2008 State of the State Speech
Delivered January 8, 2008
When I was last here, little did we know that California would be engulfed by the largest firestorm in its history. It turned the night sky an eerie, disturbing orange and the day sky black. It drove hundreds of thousands of our citizens from their homes.
In response, the Army of the Inferno - 140 aircraft, 1,600 fire engines and 15,000 firefighters - mobilized to battle the flames. It sounds like a scene from a movie but it was real...and people died. People lost their homes. Peoples' lives changed.
That first Monday night during the height of the fires, I went to Qualcomm stadium in San Diego, which by now became an evacuation center. I wanted to see for myself if the people had enough food, water, necessities. I talked to the people there. They were worried, of course, but they were in good spirits. They felt their government had responded.
Then I heard there were people at Del Mar racetrack, so I went unannounced to see the situation for myself. I found 300 frail, elderly people who had been forced from their nursing home by the fire.
It was here that I met a volunteer named Paul Russo, a nurse practitioner who appeared to be running the place. Paul, who's also in the naval reserve, had a military command of the situation. His clarity and control were impressive and I noticed this gave people confidence.
He knew that the nursing home residents - sitting in wheelchairs and lying on mattresses on the floor - had to be moved to facilities where they could get dialysis and medicines and other things they needed. Paul and a couple other volunteers were calling hospitals and ambulances trying to find places and means of transportation.
Their commitment moved me, so I said to Daniel Zingale, one of my senior advisers, "We're not leaving until we help them take care of these people." So, I got on the phone, too.
And together, we found beds for emergency situations at a nearby military base. We found a school district that agreed to send special education buses.
I left, but Paul stayed up all night and had everyone moved by the next afternoon. What Paul and the volunteers did, what the police and firefighters did and what state and federal agencies did...was this: They responded to the needs of the people. They led. They acted. They did not wait.
From bottom to top, everyone knew this was their moment. They resolved, without a word being said, that this would not be another Katrina.
President Bush and the entire Federal Government could not have been more supportive, and I want to thank the President and Secretaries Chertoff and Kempthorne for their great help.
The President said to me more than once, "If there's anything you need,
give me a call." In fact, I did call him back just to check it out - and sure enough, he got on the phone. He was there for California.
Paul Russo was there for California. And this evening, I want to recognize Paul, who represents a devotion to the greater good in a time of crisis.
In addition to the volunteers, firefighters, police, and state, local and
federal employees, let me tell you another group that deserves recognition - the general public. People came together. They cooperated, they evacuated, they rescued, they contributed. They were exemplary citizens. And so, I would like to express my profound appreciation to the people of California.
Ladies and gentlemen, working together, people can accomplish remarkable things.
In April, a fiery truck crash melted the Bay Area's 580 freeway exchange. Hundreds of thousands of Californians who depended on that interchange foresaw months of delays and stress.
Yet it didn't take the normal 150 days to repair. Caltrans, working with contractors, cleared the span in 10 days and then built a new bridge and opened it up in a record 16 days later.
Government can work. It can be efficient. It can lead.
Even though we're not suffering a serious economic downturn, still, the risk of foreclosure threatens many Californians with the loss of their homes, and thus the American Dream.
So we took action and reached a voluntary agreement with major lenders to freeze interest rates for homeowners most at risk. This could help keep more than 100,000 Californians in their homes.
Government can lead.
This last year, we took on other tough issues - the very contentious issue of prison reform and rehabilitation, the world's first low carbon fuel standard and the most comprehensive health care reform in the nation.
Let me explain why health care reform is so important.
Here in California, the health care system is collapsing under its weight, its costs, its gaping holes, its injustices. Millions of people can't afford - or can't get - health care.
Our emergency rooms are crowded or closed. 60 closed in the last ten years.
Medi-Cal patients are being turned away at hospitals.
Businesses and families are experiencing double-digit increases in health care costs.
Medical bills are the number one reason people file for personal bankruptcy.
All this is weakening our economy and contributing to our budget deficit.
But let me make this more personal and real - through a true story about a 51-year-old, self-employed San Diego man named Todd.
Todd had been on his wife's insurance plan, but after a divorce, he found a policy with a well-known company. Five months later, he started feeling tired, and soon learned he had lymphoma.
The insurance company then went back through all his records looking for a reason to cut him off. They pointed to a minor knee problem unrelated to the cancer. They noted that he now weighed less than he did when he applied for the insurance.
Well, of course, he did. He was now sick with cancer. But they cut him off.
One month after he got sick, the company cancelled his insurance. Todd died eight months later.
We are taking action so that what happened to Todd will not happen to any other Californian.
Now, I understand the concern that we have a deficit, and that our plan is too daring, too bold, too expensive. But sometimes you have to be daring, because the need is so great.
You want daring?
FDR didn't ignore the problems of the Depression because times were tough. He addressed those problems in big, visionary ways because times were tough. He saw the problems and he acted on behalf of the people and the nation.
For example, to give America jobs, he created the WPA, which built 650,000 miles of roads, 78,000 bridges and 125,000 buildings. All these things we are still enjoying today.
We, too, must act boldly on behalf of the people and the state. And I want to thank the Assembly for its action on health care. When the Senate finishes its deliberations, I am confident the people of California in November will approve the most comprehensive health care reform in the nation.
In any number of areas, we've tackled politically risky things that no one in the past wanted to touch. To me, this is progress. And now, we must make progress on another problem that's been put off for many years. Professor Schwarzenegger is now going to explain the economics of our budget problem.
Our budget problem is not because California's economy is in trouble. In spite of a weakness in housing, other areas of our economy continue to thrive. We remain a powerhouse of technology, agriculture, advanced research, venture capital, international trade and innovation. And we continue to have job growth.
So, our revenues this coming year are not going to be lower than last year. They're simply going to hold steady.
The problem is that, while revenues are flat, automatic formulas are increasing spending by 7.3 percent. Even a booming economy can't meet that kind of increase. So, the system itself is the problem.
