While we have heated debate on defunding the police, very few people have noticed that California has just defunded public education since 2014 through a pension contribution maneuver.
On Feb 12, 2019, Gov. Gavin Newsom acknowledged that California per-pupil public education spending ranks 41st in the U.S., among lowest in the country.
California 2019 per-capita income tax ranks the fifth highest in the U.S., and we also have high property, sales and business taxes. The lack of public school spending is not due to short revenue.
California didn’t do well on public education spending in the past three decades. The newest round of defunding came in 2013, with the California Public Employees' Pension Reform Act (PEPRA), to save the public pension plans (CAL-PERS for public employees and CAL-STRS for teachers).
Hidden in the details of this act, the public schools were defunded.
The pension funds are managed by the state and receive contributions from the state, employer (school districts) and employees.
PEPRA required school districts to gradually increase the employer pension contribution. From 2013-14 to 2019-20, the employer contribution increased by 8.279 percent of payroll for school employees (CAL-PERS), and by 8.85 percent of payroll for teachers (CAL-STRS). As a result of the increased pension contribution, school funding enough for hiring 10 teachers in 2013 to 2014 is now only good for hiring nine teachers.
A few examples for school spendable funding loss for 2019-20 due to PEPRA:
- The Oakland Unified School District, with 22.4 percent African American and 47.1 percent Latino students, lost about $23.2 million in annual funding
- The Bakersfield City School District, with 79.3 percent Latino and 8.3 percent African American students, lost around $16.8 million
- The Cupertino Unified School District in the Bay Area lost around $10.6 million.
For districts with affluent families, there are other local funding sources like parcel tax and donations to make up the shortfall. However, about 55 percent of California public school students are disadvantaged, for whom the alternative school funding source is limited.
During the same period, the federal kindergarten through 12th grade spending was flat, $35.3 billion in 2013, a small dip to $34.4 billion in 2017, and it even noticeably increased to $39.7 billion in 2018 and $40.1 billion 2019.
One would ask why the state "gives" the district money and then immediately takes a large portion away. Why wouldn't the state directly contribute to the public pension programs?
The answer could be in Proposition 98, which requires that the state funds at least 40 percent of the general fund to kindergarten through 14th grade public schools. By mandating school districts to pay significantly more pension contributions, the state practically circumvented the Proposition 98 mandate and reduced the public education spending obligation.
The unfunded pension liability has been exploding fast to the current around $300 billion, and it happened during one of the longest economic expansions. COVID-19 would make it much worse.
Underfunding public schools causes social injustice, particularly impacting the disadvantaged. According to a 2020 California Legislative Analyst report, only 21 percent of African American high school students who graduated in 2018 were prepared for college or a career. This compared to 33 percent Latinos graduates, 52 percent white graduates and 74 percent Asian graduates.
If the excessive school district pension contribution is taken out from public education spending, would California not rank even lower?
California public school underfunding is not a state tax revenue shortage problem, and it is not merely due to declined enrollment as many have stated. It is due to lack of priority. If we collect more taxes for public education, would the tax money not “disappear” at some point again? The only effective way to secure public school funding seems through a local parcel tax or a local community foundation. This unfortunately would be limited for disadvantaged districts.
The failing pensions should be fixed or reformed for better. If the public pension fails, retirees would be hurt with lost or reduced benefits. However, the solution should not be defunding our public schools.
Given its disproportionate harm to the disadvantaged population, mostly Black and Latino students, California public school defunding is systematic racism and it should be reversed for the public good.
Shaohua Yang works as a system architect in the semiconductor industry in San Jose.