State Tax Increase, Due to Expire in 2018, Might Live On

brown prop 30 california budgetIn 2012, Californians adopted Proposition 30, a “temporary” tax that, according to the governor, state legislators and teachers’ unions, would save the state’s education system by giving it an influx of at least $6 billion. The initiative jacked up income taxes on people earning more than $250,000 through 2018, and increased sales tax on everyone, through the end of this year. Now, the Golden State’s teachers’ unions, along with the Service Employees International Union, are looking to keep the higher income tax in place through 2030. (The sales tax increase will expire as scheduled.) California voters will decide on the tax extension in November, when the California Children’s Education and Health Care Protection Act of 2016, or Prop. 55, appears on the ballot.

It’s no surprise that the teachers’ unions would want to keep the higher tax — and the additional revenues it brings — in place. Earlier this year, California Teachers Association president Eric Heins claimed that Prop. 30 generated revenues that “continue paying back schools from the years of devastating cuts — especially those serving our most at-risk students.” But there was never any devastation. During the recession, spending dipped for K-12 schools and community colleges, but the decrease was hardly devastating. And since the end of the recession, California’s education spending has increased more than 40 percent.

All the extra money has brought paltry results. The work of the late Andrew Coulson shows that between 1972 and 2012, California’s education spending (adjusting for inflation) doubled, but students’ SAT scores actually went down. Things have gotten worse since 2012. In fourth-grade math, California ranks at the bottom nationally, just one point above New Mexico, Alabama and Washington, D.C., according to November 2015 data from the National Assessment of Educational Progress, known as “the nation’s report card.” In fourth-grade reading, only New Mexico and D.C. fared worse.

A recent study on the relationship between spending and achievement, conducted in Michigan, found no statistically significant correlation between how much a state’s public schools spend and how well students perform. 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.”

And yet, the unions look to be in strong position to win their tax-hike extension. A Public Policy Institute of California poll in April found that 64 percent of Californians support it. Among likely voters, 62 percent favor it. More than six in 10 voters believe that the state should spend more on education. And after insisting that the tax would be temporary, Governor Jerry Brown is having second thoughts. In his May budget revision report, he said, “The emerging shortfall is in large part — but  not entirely — due to the expiration of the temporary taxes imposed under Proposition 30.”

Does the average voter know how much California already spends on education? Apparently not. A recent Education Next poll asked respondents to estimate per-pupil expenditures in their local school district. On average, the respondents guessed $6,307 — but their school districts spent nearly double that, or $12,440 per pupil in 2012, when expenditures for transportation, capital expenses, and debt service are included.

The CTA has already sunk $10 million into the Prop. 55 campaign, with more to come. The Million Voters Project, an effort funded by many left-wing philanthropists, is working hard to pass it. Supporters insist that the tax falls only on the wealthy, whom they claim don’t pay their “fair share.” A look at the numbers tells a different story. A report issued by the Congressional Budget Office in 2012 shows that the top 1 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.” At what point will California’s perennially overtaxed realize that their bottom line will be much healthier in, say, Texas?

American Federation of Teachers president Randi Weingarten and other union leaders continue to believe that we can spend our way to academic success. All the data show otherwise. With a debt of more than $1 trillion and counting, along with some of the highest tax rates in the country, California can ill afford more spending. The state’s residents have to stop falling for myths about meager education dollars. Voting “No” on Prop. 55 would be a good place to start.

Teachers union has given more than $13 million to extend income taxes on wealthy Californians

As reported by the Los Angeles Times:

California’s largest teachers union has given more than $13 million to the effort to extend income tax hikes on California’s highest earners, according to newly released state campaign finance reports.

The report shows the California Teachers Assn. gave $3 million between April and June this year, in addition to the $10 million the union donated last month.

Before the $10-million contribution, supporters of the Proposition 55 campaign reported having $14 million in the bank. Also supporting the measure are the California Hospital Assn., Service Employees International Union and the California Medical Assn. …

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Why Teachers Union is Desperate to Pass Prop. 55

K-12-spending-1California voters face a daunting challenge in November in that they’ll be asked to become familiar with a stunning 17 ballot measures. Some consultants fear that this will overwhelm many voters, who will choose either to vote no on everything or not vote on many initiatives.

But when it comes to Proposition 55, ignorance of its contents is not likely to be a problem for voters. The California Teachers Association and its allies are likely to spend $100 million or more on saturation TV and social media ads depicting the measure as crucial to the future of California public education.

