Voters will be faced with two conflicting tax measures on the November ballot. One is Prop 38, also referred to as the Local Schools and Early Education Investment and Bond Debt Reduction Act, which has been funded almost exclusively by its proponent, wealthy civil rights attorney Molly Munger. The other is Prop 30, which is backed by Gov. Jerry Brown. Brown took his plan to the people after an earlier attempt to close the budget gap by raising personal income taxes failed in the state legislature. Both ballot measures focus on protecting education funding, but they go about it in different ways.
Prop 38 would raise the income tax rate on most Californians, where Prop 30 targets only those who make more than $250,000 a year. The amount of the increase would depend on the individual's tax bracket (see "What Your Vote Means" below). The revenues would go into a special fund called the California Education Trust Fund, or CETF. From there, the money would have to be used for three specific purposes, in the following proportions:
MoreFollow the Money: Interactive database lets you look at who's funding both sides of the Local Schools and Early Education Investment and Bond Debt Reduction Act
Read the Full Text: Read the proposed law as published in the state's Voter Information Guide
Video: Hard-Hit Community Colleges Could Face Steeper Cuts After Election
- to pay for schools (60%)
- to pay for Early Care and Education (ECE) programs (10%)
- to pay down state debts (30%)
However, beginning in fiscal 2017, the proportions would shift. The amount allotted for schools and ECE would be capped using a formula that takes into account the average growth in Californians' per capita income during the first five years the law is in effect. Any revenues in excess of this cap would go toward debt payments. The rest would be split, with 85% going to schools and 15% going to ECE.
One critical point to consider is how the two November tax measures (Prop 30 and Prop 38) would affect each other should both pass. The state constitution already provides that when two measures conflict, the one with the most votes prevails. In addition, sections in both Prop 30 and Prop 38 explicitly bar the other from taking effect. Even if you vote for both, only one can win. And if Prop 30 loses, the so-called "trigger cuts" built into the current state budget would go into effect.
Prop 38 has a number of very specific rules about the distribution of funds, and it is well worth your time to read the summary from the Legislative Analyst's Office. And here's the full text of the prop.
WHAT YOUR VOTE MEANS
Voting YES means that you approve of the new taxes and would like them to be allocated to schools, ECE programs, and state debt repayment. If Prop 38 prevails, then Prop 30 cannot, and a series of trigger cuts built into the state budget will go into effect. Taxes would increase according to the following table:
|Single Filer||Joint Filer||Head-of-Household||Tax Rate Increase|
|Over $2,000,000||Over $5,000,000||Over $3,402,944||2.2%|
|Source:||Legislative Analyst's Office|
Voting NO means that you reject the tax increase. The school funding and debt repayment plan laid out by Prop 38 will not go into effect.
WHO/WHAT IT WOULD AFFECT
Taxpayers: Most Californians would be faced with at least some form of tax increase. See the table in "What Your Vote Means" above.
Public Schools: Public schools could receive as much as $10 billion in the first year. The bulk of that money (70%) would be distributed to schools on a per-student basis, with more money for students in higher grades levels. Additional money (18%) would be allotted to schools based on the number of low-income students enrolled. The final portion (12%), also distributed on a per-student basis, would be dedicated solely to technology -- allowing for the purchase of new equipment and teaching materials and also for teacher training. The money would be tied to a series of restrictions and mandates, including that school districts seek public input before deciding on how to spend the money.
Early Care and Education Programs: ECE programs are those that, like preschool, begin before kindergarten. Current funding levels don't come close to supporting the number of children eligible for subsidized programs in the state (of children ages five and younger, about half are eligible but only 15% are served, according to the legislative analyst's office). Prop 38 would restore some of the funding that was cut in a series of budget reductions since 2008. It would also create a rating system for ECE programs, establish a statewide database to support program management, begin an Early Head Start program modeled after the federal one, and would expand subsidized preschool for children of low-income families, among other things. ECE programs are expected to get about $1 billion a year for the first few years if Prop 38 passes.
State Budget: A share of CETF funds each year will go toward paying down state debts, with the priority on education debt-service costs. That means more General Fund money can go to other public programs and to balancing the budget, according to the legislative analyst.
WHO'S BEHIND IT
Wealthy lawyer Molly Munger is the principal financial backer and proponent of Prop 38. Other than her own contributions, only one minor donation has been reported as of Aug. 14 -- $25,000 from the Atlas Family Trust, compared with $13.8 million from Munger herself.
WHO'S AGAINST IT
Those interests that have lined up behind Jerry Brown's tax measure, Prop 30, are naturally opposed to the Munger plan. In addition, the California Democratic Party has come out against the measure. However, no major donations to the opposition campaign have been registered with the Secretary of State's office.
ARGUMENTS BEING MADE FOR
Prop 38 restores education money that was cut from the budget in recent years, guaranteeing billions of dollars to local schools based on enrollment -- an average of $10 billion annually over 12 years.
It will prevent more cuts by setting aside $3 billion a year through 2017 to help repay state education bond debt.
It prohibits the legislature from diverting or borrowing the money, and the money cannot be used to replace current education funding.
Money is distributed on a per-pupil basis and must be spent at the school.
The money cannot be spent to increase salaries or pensions of school personnel.
Spending decisions will be made locally and will require public input.
School districts will be accountable for improvement at each school and must report how they money was spent.
ARGUMENTS BEING MADE AGAINST
Prop 38 is a massive tax hike for middle-class taxpayers and small businesses. It will damage small businesses that pay income taxes as individuals rather than as corporations.
It will kill jobs in small and family businesses where most job growth is taking place.
It can't be changed once it's passed, so it will continue for 12 years even if there is evidence of fraud or waste.
It gives Sacramento $3 billion a year for four years to spend how they please.
It creates a costly new bureaucracy by forcing schools to go through complex red tape just to receive basic funding, and it creates new programs even while necessary school functions have been cut back.
It will do almost nothing to improve student performance.
FOR THE RECORD: An earlier version of this post incorrectly referred to Molly Munger as a "tax attorney." It also may have implied that voters are only allowed to choose one of the tax measures, Prop 30 or Prop 38. Voters are free to cast their ballots how they choose. For a more detailed explanation of what would happen if both should pass, see this explainer.
Top Photo: A volunteer at St. Anthony Foundation sorts through bins of backpacks filled with school supplies in August 2009 in San Francisco. St. Anthony Foundation gave away hundreds of backpacks filled with back-to-school supplies to needy children in San Francisco's Tenderloin neighborhood. | Credit: Justin Sullivan/Getty Images