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... ities, this meant some hospital closures. Cities and counties, as a result of decisions made during more affluent times, had to set aside large amounts of money to retire bonds, pay the increasing costs of pension programs and finance employee wage agreements that hiked public employee pay an average of 35 percent since Proposition 13. Studies show that between the fiscal years of 1979 and 1980, pension costs rose 54 percent to an all-time high of over $1.2 billion. Communities were affected differently. State bailout money and moves to raise new revenues kept many communities out of trouble. Communities that had an abundance of tax-producing industries or commercial centers, and were so affluent that they never needed a property tax to begin with, were able to avoid cuts in services altogether. Older cities on the other hand, heavily dependent on property taxes, were not so fortunate and cuts were inevitable. In the first year, counties came out relatively well.
School funding increased overall, but funding levels in 44 percent of cities were down compared to the previous years, despite rising inflation. This seemed to reverse over the following 10 years though. Cities found more local sources of revenue, while counties and schools have struggled tremendously. Local agencies that depended on funding from the state- counties and schools- were beginning to feel the effects. Even with the surplus, immediate cuts were inevitable. In May 1979, approximately 100,000 public sector jobs were eliminated.
72,000 of these jobs were in schools. Library hours were cut and 75 branch libraries were forced to close that first year. Many public amenities such as libraries and schools became expendable. The effects that Proposition 13 would have on the schooling system was tremendous. Proposition 13- The Schoolhouse Effects School funding has taken the biggest blow from Proposition 13. Upper middle-class suburbs and poor inner-city neighborhoods have felt the effects of Proposition 13, as their social service funding for schools depends on its tax revenue. In 1988, school advocates led by the California Teachers Association went to the ballot to guarantee an annual share of state revenues for education.
They were victorious by a small margin. Proposition 98, set out to reverse the decline in school funding and to bring California back up to its normal level. Proposition 13 has caused a tremendous decline in revenues and the loss of nearly all local ability to affect school funding. Proposition 13 caused a shift to state funding for schools. No longer could the schools rely on funding from the communities raising taxes. Property taxes quickly dropped from 65 percent to 20 percent of school funding. The state was now forced to provide the rest. Funding per student in various districts is within $100 of each other, but Proposition 13 meant minimal growth, or even decline, in spending per pupil. In virtually every aspect, Californias schools were hurting.
There are two factors that have become significantly important in school funding over the years. First, non-English speaking students had increased from five percent to 13 percent of the school population. Secondly, schools have fought over the years to keep up with the ever-changing technological economy as well. New and improved teaching systems are needed as well as highly skilled teachers. Overall, California students need a higher quality education. Funding per student has remained relatively flat over the years, despite the aforementioned demands.
Funding per pupil in California is well below the national average. Even though K-12 funding nearly doubled between 1980 and 1988, over 500,000 new students (12.5 percent increase) were introduced into the school system. After adjusting for inflation, spending per student hardly increased during the 80s. (See Figure 4) Proposition 13 caused a decline in the share of personal income devoted to public schools both in absolute terms and compared to other states. In 1973, California collected revenues for schools as high as 5.8 percent, twelfth in the nation and slightly above the national average. After Proposition 13 was put into effect, California spent only 3.8 percent, dropping below the national average and forty-eighth in the nation.
If Californians spent at the national average, the amount of income would increase by $3 billion per year. This is exactly the number that advocates of Proposition 98 had sought after. There are increasing demands at the community college level as well. Serving over one million students, Californias community colleges are experiencing financial deficiencies. Budget cuts caused courses and programs to be eliminated. Fewer programs mean fewer students, fewer students mean smaller revenues. Community colleges are seen by many as the beginning of higher education.
Many recreational courses at the community college level were forced to close. After a seven percent cut in the first year after Proposition 13, funding per student declined significantly at the community college level. Funding per student was $25, 1.1 percent less in real terms, than in 1979-80, after initial Proposition 13 cuts took place. Community colleges suffered in other areas as well, such as shortages in equipment, deferred maintenance and capital outlay. The equipment shortage caused a decline in the quality of technical education. After Proposition 13 was put in effect, projections showed that 400,000 new students would enter the system in the following 15 years. This would require approximately 16 new campuses as well as the expansion of existing campuses. There is a definite uncertainty of how these needs would be met.
One might conclude that problems would exist in the California University systems as well. This, however, has not proven to be true. Funding per student in the University of California and California State University systems improved after Proposition 13s passage in 1978. Since 1978, UC enrollment has increased by about 25 percent, while CSUs enrollment held steady or declined during the 80s. However, recent enrollment increases put CSUs enrollment about 10 percent above the 1978 level. Finally in 1991, the fiscal squeeze hit the CSU system severely. The UC and CSU systems experienced tremendous demands in growth.
Current capacity levels are being reached at many UCs. The critical question remains of how to finance newly needed campuses. Building new campuses as opposed to expanding current campuses seems to be the favorable choice. However, the problem of course is money. Several millions of dollars will be needed annually to finance this problem. This similar problem faces the CSU system.
Again new costs of construction, and the ongoing expense of a projected enrollment growth could total over 1 billion in general funds. As population continues to grow, the question of whether additional revenue generated will cause a rise in state budget school funding. However, with state general fund revenues expected to increase only with current service levels only, the necessary funds needed looks doubtful. A Transfer of Power Proposition 13 appears to be a tax borne by upper income groups. For taxpayers, it is more progressive than the sales tax, but not as progressive as Californias income tax. With business paying two-thirds of the tax, and the top 20 percent of homeowners paying nearly 65 percent, the bottom 80 percent of homeowners bear less than 15 percent of the total tax.
Who owns property in California? Homeownership in the major urban areas is out of reach for the middle-class. If 80 percent of the tax is borne by business and 20 percent by taxpayers, one could assume that the property tax is an attractive source of revenue. Yet according to poll data, the property tax is still a very unpopular tax. Obvious inequities make it difficult to argue that the property tax is indeed a fair tax. The most often noted irony of Proposition 13 is the degree to which it destroyed the fiscal powers of local government and transferred the power decisively to Sacramento..
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