State and local governments in California impose several types of taxes and use the resulting revenue to support a variety of government activities. The most significant state taxes are on personal income, the sale of most types of goods (such as cars, appliances, and furniture), and corporate profits. At the local level, the most significant tax is on the assessed value of property (such as family-owned land and houses, retail stores, and industrial facilities). In California, the revenue generated from these various taxes is used to fund many types of government programs, including education, health, social, and environmental programs.

Local Property Taxes. Local governments in California impose a tax based on the assessed value of property. Under such a tax, the amount owed increases as the [assessed] value of the property increases. Some local governments also impose a type of property tax known as a parcel tax. Under this type of tax, the amount owed is typically the same for each parcel--or unit--of land. (Currently, state government does not impose either type of property-related tax.)

Use of Local Parcel Tax Revenue. Local parcel tax revenue may be used for virtually any designated purpose. In recent years, for example, parcel taxes have been approved by voters in several school districts and used to fund class size reduction (CSR), school libraries, education technology, and other education programs. In those school districts that have a parcel tax, this revenue can be a significant source of funding for kindergarten through grade 12 (K-12) education programs. Statewide, however, the parcel tax is a minor source of funding for school districts.

This proposition, which calls itself the Classroom Learning and Accountability Act, creates a statewide parcel tax by adding to the Constitution a flat annual assessment of $50 to be levied on each real property parcel in California that is not already exempt from property taxation. The assessment is not adjusted annually for inflation.

The measure creates the Classroom Learning and Accountability Fund in the State Treasury. It requires that funds be continuously appropriated (not part of the annual budget process), earmarked to support K-12 educational programs, and not included in the Proposition 98 calculation. It requires the Legislature to set penalties for misuse of the funds, calls for oversight and annual independent audits, and specifies that the Fund shall not be used to pay administrative overhead.

The measure exempts from the new tax any parcel owner who: (1) resides on the parcel, (2) is eligible for the state's existing homeowner's property tax exemption, and (3) is either 65 years of age or older or a severely and permanently disabled person. Proposition 88 would take effect July 1, 2007, if passed by a simple majority of those voting.

The funds would be allocated as follows: (proposed new Section 6.2 of Article IX of the Constitution)

Funds could be used only for the above purposes and only to supplement, not supplant, federal, state, or local funds.

Funds for the first three categories would be sent directly to school districts, county offices of education, and public charter schools on a per-student basis, using a weighted student formula that would account for cost differences resulting from students' disabilities, English language skills, or socioeconomic status.

K-12 Class Size Reduction. Currently, the state provides $1.8 billion for the CSR program for Kindergarten through grade 3 (K-3). This program funds school districts for reducing the size of their K-3 classrooms to no more than 20 students. The additional $175 million provided by this measure could be used to further reduce class size in grades K-3 or for any other CSR initiative. For example, the funds would be sufficient to reduce the average class size of fourth grade by about four students (reducing it from a statewide average of about 29 students to 25 students).

Instructional Materials. Currently, the state provides over $400 million annually for instructional material purchases. This equates to about $66 per K-12 student. This is sufficient to purchase one new core textbook for most students in most grades each school year. The additional $100 million provided by this measure could be used for purchasing any textbooks or other instructional materials that were approved by the State Board of Education. Funds likely would be sufficient to provide about 25 percent of K-12 students with one additional core textbook each year.

School Safety. Currently, the state provides $548 million (or about $90 per student) for after school programs, $97 million (or about $40 per grade 8 -12 student) for general school safety programs, and $17 million (or about $3 per student) for competitive school safety grants. The additional $100 million (or about $16 per student) provided by this measure could be used for school community policing and violence prevention, gang-risk intervention, and afterschool and intersession programs.

