The Real California Budget Problem

Governor Schwarzenegger signed a bill today putting a $15 billion bond measure on the March ballot.

I’ll be voting a big fat NO on that proposition. And if you live in California, I strongly encourage you to do the same.

Why? It’s quite simple.

1. I’ve been voting in California elections since 1989, and every single year there are tens of billions in bond issues on the ballot. This state now has:

  • $65 billion of general obligation and lease-revenue bond debt
  • $17.7 billion in energy bond debt
  • $4.6 billion in tobacco bond debt
  • $12.5 billion in short-term Revenue Anticipation Notes
  • $11 billion in short-term Registered Reimbursement Warrants (RAWs)

That’s a grand total of $110.8 billion. Now they want to add $15 billion more? I don’t think so.

2. California’s bond rating is abysmal. Moody’s downgraded the state to Baa1. That’s three steps above “junk” level. It’s the lowest rating of any state in the union. That means bonds must be offered with higher interest rates. Guess who pays the high interest rates? You do. And if the bond rating ever reaches junk level, you’ll really see a disaster. At “junk” level, institutional investors can no longer buy them and most individual investors won’t want to.

3. State spending has been completely irresponsible. The budget for 2002-2003 is $100 billion. That’s a 44% increase in just four years. According to the Public Policy Institute of California:

California’s budget has grown by 44 percent since FY 1997-98 due largely to increasing income tax revenues (specifically, receipts from stock options and capital gains). Revenues from stock options and capital gains peaked in FY 2000-01 at $17.6 billion and accounted for 25 percent of general fund revenues. The following year, half as much revenue was raised from these sources, with the state receiving an estimated $8.6 billion in revenues. These revenues are not expected to return to peak levels in the foreseeable future.

A pretty good case so far, eh? But I haven’t even touched on the real problem yet. The primary reason spending doesn’t get cut is that all the big ticket items are sacred cows. No one in Sacramento has the cajones to even suggest touching them. On a Federal level the budget buster is social spending–Medicare and Social Security. Here in California, it’s education.

No one will ever entertain the idea of cutting education because it’s so ripe for political exploitation as “selling our kids down the river”. Please. With all due respect, $126 billion in debt is financial slavery. And that’s exactly what the next generation will be saddled with. At a minimum.

Let’s look at education spending. The California Budget Project has a concise Excel spreadsheet that shows 44% of the budget is spent on K-12 education and another 14% goes toward the UC and Cal State systems. That’s a grand total of 58% of the state budget spent on education!

The overall long term trend, both on a total dollar basis, per-student dollar basis, and percentage of the state budget basis, has been toward greater spending on education. So next time some one tells you we don’t spend enough on the schools, tell them that.

But enough with the numbers. I went to a college that turns out a lot of K-12 teachers. I sing with an educational outreach ensemble from the Pacific Chorale in schools all the time. Many of my friends are teachers. And I ask them all the same question: is the problem with public schools rooted in a lack of money?

They all answer the same way: no.

So what is the problem? Everyone tells me the same thing. First, teachers are too restricted in the classroom. Second, students are passed on to higher grades regardless of performance. That only puts them further behind and cements their failure. And finally, lack of parental involvement.

I am not anti-education. I attended California public school through the sixth grade and my grade school teachers were outstanding. There are infrastructure needs and the student population is growing. But education cuts should not be off-limits.

I don’t know what Schwarzenegger is thinking, but all cuts that have been proposed are in the wrong areas. For example, the governor has proposed cutting all new highway construction projects state-wide. Of all the things to cut! California sees 1,300 cars added to its highways every single day. The gridlock on the roads is already hurting the economy. The Santa Cruz Sentinel summarized it best:

The worst-case scenario laid out at Thursday’s commission meeting was that any new project could be delayed until the 2009-2010 budget year.

No new road construction in California for six years? This is the kind of thing that happens when 58% of the state budget is “off the table” when cuts need to be made.

The bottom line is that the state spends way too much and Sacramento is asking you to take out a high interest rate cash advance from a new credit card because the old ones are all maxed out.

Enough is enough. It’s time to say “no”.

  9 comments for “The Real California Budget Problem

  1. Jon
    December 15, 2003 at 9:17 am

    Enlightening. I may have to link to this as I usually have nothing of value to say on my site. 🙂

  2. December 15, 2003 at 11:48 am

    i should know this, since i live here, but we spend 58% on education? where the hell is it going? from my limited exposure to graduates of the california public school system, i’m not overwhelmingly impressed.

    i don’t know the numbers, but i wonder how much virginia puts into their system. that’s where i grew up, and they always rank highly regarding public education. i don’t know anything about their debt/taxes/etc, either, so it may not be a fair comparison.

    but, damn… 58% of our money goes to CA schools and we’re churning out, um…not the best.

  3. December 17, 2003 at 12:25 pm

    Re: where does the money go, I’ve been asking that same question for a long time. I believe a lot of it is squandered on administration. The school districts and education departments are administratively top heavy.

    Do some research into the salaries of administrators versus the salaries of teachers. Look at the cars school administrators drive.

    I believe there’s also a lot of waste and mismanagement.

    As far as Virginia is concerned, the FY 2003 state budget is $24.857 billion, and education spending totals $9.435 billion. That makes education spending in Virginia 37.96% of the state’s total budget.

    For what it’s worth, that’s still the largest chunk of the state’s budget, but a much smaller percentage than what we spend here in California.

  4. aunt betty
    December 22, 2003 at 7:01 am

    i do believe that there is a lot of waste in education funding. some of those so called administrators should be back in the class rooms or out. bussing should be compensated in part at least, by the families of those who have the advantage of using the buses. those drivers should have other obligations to fill their time between runs. perhaps monitoring in the schools or part of the clean up committee. kids should be in local schools that have been brought up to stndard, instead of bussing them miles away from their homes and continuing to fill up our so called freeways. in times of disaster, at least they would be closer to their homes. additionally there would be time for them to be with their friends. putting some of the money saved on bussing, could be better spent on after school programs that could enhance their education.
    here iam on my soap.

  5. December 22, 2003 at 12:13 pm

    All good points. Boy, I remember bussing. When I was in fifth grade (1981) I was bussed from Studio City to Dayton Heights, which is one of the worst parts of L.A. The school was like a prison.

  6. Mozo Monkey
    June 2, 2004 at 9:00 am

    I konw that the cal system is screwed becaue im in it. the teacher r morons and all the money we get gos to buy playground equment!!!

    P.S. i don’t think virgina turns out the best!

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  8. Jennifer
    October 18, 2005 at 10:44 pm

    I think that you really do not know what you are talking about when you say there is enough money spent on education. I am in a public school and I have recently switched into independent studies because of a few reasons. 1. We did not have enough money to have two trigonometry classes, so there were 38 students in a room with 30 desks. I was one of the kids squished in the back in a chair with no desk. There was not enough time to answer all the students questions or help everyone in our limited time, so many of us were having lower grades than ever seen before on a whole of a class. 2. In my art class i did not have a desk either because they did not have enough money for enough sections. I was sitting against a cupboard on a broken stool with nowhere for my legs. I switched out of that class quite soon after. 3. Last year I organized a huge event that went on in our plaza to raise money so we didn’t have to shut down our school library. We weren’t going to have a library at a school. So, you throw around number here and say your friends have no problems in their schools, well let me tell you, they arent a single percent of California. I could tell you a hell of a lot more people that would say their schools do have a money problem. Our schools need more and more each year. We are getting less and less.

  9. Shooga
    October 20, 2005 at 9:08 am

    Cheese is quite cheesy.

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