Budget Numbers Support Honig--and Deukmejian

Bill Honig, the superintendent of public instruction, leans over his desk, eager to explain himself. Pencil in hand, he begins scribbling numbers. As he jots down figures and draws circles and arrows to illustrate each point, his voice rises excitedly.

“There, you see? They are playing with the numbers,” he exclaims.

The “they” Honig is talking about are officials of the Department of Finance who advise Gov. George Deukmejian on budget matters. Honig thinks they have been giving the governor bum numbers, which is why Deukmejian recently has been calling him so many harsh names--like “whiner,” “snake oil salesman” and “demagogue.”

Mentioning Deukmejian, Honig said: “I think he really believes that I am lying. I think he really thinks I am going out and misleading the public.”

The governor has made that clear.

Again last week, Deukmejian accused Honig of “distorting” the budget numbers and claimed the superintendent had embarked on a “disinformation” campaign.

More than any public policy debate in recent years at the state Capitol, this one centers on numbers.

Cites the Numbers

Deukmejian sets out his education policy in the budget. He also loves to refer to budget numbers in his speeches, using them to bolster his argument that he has made education his top spending priority.

But Honig also loves to talk about budget numbers. Using the same budget as Deukmejian, he comes away with a different conclusion: that education is not the governor’s top priority, and, in fact, this budget is “a disaster” for education.

This angers the governor, for he is the kind of straight-arrow fellow who does not like to be accused of speaking out of both sides of his mouth. At his press conference last week, Deukmejian insisted that education remained his “No. 1 spending priority,” and added, “I resent the fact that he is going around the state trying to say, in effect, that this is a disastrous budget for education, when in fact it is not.”

The governor’s proposed budget for the next fiscal year totals $39 billion. But the dispute primarily involves education’s $17.2-billion--or 55%--share of the $31.3 billion General Fund, the government operations portion of the budget. That is the part of the budget supported by general taxes, the part that gives the governor the most flexibility in determining how state dollars will be spent.

Deukmejian is proud of education’s 55% share of the General Fund. He cites the figure to bolster his argument that he has been more generous in financing school programs than either of California’s last two governors.

And that sets up the first point of contention.

Honig claims that education does not receive 55% of the General Fund budget. He argues that it’s 53.7%, a significant difference when each 1% is worth about $313 million.

Shifting of Funds

The problem is that Deukmejian, in drafting his budget, took $477 million that has always been part of the General Fund and put it into a separate, special fund to finance his proposal to give counties more control over health programs mandated by the state. Thus, the General Fund pie got smaller.

Honig claims it is unfair for the governor to imply that he has increased education spending to 55% of the General Fund, when the General Fund now is smaller than it used to be because of a bookkeeping juggle.

But Deukmejian is correct when he says that education accounts for 55% of the General Fund that he has proposed. And Honig is likewise correct when he says that this 55% represents a smaller slice of the General Fund than it would have under the measurement that Deukmejian formerly used.

Another point of disagreement involves what share of next year’s increased tax revenues would go toward financing programs in kindergarten through 12th grade.

The budget for kindergarten through high school is one closest to Honig’s heart, since his job is to provide statewide direction of public school programs for an estimated 4.5 million students and about 200,000 teachers in more than 1,000 school districts throughout California.

Honig and others close to the education system believe that public school programs went into a decline during the 1970s primarily because of a steady erosion of tax dollars.

The decline was marked by weak test scores by students, poor teacher morale, poorly maintained school buildings and, in some cases, elimination of summer school and shortened school days.

The biggest factor in the squeeze on school budgets was passage in 1978 of Proposition 13, the property tax cut initiative, which undermined what had been the source of most school financing.

The state stepped in to bail out the schools but could not stretch its own dollars far enough. During a period when inflation was running in the double digits, schools did not receive enough money to keep pace.

California, which during the mid-1960s ranked among the top five states in terms of money spent on each public school pupil, plummeted all the way to the 32nd ranking by the last year of former Gov. Edmund G. Brown Jr.’s second term.

Deukmejian pledged to turn the situation around and he did during his first four-year term.

Share of New Money

One key measure of his success was the share of so-called “new” money he allocated to elementary and secondary school systems.

During Deukmejian’s first budget, schools got 43% of the new funds, or $924 million, according to a Department of Education survey. The next year, they got $1 billion, or 28%; then $977 million, or 40%; and, during the current year, $893 million, or 46.5%.

By the 1985-86 budget year, California had pulled from 32nd to 23rd among states in per-pupil spending.

