Jerry Brown’s timid education agenda

By David Crane | In his final State of the State address, this is all Jerry Brown had to say about K-12 education:

“In education, after seeing 30,000 teachers laid off [as a result of the collapse in state revenues after the Great Financial Crisis], spending has dramatically recovered, increasing by $4,600 per student — $31 billion overall. We will also be able to completely fund the Local Control Funding Formula, which directs more money to those schools with the greatest challenges. For decades, school districts had widely disparate funding until the [1976] Serrano v. Priest decision mandated equal funding for all children. Now with our current formula, the most disadvantaged districts will get substantially more — not just equal funding. Importantly, this year’s budget proposes to link spending with the local accountability plans so that parents can see how the additional spending supports English learners and students from low-income families. Look, it is no secret that kids from more privileged backgrounds generally do better on standardized tests. But the answer is not more micro-management with intrusive state laws. Learning takes place in the classroom and that’s why our first job is to support teachers and give them the training and the freedom to teach as they know best.”

Here’s what Brown did not say:

  • Much of the revenue boost to which he refers has been offset by increases in school district spending on pensions and other retirement costs, as illustrated here.
  • Students aren’t performing better, as reported here.
  • The “local accountability plans” to which he refers don’t confer the powers needed to modify the terms under which teachers are tenured or dismissed or to improve the ability of school principals to actively manage staffs and schools for the benefit of students.
  • School funding is still at risk to a collapse in state revenues, as explained here.

David CraneBrown even set up a straw man when addressing poor student performance by saying “the answer is not more micro-management with intrusive state laws” when the remedy most often proposed by reformers is to liberate school districts from intrusive state laws! Also he neglected to mention that according to the most recent state results, 73% of low-income students, 72% of Hispanic/Latino students, 78% of African American students and 85% of English learners are not meeting standards in 4th grade math, and only 3 out of every 20 English learners are at grade level in math in 4th grade. So much for California presenting itself to the nation as a model of progressive success.

Brown also didn’t tell the audience that several California school districts are in financial distress, something that normally doesn’t happen during economic recoveries. In December the Oakland Unified School District announced a cut to services caused in large part by a 107 percent increase in district spending on pensions and other retirement costs over the past five years. Only 29 percent of the San Francisco Unified School District’s budget is available for teacher salaries this year because retirement spending more than doubled in the last five years. The finances of the largest district in the state — LA Unified — don’t even qualify for certification by the State Board of Education. And more. To his credit Brown has filed a brief with the State Supreme Court that could help school districts to cut retirement costs but he needn’t wait for the Court to act or risk leaving legislation to the next governor.

If Brown is serious about local control he should seek legislation letting school districts set their own tenure, dismissal, principal-authority and remuneration rules and granting them the powers they need to improve their finances. It would take only 62 members of the State Legislature — just 41 members of the State Assembly and 21 members of the State Senate make for a majority — to put such a bill on Brown’s desk.

To his discredit, Brown presided over the centralization of power in Sacramento when serving as governor in the 1970s. To his credit, he has devoted much of his third and fourth terms to returning power closer to the people.

But public schools are still in a Sacramento-controlled straitjacket. Brown should work to release school districts from intrusive state laws, liberate them to act in the best interests of students, and endow them with the powers to adjust their finances as they see fit.

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Fifty-four years ago today

By Carl M. Cannon | It’s Wednesday, February 7, 2018. Fifty-four years ago today, a hot new British band with a peculiar name boarded a Pan Am jet at Heathrow Airport. Destination: New York City — and musical immortality.

The Beatles arrive in New York on February 7, 1964Let me clarify: The Beatles weren’t really “new” on February 7, 1964. By the autumn of 1962, drummer Pete Best had been replaced by Ringo Starr, meaning that the “Fab Four” had been truly constituted, and the group had released its first records.

“I Want to Hold Your Hand” was released as a single in England seven days after President Kennedy’s assassination. It instantly topped the charts in Great Britain. (Side B was another Beatles song, “This Boy.”) Beatles manager Brian Epstein convinced Capitol Records to release it in the U.S., with “I Saw Her Standing There” on the flip side. It came out the week after Christmas. It topped the charts here, too, and on February 7, 1964, when the band emerged from their Pan Am plane, some 3,000 fans, mostly teenage girls, mobbed the old Idlewild Airport, recently renamed after John F. Kennedy.

