May 20, 2006

Preschool for All Act Off Education Priorities
 

By Marna Smeltzer

President/CEO

The justification for the Preschool for All Act can be likened to Robin Hood justifying his stealing from the wealthy because he wanted the riches to educate the poor children in the forest where he hid! Proposition 82 (the Preschool for All Act) is the type of initiative that is most dangerous and insidious. At the core is the intent to create a constitutional entitlement that circumvents the lawmaking process. Consider the facts.

Supporters misuse study data from a preschool study conducted in Chicago that is not relevant to the current proposal. This was revealed in a Los Angeles Times article written by Michael Hiltzik on February 2nd. In his article he quotes the Rand senior economist that authored the study that their calculations were projections, not measurements.

It has been proven in past income tax increases applied to the higher income Californians do not work. A 1991 personal income tax rate increase caused revenues to be flat until it expired. Once expired, personal income taxes grew more than 80% in six years.

Over 70% of personal income tax that supports in excess of 50% of the General Fund budget revenues is provided by 11% of the taxpayers. An increase of taxes for this small, influential, and very mobile population will cause further migration out of the state.

Most telling is that funding an expensive, new, and unproven preschool program flies in the face of the failing K-12 public school system in California. Priorities have to favor not ignoring our responsibilities to fix this failing system before overlaying it with another new program.

Just like responsible parents must say no to their children when circumstances call for discipline, voters must do the same to this bill. It is a “feel good” petition without real justification foisted upon taxpayers by a former actor that was called “Meathead”!
 

May 20, 2006

Proposition 82 a Case of Misplaced Priorities

By Allan Zaremberg
President/CEO
California Chamber of Commerce

Prop. 82 is NOT a question of whether preschool is good or bad. Rather, the question posed to voters in June is whether Prop. 82 is the best way to expand preschool opportunities to our kids, and if it’s the best use of $2.4 billion of limited state funds.

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, while well-intentioned, is simply a bad deal for our state and for our children. It erodes the general fund resources that are intended to pay for K-12 education.

Prop. 82 would increase taxes on certain Californians by as much as 18% 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 gridlocking our economy and the quality of life of every Californian; local law enforcement and firefighters are undermanned; our levees are overstressed.

Rather than focus limited resources on these problems, Prop. 82 asks voters to authorize a state takeover of the existing 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 percent to 5 percent increase in preschool enrollment.

And the program is extremely costly. 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, which is almost as much as we currently spend for full-day instruction for K-12 students.

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.

Many members of our coalition 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.

Prop. 82 will also have significant negative consequences on funding available for K-12 schools, health care, emergency response services, public safety and all other state programs. In studying Prop. 82’s design, Dr. Hamm found the measure would significantly erode general fund revenues by more than $1 billion each and every year by 2011.

That’s because, according to Hamm, rather than just absorb an 18% 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.

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.
 

March 30, 2006

Chamber Opposes Proposition 82: A $2.4 Billion Tax Increase

While expanding educational opportunities is a laudable goal, the Redondo Beach Chamber and the State of California has many other priorities to address before raising taxes to create a new government-run preschool program.

Here’s why the Redondo Beach Chamber OPPOSES Proposition 82:

Hurts Small Business Owners
 

- Eighty percent of California businesses pay taxes under the personal income tax-primarily small business owners (including Sub S Corporations). This initiative would increase the tax they pay and harm small business owners – the backbone of our economy.

- Higher taxes will chase away small businesses, higher income entrepreneurs and business leaders – as well as their tax dollars. Companies must look at personal income tax rates to see how it will affect managers, and many may decide to locate in a state with a more favorable tax structure.

Small, Privately Run Preschools Would Be Shutdown
 

- The government-run preschool bureaucracy will also shut down thousands of private, community based preschools that currently enroll nearly 50 percent of all children enrolled in preschool programs in California – replacing thriving businesses that provide jobs and tax revenue and reducing educational and childcare options for families.

- Especially hard hit would be low-to middle-income women who run nearly all private early-care centers that comprise 70% of California’s child-care industry.
 

- The onerous credentialing requirements, union and other mandates that the initiative would trigger would devastate the industry’s entrepreneurs.

