Public School Funding 101
Confused by terms like “ADA” and “Base Revenue Limit?” Wondering why AUSD is having such financial challenges? Our easy-to-read FAQ tells you just what you need to know.
Where do public schools get their money?
For many decades, the money for public schools came from local property taxes. But that led to large inequities between communities, because wealthy communities, which have more expensive houses, raised more in property taxes than poorer communities, which have less expensive houses. This, in turn, meant that school districts in wealthy communities had better schools—or at access to more resources—than those in poorer communities. As a result, a number of parents sued their state governments during the 1970s and 1980s.
What is Proposition 13?
Proposition 13 was a ballot measure that California voters approved in 1978. It cut existing property rates an average of 60 percent and set the maximum base rate for property taxes at 1 percent of the purchase price. Equally important, the proposition limited the amount the assessed value can increase by 2% or the percentage growth in the Consumer Price Index (CPI), whichever is less.
In other words, if you have a $100,000 house, the most you will pay in property taxes, the first year, will be $1000.00. For every year after that, the most that your house can be valued (and therefore taxed) at is 2 percent more than that purchase price— even if, as is common in the Bay Area, your house’s value increases 20 percent in one year and then another 18 percent the next year.
If you sell your house, the new buyer will begin paying property taxes on the current market worth of the property. If your house declines in value, the assessor is legally bound to decrease your tax rate either to the original purchase rate or the current market value, whichever is lower.
Before Proposition 13 passed, the amount of property tax you paid increased with the value of your house, so consumers’ property taxes sometimes jumped by 8, 10, or 15 percent in one year. In the long run, advocates of Proposition 13 hoped, homeowners would be protected from the kind of real estate “bubble” that, in the past, had created unexpectedly high tax bills. Unfortunately, the Consumer Price Index has risen higher than the 2 percent cap 23 years out of the last 28, so cities have collected only 2 percent of the assessed values of properties. And that has meant that local communities haven’t been able to collect enough funds to keep up with rising costs associated with inflation.
Because it affected the amount of property taxes a community could garner, Proposition 13 decreased the amount of local revenue available for schools and increased the amount the state government was legally required to contribute to meet its obligation to provide free schooling for every family that wanted it. That means that more and more of the State’s general fund was required to cover education expenses for the state.
So then what’s Proposition 98?
The continual turbulence in public school funding led some California citizens to put Proposition 98 on the ballot in 1988. Under Proposition 98, both public schools and community colleges are constitutionally guaranteed to receive a minimum amount of funding each year. This was meant to protect school funding from the ups and downs of state finances. Generally the level of new funding each year matches the previous year’s funding—with some adjustments, depending on changes in the student population, per capita income, state economic conditions, and other factors.
Lots of propositions! What’s the net effect?
Over the last 35 years, various court decisions, as well as Proposition 13, Proposition 98, and government regulations, have made it quite clear that the California state government is responsible for providing a minimum level of funding to guarantee free public education to each of its children.
Doesn’t the lottery system contribute money to the schools?
California voters approved a state lottery system in 1984. The constitutional amendment that authorized the lottery requires that at least 34% of the total lottery receipts (i.e., the money consumers spend on lottery tickets) be distributed to public schools, colleges, and universities. Of that total pot, about 80 percent of the lottery educational fund goes to K-12 education. The amendment also specifies that the money is to be spent “exclusively” on the education of students—and not on real estate, construction, or research. And it is meant to supplement, not replace, state funds for education
According to the Annual Report of Lottery Expenditures for K-12 Education (which is prepared by the California Department of Education), about 77 percent of lottery educational funds goes to teacher salaries and benefits and18 percent goes to classroom materials. In most years, lottery funds generate about 2 percent of the total amount the state allots per pupil in California.
What’s the current state of the AUSD budget?
In January, 2008, Governor Schwarzenegger proposed cutting $14 billion from the state budget — including more than $4 billion from funding for public education. This translates into a $4.5 million loss of funding for AUSD — a budget cut of historic dimensions. The Governor has also proposed cutting funding for programs like special education, child nutrition, and before- and after-school programs.
California is currently 47th in the nation for per pupil spending. With the governor’s proposed budget for 2008-09 (which includes a $4 billion reduction in public education funding), we will sink to 50th.
In order to submit a balanced budget — as required by state law — the Alameda Unified School District has proposed cutting $4.5 million over the next two years. Those cuts will come from cutting programs like reduced class sizes, high school athletics, AP programs, and music for grades 1-3 — as well as closing elementary, middle, and high schools.
Why is AUSD always having such financial problems?
Even before the governor proposed his budget for 2008-09, AUSD had taken a number of financial hits. The district, for instance, currently gets the lowest Base Revenue Limit (the amount of state funds, per pupil, received by the district) in Alameda County. The BRL is low due to several reasons, the most pressing of which is that for a long time the district received federal funds for students at the Naval Air Station. Since the naval base closed, the way BRLs are calculated has not changed, so ours remains lower than other Bay Area districts (although it’s pretty close to the state average).
For perspective: If AUSD received as much per child as Dublin does, our schools would receive $9 million more each year.Besides, AUSD is hardly the only district struggling this year. Dozens of districts across the state are handing out pink slips, cutting beloved programs, and closing schools to deal with the hardships imposed by the governor’s proposed budget.
What can I do to help this year?
There are a number of actions you can take to help AUSD this year. First, you can vote for Measure H, the parcel tax sponsored by the AUSD Board of Education. The $4.2 million generated by that tax will coverthe cuts currently proposed by the AUSD.
Second, you can volunteer for Keep Alameda Schools Excellent, the organization that is running the Measure H campaign.
Third, you can donate to AEF, so that we can continue to provide funds to the district for art, music, technology, “green” programs, and sports.
And fourth, you can write letters to your legislators protesting the governor’s proposed cuts to education.
Want to learn more about what you can do? See How You Can Help.
Where can I learn more about public education financing?
One of the best websites for financial information about our public schools is Ed-Data. This site contains information on California public education financing as well as information by county, district and school. You can also get good information at the website of the independently funded California Budget Project (CBP).For more information and details about California State budgets and, specifically, state education funding, go to the state Department of Finance . Click on any fiscal year budget and then click on the education portion.
The Alameda Education Foundation 501(c)(3)
PO Box 1363, Alameda, CA 94501
Tel: 510. 748.4008, ext. 105
info@ alamedaeducationfoundation.org
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