Not able to actually hold the hands of any of the Beatles, the young audience contented itself with screaming hysterically. “Beatlemania” had announced itself.

The Beatles were the vanguard of the so-called “British Invasion,” but this phenomenon is more properly described as a re-importation than an invasion. The Beatles and other top musicians from the United Kingdom, including the Rolling Stones and Eric Clapton, were always open about who their musical influences had been: Elvis, Jerry Lee Lewis, Carl Perkins — along with a host of African-American jazz performers and rhythm and blues players ranging from Count Basie, Ella Fitzgerald and Sarah Vaughn to Louis Armstrong, Chuck Berry, Bo Diddley and T-Bone Walker.

Stones guitarist Keith Richards has explained that when he first heard Muddy Waters, he discovered “the most powerful music … and the most expressive” he’d ever heard. The Stones took their name from the title of a Muddy Waters song.

So, what’s the underlying lesson of today’s history remembrance? Perhaps it’s this simple: Rock music’s evolution reminds us that the conformity demanded by today’s thought police — those supposedly “woke” cultural arbiters who seek to tell authors and artists what books they can write and paintings they can draw, or even how everyday Americans can wear their hair or clothes — because of their ethnicity or gender, well, they lack an understanding of how civilization develops.

I’ll make this plain: The phrase “cultural appropriation” is an oxymoron. Culture comes from borrowing the ideas and styles of other people in other places. This is true in commerce as well as art.

The Ford Motor Co., for instance, pioneered mass production of automobiles. Many years later, the Japanese perfected it — in part by incorporating the theories of an American management guru. His ideas, in time, were re-imported back to the United States, and re-learned in Detroit.

Today, excellent cars are built in factories all over the world, including Korea — and, yes, Michigan — and others places in the U.S., often by foreign-owned companies. As Eminem and Clint Eastwood reminded audiences in Super Bowl ads in the early part of this decade, Detroit is getting its act together again in other ways, too.

This can only be a good thing. Remember, Motown Records was formed when the Beatles were still teenagers playing Liverpool clubs as the Quarrymen. Motown, for you young readers, was Detroit’s nickname — shortened from “Motor Town” when the Big Three dominated auto manufacturing worldwide.

Here’s how Time magazine’s Gilbert Cruz described the soul music record label: “Founded on January 12, 1959, Motown quickly became another Detroit factory; where the Big Three produced automobiles, Motown assembled the soul and pop classics that changed America.”

“Arriving at the height of the civil rights movement,” Cruz continued, “Motown was a black-owned, black-centered business that gave white America something they just could not get enough of — joyous, sad, romantic, mad, groovin’, movin’ music.”

Thus does artistic cross-pollination, like global competition, entail worldwide sharing. Imagine.

This commentary was swiped from the daily email sent out by Carl M. Cannon to promote the day’s headlines posted on the RealClearPolitics website. Cannon is Washington bureau chief for RealClearPolitics.

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Watch last night’s city council meeting

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California’s OPEB crisis

By David Crane | Everyone has heard about pension costs but few have heard about the other retirement cost that’s burdening California governments and schools. “OPEB” — “Other Post-Employment Benefits” — are a form of deferred compensation, just like pensions. The principal OPEB benefit is a promise to cover post-retirement health costs. Because government employees in California may retire before they are covered by Medicare and often receive benefits on top of Medicare, OPEB promises in California add up to hundreds of billions of dollars.

David CraneThe promises themselves are not a problem if sufficient money is set aside at the time the promises are made. You can see examples here of honestly-run enterprises that properly fund such promises. But if not, future budgets get invaded to pay off the past promises. That starves citizens at that time of the services they need because their taxes are being diverted to meet past unfunded retirement promises.