Also, for example, the rich in California by far pay most of the income taxes, but we only have so many rich people. The top 10 percent of our population - those making more than $119,000 a year - pay nearly 80 percent of the taxes. So, our whole revenue system, its ups and downs, is based on whether the rich have a good year.
That's no basis on which to run a government. We need more stability.
Another thing...some people say, "Arnold, you're part of the reason we have this deficit - because you stopped the car tax increase."
Yes, I did do that, and I would do it again. It's not fair to punish people who can barely afford the gas to get to work, and on top of that ask them to pay for a tax increase to cover Sacramento's overspending.
I said it back during the Recall and I'll say it again, "We do not have a revenue problem; we have a spending problem."
We have to fix the system. The first year I was here, I tried to fix the system. I tried to get the legislature to pass a constitutional amendment to limit spending, but it did not pass. Then, in 2005, I tried to convince the voters to pass a constitutional amendment to control the budget, but that failed, too.
So, for several years, we took actions that balanced the budget as long as the economy was booming. For several years, we kept the budget wolf from the door. But the wolf is back.
It used to be that Sacramento plugged deficits by grabbing money everywhere it could - pension funds, local governments, bonds, gas taxes meant for transportation. But we tightened the noose by taking away those options. We passed Proposition 1A, Proposition 58 and Proposition 42.
We now have no way out, except to face our budget demons.
To address next year's $14 billion deficit, in two days I will submit a budget that is difficult. It does not raise taxes. It cuts the increase in spending. And it cuts that spending across the board.
As governor, I see firsthand that the consequences of cuts are not just dollars, but people. I recently brought leaders and advocates of various communities into my office to tell them about what we faced financially.
I had to look into their eyes and tell them.
Talking about fiscal responsibility sounds so cold when you have a representative for AIDS patients, or poor children, or the elderly sitting across from you. It's one of the worst things about being governor.
Yet fiscal responsibility, like compassion, is a virtue, because it allows the necessary programs in the first place.
What I find most troubling is the erratic ways we treat those who need our help. Up one year and down the next. We cannot continue to put people through the binge and purge of our budget process.
It is not fair. It is not reasonable. It is not in the best interests of anyone.
So I am again proposing a constitutional amendment so that our spending has some relationship to our revenues. It is modeled after the process used in Arkansas. When revenues spike upwards, the amendment I propose would not let us spend all the money that rushes in when the economy is good. Instead, we would set some of the good year money aside for bad years.
When revenues jumped 23 percent in 1999-2000, or when they jumped 14 percent in 2005-2006...those were sugar highs. I remember how everyone here was so enthusiastic and so hopeful and so creative about how to spend that money. Everyone was saying, now is the time to do this, now is the time to do that. All good causes. If not now, when?
Then the sugar is gone and we come down off our high. We spend it all one year and can't sustain it the next. We need to budget more evenly.
Also, the way things are now, when we see a budget problem developing during the year, we don't have a way to stop it. We just keep the spending accelerator to the floor. What kind of sense does that make?
We need some brakes. We need an alternative to crashing. It's like a slow motion crash. You can see it happening, but you can't do anything about it.
Like right now, we're spending $400 to 600 million more a month than we're taking in. And we can do nothing to stop it.
This amendment would do something. It would trigger lower funding levels if a deficit opens up during the year.
Ladies and gentlemen, I have faith that working together we can give California a budget system worthy of the people who rely on it.
Which brings me to public education. It makes me proud as governor that a recent survey found that 23 out of the top 100 public schools in the nation were in California. I would like to congratulate the teachers, principals, administrators and all who are responsible for these remarkable schools.
There are other good things, too. The number of high school students taking advanced math and science courses has increased 53 percent since 2003. That's terrific for our high-tech future.
And we have other good education news, but as you know, it is not all good.
Our dropout rate is between 15 and 30 percent. We don't even know.
This is not just a statistic. These are children lost in a black hole of ignorance, poverty and crime. Our schools have 30 percent fewer teachers and half the number of counselors than other schools in the U.S.
Everyone knows that to dramatically change our education system we have to undertake reforms, and we have to fund those reforms. In light of the current budget situation, this is not the year to talk about money.
I do believe, however, we still must undertake reforms right now in the schools that need our help most.
To varying degrees, 98 school districts in California are out of compliance with the No Child Left Behind Act. According to the Act, after five straight years of noncompliance by a district, the state is required to take action or lose federal funding. We have identified several districts that on the whole have persistently failed to educate children.
I am announcing tonight that California will be the first state to use the powers given to us under the No Child Left Behind Act to turn these districts around. We will be working with Superintendent of Public Instruction Jack O'Connell, the teachers, the administrators, the parents and elected officials to make these districts models of reform.
No more waiting. We must act on behalf of the children.
Likewise, on infrastructure, I will continue to push for action. We have a water system built decades ago for 18 million people.
Today we have 37 million people. In 20 years, we will have 50 million people. We have to get going.
Already homes and businesses are facing mandatory cutbacks. Farms are unable to irrigate crops. Building permits are being denied.
And yet raging flood waters run wasted into the sea because they can't be captured. We must expand water storage. We must build new water delivery systems. We must fix the Delta and restore its ecosystem.
And I will continue to push you on this, because California needs water now - and 20, 30, 50 years from now.
Over the next 20 years, we have $500 billion worth of infrastructure needs to be met. As we head into this new century, we also need digital infrastructure to keep our economy growing.
So how do we meet all these needs? There isn't enough money in the public sector to do all of it.
We need to expand partnerships where government and the private sector work together to meet the needs of the people. These partnerships can often deliver infrastructure faster, better and cheaper.
For instance, in British Columbia, public-private partnerships are common for building highways, bridges, rapid transit, water treatment. Everyone is happy. The political leaders are happy, business is happy, the public is happy, the economy is happy, the future is happy.