Limited Funds Should Focus on Reaching Those Kids Who Aren’t Currently Enrolled
 

- Currently, 66 percent of preschool age children attend preschool in California. The Reiner Initiative aims to raise taxes and build a new bureaucracy to bring that number to 70 percent – that’s $2.4 billion a year in new taxes and spending for a 4 percent increase in preschool enrollment.
 

-  A May 2005 UC Berkeley/Stanford study contends that free and universal access to preschool would be more costly and could widen, not close, early achievement gaps when compared with targeting dollars to families who have few other educational options in their neighborhoods.
 

-  California taxpayers already spend more than $3 billion each year to subsidize preschool for low-income children in the state. The new money will go to subsidize many middle- and upper-income families who already send their children to preschool.
 

-  The Legislative Analyst estimates this initiative spends as much as $8,000 per child for only three hours of instruction per day.
 

-  The Reiner Initiative also directs nearly $150 million dollars a year to administration and overhead first, and directs funding to classrooms and per-pupil preschool spending last.

Puts Preschool Above All Other Priorities in the State, Including K-12 Education

-  History shows that raising taxes on higher earners causes them to flee the state and take their businesses and investments with them—reducing existing State revenues from income taxes. The personal income tax is now more than 50% of state General Fund budget revenue. Only 11% of California taxpayers pay 73% of this tax. Even a slight reduction in revenues from these higher earners will have a significant negative impact on State revenues and the existing vital services that rely on the General Fund including schools, roads, public safety, healthcare and other priorities.
 

-  Proposition 82 specially circumvents the educational funding guarantees of Proposition 98, sending new tax dollars to this new bureaucracy while shortchanging California’s K-12 schools of these funds.

There are more important uses for limited state resources, like K-12 schools.

-  At a time when California faces chronic budget deficits, and we have a shortage of funding for existing important programs, we should not be creating a new, multi-billion dollar preschool bureaucracy.
 

-  We should fix the problems we have with our current K-12 system before spending $2.4 billion annually in limited resources to create an unnecessary and duplicative new preschool bureaucracy.
 

-  Currently, 66 percent of preschool age children attend preschool in California. Proposition 82 aims to bring enrollment to 70 percent. That’s $2.4 billion per year for a 4% increase in preschool enrollment – hardly a wise use of limited taxpayer dollars!

We should focus on expanding preschool availability for those children most in need.

-  According to an analysis by respected former Legislative Analyst William Hamm, only 9.4% of funding from the new tax will go to enroll “high risk” kids in preschool who otherwise wouldn’t have gone-those children from lower-income families or children that historically have shown achievement gaps.
 

-  All the academic evidence (even the RAND report cited by the proponents) shows that lower income, minority and high risk children benefit most from preschool. We should target limited resources to help those kids most in need.

Proposition 82 would reduce funding for schools, roads and other state programs and services and could cost all taxpayers!

- History shows that raising taxes on higher earners causes them to change their investment patterns to avoid the increased taxes. The personal income tax is now more than 50% of state General Fund budget revenue. Only 11% of California taxpayers pay 73% of this tax.
 

-  This measure imposes an 18% increase in the personal income tax rate currently paid by higher earners and will have a significant negative impact on revenues for other important programs such as schools, public safety, transportation and health care.
 

-  What’s more, it is highly likely that the new bureaucracy will cost much more than the $2.4 billion per year the proponents claim this tax will raise. When the program costs more money than expected or when tax revenues fail to cover all the costs, the legislature will be forced to either raise taxes again or start charging parents of preschool kids. In fact, hidden in the fine print of this measure is a provision that allows the state to assess user fees for parents with kids in this preschool program in the event the program runs out of money. A new parent tax!

The state takeover of preschools would decimate private preschool providers.

-  The government-run preschool bureaucracy will shut down thousands of private, community based preschools that currently enroll nearly half of all children enrolled in preschool in California – replacing thriving businesses that provide jobs and tax revenue with a government-run program.
 

-  We shouldn’t let the state education state bureaucracy – which already has its hands full without our struggling K-12 system – come in and take over something that is already working well for parents and children.