California Proposition 223, Performance Budgeting Requirements for School Districts (1998)
Proposition 223, if it had been enacted, would have limited the amount each public school district in the state could spend on administrative costs. It also would have established performance budgeting requirements.
Specifically, Proposition 223 would have:
- Limited certain administrative costs, starting in 1999-2000, to 5% of all funds received. The remaining 95% of funds would have had to be spent on what Proposition 223 defined as "direct services". "Administrative costs" under the proposition were defined as activities involving central school district management, including general district administration and central data collection, while "direct services" were defined as services directly serve students, school site employees, and school facilities, including salaries of classroom teachers.
- Required each school district, starting in 1998-1999, to link its annual budget to specific outcome objectives related to improving student performance.
- Imposed a penalty for non-compliance that would have come to about $175 per student.
Supporters of Proposition 223 spent $2,083,736. The top contributors to pass the measure were:
- United Teachers Los Angeles: $305,475
- United Teachers Los Angeles-PACE Issues: $214,262
- Michael Huffington: $150,000
- Stewart A. Resnick: $100,000
- The Riordan Blind Trust: $100,000
- Selim K. Zilkha: $100,000
- Amgen: $65,000
- Jerrold Perenchio: $60,000
- Ralph's Food 4 Less: $50,000
- Riordan, Lewis & Haden: $35,000
Opponents of Proposition 223 spent $2,530,133. The top contributors to defeat the measure were:
- PACE of California School Employees Association Issues PAC: $1,190,947
- Association of California School Administrators Issues PAC: $1,002,659
- California State Council of Service Employees Political Action Issues Account: $110,700
- Service Employees International Union Local 99, Political Education Fund: $100,880
- California School Boards Association: $50,000
- Association of California School Administrators PAC: $34,737
- American Federation of State, County and Municipal Employees, AFL-CIO: $20,280
- California Republican Party: $14,740
- Laidlaw: $10,000
- Lozano Smith Smith Woliver & Behrens: $10,000
The ballot title was:
The official ballot summary for Proposition 223 was:
- Prohibits school districts from spending more than five percent of funds from all sources for costs of general administration, instructional resources supervision, and supervision of instruction, beginning fiscal year 1999-2000.
- Requires State Board of Education to fine districts failing to comply.
- Requires districts to publish percentage of funds expended on administrative costs annually, report expenditure information to State Board of Education, and undertake performance audits and fiscal efficiency reviews every five years.
- Requires districts to develop systems which indicate the intended contribution of each projected expenditure to the achievement of specific performance objectives.
The California Legislative Analyst's Office provided an estimate of net state and local government fiscal impact for Proposition 223. That estimate was:
- "This measure would require school districts to reduce administrative costs (as defined by the measure) by up to $700 million. To comply with this requirement, districts could more accurately account for administrative costs, move operations from central locations to school sites, and reduce administrative spending.
- The measure also would result in costs of around $10 million annually for performance based budgeting, and around $20 million every five years for auditing requirements."
- California's 994 public school districts receive funds from federal, state, and local sources to provide kindergarten through twelfth grade (K-12) education. In the 1996-97 fiscal year, K-12 public schools spent about $34 billion from all sources.
- Each year, school districts provide information on how they spend their funds to the State Department of Education--including amounts spent on administrative costs. In general, districts determine what portion of their funds will be spend on administration.