In the weeks ahead, I will send you legislation to make these partnerships more available to our state and to our local governments.
We will also continue to make California the world's environmental leader.
We are leading on climate change, low carbon fuels, energy efficiency - and on clean, green technology. When it comes to cleaning our air, preserving our oceans, protecting our environment, California will continue to be the foremost advocate for change.
And if we have to sue the federal government to get out of our way, we will do so.
Now, I will be submitting to you many legislative proposals - on energy and the environment, on infrastructure, on education.
And I will also submit a proposal on behalf of our returning veterans. They deserve not only our gratitude and respect, but a more open, welcoming door to civil service and education benefits.
Let me close by saying that last year I talked about post-partisanship. A few cynics made fun of that idea. But that is how I tried to conduct my Administration over this past year. It's how I intend to conduct business over the coming year.
Speaker Nunez, Senate Leader Perata, Senator Ackerman and Assemblyman Villines, I cannot fix the budget alone. I can't build the roads and bridges alone. I can't improve education alone.
You are my partners. All of you sitting here in this chamber are my partners.
This coming year will test us in very hard ways.
I like something that Paul Russo said when he was asked why he didn't go home and get some sleep that night at Del Mar. He replied, "When you have a job to do, you get it done."
Ladies and gentlemen, we have a job to do for the people of California. Let's get it done.
Budget repair tool too weak?
Prop. 58 puts onus on the Legislature; GOP lawmakers skeptical
By Judy Lin, Sacramento Bee, February 5, 2008
Turns out a law voters approved four years ago to force the Legislature and governor to fix state budget problems may be broken itself.
The Legislature's lawyers have concluded that Proposition 58, invoked for the first time by Gov. Arnold Schwarzenegger this year to help deal with the state's projected $14.5 billion budget shortfall, could let lawmakers sidestep punishment if they fail to agree on budget solutions.
Passed in March 2004 along with another measure to authorize bonds to reduce that year's deficit, Proposition 58 allows the governor to declare an emergency when revenues "decline substantially" and gives lawmakers 45 days to "address" the problem.
If they don't, "the Legislature may not act on any other bill, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the governor," according to the law.
Schwarzenegger declared the emergency on Jan. 10 and proposed $800 million in cuts in the current year's budget, giving lawmakers 45 days – until Feb. 23 – to act.
But some Republicans are worried that Democrats, who control both houses, will use loopholes in the law to avoid making difficult decisions.
In a letter to Assemblyman Todd Spitzer, R-Orange, the Office of the Legislative Counsel wrote that lawmakers don't have to submit a balanced budget in order to "address" the state's fiscal emergency. The letter said the Legislature could continue its policy work and recess for up to 10 days even after a 45-day deadline to address the state's fiscal emergency has passed.
Spitzer said that's not what voters intended when they passed Proposition 58. "You must put down all your work and completely focus on the budget," he said.
It's also unclear what could happen if the governor finds the Legislature's proposal unacceptable.
"The governor can do any number of things," said Assemblyman Roger Niello, R-Fair Oaks, vice chairman of the Assembly Budget Committee. "He could veto, call another emergency session, but it's a hypothetical question."
Administration officials are reluctant to speculate about what might happen if the Legislature fails to shave more than $800 million off the current budget – or come up with its own cuts.
"We're not going to get into speculation on a hypothetical," said H.D. Palmer, a spokesman for the governor. "The Legislature has a plan before it from the governor that addresses the emergency he declared on Jan. 10. I think the Legislature understands the gravity of the situation."
Democratic leaders dismissed the notion of loopholes, saying they're working overtime to pare the current-year deficit, which has been pegged at $3.3 billion. That gap, if ignored, would grow to $14.5 billion by the end of the new fiscal year, which begins July 1. Other midyear solutions include the sale of deficit-financing bonds.
"We will not go past the 45 days," said Senate President Pro Tem Don Perata. "All I can tell you right now is we will meet the deadline."
Proposition 58 was attached to the deficit bond measure, Proposition 57, in 2004, the result of a compromise between a newly elected Schwarzenegger and the Legislature. Voters approved the measure 71 percent to 29 percent.
Former Finance Director Donna Arduin said Schwarzenegger wanted a stronger spending-limit bill that would have tied spending to revenues – a change he continues to champion today.
"We wanted to give the governor a tool to deal with midyear budget problems," Arduin said. "If the governor's first spending limit had been adopted, the state wouldn't have a budget problem now."
Proposition 58 does not provide the governor recourse if the legislative body fails to pass a bill reducing spending. "They're saying, 'Whatever you do, it'll turn out to be OK,' " Spitzer said. "And that can't be right."
Assemblyman John Laird, D-Santa Cruz, chairman of the Assembly Budget Committee, said it was "premature" to discuss what could happen when both houses have been conducting hearings to review the governor's proposals.
Lawmakers are considering $817 million in cuts outlined by the governor. Half the cuts would come from education, although the governor is also proposing to delay Medi-Cal provider payments, cut children off welfare if their parents don't meet work requirements, and suspend a state increase for the elderly, blind and disabled receiving Social Security benefits.
Democratic leaders are expected to negotiate with GOP leaders and hand the governor a different plan. "We're going to work hard to get as close to (the governor's number) as possible," Assembly Speaker Fabian Núñez said.
State Democrats determined to raise taxes
Legislative leaders, saying school cuts under the governor's proposed budget are unacceptable, are prepared to dig in for a long fight to get about $5 billion in tax increases
By Evan Halper, Los Angeles Times, March 5, 2008
SACRAMENTO -- -- Democratic legislative leaders declared Tuesday that they are prepared to delay the state budget this year if that's what it takes to get tax increases, which they called the only reasonable solution to California's multibillion-dollar shortfall.
"This is going to be the fight of a lifetime," Senate leader Don Perata (D-Oakland) declared at a news conference. He spoke on the steps of a Sacramento high school that faces layoffs and bigger classes under Gov. Arnold Schwarzenegger's plan to close the deficit with spending cuts, borrowing and deferrals.