Prop. 55 would extend for 12 years the temporary tax hikes on single people earning more than $263,000 and couples earning more than $526,000 that voters approved in 2012 (then at slightly lower income thresholds) as part of Proposition 30. Instead of sunsetting at the end of 2018, the income tax increase would continue through 2030. The $7 billion or more this is expected to generate annually would be earmarked for education. The temporary sales tax hike that voters also approved in 2012 will lapse at the end of this year.

Revenue recession took toll on teachers

prop 55 websiteThis month, the CTA wrote a $10 million check to the Yes on 55 campaign, which now has a $28 million warchest. The CTA and the smaller but still powerful California Federation of Teachers are likely to write several more checks that size to try to avoid the headaches that public school teachers faced from 2008 to 2012 during California’s long revenue recession.

While the “step” increases in pay that teachers typically receive in 15 of their first 20 years on the job were largely protected, strapped school districts didn’t grant additional across-the-board pay hikes that many provided during recent tech bubbles that pumped up capital gains revenue for the state. They also pushed for teachers to pay more toward their benefits and in some cases accept layoffs that extended beyond the newly hired to those with several years of experience.

As the Legislative Analyst’s Office graphic above shows, education spending has strongly rebounded since 2012, helped by a new boom in Silicon Valley and Proposition 30’s adoption that year. But the CTA and the CFT share Gov. Jerry Brown’sskepticism that the current good times can last. After first insisting that the temporary tax hikes must be allowed to expire because that’s what voters were promised, Brown has been far less vocal on the topic in the wake of new forecasts from his Department of Finance that state deficits are likely in coming years without retention of the income-tax hike.

Since state coffers are the main source of K-12 funding, Prop. 55’s approval is crucial to maintaining teachers’ pay and benefits. In most school districts, compensation eats up more than 80 percent of general fund budgets.

But Prop. 55’s route to passage may be rougher than Prop. 30’s in 2012. The Sacramento Bee editorial page has already saidthat support for extending the tax hikes should be explicitly linked to reforms in teacher tenure and to teacher unions’ support for state-subsidized childcare for poor families.

Some state lawmakers may also try to leverage their support for Prop. 55. Led by Assemblywoman Shirley Weber, D-San Diego, they are unhappy with how 2013’s Local Control Funding Formula has been implemented. The measure was supposed to pump billions of dollars in extra funding to districts with large numbers of English-language learners and foster children so they could provide help specifically for such students.

But three years in, education reform groups say that’s not happening, citing the absence of evidence of additional help for either category of student. Last year, Superintendent of Public Instruction Tom Torlakson said the local control dollars could be used broadly for general pay raises, overruling a lower-ranking official.

This article was originally published by CalWatchdog.com

California bill tackles teacher tenure, firing, layoff rules

As reported by the Sacramento Bee:

A California lawmaker is introducing legislation to answer a court ruling that could upend California’s teacher employment rules.

Currently on appeal, a 2014 decision in the Vergara v California lawsuit ruled unconstitutional laws that dictate how long it takes teachers to earn tenure, how underperforming teachers can be fired and how teachers are laid off during budget pinches. Judge Rolf Treu agreed with plaintiffs that the laws hurt disadvantaged students by keeping inept teachers in classrooms.

The group pursuing the lawsuit argues they went to the courts because a Legislature cozy with teachers unions will not act. Since Treu’s ruling, Republicans in the Democrat-dominated Legislature have unsuccessfully pushed bills to change teacher employment rules. They failed, opposed by the California Teachers Association and other unions.

But Assemblywoman Susan Bonilla, D-Concord, believes her new bill will …

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The Case That Could End Forced Union Dues

http://www.dreamstime.com/-image1661658The U.S. Supreme Court will hear from 10 teachers Monday in a case that could upend decades of labor law by granting public-sector workers the right refuse to pay union dues.

Generations of lawmakers and legal experts have struggled with the question of whether unions can require mandatory payments. The Supreme Court ruled in the 1977 case Abood v. Detroit Board of Education that unions can collect dues so long as the mandatory payments are used solely on representation costs and not political activities. Workers are allowed to pay fees instead of full dues if they don’t want to fund the political activities of the union.

Rebecca Friedrichs and the nine other teachers, however, don’t want to make any payments to the California Teachers Association (CTA). They also assert the process to opt-out of paying full dues or partial fees should be an opt-in system instead. The Supreme Court agreed Jun. 30 to hear their case. Here are the nine most important facts about Friedrichs v. California Teachers Association.

