School & District Management Opinion

A Proposal to Revive Local Taxing Authority for Calif. Schools

By Charles Taylor Kerchner — March 06, 2017 6 min read
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It’s hard to grow strong on a starvation diet. California’s new Local Control Funding Formula moves substantial spending flexibility to districts and communities. It strikes a blow for equity by allocating more money for districts whose students are in poverty, are English language learners, or live in foster homes. But it doesn’t do much to solve the historic slim diet that California schools face even in the best of times.

Depending on the data source, California ranks 46th, 41st, 29th, or 22nd among the states in per pupil spending; this in the state with the largest number of children living in poverty in the country and the highest percentage of English learners.

Rick Simpson thinks that he has the answer to this problem. Bring back local funding. “I have a plan,” Simpson told a Policy Analysis for California Education conference recently. [Photo at left. See video at bottom of this post.]

Simpson occupies near-legendary status in Sacramento as one of the few people who not only understands education policy, but who can explain it in language that ordinary people, like legislators, can understand. He retired last year after 38 years as an advisor and staff member in Sacramento, in both the executive and legislative branches. He’s now playing out a public policy trifecta as a member of the Commission on Judicial Performance, the state panel that investigates and disciplines judges.

Usually, efforts to bring back local funding for school districts incinerate themselves by touching what is known as “the third rail of politics,” the 1978 property tax limitation measure known as Proposition 13. But Simpson’s plan would leave Proposition 13 in place.

Scholars who have studied what it would take for California to provide an adequate education come up with large numbers that scare off politicians. Some estimate that it would take a 40% increase in the elementary and secondary school budget. “So, where’s that kind of money going to come from,” Simpson asks? “Certainly not the feds,” he adds. And the multiple demands on the state budget make it unlikely state dollars for education will grow faster than overall revenue. “Proposition 98 [which guarantees a percentage of state funding for schools] is a constitutional floor but effectively a political ceiling,” Simpson said in an interview.

By the process of elimination, that leaves local funding. Simpson noted that with Local Control Funding, “We deregulated half of the budget equation—to spend dough—we didn’t deregulate how to get the dough.”

The California constitution presents a small barrier to increasing local taxes other than property taxes, which are limited under Proposition 13 and parcel taxes, which Simpson dislikes. “In my personal opinion, parcel taxes are just about the dumbest tax on the planet. They are regressive, and they are not economically sensitive. They don’t grow with the economy.”

The constitution defines two types of local taxes: general taxes, which require a majority vote in the affected jurisdiction, and special taxes for specified purposes, which require approval by a two-thirds supermajority.

The constitution does not allow school districts to levy a general tax. (Section 2, Article 13c). But cities and counties can.

“My suggestion would be to put school districts basically on a level playing field with cities and counties,” Simpson said.

In order for this to happen, the voters would have to authorize general taxing powers for school districts. Either the legislature could vote to have a referendum on the measure, or the taxing measure could reach the ballot through the initiative process.

Then, the legislature could define what taxes might be used and the overall limits on school districts’ taxing authority.

Simpson would make any new tax revenue raised explicitly supplemental to the state funds guaranteed under Proposition 98, so that if a school or district votes to tax themselves the state will not reduce its support.

The reduction of the needed majority from 2/3 to 1/2 would empower communities to pass school tax measures. Something analogous happened in 2000, when voters approved a constitutional amendment, Proposition 39, that reduced the requirement for school construction bonds from 2/3 to 55%. The results were dramatic. In just over a decade, voter approval allowed California schools to alleviate overcrowding that had plagued the schools for decades.

Any mention of local taxes immediately brings forward concerns about equity. California has long struggled with how to attach public school funds to the students whose educational needs are the greatest. The 2013 Local Control Financing Formula has been hugely redistributive. Much more of the state’s support goes to school districts with low income students, English learners, and foster youth than would have been the case under the old formula. But historically local taxes favored districts with high value property.

Simpson foresees the legislature authorizing a menu of possible taxes: for example, sales and use tax, income tax, excise tax, business activity related tax. “Any tax you choose is going to have low tax base and high tax base communities. If you have a menu to choose from, there will be something on the list,” he said.

Moreover, the state could do what it did in the mid-1970s when a then young Gov. Jerry Brown signed legislation (AB 65) creating what was known as power equalizing. This type of legislation, long favored by school finance equity experts, compensates lower wealth districts through guaranteeing the yield from each unit of tax levy.

Would this be complicated to administer? Yes, says Simpson, “My reaction is that I would love to have to do that, because it means that I would have solved the constitutional problem.”

“My main emphasis has been on making people understand that it is possible to create the environment where local taxation could become a realistic environment again,” he said.

I think Simpson has an important idea, both for the money it would raise for California’s school children and for the politics of education. Rather than only struggling over the targeted funds under LCFF, boards and local school advocates would have the option of seeking additional funding, and the task of selling their ideas to the public. The possibility of locally generated taxes provides both an opportunity and the necessity for school board members, union leaders, and administrators to make their case to the public.

Joining the politics of spending money to the politics of raising it sounds like a good idea. Supporting public schools could again become an object of civic pride.


Rick Simpson joins a panel discussion of funding adequacy for California schools at the PACE research and policy conference. The panel was moderated by Stanford University professor, Susanna Loeb. The other panelists are William Koski, director of the Stanford Law School Youth and Education Law Project; Ana Matosantos, policy consultant and former director of the California Department of Finance; and Vernon Billy, CEO/executive director of the California School Boards Association. Listen to all of it for context and the sweep of finance issues facing the state. Simpson’s presentation starts about 40 minutes into the panel’s presentation. [Video courtesy of PACE.]

Simpson photo: CTK

The opinions expressed in On California are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.