"We are not going to be going anywhere this summer," he said, referring to the annual process of trying to agree on a budget by the July 1 start of the new fiscal year. "I told everybody that wants to go to the Democratic [National] Convention . . . TiVo it. That is as close as you are going to get."
Perata drew his line in the sand while standing with Democrat Darrell Steinberg of Sacramento, who will succeed him as Senate chief later this year, other senators and school leaders. Perata said the governor's proposal to cut school spending by 10% is unacceptable, and Democrats will reject any budget that includes less for education next year than this year.
Asked how Democrats propose to make up the difference, Perata said: "Raise taxes. That clear enough? Raise taxes."
Republican lawmakers have repeatedly said they will not vote for any budget that includes new taxes.
Almost every GOP lawmaker has signed a "Taxpayer Protection Pledge," vowing to "oppose and vote against any and all efforts to increase taxes."
"Raising taxes can have extremely negative consequences for the economy," said Assembly Budget Committee Vice Chairman Roger Niello (R-Fair Oaks). "Right now, California has the 12th highest tax burden in the country. Why would we want to move into the top 10?"
Although Republicans are the minority in the Legislature, a state budget cannot be approved unless at least eight GOP lawmakers sign off on it. The Republicans have used those votes to block past tax increase proposals.
Last year, they delayed passage of a budget by 51 days over the issue of spending, until Democrats and the governor agreed to hundreds of millions of dollars in additional program cuts.
Caught in the middle is the governor, who is urging Democrats and Republicans to begin working toward a solution now. In January, Schwarzenegger proposed a budget that cut spending by 10% in all state programs and included no new taxes. But last week he said he would support raising $2.5 billion by closing tax "loopholes" -- decreasing or eliminating various tax breaks available to individuals and businesses.
But he has declined to provide particulars. The one example he has cited is a provision in the law that allows owners of yachts, airplanes and luxury RVs to dodge the sales tax on their vessels if they keep them out of state for 90 days.
Eliminating that tax break would generate only $26 million for a state budget that is projected to be at least $16 billion out of balance.
GOP lawmakers say closing loopholes is essentially a tax hike. They say the only way to raise $2.5 billion by eliminating tax breaks is to scale back credits and deductions that benefit millions of Californians, such as the mortgage interest deduction or the dependent care credit. Doing so, they say, would have the same effect as a broad-based tax increase.
The governor waved off that criticism at a Sacramento news conference Tuesday.
"We should not get caught up in what is something called and what is the definition of something, because that doesn't bring anyone any healthcare, that doesn't bring anyone any education," he said. "Let's just put everything on the table and not debate what the definition of something is, but just say everyone has to participate, everyone has to contribute."
Schwarzenegger warned that a late budget would have serious consequences -- such as damaging the state's credit rating, which could ultimately cost taxpayers hundreds of millions in increased borrowing costs.
"The most important thing is that we fix the problem as quickly as possible," he said. "Any change in the credit rating will have a tremendous effect."
Late budgets have other effects as well. State payments to medical clinics, schools, community colleges and others stop. Vendors stop getting paid. Services for the poor, the elderly and the disabled are affected, with some programs forced to suspend operations until a state spending plan is in place.
But Democrats say closing $2.5 billion in tax loopholes would not go far enough.
They want to raise taxes by double that amount, possibly by hiking sales taxes, tobacco taxes or taxes on the wealthy. Perata said Democrats will spend the next few months devising a specific plan.
Given the state's dire finances, he said, "no one is going to tell me . . . the average Californian would not be willing to pay pennies on the dollar more for an education system . . . that is worth what we believe California is about."
Teachers caught in middle of state deficit debate
DISTRICTS TO SEND LAYOFF LETTERS
By Mike Zapler, San Jose Mercury, March 9, 2008
SACRAMENTO - Late this week, notices will go out to thousands of teachers across California informing them that they may be out of a job in a few months - the first and clearest indication to many families of the kind of pain that California's massive budget deficit could inflict.
The layoff letters, which must go out by Saturday, could number in the tens of thousands, school officials warn. And though it's possible, if not likely, that many of the warnings won't result in actual pink slips, the notices could be a flash point in the debate over how to close an $8 billion budget deficit - and what the fallout might be on rank-and-file Californians.
The legislative budget debate this year is following a familiar formula: Democrats generally vow to protect education and social services for the poor, even if it means raising taxes; Republicans decry overspending and pledge to block a tax increase at all costs.
But the bigger challenge for lawmakers may be getting the public to view the back-and-forth as more than a distant standoff among politicians, and care enough to press for one solution over the other. Democrats are hoping that the prospect of fewer teachers in classrooms is something most any family with children can appreciate, even as Republicans accuse them of engaging in fear-mongering.
Gov. Arnold Schwarzenegger and GOP lawmakers contend that the size of cuts to education remains negotiable, and that any cuts that are made to schools can be managed in ways to reduce impacts in most classrooms.
But there's no denying the emotional power generated by thousands of teacher pink slips in schools all over the state.
"It's difficult for people to grasp a debate over something as abstract as the budget," said Fred Silva, a budget expert and fiscal policy analyst at Beacon Economics. "But how much your public school is going to have for an arts program, or a reading program, is not abstract at all."
Hoping that's the case, Democrats are doing everything they can to call attention to the cuts to K-12 school spending that Schwarzenegger proposed in his January budget. His plan would give schools $4.4 billion less than they had been slated to receive next year - cutting per-pupil spending by about 10 percent, or an average of $786 a student, according to an analysis by the California Budget Project.
In recent weeks, school advocates have staged news conferences around the state to call attention to their plight, and on Monday school administrators are planning to descend en masse on the Capitol to protest the governor's plan.
"This is where you get a chance to see what these cuts actually mean," said Sandra Jackson of the California Teachers Association. "It's where the chalk meets the blackboard, so to speak."