1. Free-Riders Or Captive Passengers

The question before the court is whether the teachers have the right to disassociate from their union. To the teachers and their supporters, the case could mean the end of laws that restrict worker freedom. To opponents, though, unions are what give workers a voice and limiting their power will adversely impact their ability to fairly communicate and negotiate with their employers.

The teachers have argued mandatory union payments violate their constitutional right to free-speech. They said the union often engages in activities or takes a position they neither support nor wish to fund. The union disputes the argument by noting they are legally compelled to represent the teachers regardless of whether they pay dues. Therefore its only fair all workers should have to pitch into the cost of representation.

“The court also has implemented various procedural requirements to ensure that unions are properly reimbursed for chargeable costs,” the union stated in its brief to the court. “While protecting objecting non-members from having their funds used for purposes not germane to collective bargaining and contract administration.”

When a union gets voted in as the exclusive representative for a workplace, they are required by law to collectively bargain for all the workers. Unions often warn workers could just free-ride on those benefits were dues an option.

“The free-rider argument is bad for several reasons,” Jacob Huebert, senior attorney at the Liberty Justice Center, told The Daily Caller News Foundation. “These people don’t consider the union to be a benefit.”

The teachers are allowed to leave their union but are still required to pay the representation fees. If they leave, they lose their liability services and the ability to talk at union meetings.

2. Who Exactly Is Rebecca Friedrichs

It all started when Friedrichs, while teaching out of Buena Park, Calif., tried to leave her union. She felt it benefited its members at the expense of the students. Though she could leave and forfeit most union benefits, she was still forced to continue paying dues. She and a group of other teachers were left with no choice but to file a lawsuit in April of 2013.

“Many of the things the union bargained for made it harder for me,” Friedrichs recalled Thursday during a phone interview with reporters. “To the union, salary and seniority came before everything else.”

Her first encounter with the union culture was when she was an assistant teacher at the beginning of her career. At the time, she said she felt as though the teacher who worked in the classroom next to hers was abusive towards her students. The teacher, she said, couldn’t be fired because the union had implemented a seniority structure. Friedrichs eventually took a leadership position in the union but was still unable to change what she saw as a bad culture.

“I wanted to be there to speak common sense,” Friedrichs said. “But the response from union leadership was to ignore everything I tried to do.”

3. The Case Goes Far Beyond Just Teachers

A decision in favor of the teachers is likely to go beyond just schools. All government workers could be granted the right to stop funding union activities since the teachers are technically public-sector employees. Such a decision could be devastating to the labor movement which has already lost a lot of members in the private-sector.

“It’s an extremely important case,” Huebert said. “It certainly might be a landmark case, especially if they side with Friedrichs.”

Huebert adds the case should only impact public-sector workers and not private. The Supreme Court will decide on a wide variety of issues this session, from how sentencing hearings are conducted to whether colleges admission offices should consider race. NYU Law Professor Richard Epstein, though, says the Friedrichs case could very well be the most important.

“This is a case that attracted scrutiny on both sides,” Epstein told TheDCNF. “In some ways this is the most important case this session.”

The case seeks to reverse the decision in Abood, which has allowed public-sector unions to require mandatory payments for nearly three decades. Abood also dealt with teachers, but the decision set a precedent that impacted all public-sector employees.

4. Are Public Sector Unions Done For? Probably Not.

Unions have argued on numerous occasions the case is aimed at destroying the labor movement. Membership is likely to go down, but many workers are still likely to stay unionized. Former Supreme Court Clerk Carrie Severino notes the case will not take down public-sector unions.

“It’s not a victory that will take down the unions,” Severino, now chief counsel for Judicial Crisis Network, told TheDCNF. “It just gives people the right to choose.”

Federal employees already have the right to not fund unions, yet membership is still fairly high. In states that have passed right-to-work legislation, all workers are allowed the same privilege, yet it hasn’t destroyed the unions. The policy, which has passed in 25 states, outlaws mandatory union dues or fees as a condition of employment. Terry Pell, a lawyer representing the teachers, predicts the membership drop will be slight.

“A 10 percent drop in members won’t impact their ability to bargain,” Pell said during a Thursday call with reporters. “The 25 states show that.”

Pell said the biggest difference once right-to-work is passed is that the salaries of union leaders go down.

5. The Beneficial Burden Of Collective Bargaining

Collective bargaining is the burden put on unions when they become the exclusive representative for a workplace. It means they are required by law to benefit all the workers they represent. Collective bargaining already comes with a huge benefit often overlooked during the free-rider debate.