Elected officials in California have been making OPEB promises for decades without setting aside enough money to meet the obligations as they fall due. Every time they do so they create debt without voter approval. The result: the State of California has more OPEB debt than General Obligation Bond debt, which voters do have the right to approve. Last week State Controller Betty Yee reported that the state’s OPEB debt had reached $91 billion* at of June 30, 2017:

That’s just the state’s obligation. OPEB is also owed by many local governments and school districts. Los Angeles Unified School District alone has a $14 billion OPEB liability. Look what it’s doing to classrooms:

 

 

 

 

 

 

 

Now take a look at page 116 of the Governor’s Budget for 2018–19. Since Governor Jerry Brown took office in 2011, state spending on OPEB (retiree health and dental costs) has grown more than 50 percent to more than $2 billion per year. $2 billion in a $130 billion General Fund may not sound like much but all of it burdens a small portion of the budget that finances universities, courts, parks and other important programs, as explained here. That’s in part why their share of the General Fund has fallen nearly in half since 2010. Absent reform, that will worsen, especially when the state is no longer enjoying high revenues from a bull stock market.

The state has added more than $30 billion of OPEB debt since Brown took office in 2011. That will translate into an additional cost of $1.35 billion per year. Local governments and school districts have added billions more.

[The City of Fullerton's OPEB debt was $35,146,014 as of January 1, 2017.]

To his credit Brown has boosted pre-funding of OPEB promises but to his discredit he hasn’t attacked the liability itself. That’s surprising because the Affordable Care Act and the state’s excellent Covered California insurance exchange provides one means for doing so. (Full disclosure: my wife and I are satisfied Covered California customers.) For example, in 2015 the City of Glendale enacted reforms that leverage the ACA and Covered California. But neither Brown nor Yee mention that option. Instead the only “solution” they mention is gradual pre-funding. As Yee puts it, “by 2048, it is estimated that the state will be 100 percent caught up in funding” the OPEB debt. But what Yee doesn’t tell you is that (i) OPEB is going to keep rising and crowding out critical services and (ii) her “100 percent” assertion is based on an accounting gimmick that’s derived from the same practice that allowed governments to hide the truth about pension promises.

You might ask why Brown and Yee don’t raise the obvious option of reducing the OPEB liability. Presumably they are afraid of the state’s politically powerful government employee unions that are the largest recipients of state spending and the biggest beneficiaries of OPEB debt. But don’t blame the unions. They are just doing their jobs. Blame Brown and Yee. They are supposed to represent the people.

In 2010 I testified to the California State Senate that one cannot both be a progressive and be opposed to pension reform. That’s because unfunded pension costs harm the state’s most vulnerable citizens.

The same is true of OPEB. Cities all across California are regressively raising parking, traffic and other fees and the state and school districts are cutting back services, all in order to meet unfunded pension and OPEB costs. Yet instead of attacking OPEB and pension liabilities, California’s legislators are presently working to create a federal tax deduction for affluent people who have been disadvantaged by elimination of the state and local tax deduction over $10,000 per year. Doesn’t seem very progressive to me.

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Market downturn is a triple whammy for Californians

By Richard Rider | Most of us are less wealthy than last week. The stock market and crypto-currencies took dramatic tumbles. But it’s actually a triple whammy — especially for Californians.

Richard Rider  Not only did our investments, IRAs and 401(k)s take a belly punch. The drop in equity values means that our mandatory obligation to our California state and local public servants jumped as well, as the unfunded pension obligations just soared higher. And then there’s that coming California capital gains tax shortfall.

Only our risk-free public employees are pretty much unconcerned about economic downturns. Because the government worker pensions are guaranteed, we hapless taxpayers will simply have to write bigger checks to make up the bigger shortfall.

And to add pain to suffering, a stock market downturn translates in into lower capital gains on tax returns. Few realize that the major reason we have a California “budget surplus” (ignoring the Madoff-type accounting used) has been the flood of capital gains tax revenue into state coffers fueled largely by our rising stock market.

Our federal and California combined capital gains tax is the second highest in the world. This windfall has been used primarily to raise the pay of our “long-suffering” public employees — a “ratchet” budget item that now recurs every year. If the capital gains tax revenue plummets, well, you know who gets to make up the difference.

With the change in state tax deductibility on federal tax returns, it’s likely that more taxpayers — especially wealthy taxpayers — will leave our high-tax Golden State, putting these pension obligations in their rear-view mirrors. Those who remain will have to make up that shortfall as well.

Uh, oh.

Richard Rider, a longtime friend and political ally, is chairman of the San Diego Tax Fighters. He was named Taxfighter of the Year in 2009 by the Howard Jarvis Taxpayers Association.

