Posts

Let’s Deep-six Prop. 30

The signatures for an initiative that would extend 2012’s “temporary” tax increase in California are due today.

Four years ago Californians voted in Prop. 30, a “temporary” tax, to pay back schools “from the years of devastating cuts.” But as I show here, there was hardly any devastation; in fact, our spending had continued to be quite robust. The measure jacked up income tax on people with incomes exceeding $250,000 through 2018 and increased sales tax on all of us through the end of this year. But, the Beholden State teachers unions are trying to get an initiative on the 2016 ballot that would continue the higher income tax through 2030. (The sales tax increase would expire as scheduled.) Earlier this month, California Teachers Association president Eric Heins told the union’s State Council that “…we need to gather 900,000 signatures to get our measure on the ballot. We are about 60 percent there, and we only have about three more weeks.”

Today, in fact, is the deadline. If enough signatures are gathered, the extension has a good chance of success. As reported by EdSource’s John Fensterwald, a Public Policy Institute of California poll found, “…among all Californians, 64 percent support the extension, 32 percent oppose it and 4 percent are undecided. Among likely voters, 62 percent back it, 35 percent oppose it and 2 percent haven’t decided. By party affiliation, 82 percent of Democrats support it while only 32 percent of Republicans do.”

When I read poll numbers like this, I always wonder if the people questioned know what we actually spend on education. My guess is that many don’t. A recent Education Next poll, which included a question about that issue, is instructive. The school districts in which their survey respondents resided spent an average of $12,440 per pupil in 2012 (the most recent data available). But when asked, the respondents estimated per-pupil expenditures in their local school district, they guessed, on average, just $6,307 – about half of what was actually spent. (By the way, these dollar amounts would be considerably higher if expenditures for transportation, capital expenses, and debt service were included.)

Should Prop. 30 (or any future such tax increases) make it on to the ballot, I would ask voters to consider the following:

  • The unions will tell you that the tax is only on the wealthy, whom they claim don’t pay their fair share. But a look at the actual numbers tells a different story. A report issued by the Congressional Budget Office in 2012 shows that the top one percent of income earners across the nation paid 39 percent of federal individual income taxes in 2009, while earning 13 percent of the income. Hence, it’s clear that the rich are already paying considerably more than their “fair share.”
  • Courtesy of Cato Institute’s late, great Andrew Coulson, we see that between 1972 and 2012 California’s education spending (adjusted for inflation) has doubled, while our students’ SAT scores have actually declined.
  • The latest study on the relationship between spending and achievement, recently conducted in Michigan, found no statistically significant correlation between how much money the state’s public schools spend and how well students perform academically. Mackinac Center Education Policy Director Ben DeGrow, who coauthored the study said, “Of the 28 measurements of academic achievement studied, we find only one category showed a statistically significant correlation between spending and achievement, and the gains were nominal at best.” He added, “Spending may matter in some cases, but given the way public schools currently spend their resources, it is highly unlikely that merely increasing funding will generate any meaningful boost to student achievement.”
  • Unconditional money poured into public education from the private sector doesn’t help either. In 2010, Facebook founder Mark Zuckerberg donated $100 million to the Newark public schools, which was matched by another $100 million from unnamed donors. As documented in The Prize: Who’s in Charge of America’s Schools, a book about the gift, the money went up in smoke, with the teachers union playing a big role in vaporizing it. As reported by the New York Times, Newark Teachers Union leader Joe Del Grosso “demanded a ransom of $31 million to compensate for what he felt members should have received in previous years — before agreeing to discuss any labor reforms.” The new labor contract accounted for almost half the $200 million. In a review of the book, Cato Institute’s Jason Bedrick wrote, “The union boss… made the back pay a condition for even holding the negotiations. ‘We had an opportunity to get Zuckerberg’s money,’ Del Grosso later explained, ‘Otherwise, it would go to the charter schools. I decided I shouldn’t feed and clothe the enemy.’” But it wasn’t only the unions that abused the gift. As Bedrick says, “The Prize demonstrates in depressing detail just how difficult it is to reform public schooling in the United States. Laws, regulations, and labor contracts favored adult jobs over kids’ education and this entrenched bureaucracy was difficult to change—especially because reforms met opposition from special interests and their political allies.”

With a debt of over $1 trillion and counting, California clearly has a spending problem, not a too-little-tax problem. The taxpayers must take action. First, we all need to know specifically where our edu-bucks are being spent. You can start at the Ed-Data website for general expenditures. Do some digging to find out how teacher union (and all public employee union) pensions are bankrupting cities across the state. For that kind of information, Pension Tsunami is an invaluable resource. Perhaps most importantly, communicate with legislators and demand school choice. Among other things – just as in business – competition lowers prices while increasing product quality. And God knows we would benefit from both.

Randi Weingarten and other union leaders have a prized talking point: “You can’t fire your way to a teaching force.” It’s a ridiculous claim, which I debunked last week. And at the same time, they erroneously believe we can spend our way to success. But they make no real case for this, because there isn’t one. It’s time for all of us to stop falling for the feel-good fairy tales. Just saying “No!” to the Prop. 30 extension – should it get to the ballot – would be a great place to start.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Will Silicon Valley’s Elite Take On Public Sector Unions?

