Educators Get Help Unraveling Prop. 98 Effects

His manner is unassuming, his speaking style matter-of-fact and the details of his message downright bewildering. But across the state, education officials are clamoring to hear Paul Goldfinger.

That’s because Goldfinger has a rare mastery of Proposition 98, the notoriously complicated amendment to California’s Constitution that guarantees K-12 schools and community colleges the single biggest chunk of the state’s general fund. Still, Goldfinger offers little comfort to his capacity crowds, telling them not to expect Proposition 98 to save schools from the recession and the state’s budget crisis.

“We’re into the most extreme uncertain times,” said Goldfinger, vice president of School Services of California, a consulting firm that advises school districts, at a recent seminar in Ontario.

A soft-spoken man who carries a pocket watch, Goldfinger delivered this grim news with more technical details than his audiences really needed. Each person attending paid $135 to hear him speak, some driving 200 miles, because they were panicked about Gov. Gray Davis’ proposal to reduce school funding by more than $5 billion over the next year and a half.

Such cuts would be allowed under Proposition 98, which was narrowly passed by voters 15 years ago to insulate school funding against the vagaries of politics. Although the measure is beloved by educators, its inner workings and fluctuations remain a mystery to most.

“I was a Phi Beta Kappa from Berkeley, but I don’t understand the complexity,” said Supt. Marilyn Loushin-Miller of the Hillsborough City School District near San Francisco, who attended a School Services seminar last month in Sacramento.

As for those who understand Proposition 98’s formulas, she said: “I think there are probably three people in the whole state.”

Actually there are at least twice that many. School finance consultants such as Goldfinger and John Mockler and a few others now are holding more people’s hands and fielding a surge of calls from school district administrators, legislators, even members of Davis’ staff. Those Proposition 98 mavens speak a strange language all their own, throwing out such terms as “maintenance factor,” “restoration target” and “equalization aid” without batting an eye.

Goldfinger even devoted a 19-page chapter to Proposition 98 in his book, “Revenues and Limits: A Guide to School Finance in California,” published by School Services and soon to be in its 23rd edition.

Goldfinger, 56, said that explaining such things gives him great professional satisfaction. He earned a bachelor’s degree in physics from the City University of New York and a master’s in engineering science from UC Berkeley. He learned the minutiae of school finance first as a research assistant to a Berkeley education professor, then as a consultant to a state Senate committee. He has been with School Services for 26 years.

He has a personal connection, as well: His daughter attends high school in Davis. “I believe in public education,” he said in an interview.

“We’re helping public schools to help the next generation. We feel it’s important work.”

Record crowds, about 2,000 total in Ontario and Sacramento in two days of School Services seminars, recently hung on Goldfinger’s words. The school administrators also snapped up thick binders prepared by the company, each filled with charts and graphs, as if they were the latest Harry Potter novel. All were hoping to get a better handle on the state’s budget crisis and whether they would have to lay off employees, defer campus maintenance, and slash computer and music programs among other things.

Goldfinger strove to provide clarity during a 20-minute monologue in front of a screen filled with factoids and figures. But it was a tough sell.

Proposition 98, he said, guarantees public schools and community colleges a minimum funding level each year, at least 34.6% of the general fund.

That’s the simple explanation. The measure actually turns on three formulas that fluctuate with changes in student enrollment, per capita personal income and state tax revenues. Get slammed by a recession and there are no more guarantees of last year’s spending level.

He told the crowd that money provided through Proposition 98 still will take up more than 40% of California’s general fund, or an estimated $28 billion, in the next fiscal year. (That’s more than the state will spend on public health, human services and prisons combined. In addition, schools will receive about $16 billion more from property taxes and smaller amounts from the lottery, the federal government and other sources.)

A Series of Tests

In a healthy economy, he said, Proposition 98 requires the state to choose between two formulas, known as tests, picking the one that generates the most money. Test 1 requires the state to spend at least 34.6% of the general fund on schools and community colleges. State officials have exceeded this level virtually every year since Proposition 98 was enacted.

