CFT Sues Arnold For Education Funding Under Prop. 98

At last count, the California Teachers Association has dumped $10 million dollars or so into a FAIL whale of a special election, so they could secure their out-of-court settlement for $9.3 billion dollars in education money. It's important to understand what that money at stake in Prop. 1B represents. It's OWED to the schools. Not a gift, not a reward for good behavior, but owed. Under Prop. 98, the state must provide a minimum level of baseline funding to education, based on an algorithm that can be calculated in a number of ways. This Governor has consistently tried to under-calculate Prop. 98, and most recently, his Administration determined it in such a way that shortchanged the schools by $9.3 billion dollars. The education community could have demanded payment under statutory law, but instead the CTA decided to enter into what ultimately appears to be a failed bargain, whereby schools would receive money down the road from Prop. 1B if Prop. 1A, the funding mechanism for those payments, passed. The California Federation of Teachers, which unlike CTA has opposed Prop. 1A, yesterday did what would have been much cheaper for CTA to do, which is sue the state for the money owed the schools.

"Proposition 1B is going to fail, and besides that, we still have to worry about funding for 2009-10," said Marty Hittelman, CFT president. "We need to do this right away so we can take care of 2009-10, since they're already debating that. We want to make sure they understand they have to repay us."

After revenues sharply declined, the state cut 2008-09 school funding by $7.9 billion, and Gov. Arnold Schwarzenegger believed the state did not legally owe that money back to education. School groups disagreed and threatened to sue the state before Schwarzenegger and lawmakers put Propositions 1A and 1B on the ballot to repay that money, plus another $1.3 billion owed from 2007-08.

CFT also wants the courts to resolve for good whether the state owes schools money in similar budget situations in the future.

Arnold Schwarzenegger has simply been untrustworthy when it comes to education, and has repeatedly broken the law when it comes to funding. You don't bargain with that, you fight it. Eventually, CFT and SEIU Local 99, also on the lawsuit, will win in court. And by the way, they'll end up getting the money faster than under Prop. 1B, which doesn't pay out until 2011-12. Not to mention that Prop. 1B is, you know, losing.

More on the PPIC poll here. Every ballot measure looks to fail, and PPIC has been more generous than the traditionally more accurate Field Poll.

Special Election Fight Becoming Establishment v. Grassroots

The establishment in both parties continue to close ranks around the May 19 special election, even as the grassroots continues to reject it. Today Antonio Villaraigosa endorsed all six ballot measures, asserting that they will "bring stability back to California's budget system," like any artificial spending cap that forces spending $16-$20 billion dollars below initial baseline estimates during an economic crisis where state spending is needed urgently tends to do. Without question, Villaraigosa, a potential candidate for Governor, sees that giant pot of CTA money being tossed around in support of the measures and figures one of the candidates could draft off of that nicely in the primaries.

At the local level, more and more Democratic clubs are opposing the ballot measures, because unlike the establishment, they have read them and calculated that they would put the state in an objectively worse situation, and they are unmoved by the idle threats of Armageddon casually tossed out by the Governor and his minions. The dichotomy is both interesting and revealing.

Meanwhile, in maybe the lamest online initiative effort since the invention of Compuserve, Abel Maldonado's tears have created "Reform For Change," a site dedicated to the petty, self-righteous, useless Prop. 1F measure that would eliminate raises for lawmakers and staff during an economic downturn. In the silly video accompanying the site, Maldonado's tears tell us that "we can fundamentally reform California and change it forever," through apparently passing a .0001% change in funding for state lawmakers that is dealt with through an independent commission and not "the legislators themselves" (one of many lies on this site).

Sigh.

Prop. 1A: Stakeholders Line Up

I'm thoroughly unsurprised that Steve Poizner has joined Meg Whitman in an effort to out-anti-tax one another through opposition to Prop. 1A.

Specifically, the politicians don’t want you to know all the facts when it comes to Proposition 1A. This is the ballot measure that would impose a state constitutional spending limit - a concept that is supported by an overwhelming majority of Californians.