One district's plans
Berryessa Unified is one school district bracing for the worst. It plans to issue 79 layoff notices to teachers, administrators and counselors; the district employs about 400 teachers. Superintendent Marc Liebman said he expects fewer than half of the 79 will end up losing their jobs, but that hardly softens the blow.
Spending on core classes probably won't suffer, Liebman said. But an elementary school program that teaches kids to play string instruments could be eliminated, he said, as well as counselors who work with troubled adolescents. Special education classes could be crammed with more students.
"All the teachers that help students get a more rounded education may be gone," said Joyce Singh, a kindergarten teacher at Northwood Elementary School who heads the CTA's Berryessa chapter.
Schwarzenegger and Republican lawmakers insist they're not out to harm schools, and say that budget talks over the next weeks and months could forestall some of the draconian cuts that critics fear.
"Our negotiations will start very soon, hopefully tomorrow, so that we can solve all of those problems as quickly as possible," Schwarzenegger said Friday during an appearance in Oakland. "Because what concerns me is that on March 15th the education community has to make serious decisions about should they lay off teachers or not."
The governor repeated his plea to reform the budget so that schools aren't held captive to the wild swings in tax revenue that California perpetually faces, depending on how the economy is faring.
Political posturing?
Assembly Minority Leader Mike Villines, R-Fresno, accused Democrats and advocates of using the threat of teacher layoffs to score political points.
"I think they do this to scare a lot of people and it's not the healthiest thing to do," Villines said. "There are ways to do this that do not hurt the classrooms." He said Republicans in the coming weeks would lay out their own ideas to balance the budget.
State law mandates that districts issue preliminary layoff notices by March 15. Final notices must go out before May 15, and the layoffs would take effect July 1.
How many layoff notices will go out is anyone's guess. But based on the number of teachers in the state - about 350,000 - and the number that would need to be let go to reach the spending-cut target, it is likely to be in the tens of thousands, predicted Bob Wells, executive director of the Association of California School Administrators.
He noted that California ranked 46th out of 50 states in per-pupil spending, according to a recent survey by Education Week.
"The only thing that would forestall these layoffs," Wells said, "is if legislators stand up and say they're not going along."
Speaking in front of a Sacramento high school last week, Senate leader Don Perata, D-Oakland, a former teacher, vowed to hold up the budget into the fall to head off cuts to education. The Legislature is required to pass a budget by June 15, though it routinely misses that deadline.
"The real issue this summer is whether the Legislature . . . will pass a budget that does damage to education," Perata said. "And the answer is no."
Per-pupil spending rankings all relative
Different figures often cited in debate over budget cuts
By Ed Mendel, San Diego Union, April 13, 2008
SACRAMENTO – Does the amount of money spent on each public school student in California, with the world's eighth-biggest economy, rank near the bottom among states or near the middle?
Democrats and Republicans are citing different figures in a complex but high-stakes dispute: Money for schools is the main issue in what could be a lengthy partisan battle over the state budget this year.
“Let's remind ourselves that California already ranks at the bottom in school funding,” Assemblywoman Julia Brownley, D-Woodland Hills, said during a legislative floor debate last month.
Brownley was referring to a listing by Education Week, a national newspaper, that ranks California's spending on kindergarten-through-high-school students 46th among states.
“Don't throw out those bogus numbers of 46th going to 49th,” said Assemblyman Bob Huff, R-Diamond Bar. He pointed to a listing by the National Education Association that ranks California 29th.
The Education Week ranking of 46th is often cited by advocates of increased school funding such as the two-decade-old Education Coalition, led by the politically powerful California Teachers Association.
Ironically, Republicans are making their case by relying on figures from an organization they often disagree with – the National Education Association, the nation's largest teachers union.
Why are the rankings so different?
Education Week adjusts per-pupil spending to reflect regional variations in cost of living, particularly teacher salaries, and the National Education Association does not.
Both start with similar spending in California during fiscal 2004-05. Education Week uses federal data, $7,905 per pupil; the NEA uses its own data, $7,942 per pupil.
Then Education Week applies a 1990 federal “geographic cost of education index” that drops California from 30th to 46th at $7,081 per pupil, well below the national average of $8,973 per pupil.
Spending more than $12,000 per pupil in Education Week's ranking are New York, New Jersey, Vermont and the District of Columbia. Below California are Idaho, Arizona and, at the bottom, Utah at $5,463 per pupil.
Some experts think a regional cost adjustment is appropriate but difficult to do accurately.
In February, California's Legislative Analyst's Office cited unadjusted federal data for fiscal 2003-04 (then the most recent available), ranking California “right in the middle of the pack” at 25th among states, with $7,673 per pupil.
A scathing 2005 Rand Corp. report on California's schools – finding them below the national average in test scores, funding, teacher qualification and facilities – did not adjust per-pupil funding for regional cost differences.
“We considered it some,” Rand's Stephen Carroll said at the time, including a look at the index used by Education Week. “We weren't aware of an index we liked.”
Advocates of increased spending on schools have long used per-pupil comparisons with other states as a benchmark. California was among the leaders during the 1960s, but it has been below the national average by any measure for decades.
“We were gaining toward the middle of the pack under (then-Gov.) Gray Davis, and we also were the fifth-largest economic engine in the world,” state Superintendent of Public Instruction Jack O'Connell, a Democrat, said in an interview.
“I would suggest that there is a commensurate linkage to the reduction in school funding to the lack of economic productivity in the state,” O'Connell said, referring to California's slide from fifth in the late 1990s to eighth among world economies.
School-funding advocates are alarmed by Republican Gov. Arnold Schwarzenegger's proposal to help close a huge shortfall in the 2008-09 state budget with a $4 billion cut for schools, triggering notices of potential layoffs to 14,000 teachers statewide last month.
The governor's proposal includes a $1 billion reduction in current spending and a $3 billion cut in projected school-funding increases.
