Wednesday, January 14, 2004

Arnold's 2004-2005 education budget

Over at Reason Public Policy Institute, I analyze the education portion of my Governor's 2004-2005 budget.

Imagine if my kids had a constitutional right to a weekly allowance that was 5 percent of my total income every year and that they could never receive less money than the year before plus a cost of living increase. If I made $30,000, my kids would get a generous allowance of $25 dollars a week. However, if I made $50,000 my kids would get $45 dollars a week and if I made $100,000 my kids would get $90 a week. If I lost my $100,000 a year salary, I still must pay my kids $90 a week plus a cost of living increase. This is how we finance schools in California, and this is why school districts have no incentive to ever reduce spending. The Constitution guarantees that education spending will always go up by at least a small amount, even during economic downturns.

This also explains how Governor Schwarzenegger could give schools $2 billion less of a $4 billion automatic spending guarantee based on total state revenue collections and still be increasing the education budget by more than $2 billion.

I look at structural reforms for education funding in California and conclude that:

At some point a reasonable Governor (however unlikely), might question the sacred cow of Proposition 98 funding by asking why education funding should be determined by a percentage of state revenue, no matter how high the revenue climbs. However, even if one concedes the questionable fundamental fiscal premise of Proposition 98, that schools should always get more money when state revenues increase (over and above cost of living and enrollment growth), the current structure of categorical and revenue limit spending and the legal barriers to school outsourcing ensure that those ever-increasing resources are not targeted toward classroom level spending. While Arnold's education budget is a first step toward reducing categorical administrative costs, the next step is to move toward structural school finance reform that ties funding to the characteristics of individual students and encourages schools to more efficiently target their resources to the classroom.

Whole thing here.

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