However, if the measure passes, it will also extend the huge tax increases recently approved by the legislature. Passage of Proposition 1A means that the near-doubling of the car tax, the 1 cent statewide sales tax increase, the income tax hike and the reduction in the dependent tax credit would continue for an additional two years. That adds up to an estimated $16 billion in higher taxes. It’s no surprise these taxes are not supported by the majority of Californians.

That’s why our state legislators want to keep the truth from you about Proposition 1A and they’ve stacked the deck in their favor. So when you read the official ballot description of the measure – what should be an objective description on what is being voted on - you will see no mention of the taxes. The legislative leadership wrote the ballot description themselves and intentionally omitted any reference to the tax increase extension. They made sure what you read is biased.

The Yacht Party has been so consumed with tax ideology, as if the only role of government is to decide what not to tax, that they fail to see the spending cap forest through the trees. Which is fine with me, because as Anthony Wright notes, this cap would painfully ratchet down services and make any economic revival in California extremely difficult.

The revenue forecast amount established by Proposition 1A, which limits spending from the state’s existing tax base, would be significantly below the Governor’s “baseline” spending forecast, a forecast that assumes that the cuts proposed by the Governor in his New Year’s Eve budget release continue. For example, in 2010-11, the first year when the Director of Finance would be required to calculate whether the state has received “unanticipated revenues,” the revenue cap would be an estimated $16 billion lower than the Governor’s “baseline” spending estimate for the same year. The gap would widen in 2011-12 and 2012-13 to $17 billion and $21 billion, respectively.

By basing the new cap on a level of revenues that is insufficient to pay for the current level of programs and services, Proposition 1A would limit the state’s ability to restore reductions made during the current downturn out of existing revenues [...]

Proposition 1A limits the amount that can be used from the reserve in “bad budget” years to the difference between anticipated revenues and prior year’s spending adjusted for population growth and the CPI. It does not allow the reserve to be used to support a “current services” or “baseline” budget, even if sufficient funds would be available in the reserve to do so. The discrepancy arises from the fact that the CPI – the inflation measure used by Proposition 1A – is designed to measure changes in the cost of goods purchased by households, not governments.

Thus, the CPI does not accurately measure the year-to-year increase in the cost of delivering the same level of public services. Specifically, the CPI does not take into account the fact that government spends a larger share of its budget on items – such as health care – for which costs have risen faster than the rate of inflation. Between 1990 and 2007, for example, national per capita health care expenditures more than doubled, rising by 164 percent, while the CPI for California, which measures inflation in households’ purchases, rose by just 61 percent.

The particular concern for health care is noteworthy. If the formulas in Prop 1A don't take into account medical inflation, an aging population, or other impacts--like the erosion of employer-based health coverage--then existing health programs are threatened.

Read the whole thing. These are the guts of this awful deal, what you won't hear when you call your legislator and they use buzzwords like "rainy day fund." At a time when the health care system in California frays at the edges, this spending cap would ultimately stop any progressive reform on anything that costs money, bottom line. The executive under 1A gets all kinds of new powers to make cuts, and absolutely none to raise revenues. It's Prop. 13 on steroids. That's why the Governor likes it so much.

But 1A has been structured to sidestep vigorous opposition through a series of bribes, particularly to the teacher's union. Prop. 1B, which would repay $9.3 billion dollars to schools starting in 2011-2012 can only pass if Prop. 1A passes. This has led the CTA to support all six budget measures on the May ballot, severing the united front that labor used to beat Arnold's special election measures in 2005. Interestingly, the California Federation of Teachers (CFT) will only support Prop. 1B, and in a pique of schizophrenia, denounced 1A as a "power grab" by the Governor.

Of course, the CFT is substantially smaller than CTA. And while the California Nurses Association's opposition to the whole special election ballot is noble and appreciated, ultimately some of the stakeholders with money will need to enter the arena. We leave a shameful legacy to the children of this state if the spending cap passes.