Democrats are urging a tax increase to avoid school cuts. The exchange between Assembly members Brownley and Huff was in a debate over a proposed $1.2 billion tax on oil production, which was blocked by Republicans.
Schools are the biggest item in the state budget, getting more than a third of the $100 billion general fund. Education also is a strong political issue, with broad bipartisan support in polls.
The view of O'Connell and others – that an educated work force is needed to keep California competitive in a global economy – has a public appeal that goes beyond parents with children in schools.
Republicans tend to emphasize reform for schools rather than increased funding. Assembly Republicans recently introduced a package of bills that would, among other things, cut state red tape for local school districts.
But Republicans also say they are working on a plan to keep their pledges against raising taxes and still give schools more money next year. The Republicans would require cuts in other programs but didn't identify them.
“We believe that there are many other places that you can go to (for cuts) outside of education,” Assembly Republican Leader Mike Villines of Clovis said at a recent news conference. “A tax increase is not needed in California.”
One problem with using statewide per-pupil averages as a way to measure what is needed is the wide variation in California's giant public education system: roughly about 6 million students, 10,000 schools and 1,000 local school districts.
Here's an example from the state Department of Education Web site: San Marcos Unified School District received $7,923 per pupil last fiscal year (89 percent of the statewide average $8,923), while San Diego Unified received $10,846 per pupil (122 percent of average).
Funding for schools is based in part on historical formulas and more than 100 programs added piecemeal by legislators over the years, such as class-size reduction, economic-impact aid and English-language acquisition.
Some districts get more funding from these programs, called “categoricals” in bureaucratic language, because of decisions by administrators, the number of students from low-income families and other factors.
School performance varies widely. In January, Schwarzenegger cited a survey showing that California has 23 of the top 100 public schools in the nation. But the dropout rate in some urban high schools is said to be 50 percent.
Legislation in 2002 aimed to move California beyond the per-pupil spending debate. The bill sought to establish a commission, patterned after one in Oregon, that would create models for adequate funding in various regions of California.
But Davis never appointed the commission. After Schwarzenegger took office in November 1993, his administration gave the commission's task to an advisory committee that was taking a larger look at schools.
The report by the Governor's Committee on Education Excellence, issued last month after two years of work, was supposed to kick off Schwarzenegger's “Year of Education.” But the governor postponed his program because of the state budget deficit.
The committee made broad recommendations, among them to provide more funding for some students, particularly English learners and those from low-income families, costing about $5 billion a year. A preschool expansion would cost $1.1 billion a year.
Then-Sen. Dede Alpert, D-Coronado, was a co-author of the commission legislation in 2002 and later served as vice chair of the Governor's Committee on Education Excellence.
Alpert said she is satisfied with the committee's report, even if it did not directly complete the mission of her 2002 legislation. Serving on the committee, she learned “what I did not know” when working on the legislation.
“It's so complex there really isn't one easy answer,” said Alpert. “I think we tried the best we could to get a starting point.”
Budget analysis: Almost never on time and no one can agree why
By Dan Smith, Sacramento Bee, May 11, 2008
The state budget will be late again this year, barring some fiscal or political force that has yet to assert itself.
Gov. Arnold Schwarzenegger, who will offer a revised plan Wednesday, says the soft economy has contributed to a gap between expected revenues and expenditures that could reach $20 billion for the year beginning July 1 – about a fifth of the $101 billion plan he proposed in January.
But that isn't necessarily the only reason the budget probably will be tardy.
Lawmakers have not met the June 15 constitutional deadline to send the governor an approved budget since 1986, and have accomplished the task only four times since 1977. Only 10 times in the last 31 years have the Legislature and governor combined to get a budget in place by the beginning of the fiscal year on July 1.
Deadlines tumble in years with deficits and years with surpluses. Neither Republican nor Democratic governors have had much success.
Ask a roomful of budget veterans why the Legislature and governor can't seem to deliver on time and you'll get a roomful of answers.
In no particular order:
The requirement for a two-thirds vote stifles the ruling party's (usually Democrats) majority will, giving the minority (usually Republicans) effective veto power.
Voters added the supermajority requirement to the constitution in 1933, although it only kicked in if spending was to increase by 5 percent or more over the previous budget.
That lasted until 1962, when nearly 80 percent of voters agreed to remove the 5 percent spending cap provision, thus requiring all budgets be approved with a two-thirds vote. Supporters said Proposition 16 that year would remove wording that was "without present-day significance."
Voters soundly defeated Proposition 56 in 2004, which would have let the Legislature approve a budget with 55 percent of the vote. But it also would have lowered the vote threshold for raising taxes, drawing widespread opposition from anti-tax groups.
Only two other states – Arkansas and Rhode Island – require more than a majority vote to approve a budget.
Various voter-approved budget rules, notably the constitutional guarantee for minimum school funding, limit policymakers' choices for cuts. Other ballot measures largely protect transportation funds and local government payments.
Some of the rules can be suspended – with enough votes in the Legislature – but those decisions can be politically perilous, particularly if they take on a powerful special interest, such as public school teachers.
Lawmakers are calendar-challenged: They have more than five months from the unveiling of the governor's proposal in January until the June 15 deadline but never seem to get down to real work on the big decisions until the proposal is revised in May based on April tax returns and updated spending estimates.
Legislative leaders counter that economic projections can change dramatically between the holidays and income tax season and they need to wait to make choices with more precision. In the meantime, they say, budget subcommittees review dozens of programs in the governor's proposal.
Court decisions through the years have ordered the state to pay most school expenses, health and welfare programs required by federal law and state employee payrolls even without an approved budget.
That reduces the political consequences for tardiness, making it easier for legislators to hold out through the summer based on ideology and encouraging brinkmanship.
"Everybody is playing to the sound bite of the moment," said Steve Merksamer, lawyer and chief of staff to former Gov. George Deukmejian. "The courts have jumped in and taken the consequences off the table. Then it becomes more of a PR battle about who's holding up the budget."