The San Francisco Bay Area is probably the most liberal in America. Democrats are typically favored over Republicans in elections by an 40 to 50 percent margins. The SF Bay is also perhaps the wealthiest region in America, with a GDP of over $500 billion, and more than 10% of the nation’s billionaires. Not least, as the global center of information technology, attracting top talent from around the world, the SF Bay region probably has one of the smartest populations in America.

So when are they going to take on their public sector unions?

One of the Silicon Valley’s newest billionaires is Mark Zuckerberg, who burnished his liberal credentials a few years ago by hosting President Obama at a town-hall meeting at Facebook headquarters. But earlier this year Zuckerberg committed to raising funds for embattled New Jersey Governor Chris Christie, who has vaulted to the national stage because of his refusal to bow to the demands of public sector unions.

Could it be that public sector union reform is a bipartisan issue? A lot of Democrats agree with that thought, mostly in private, but they aren’t billionaires, and they aren’t raising funds for Gov. Christie.

It’s important to reflect on what this could represent, because the Silicon Valley has been relatively absent from politics until recent years. As a source for political fundraising, it is probably the biggest ATM machine in the nation, but in terms of aggressively lobbying to influence policy in California, its been punching way under its weight. At the risk of being presumptuous, one might argue the two primary reasons the Silicon Valley leadership are almost all Democrats is because they are social liberals, and because they have never encountered serious attempts at union organizing at their companies. But unions are alive and well in the Silicon Valley, in the public sector, and the high-tech billionaires are starting to take notice.

The first example of this is public education, where the teachers unions exercise veto power over virtually any innovations affecting education policy in California. This has already led to clashes between teachers unions and members of the business community, nearly all of them faithful Democrats, who want a better trained workforce.

The second example is more recent, and concerns the troubled finances of local governments. Public sector unions have been unrelenting in their push for higher tax revenues to sustain services, which in turn is calling attention to the pay and benefits of unionized civil servants. Here are calculations from a recent California Public Policy Center study showing the median total compensation for San Jose city employees, using detailed data provided by their payroll department:

San Jose police officer, 2011 median total compensation = $189,411
San Jose firefighter, 2011 median total compensation = $205,557
San Jose other city employees, 2011 median total compensation = $120,092

By contrast, the average 2010 household income in San Jose was $76,495.

A veteran firefighter who (taking into account vacation) works two 24 hour shifts per week before overtime, and makes over $200,000 per year in total annual compensation, may not seem extraordinarily well compensated to a billionaire. But to a self-employed veteran of Silicon Valley start-ups, who enjoys no job security, no pension, struggles to maintain continuity of health insurance, and pays (including “special assessments”) property taxes at a rate of 1.5% on homes that cost over $500 per square foot, it is unfair, extravagant, expensive overkill.

The billionaire business leaders of Silicon Valley are smart enough to know it is economically impossible to pay every skilled worker total compensation averaging between $150,000 and $200,000 per year. And the information technology industry is itself living testimony to the power of innovation to lower the cost of living. The irony is real; if public sector employees made less, and if their unions didn’t ceaselessly lobby for inefficient work rules designed to increase headcount, they could afford to make less. Implementing measures to lower the cost of living through increased private sector competition and more efficient government is the solution – and a big part of doing this requires confronting public sector unions.

Mark Zukerberg parlayed world-class talent, a brilliant vision, hard work and fortuitous timing to build one of the most spectacular success stories the Silicon Valley has ever seen. But for every start-up entrepreneur and the employees who join them to achieve such glory, there are thousands more whose ventures languish or fail. This is the harsh but necessary essence of Silicon Valley culture, the rich innovation ecosystem that the world tries to emulate.

For Silicon Valley’s wealthiest citizens not to confront the public sector unions who control our cities and counties, perpetually raising taxes to sustain themselves, is to turn their backs on the vast majority of workers who helped get them to where they are today.

Forming a coalition to reform public sector unions will not be easy. In California’s current political landscape, consultants who take on anti-union campaigns risk being blacklisted. Donors risk harassment at their homes and businesses. Companies risk being targeted with a “corporate campaign,” where the unions launch a multi-pronged attack directed at employees, shareholders, clients, vendors, and the media. In private meetings, union operatives openly threaten the leadership of business associations to follow their agenda. But even California’s all powerful public employee unions cannot withstand a sustained and determined reform effort led by Silicon Valley’s elite.

For Democrats, advocating for union reform is problematic. Unions provide much of their financial support, even in the wealthy, Democratic Silicon Valley. But reform is inevitable because without it, schools will continue to deliver sub-optimal results and more cities and counties will go bankrupt. Democrats are destined to be as bitterly divided over the public sector union question as Republicans currently are over social issues.

Along with declaring his support for Gov. Christie, Zuckerberg has reportedly formed a political organization to promote education reform, immigration reform, increased spending on research, and economic growth. He may wish to consider adding to his political list public sector compensation reform, and public sector union reform. It is an innately bipartisan imperative on which liberals and conservatives alike may find common cause.

*  *  *

UnionWatch.org is edited by Ed Ring, who can be reached at editor@unionwatch.org