Facility-Related Grants. Currently, the state provides funds for school facilities primarily using general obligation bonds. In addition, it has provided $9 million annually for the last several years to help public charter schools in low-income areas cover some of their facility lease costs. The $85 million provided by this measure would be for school districts and charter schools that have not yet received any state general obligation bond monies for school facilities. In addition, charter schools are only eligible if they are governed by or operated by a nonprofit public benefit corporation. If those conditions are met, then school districts and charter schools would receive funding for each student enrolled in a school ranking in the top 50 percent based on the state's standardized test scores. They could use the grants for any general purpose. Districts and schools receiving such grants would be prohibited from receiving future state general obligation bond monies unless the bond expressly allowed them to receive such funding. We estimate that about 40 noncharter schools (serving less than 1 percent of all noncharter enrollment) would be eligible for grants. For charter schools, we estimate about 100 schools (serving about 25 percent of all charter enrollment) would be eligible for grants.

Data System. Currently, the state provides virtually no state funding expressly for the ongoing collection and maintenance of student-level and teacher-level data. The additional $10 million provided by this measure would be for an integrated longitudinal data system. Such a system would allow the state to measure student and teacher performance over time. The measure requires school districts to collect and report the data needed to create and maintain the system.

The Legislative Analyst's Office (LAO) estimates the statewide parcel tax would result in roughly $450 million in new tax revenue each year. The LAO goes on to note that: "Given that the dollar amount of the tax would not increase, total parcel tax revenues would grow slowly over time as new parcels of land were created (such as by new subdivisions of property). Roughly $30 million of the parcel tax revenue would be transferred annually to the state General Fund to offset a projected decline in state income tax revenues (due to increased property-related tax deductions). In addition, the measure sets aside no more than 0.2 percent (or approximately $1 million annually) for county administration of the parcel tax. The remainder of new tax revenue would be allocated to schools for the specified education programs. These revenues likely would be somewhat less than that needed to meet the measure's designated funding levels. If so, the program allocations would be adjusted downward proportionally."

ADDITIONAL COMMENTS

• While our State and Local Finances positions (see below) support the use of facilities bonds for long term infrastructure needs, there is nothing in our positions that supports the use of a statewide parcel tax (as distinct from local parcel taxes, which local Leagues have supported). Parcel taxes are regressive. This one is earmarked and written into the Constitution. While very well-intentioned and including some needed funding, the social value does not outweigh the loss of flexibility, the regressive nature of the tax, or the incorporation of specific dollar amounts into the Constitution.
• Clearly our schools are underfunded, but the League's support needs to be applied strategically. The allocation of funds by Proposition 88 is clearly delineated, accountability and oversight are established, and the distribution of funds is to uses supported by the League. However, according to the Legislative Analyst's Office, "These revenues likely would be somewhat less than that needed to meet the measure's designated funding levels. If so, the program allocations would be adjusted downward proportionally."
• This measure may distract voters from Proposition 1D, which is a high priority for schools and a fundamental need. Will voters, who have already demonstrated their unhappiness with our "never-ending election cycle," be more inclined to vote NO if there are two school funding measures on the same ballot?
• Having a statewide parcel tax on the ballot may hurt the chance of local school district parcel taxes, which, unlike local facilities bonds, still require a 66 2/3 percent supermajority to pass. Local parent activists have already started expressing concerns that voters will become confused and vote for the lower amount (the state measure) at the expense of their local parcel taxes.
• This is another measure that proposes to earmark education funds outside of the Proposition 98 calculation, without improving education funding itself.
• It may have the same psychological effect as the lottery--providing a small percentage of funding, but giving voters the illusion (if passed) that education has been "taken care of." How many times have we heard the question, "Why should we vote for more education funding? What about the lottery--that was supposed to . . ." In reality, the proceeds from the lottery are no more than 2 percent of school district budgets. If what we need is real school funding reform, again, we need to be strategic--we don't want to spend political capital with voters on this kind of measure.
• There are a number of ambiguities in the measure which may cause legal difficulties if passed. One is the severity of the penalties for misuse of funds. According to the California School Boards Association, the terminology is not defined to distinguish between inadvertent errors and intentional illegal behavior.
• The tax is a fixed dollar amount per parcel. Inflation can be expected to cause the receipts from the parcel tax to diminish as a percent of the total education spending over time.

The rebuttal to the supporters' argument was signed by Clifford Corigliano, Sr., Teacher of the Year, 2003; Art Pedroza, Member, California and American Federation of Teachers, AFL-CIO; and Lorie McCann, Parent-Teachers Association Local President.

