–
Two Views: This is one of two commentaries written for the Business Journal regarding the debate over Proposition 82.
California’s Proposition 82 on the June ballot is NOT a question of whether preschool is good or bad, or even if expanding preschool opportunities is a worthwhile goal. Instead, the question before voters is this: At a time when California has many other pressing needs, like fixing K-12 schools, should we institute a massive new preschool bureaucracy at a cost of $2.4 billion annually, in order to increase preschool enrollment by a mere 4 or 5 percent?
A broad coalition of educators, preschool teachers and providers, minority groups, seniors, taxpayer groups and businesses have studied this proposal and concluded that Proposition 82 is simply a bad deal for our state and for our children.
Proposition 82 can be summed up like this: good intentions, horrible execution. Proposition 82 would increase taxes on certain Californians by as much as 18 percent to fund a new, $2.4 billion state preschool bureaucracy.
Even those who have no problems taxing higher earners see this as a wasteful new program and a misdirection of limited resources. California faces chronic budget deficits; our K-12 schools are in serious need of help; traffic congestion is grid-locking our economy and the quality of life of every Californian; local law enforcement and firefighters are undermanned; our levies are overstressed.
Rather than focus limited resources on these problems, Proposition 82 asks voters to authorize the creation of a massive new preschool bureaucracy to take over the private preschool market that is largely serving parents and students well.
Approximately 65 percent of 4 year olds already attend preschool, according to the non-partisan Legislative Analyst. Proposition 82 supporters admit this measure will only increase enrollment to 70 percent. That’s $2.4 billion in new spending every year for a mere 4 to 5 percent increase in preschool enrollment.
The Legislative Analyst also estimates this program will spend as much as $8,000 per student for a part-time, three-hour-per-day program. That’s almost as much as we currently spend for full-day instruction for K-12 students.
Many of us support efforts to expand preschool opportunities, but believe we must target those efforts to help children most in need. On this front, Proposition 82 fails completely.
According to an analysis by former Legislative Analyst William Hamm, only 8.4 percent of funding from the new program will go to enroll “high risk” kids in preschool who otherwise wouldn’t have gone. This, despite the fact that all of the academic evidence even a study by RAND frequently cited by Prop 82 proponents shows that lower-income, minority children benefit most from preschool.
Rather than close achievement gaps, Prop 82 could actually expand achievement gaps by perpetuating the failures of our K-12 system where the best teachers, facilities and resources go to the more affluent communities at the expense of children most in need.
Proposition 82 will also have significant negative consequences on funding available for K-12 schools, healthcare, emergency response services, public safety and all other state programs.
In studying Proposition 82’s design, Hamm found the measure would significantly erode general fund revenues by hundreds of millions of dollars every year.
That’s because, according to Hamm, rather than just absorb an 18 percent tax increase, the targeted taxpayers are likely to change their investment behavior to reduce their tax burden. This includes completely legal steps like changing from taxable stocks to tax-free bonds or deferring compensation to a later date.
These aren’t doomsday predictions. Hamm predicts a moderate 2 percent to 5 percent reduction in reportable income. But because California’s finances are so reliant on this class of earner, even that small reduction will drain the state’s general fund to the tune of more than $1 billion each and every year by 2011.
Further, there is no guarantee that the program won’t cost more than anticipated. When was the last time a government-run program was managed “under” budget? If the program costs more, Prop 82 gives the legislature the authority to impose a “parent tax” on all participating families.
Equally troubling for those of us in the business community is the impact this measure will have on thousands of private preschool providers in this state a proud and reputable industry run by women and men of all backgrounds who currently teach our children so capably. The new, government-run preschool bureaucracy will likely shut down many of these private, community-based preschools, replacing thriving businesses that provide jobs and tax revenue with a government-run program.
Come June, voters must look beyond the feel good promises of “preschool for all” and recognize that Prop 82 isn’t a question about preschool. It’s a question about priorities for our state and our children. We’re confident that voters will come to the realization that fixing problems like K-12 schools should come first, before we create a new $2.4 billion state program that helps so few.
Allan Zaremberg is president and CEO of the California Chamber of Commerce.