Lawmakers draw their own districts, and they're rigged for one party or the other, resulting in a Legislature full of hard-line liberals and conservatives. That dynamic provides no motivation for finding a middle ground on spending and taxing decisions and could lead to political consequences in party primaries for those who compromise.
Schwarzenegger is leading a ballot effort to turn over the once-a-decade redistricting task to a commission. Several similar efforts, including one pushed by the governor in 2005, have failed. Even if approved, the new districts would not be in place until the 2012 elections.
Garry South, who was chief of staff to former Gov. Gray Davis, noted that governors have tried, without success, to pressure legislators during budget delays by going to their districts and calling them out.
"The unfortunate thing is, there's really not much a governor can do to threaten these people," South said. "Arnold tried it as a newly elected, very popular governor with shopping mall rallies (and) it was a joke at the Capitol. Legislators said, 'He got 14 (television) cameras in my district and I only got two e-mails on the budget.' "
The tax system is outdated, relying too much on personal income, leaving state programs unusually vulnerable to the ups and downs of economic cycles.
There have been dozens of proposals to change the balance in the system among sales, income, corporate, property and other taxes. No comprehensive plan has come close to adoption.
In the era of term limits, legislative leaders have little opportunity to gain crucial experience needed to complete an increasingly complex task. The "Big Five" budget discussions soon to begin will include Schwarzenegger (four budgets), Assembly Speaker-elect Karen Bass, D-Los Angeles (three budgets, none as leader), Senate President Pro Tem Don Perata, D-Oakland (11 budgets, three as leader), Assembly Republican leader Mike Villines, R-Clovis (three budgets, one as leader) and Senate Republican leader Dave Cogdill, R-Modesto (seven budgets, none as leader).
The process isn't the problem; the problem is the problem – reconciling a budget billions of dollars out of whack is a monumental task in any structure – let alone doing it on time.
As another budget season begins in earnest with Schwarzenegger's revision this week, discussions of structural change have become louder.
"It's time to rethink the entire structure," said Merksamer, who was in office with Deukmejian 22 years ago when lawmakers last produced a budget on time. "We have a structure that was designed for the 1950s. This is 2008."
A nonprofit organization headed by Leon Panetta, former congressman from Monterey and chief of staff to President Clinton, is examining the budget tardiness issue. California Forward, Panetta said, is supporting Schwarzenegger's redistricting measure and will look specifically at pushing an overhaul of the taxing system and creating a more rigorous process to review the effectiveness of existing state-funded programs.
But the most important fix, he said, is getting the Legislature to face tough decisions.
"There really is no excuse for it," Panetta said. "Both sides know a deal is going to have to be made. Rather than let it drag on, it would be refreshing for the people of California to have their leaders solve it up front."
GOP lawmakers put 'no new taxes' pledge in writing
By Jim Sanders, Sacramento Bee, August 28, 2008
Don't read their lips when California's Republican lawmakers say 'no new taxes' – they've put it in writing, signed their names, essentially inviting their own party to oust them if they renege.
Every GOP lawmaker except Fair Oaks Assemblyman Roger Niello has signed the "Taxpayer Protection Pledge" this year, casting a shadow on budget talks by making any vote to raise taxes a potential career killer.
"If you break the pledge, the people who voted for you will say, 'Excuse me, not only did you raise my taxes but you lied to me,' " said Grover Norquist, president of Americans for Tax Reform, in Washington, D.C., which conducts the pledge drive nationwide.
The tax pledge, whose signers are publicized on the group's Web site, is a written promise to voters that "I will oppose and vote against any and all efforts to increase taxes."
Opponents argue that such vows can torpedo budget talks by making the outcome intensely personal and hamper efforts to find tradeoffs in bridging the state's $15.2 billion deficit.
"They've put themselves in a box that leaves Bush-style borrowing as their only exit strategy," Steve Maviglio, spokesman for Assembly Speaker Karen Bass, said in a written statement.
"Effective governing requires compromise," added incoming Senate President Pro Tem Darrell Steinberg, D-Sacramento. "In part because of the pledge, and what underlies it, they've limited their ability to be effective partners in government."
Passing a budget requires a two-thirds supermajority in each house, so Democrats need at least two GOP votes in the Senate and six in the Assembly to pass any spending plan covering the fiscal year that began eight weeks ago.
Republican Gov. Arnold Schwarzenegger, who has not signed the tax pledge, rocked GOP ranks this month by proposing a 1-cent sales tax increase for three years, which then would drop permanently to a quarter-cent below the current rate.
Norquist said the proposal, touted by supporters as a long-term cut, would violate the anti-tax pledge because its goal is to create an immediate increase of $4 billion in state revenues.
"Nobody believes for 30 seconds that the tax cut really happens," he said.
Aaron McLear, Schwarzenegger's spokesman, said the governor hates tax increases, too, but that no budget deal can be struck without sacrifice.
"Republicans and Democrats need to come out of their corners and compromise," he said. That's the only way we're going to get through this."
Though nearly every legislative seat has been drawn to protect the party holding it now, incumbents can be vulnerable in primary elections, where reneging on a tax pledge could prove disastrous.
Four GOP assemblymen were denounced as traitors seven years ago when they broke party ranks, in exchange for millions in district incentives, to side with Democrats on a state budget that raised the sales tax by a quarter-cent.
Two of the GOP dissidents, Mike Briggs and Richard Dickerson, were targeted and defeated in later GOP primaries.
David Kelley and Anthony Pescetti, of Rancho Cordova, did not run again. In the Senate, Maurice Johannessen was ostracized by colleagues for casting the necessary GOP budget vote.
Lew Uhler, president of the National Tax Limitation Committee, said he will join with other watchdog groups this year to hold lawmakers accountable if they violate the tax pledge.
"There is no question they will hold your feet to the fire if you break that pledge," said Assemblyman Tom Berryhill, R-Modesto. "Down the road, whatever you run for, it will haunt you."