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Discounted gas sold in Carlsbad in an effort to repeal the gas tax

On Monday, the statewide effort to overturn the 12-cent gas tax increase took an interesting turn when former San Diego city council member Carl DeMiao lured people into signing the gas tax repeal petition with really cheap gas.

The gas station owner agreed to lose money in order to entice people with a price of $1.99 per gallon.

“I’m taking a hit, but it’s okay,” said Les Kourie. “The public is happy, they seem happy. And they get the message, stop this gas tax.”

Radio talk show host Carl DeMaio started the gas tax recall initiative after a super-majority of Democrats in Sacramento, including state Senator Josh Newman (D-Fullerton), approved a 12-cent tax on each gallon of gas and a huge increase in the car tax.

“The people up there are not accountable,” DeMaio said. “They say this money will fix roads and bridges and it’s simply not true.”

DeMaio is hoping to collect almost 600,000 signatures to make the November ballot. About 500,000 signatures have already been gathered.

While hundreds of people enjoyed filling up their tanks with cheap gas, they also signed the petition. [Source: KUSI-TV]

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Tonight’s city council meeting agenda

The AgendaTo read or download tonight’s detailed council meeting agenda, please click here (pdf).

The public participation portion of the meeting begins at 6:30 with presentations and awards. Actual city business normally doesn’t start until 7:00 or thereafter.

And you can always watch it on cable Channel 3 (Spectrum — formerly Time Warner Cable).

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Surging pension costs push more California cities toward bankruptcy

By Dan Walters | From one end of California to the other, hundreds of cities are facing a tsunami of pension costs that officials say is forcing them to reduce vital services and could drive some—perhaps many—into functional insolvency or even bankruptcy.

The system that manages pension plans for the state government and thousands of local governments lost a staggering $100 billion or so in the Great Recession a decade ago and has not recovered. The California Public Employees’ Retirement System (CalPERS) is rapidly increasing mandatory contributions into its pension trust fund to make up for those losses, cope with a host of rising expenses and, it would appear, stave off the prospect of its own insolvency.

City managers, facing annual increases in contributions of 15-plus percent, are feeling the squeeze, which a new Stanford University study finds is crowding out “resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety.”

Dan WaltersMarina Gallegos, the human resources officer for Salinas, spoke for many city officials when she told CalPERS representatives who briefed her city council on the increases: “This growth is unsustainable.”

“Unsustainable” is a word that pops up frequently in public statements and interviews with local leaders, along with the “B-word.”

“We don’t know how we’re going to operate,” Oroville’s finance director, Ruth Wright, told the CalPERS board last year as a delegation of city officials pleaded for relief. “We’ve been saying the bankruptcy word.”

While all CalPERS client agencies, including school districts, counties and the state itself, are being hit by its rising demands for money, the state’s 482 cities [including Fullerton] are being clobbered the hardest. They devote the vast majority of their budgets to personnel costs, particularly for firefighters and police officers who have the most generous pension benefit—up to 90 percent of their highest earnings—and thus incur the highest pension costs.

To read the entire column on the CALmatters website, please click here.

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‘Trump bump’ rescues California’s unemployment fund

By Jon Coupal | America’s economic recovery has benefited California more than most states because the real estate crash hit the Golden State a lot harder. In other words, we’ve had to claw our way up from a deeper hole.

A weekly column by Jon CoupalThe good news is that the strength of the recovery is impressive. Hourly wages have jumped by four dollars since the start of the Great Recession. Unemployment has dropped to 4.3 percent, a record low since 1976 when California started keeping track of the data. The new $190 billion general and special fund budget that Gov. Brown proposed last month is an all-time record and $26 billion more than just two years ago. By any metric California’s economy, the 5th largest in the world, is strong.

While California’s progressive legislators seize any opportunity to trash President Trump, the undeniable truth is that most Californians will benefit from the federal tax-reform bill both from increases in their paychecks as well as largess from their employers handing out raises and bonuses.

To read the entire column, please click here.

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Total number of signatures to repeal the gas tax has passed 500,000

Friday on the John and Ken Show on KFI Radio, Carl DeMaio updated the progress of the signature-gathering effort to repeal the gas tax. The report lasts less than 10 minutes:

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