Along with the new money, Honig, Deukmejian and the Legislature reached agreement on legislation to upgrade teacher salaries, toughen academic requirements for graduating high school seniors, lengthen the school year and other measures designed to improve the system.

Honig said the new money, plus the so-called reforms, had a fast payoff.

According to a Department of Education study, there was a marked increase between 1983-84 and 1985-86 in student enrollments in such basic courses as mathematics, English, science, history and foreign languages. There also was improvement in test scores in reading, writing and math for elementary schools students, and in the scores achieved by high school students on nationally administered Scholastic Aptitude Tests.

Average starting teacher salaries went from about $13,500 a year in 1983 to $20,000 in 1986, a 48% increase in three years. Average salaries for all teachers--the very experienced as well as inexperienced--also went up, but much less: from $23,614 to $29,022, or 23%.

Honig Argument

In the governor’s new proposed budget, according to Honig, public schools will receive only 9% of the new money being allocated to the General Fund. He argues that this will force cuts in programs and jeopardize all the momentum in education that was built during Deukmejian’s first four years.

Deukmejian disputes the 9% figure, saying he is giving the schools 29% of the new money.

Again, the dispute is over the size of the pie that each man is talking about. Deukmejian said there is $977 million in new General Fund money; Honig, again factoring in the $477 million that the governor is turning over to the counties, says there is roughly $1.4 billion.

And, indeed, the governor’s point seems to be a valid one, because the General Fund he has proposed does contain only $977 million in additional funds over the present budget. However, Honig is correct when he points out that this would represent only a 9%--not 29%--increase in the General Fund the way it used to be structured.

But there also is a dispute over just what expenditures should be counted.

Deukmejian said his budget provides for a $621-million, or 4%, increase in public school spending. But of this increase, $281.4 million is due to improved collections from local property taxes, $98.4 million comes from a bonus derived from state lottery revenues and $685,000 represents federal aid. So the actual increase in state revenues not related to the lottery is only $240.6 million.

Honig said that number is also subject to question, because $90 million of the increase represents a restoration of money that Deukmejian cut from the schools budget by executive action in December, and an additional $25 million amounts to a bookkeeping transfer. When these factors are discounted, Honig argues, the new state funds represent only a $125-million increase--or roughly 1%--over the amount Deukmejian approved when he signed the budget last June.

Teachers Pension Fund

Actually, for Deukmejian to come up with his 29% figure--representing the amount of new General Fund money allocated to education--he has to tack on an additional $42.5 million contribution to the State Teachers Retirement System, which not even his Finance Department counted in the budget “background” booklet it distributed to legislators and reporters when the budget was released. Honig does not include these new retirement funds in his calculations.

By contrast to all these figures, Honig had asked Deukmejian for a $750-million increase for schools. The superintendent contended that the $750 million, though it sounds big, would buy only enough to provide a 3% salary raise for teachers and a 2.5% increase for the general operating budgets of school districts.

What Honig really wants is $2 billion a year more for the public schools. He argues that this is what it would take to bring California to the national standing it enjoyed during the 1960s. As a compromise, he said, he would be willing to accept increases over and above inflation of $500 million a year.

There is one fact that both Deukmejian and Honig agree on: “Real” after-inflation spending per pupil in California would decrease in the governor’s proposed budget, compared to what is now being spent. The figure now is $1,983; under the new budget it would be $1,954--the first decrease under Deukmejian’s tenure as governor.

Deukmejian argues that it is virtually impossible to give education the kind of increases sought by Honig because of competing pressures on the state budget caused by such things as soaring prison populations and the rising costs of providing health care to the needy under the $5-billion Medi-Cal program.

Budget Reserve

Honig believes that additional money for public schools can be taken from the governor’s proposed $1-billion budget reserve. And if necessary, he said, he would support a tax increase.

And Honig said that while the state has started back from the decline of the 1970s, there is still a long way to go. “If you can’t come up with the extra $200 million or $300 million to invest in the system over the rate of inflation, then we’ll always be where we are,” he said.

Deukmejian still rejects a tax increase. And he said a $1-billion budget reserve is necessary to maintain for potential emergencies.

During his news conference, Deukmejian said of Honig: “I don’t recall that he went out and said to the people (when campaigning for reelection last year) that we’ve got to increase taxes or we’ve got to take money from some other program . . . and put it into education. He went out and said to the people that he wants more money for education. That’s easy to say. But he doesn’t, as superintendent of public instruction, have the responsibility of balancing the budget, of addressing other priority needs, such as in the health and welfare area, for the disadvantaged and the sick and the disabled and others.”