How the Teachers’ Unions Wrecked California

As Governor Arnold Schwarzenegger and California legislatures finally cobble together a workable budget, what lessons can be drawn from the state’s seemingly intractable woes?

Perhaps, most fundamentally, the Golden State’s most recent budget crisis shows loud and clear that Proposition 98 is more trouble than it is worth.

The proposition, originally passed in 1988 by California voters, created a generous constitutional mandate for education spending. Funding levels for K-14 (the last two years being community colleges) are either tied to per-capita personal income growth in California (usually used in years of strong growth) or general fund revenue (used in years of weaker growth). In practice, this translates to a guarantee that around 40% of the state budget is devoted to K-14 education.

The proposition was a response to 1978’s famous Proposition 13, which greatly restricted property taxes and erected the need for a two-thirds legislative majority to raise state taxes, thereby limiting Sacramento’s ability to tax-and-spend.

Over the decades, however, Prop 98 has been an enormous budgetary headache. The law allows little room for the shifting fiscal constraints of a struggling economy. In moments of crisis – such as this year – the proposition becomes an albatross around Sacramento’s neck. Periodically, then, legislators lighten their load by suspending the law, as they did in the recession of the early 1990’s and the aftermath of the dot-com bubble.

This year, however, this move was basically politically infeasible. A few weeks ago, as California stared into the budgetary abyss, and the abyss stared back, Governor Arnold Schwarzenegger merely floated the idea of suspending Proposition 98. Instantly, teachers’ unions – those humorless guardians of school coffers – were up in arms.  In a fit of rage, for example, the California Teacher’s Association sent 10,000 postcards to the San Diego office of Arnold Schwarzenegger. Around that same time, you could turn on any local station in California and you would eventually see an ad decrying the initiative’s possible suspension.

Teachers’ unions are the crux of the political problem.  Prop 98 is a leaden monument to the influence of California’s teachers’ unions.  In the late 1980’s, these unions couldn’t get the legislature to do what they wanted, so they mobilized to sway California’s voters.  Their efforts, clearly, paid off. Teachers’ unions are one of the most organized and politically effective special interest groups in the Golden State. (For a good take on the distorted influence of teachers’ unions, read this op-ed by Stanford professor Terry Moe.) Prop 98 ensures that the union gets what it wants regardless of the state’s other concerns.

Finally, Proposition 98 is a testament to circus that is California’s ballot initiative system.  It is a terrible system: out of brief, shameless, political spectacles emerge laws that shape policy for decades.  The overall ballot initiative system- and Proposition 98 in particular- makes H.L. Mencken’s famous quip ring true: “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”