“When you have a union whose already in power to be the monopoly bargainer,” Severino said. “That’s already a huge benefit to unions.”

The Heritage Foundation notes in a fact sheet that the union claim is very misleading. Exclusive representation is not the only way a union can organize workers. Unions can choose to only represent dues paying workers by becoming a member-only organization. A member-only union, though, would not have monopoly rights and therefore other unions could try to organize the same workplace. It’s an option they tend to avoid.

6. Recent Cases Give Union Critics Hope

Supporters are optimistic the court will side with Friedrichs given recent decisions. In the 2015 case Harris v. Quinn, the court ruled Illinois state home healthcare workers could not be forced to pay union dues. The decision found a middle ground by only applying to the workers upon whom the case was centered.

The court was faced with the question of whether home healthcare providers were public-sector employees. State healthcare workers are required to fund the union which represents them. The Friedrichs case has a much broader scope. Teachers are already considered public employees, therefore a decision in their favor is much more likely to impact all government workers.

“The middle ground is essentially accepting the opt-in argument,” Epstein stated. “That’s why this case is so much more important than Harris.”

7. The Powerful Groups Behind The Case

The Center for Individual Rights (CIR) is a non-profit public interest firm representing Friedrichs and the other teachers involved in the case. Pell said they looked for teachers that were willing to join onto a lawsuit. For a case to be considered by the courts, the plaintiffs must have standing by proving in some way they have suffered damages.

“We were pleasantly surprised when there were so many teachers focused on this,” Pell said. “It came together much more quickly than other cases.”

Pell added that the response showed them many teachers were discontent with their union. The case has also attracted a lot of attention from outside groups and lawmakers. The National Right to Work Legal Defense Foundation, the Mackinac Center for Public Policy, the Cato Institute and the Goldwater Institute have all filed legal briefs in support of the teachers. The organizations are primarily conservative and libertarian leaning. Labor unions have condemned the lawsuit as being nothing more than a coordinated attack by the right.

Nevertheless Labor unions are some of the most powerful political entities and fighting them is not an easy task. The AFL-CIO, AFSCME and the Service Employees International Union among others have banned together against the teachers. Even local unions have spoken out about the case. Some of the most influential unions have also submitted legal briefs urging the justices to rule against the teachers.

8. Workers Would Still Be Able To Unionize

Union leaders have claimed the case is an attack on the rights of workers to collectively come together. The teachers in the case, though, counter the argument by noting its actually about giving workers a choice.

“The main thing you need to know is that this is an attack on working people’s freedom to come together and form unions, plain and simple,” the AFL-CIO noted. “These are the nurses who make sure their patients have what they need to get well and the teachers who advocate for their students and class sizes.”

The case does not seek to prevent workers from organizing despite the union claim. A decision in favor of the teachers would be very unlikely to outlaw the right to unionize. Instead it would simply mean public-sector employees would have the right not to participate or fund their workplace union if they so choose.

“This case does not impact public employees and their right to join a union,” Pell added. “It impacts a union funding mechanism.”

Friedrichs notes unions would be compelled to do what’s best of their members if workers were free to leave.

9. How An Opt-In System Might Impact Unionization

CTA states the opt-out system is legal and fair. It allows workers the right to refrain from funding union political activities. If a worker doesn’t want their dues going to politics they can simply sign a form and mail it to the union. The teachers included as a secondary point to their lawsuit that an opt-in system would be fairer. Essentially public-sector workers would have to request to join a union instead of getting automatically enrolled.

“The right to opt out sufficiently protects both First Amendment guarantees and other core constitutional rights,” CTA noted in its brief to the court. “There is no justification for carving out a special exception based solely on petitioners’ animus toward statutorily recognized union activities.”

Critics contest opting out is not always easy for workers. Rules regarding membership are not the same in every union. Most unions only allow members to leave at certain points in the year. These opt-out windows are often not disclosed to members. Unions have also been known to ignore opt-out requests.

“They often don’t have good information on how to opt-out,” Huebert added. “And its often a difficult process.”

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This piece was originally published by the Daily Caller News Foundation

Hurray for Hollywood Tax Credits?

Is California’s political establishment trying to crush the Golden State’s economy and punish Hollywood movie moguls? That’s one interpretation of Governor Jerry Brown’s decision to sign a $330 million movie tax credit into law, but only if you take seriously the argument that tax increases—as opposed to tax credits—have driven the so-called California Renaissance. Recall how Brown, legislative leaders, and prominent columnists lauded voters’ approval of Proposition 30, which significantly raised sales and income taxes two years ago. The best businesses, they said, don’t mind California’s high tax burden so long as the weather stays nice. But if that’s so, then why the giveaway to Tinsel Town?