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the tax pledge simply documents a stark reality for Republicans.
"I think, quite frankly, with or without the pledge, if they were to vote for a tax increase, there would be consequences," Coupal said.
The anti-tax pledges are not legally enforceable, but state Sen. Tom McClintock, a Thousand Oaks Republican who helped solicit them months ago, said they are taken very seriously by signers.
"I believe that every one of them is a man or woman of their word, so no, I don't expect that they would break a written contract with their constituents," McClintock said.
Larry Gerston, political science professor at San Jose State University, said the tax pledge tightens GOP ranks and makes it harder to pick off Republican votes for a compromise budget.
"You have the deepest chasm I can remember," Gerston said. "Even the governor knocking heads does nothing here."
Niello, the lone GOP lawmaker not to sign the tax pledge, said he consistently has opposed broad-based tax hikes nonetheless.
"I just don't like to sign pledges," he said.
Gerrymandering a key culprit in California budget mess
Proposition 11, which would strip the Legislature of its power to draw state Senate and Assembly district lines, is desperately needed
George Skelton, Los Angeles Columnist, August 28, 2008
For Gov. Arnold Schwarzenegger, nothing better illustrates the evils of legislative gerrymandering -- and the need for Proposition 11 on the November ballot -- than Sacramento's two-month budget stalemate.
I'd place California's ridiculous two-thirds majority vote requirement for budget passage higher on the list of culprits that create gridlock. But I wouldn't argue with Schwarzenegger's thesis: Gerrymandering tends to reward extremism in both parties and punish compromise, locking lawmakers into ideological corners.
That was especially true of the last gerrymander in 2001. The Legislature redrew legislative and congressional districts to protect the political status quo, keeping general-election competition to a bare minimum.
Districts were shaped to be "safe" for either a Democrat or a Republican. As a result, the real election battles have been waged in the party primaries. And since low-turnout primaries normally are dominated by party purists, the contests usually have been won by candidates who run the furthest to the left or the right.
Republicans pledge not to raise taxes. Democrats promise a laundry list of social programs the state can't afford.
Then they come to Sacramento and can't compromise.
"With the redistricting the way it is done, Republicans can only win [primaries] if they're way to the right and Democrats can only win if they are way to the left," Schwarzenegger lamented to a Los Angeles news conference Wednesday, pitching for his budget proposal that includes a sales tax increase, billions in spending cuts and budgeting reform.
One big problem for the public is that there is no real accountability for legislators after the primary. No current lawmaker running for reelection faces any serious competition in November.
So legislators who have been procrastinating and shilly-shallying on the budget -- holding up payments, for example, to private vendors and care centers -- won't have to answer for it in November.
Because of gerrymandering, there are few hot races even in "open" seats, where no incumbent is running: probably just one in the Senate and four in the Assembly -- out of 100 contests -- according to Tony Quinn, co-editor of the California Target Book, which chronicles legislative races.
Proposition 11, sponsored by a host of good-government groups -- Common Cause, AARP, League of Women Voters -- would seize the Legislature's power to draw its own districts and hand the job to an independent citizens commission. (Full disclosure: My daughter works for a firm that is handling some of the proponents' campaign.)
Congressional lines still would be drawn by the Legislature -- a failed strategic move aimed at heading off campaign opposition from House Speaker Nancy Pelosi (D-San Francisco). She came out against the measure anyway, apparently fearing it as an unwelcome foot-in-the-door to eventual fair redistricting of House seats. In fact, practically the entire Democratic establishment in California is opposed, fighting to retain its gerrymandering power.
Some civil rights groups also are opposed, contending the measure wouldn't sufficiently protect the Voting Rights Act.
The opposition campaign is headed by termed-out Senate leader Don Perata (D-Oakland), who reneged on a promise three years ago to produce a legislative version of redistricting reform.
The Sacramento Bee reported Wednesday that the state prison guards union has donated $577,000 to a Perata political account to be used to fight Prop. 11. Most of the union funds have been delivered in the final weeks of the legislative session as the guards press the Legislature for a pay raise. They "ought to be ashamed of themselves," AARP President Jeannine English told a media conference call, referring to both Perata and the union.
Schwarzenegger has donated about $2.5 million of his political money to the Prop. 11 campaign. Recently, the governor said he has witnessed firsthand in budget negotiations the need for redistricting reform and competitive general election races.
Sitting in his conference room, Schwarzenegger told me: "They are saying things in here -- and I never want to repeat it because what we say in this office shouldn't be repeated -- but it's clear that their hearts are sometimes in the right direction. But they're afraid to go back to their districts because they'd get slaughtered.
"They could never win anything again. Their political career is over."
Schwarzenegger was referring to the Republicans he has been trying to lobby for a tax increase. But he added: "Same thing with the Democrats. They have those kind of fears."
With Republicans running so far to the right and Democrats to the left, the governor complained, "they can't meet in the middle."
Schwarzenegger also said he'd like to see California return to an open primary. Ours was declared unconstitutional after both parties fought it in court. But the U.S. Supreme Court in March approved an open primary in the state of Washington, in which there are no party nominations. Candidates from all political stripes run on the same primary ballot. The two top vote-getters -- regardless of party -- advance to the general election. This forces candidates to run more to the middle.
"Between the redistricting and open primaries it would change the whole situation," the governor contended.
And he'd also loosen up term limits.
"Term limits has not worked as far as I'm concerned at all," he said, citing inexperience in budgeting. "Legislators come up to me all the time and say, 'I've only done one budget. . . . I've never done a budget.' "
"Look at Karen," he continued, referring to Assembly Speaker Karen Bass (D-Los Angeles). "As leader, it's her first budget. I mean, poor girl. She gets thrown into this. . . . It makes it very, very difficult when people start from scratch all the time. . . .
"The good thing is we do have a lot of smart people in this building. It's all about the political system."
Good people working in a bad system -- some of it, the gerrymandering, self-perpetuated by Democrats.
