years to education and careprograms for children 0-5.Restores recent budget cuts,expands the number of low-income children served by childcare and preschool programs, &provides funds to establish aquality rating scalew/supplemental funding goingto highly-rated programs.

Does not address earlychildhood education or childcare.

Does not specifically identifyearly childhood education or childcare except as to fundservices to children providedbefore Jan 1, 2008 cuts tookeffect.

21. Effect on Prop 98minimum fundingguarantee?

No change to the Prop 98guarantee; all funding from thisinitiative is above & beyondProp 98 minimums which mustbe met from the general fund.

Increases Prop 98 guaranteeby defining the temporarytaxes as General Fundrevenues for calculation of theguarantee. LAO: this increasecould be in the “billions of dollars annually.” Allows thenew funds to legally fulfill theexisting Prop 98 guaranteepaid for by the General Fund.

No change to the Prop 98guarantee; all funding from thisinitiative is above & beyondProp 98 minimums which mustbe met from the general fund.

22. Small class sizes, K-3?

(See also AB18 text & billhistory)

Permissible to fund under theinitiative.



23. Reintroduction of music, art, history, PE (etc)classes?(See also your local parceltax)




24. If both/all pass? If this measure gets more votes,the realignment of state andlocal services in the Governor’smeasure will take effect, but thesales and personal income taxincreases in that measure willnot.

If this measure gets morevotes, Our Children Our Futurewill not take effect.

If portions of the measure areheld unconstitutional, then theremaining parts will still bevalid and applicable. If thismeasure is approved by votersbut superseded by a conflictingballot measure that’s later found invalid, this measure will

be self-executing and will holdthe full force of law.


2/27/12 Page 4 of 4

http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/ab_18_bill_20110705_amended_sen_v96.html

http://asmdc.org/members/a41/legislation/itemlist/category/300-2012-legislative-highlights




http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/ab_18_bill_20110705_amended_sen_v96.html


