Education Funding

Calif. Leaders Balk at Tax Break For Teachers

By Bess Keller — May 24, 2000 5 min read

California legislators of both parties seem content to go along with Gov. Gray Davis’ proposal to spend nearly $4 billion more on education, but they appear to be giving a collective thumbs-down to his widely publicized plan to exempt teachers from the state’s personal-income tax.

“It’s discriminatory, and it would set a terrible precedent,” said Republican Assemblyman Scott R. Baugh, the minority’s floor leader in the lower house. “That proposal arrived dead in the legislature in a coffin.”

Assemblywoman Kerry Mazzoni, the Democrat who chairs the education committee, agreed. “It has been received very coldly by the legislature,” she said. “It is fraught with problems.”

Legislators on both sides of the aisle applauded the governor’s proposal to spend about a third of the state’s projected $12 billion budget surplus on schools, and endorsed most of his choices on how to spend the extra money. Two weeks ago, Mr. Gray, legislative leaders, and the state’s most powerful teachers’ union agreed on a plan that would provide an additional $1.8 billion annually in “discretionary” money to local districts, much of which would likely be used to hike teachers’ salaries. (“Calif. Leaders Cut Deal With Teachers on Raising Pay,” May 17, 2000.)

The rest of the governor’s education plan has been unveiled in pieces since then, including proposals to spend $300 million to offer students and their families intensive instruction in English as a second language, $400 million to buy computers and improve classroom technology instruction, and $500 million to reward the teachers in schools that showed significant test-score gains.

In fact, the only part of the budget that came in for brickbats was the proposed tax exemption, which was kept a closely guarded secret until just before the May 15 deadline for the revised budget.

Altogether, Gov. Davis is proposing spending more than $30 billion in state revenue to operate the state’s schools in the fiscal year that begins July 1, a figure he calculates would put California at least $267 ahead of the national average for per-pupil spending. The governor, a Democrat in his second year in office, has come under increasing pressure to address educational problems in a state that once led the nation in per-pupil spending and achievement but since the late 1970s has slipped to near the bottom in national rankings.

In releasing his revised budget, Mr. Davis said he hoped the tax-exemption proposal would “send a clarion call across America that California truly values its teachers. We’re making a value judgment that being a teacher is the most important thing you can do for your country in the year 2000.”

Like Ike?

The idea, which would apply to all credentialed teachers in public schools, including administrators, came out of a recent staff retreat, senior aides to the governor have said. Mr. Davis likened it to President Dwight D. Eisenhower’s initiative on using federal money to pay for the college education of engineers when Americans feared in the late 1950s that the Soviet Union was winning a technology race.

Gubernatorial aides and legislators said they knew of no existing peacetime exemption from all state income tax for an occupational group in the nation, although at least one other high state official, Maryland schools Superintendent Nancy S. Grasmick, has proposed a tax credit for teachers. Ms. Grasmick’s proposal for a $500 credit, made in 1998, did not get support from legislators.

Under Gov. Davis’ plan, a teacher making $50,000 would save about $1,350 on state taxes, while a rookie earning an entry-level wage would average a savings of roughly $500. With 283,000 credentialed teachers in the state, officials would expect to lose about $545 million in revenue in the coming fiscal year.

“I do think it’s a bold plan and really speaks volumes about how strongly we feel about making the teaching profession attractive,” said Susan K. Burr, the interim state secretary for education. California public schools expect to need as many as 300,000 new teachers over the next decade, and now employ some 34,000 teachers who possess only emergency licenses.

But as legislators geared up for negotiations over the proposed spending plan, they all but dismissed the tax- exemption idea, which last week was also drawing increasing criticism from unions and the public.

Lawmakers and others called the proposal bad public policy because it would single out teaching over other “noble” and underpaid callings—public safety or child care, for instance. Critics also noted that because of California’s school funding formula, the loss of more than $500 million in tax revenue would cut spending on schools by $230 million that would otherwise be guaranteed.

Republicans in particular said that while they favored further tax relief, they preferred measures that applied across the board. Mr. Davis’ plans for doling out the surplus already include a $150 income-tax rebate for people who file as individuals, and $300 for couples filing jointly.

Democrats, who hold the majority in both houses, emphasized other measures aimed at attracting and retaining teachers that might be funded this session. Assemblywoman Mazzoni, for instance, said she would like to see the state plow money into pilot programs for granting educators 12-month employment contracts.

“I think that’s the most powerful thing we can do” to put teachers on a professional footing and pave the way for higher salaries, she said. Late last week, the legislature’s nonpartisan fiscal analyst, Elizabeth Hill, issued a report questioning the wisdom of the exemption, noting that teachers with the same salaries could save very different amounts, depending on their tax profiles.

Even the California Teachers Association, which has been smiling on Mr. Davis since the agreement for $1.8 billion that will go to districts, last week tempered its initial enthusiasm for the tax exemption. “It’s good that the governor is showing teachers we are valuable, but we have to find the right vehicle, and this may or may not be it,” said Barbara E. Kerr, the vice president of the CTA, the state’s largest teachers’ union.

Rewards Tied to Scores

Besides the exemption, Mr. Davis’ budget calls for giving teachers and other school professionals one-time awards ranging from about $2,000 to $5,000 apiece for test-score improvements in their schools. The bonuses would vary with the extent of the improvements and would cost the state an estimated $500 million.

Despite the controversy and the prospect of political maneuvering over specifics, overall support for the governor’s plan to ratchet up spending on education appears strong.

“I think this is the year when it’s finally time to make up for reductions made in the early ‘90s,” said Jean Ross, the executive director of the California Budget Project, a public-policy think tank focusing on low- and moderate-income Californians. “If there weren’t so many needs out there to be fulfilled, you might say you’re squandering money. But there are great needs out there.”

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A version of this article appeared in the May 24, 2000 edition of Education Week as Calif. Leaders Balk at Tax Break For Teachers


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