Test 2 ties education spending to California’s per capita personal income. Under this test, the Proposition 98 minimum equals the amount spent in the prior year, plus increases to reflect enrollment growth and the change in per capita personal income.

The administrators listened attentively, took notes politely and showed signs of comprehension.

Then Goldfinger explained that in tough times like these, there is a third test, the most arcane and damaging one. Test 3 was approved by voters in a 1990 election as a compromise between schools and non-education groups concerned about losing state funds in recessions.

According to that test, the state is allowed to reduce Proposition 98 funding in years when state revenue declines or grows less than per capita personal income. In exchange, the state must promise to return to the higher funding levels when revenue increases. Even so, schools will not retroactively recoup money lost during the intervening years.

Some of the administrators slouched in their chairs or held their heads in their hands as Goldfinger ran through the complicated details of Test 3. If they didn’t understand the twists, they grasped the unhappy conclusions.

“As a school district administrator, the details are irrelevant,” said Diane Bennett, assistant superintendent of business in the Santa Maria Joint Union High School District. “It’s not something we have any control over. What we care about is how the pie gets divided up.”

What Bennett and the others learned is that Test 3 is now central to Davis’ budget because state revenue has dropped. Davis has proposed cutting $2.7 billion in Proposition 98 funding in the current fiscal year. That would make the floor for Proposition 98 funding next year $2.7 billion lower than it otherwise would be. Legislators are countering with a plan to slightly soften this year’s cuts.

But without Proposition 98, things could have been much worse for schools, its supporters say.

Proposition 98 was spawned to protect public school funding from the budget-cutting whims of the Legislature and the governor. The California Teachers Assn. led a campaign to put the measure on the ballot in November 1988. It won with 50.7% of the statewide vote.

“Proposition 98 stopped the bleeding” in public school funding, said John Mockler, who served as executive director of the state Board of Education, state education secretary and worked as an education lobbyist for several decades in Sacramento. “It kept education funding relatively stable and slowed the Legislature from siphoning money.”

Mockler should know; he helped write the law. Now, as a private school finance consultant in Sacramento, he is giving advice to clients and friends on its impact during this crisis.

His cellular phone rings frequently these days. Teachers unions are calling. So are school administrator groups and county superintendents. Even members of Davis’ staff have questions -- they want to know how far the governor could cut without having to suspend Proposition 98.

“As soon as you know you’re in a fiscal crisis, people in every field turn to experts,” Mockler said. “If you’ve got something really wrong with you, you go to the best doctor you can find.”

Davis Had a Choice

Many educators wondered whether Davis would try to suspend Proposition 98 in the current budget crisis, a step that would require a two-thirds vote in both houses of the Legislature. That option would have been politically risky for the governor, who declared public education his top priority when he took office four years ago. Ultimately Davis decided not to try to suspend the measure.

“Suspension of Proposition 98 is political suicide for any politician,” said CTA President Wayne Johnson.

Former Gov. Pete Wilson tried to suspend Proposition 98 in the early 1990s during a budget crisis similar to the current one. He retreated amid pressure from teachers unions and other education groups.

Davis exceeded the Proposition 98 minimum funding level for the first three years of his administration. However, by over-funding Proposition 98 when state coffers were brimming, Davis raised the spending base for future years. That was not a problem until California’s economy went sour. Now, Davis’ proposed cuts are forcing local school district officials to consider deep reductions.

That pain means a steady flow of customers for people such as Goldfinger. After the recent session in Ontario, Goldfinger joined a group of administrators in an informal conversation. One superintendent, Mimi Hennessy of the Arcadia Unified School District, called Proposition 98 an “arcane subject,” adding that she was mainly interested in the funds it generates for Arcadia.

That didn’t surprise Goldfinger. He sympathizes, conceding that the law can stump even him: “There may be some esoteric nuances that I don’t understand.”