Barbara Inatsugu, LWVC Education Program Director (PK-12), education_pk12@lwvc.org

Julie Rajan, LWVC Social Policy Director, social_policy@lwvc.org

Jack Sullivan, Legislation Director, legislation@lwvc.org

Trudy Schafer, LWVC Program Director/Advocate, 801 12th Street, Suite 220, Sacramento 95814, 916-442-9210, Fax 916-442-7362, advocacy@lwvc.org

EdSource Voter Guide, Proposition 88: Classroom Learning and Accountability Act, September 2006, www.edsource.org/pdf/prop88_906.pdf. Also available in Spanish at www. edsource.org/spa_pub.cfm.

California Budget Project, What Would Proposition 88 Mean for California?, September 2006, www.cbp.org.

Californians Against the Statewide Parcel Property Tax, No on Proposition 88, 916-927-1512, www.noprop88.com.

NO on Proposition 88
Classroom Learning and Accountability Act

• Proposition 88 will not generate enough money to meet its projected funding levels. That means even less money for its programs as the amounts are adjusted down.
• Proposition 88 sets a precedent for a new kind of property tax. It would impose the first statewide property tax since 1910, and would encourage other special interests to put more and bigger property parcel taxes on the ballot for their special interest causes.
• Proposition 88 has no expiration date or provision to evaluate for effectiveness. Funds would be continuously appropriated, with no sunset clause or provision for either evaluation or reauthorization. Local parcel taxes regularly have sunset dates and need to go through a reauthorization process, which allows for a reassessment of a district's current needs.
• Proposition 88 would impose a new statewide parcel tax with only a simple majority vote. Local parcel taxes require a 2/3 supermajority.
• Proposition 88 does not achieve its own goals. It is not an effective tool for improving student achievement or for raising funds needed to assure schools have adequate resources.
  • For example, Prop 88 provides $100 million ($15.87 per student) for textbooks and other instructional materials. This is only enough to provide about 1 in 4 public school students with a new book each year.
  • Proponents also claim Proposition 88 will reduce class sizes. The truth is, the initiative only allocates $175 million for class size reduction (about $27 per student). By contrast, state funding for class size reduction is more than $1.7 billion and it does not cover the full cost of the program.

• Proposition 88 could distract Californians from the real needs of our public schools by creating a new "lottery effect," the illusion that schools' needs have been met. In reality, rather than being a significant source of funding, lottery proceeds accounted for about 1.3 percent of the state education budget in 2005-2006. Proposition 88 would provide about half of that amount.
• Districts that receive Academic Success Facility Grants provided by Prop 88 are then not eligible to receive construction or modernization funds from other, more substantive, state bond measures. Prop 88 facilities grants of less than $500 per student would eliminate a district's eligibility for facilities grants of up to $9,805 per student. Does this make sense?
• Proposition 88 would impose severe penalties for what it calls "misuse" of funds, but does not make a distinction between inadvertent errors and intentional illegal behavior.
• Proposition 88 is opposed by a broad and unusual variety of groups. For their own reasons, the following ALL say No on Prop 88: California State PTA, California Democratic Party, California Republican Party, California Federation of Labor--AFL-CIO, Howard Jarvis Taxpayers Association, California School Boards Association, Small Business Action Committee, California Taxpayers Association, and the League of Women Voters of California.

Note: Please adapt this letter to your own community and check your local paper's word limit for published letters.

Editor:

Proposition 88 on the November 7 ballot would impose the first statewide property tax since 1910 and encourage other special interests to put more and bigger property parcel taxes on the ballot for special interests.

Proposition 88 will not generate enough money to achieve its own goals and meet its projected funding levels. That means even less money for its programs as the amounts are adjusted down. For example, it would raise only enough money to provide one in four students with a new textbook each year.

Proposition 88 could give Californians the illusion that the real needs of our schools are being met when it will not be a significant source of funding or produce real results.

Vote NO on Proposition 88 in November and rejecting this ineffective new tax.

Sincerely,

(your name)