The Film and Television Job Creation and Retention Act more than triples the current $100 million-a-year movie tax credit for five years beginning in fiscal year 2015–16. The new law allows studios to use the credits for television pilots and eliminates a lottery system for selecting beneficiaries. It also removes the existing credit’s cap of $75 million on production budgets, according to a state senate analysis.

The California Teachers Association opposed the bill for self-interested reasons: the union doesn’t want any money potentially taken away from public schools, which currently eat up more than 40 percent of the state’s general fund. Despite the CTA’s opposition, the legislation enjoyed broad bipartisan support. Republicans usually argue that tax credits are much less important than a more favorable overall tax climate, but they agreed to these special credits, just as they supported tax credits for a proposed Tesla electric-car battery plant, which wound up going to Nevada. More unusual was the support from the otherwise tax-credit-averse Democrats. “This legislation will keep the cameras rolling in California and strengthen our position as the entertainment capital of the world,” claimed Kevin de Leon, a Los Angeles Democrat and new leader of the state senate. Governor Brown, who had criticized the credit in the past, said at the bill signing that SB 1839 “helps thousands of Californians—from stage hands and set designers to electricians and delivery drivers.” At least Democrats are tacitly recognizing the value of lower taxes—even if only for a handpicked industry that happens to support them.

But politicians’ assertions notwithstanding, the nonpartisan Legislative Analyst’s Office in April released a report questioning the effectiveness of the existing tax credit. The LAO argued that studies promoting the credit’s economic benefit “vastly overstate” its advantages: “A return of $0.65 in state tax (excluding unemployment insurance) revenue for each $1 in tax credits may or may not be a good return compared with other state programs. However, it is incomplete—and, arguably, not accurate—to claim that the tax credit program pays for itself.”

Tax-credit supporters point to the loss of 16,000 California film-industry jobs over an eight-year period and blame other states, such as New York, for offering large subsidies that are supposedly stealing away movie productions. Just because other states lavish subsidies on movie companies doesn’t make it a great economic idea. “The state government in New York has dished out well over $2.5 billion in film industry tax incentives since their program began in 2004,” noted Christopher Thornberg, founder of Beacon Economics in Los Angeles. “And for that payout, New York has ‘stolen’ a total of roughly 10,000 jobs from California . . . Do that math! New York has paid $250,000 for each new job.”

The LAO pointed out another flaw in the case for Hollywood giveaways: “Other industries—such as manufacturing or software development—also could become the target of aggressive state subsidies. If this were to occur, would California also provide subsidies to retain these businesses? Doing so could be prohibitively expensive. Instead of approaching economic policy on an industry-by-industry basis, the Legislature may take actions that encourage all businesses to stay or relocate to California, such as broad-based tax reductions or regulatory changes.”

Unfortunately, a political party addicted to taxing and regulating happens to control California’s legislature. It’s funny how Democrats can rationalize tax hikes on the one hand and tax credits on the other. Pulitzer Prize-winning writer David Cay Johnston mocked claims that higher taxes destroy jobs: “Some research into tax rates indicates that high tax rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered.” In other words, high tax rates aren’t detrimental to the California economy—they may even be the cause of its recent growth.

Johnston’s pro-tax argument is popular in Sacramento. Recently, Senator Hannah-Beth Jackson, a Santa Barbara Democrat, argued in support of a bill that would base corporate tax rates on CEO compensation—with higher rates imposed on companies that pay executives more. Yet Jackson joined her colleagues (only two voted no in both houses) in supporting the Hollywood tax credits.

Tellingly, policymakers have been unwilling to consider less costly ways to encourage film production in the state. None of the discussions surrounding SB 1839, for instance, pointed to the pernicious effect of Hollywood’s union-dominated work rules. Think of the TMZ, or Thirty-Mile Zone, the radius the various movie and TV unions use to determine per diem rates and driving distances for crew members. Nor did any of the bill’s sponsors have a word to say about the creative accounting Hollywood studios employ to show profits and losses.

So even as they peddle the fiction that California is booming because of high tax rates, legislators feel compelled to subsidize one of the state’s signature industries. Maybe they should have raised taxes on Hollywood instead. After all, it would be good for the economy: the higher taxes would make the studios work harder.