Prop 3: The Forever Tax

By James Fenkner, CFA

The Boy Who Cried “Temporary!”

Prop 3 is not a new school-funding measure. It is the final act in a long confidence game, a tax that began life as temporary, was later extended, and now seeks permanence under the soft lighting of “children’s education and health care.” It is a classic fable of institutional self-interest dressed in the language of compassion. Every California public school should teach this story as a warning.

None will.

Without the ignorant and gullible public, it wouldn’t work.

In 2012, voters approved Proposition 30, marketed as “Temporary Taxes to Fund Education.” The first word was the tell. Governor Jerry Brown and the California Teachers Association (CTA) sold it as a short-term bridge across a $6 billion recession shortfall. High earners would pay a bit more; the sales tax would rise a quarter-cent; the money would “protect” California classrooms. It passed with 55 percent of the vote.

“Temporary,” they said. “Trust us,” they said.

Four years later the CTA returned with Prop 55. This same coalition that had educated much of the electorate now asked that electorate to extend the income-tax rates through 2030. Proposition 55 passed with 63 percent. The “temporary” measure easily becomes a medium-term one.

The pattern was set: declare “crisis,” extract money, declare new crisis, extract again.

Now Comes Proposition 3

It’s billed as the California Children’s Education and Health Care Protection Act. Its purpose is simple: remove the expiration date on Prop 30. What began as temporary and was then prolonged would, under the new Prop 3, become permanent.

Shakespeare understood this move.

In Macbeth he warned us of those who “Look like the innocent flower, but be the serpent under’t.” Prop 3 is that flower covered serpent: wrapped in the soft language of children’s education and health care, while delivering a permanent tax increase that serves the adults who administer it, not the students in whose name it is advanced.

The numbers are enormous. Since 2012 the higher rates have generated more than $120 billion, according to the California State Controller’s office. That is twenty times the original shortfall Brown cited.

Twenty times.

Let that sink in.

This is one of the largest, if not the largest, temporary to permanent tax in California history. Should voters naively approve Prop 3, enhanced tax receipts on the order of billions of dollars a year will only grow with inflation and will continue forever.

And what did California receive for the money?

Fourth-grade reading scores on the national assessment have essentially flatlined. In 2012 the average was 213 (out of 500); in 2024 it was 212. Math moved from 234 to 233 (also out of 500). State proficiency rates tell the same story. Roughly half of students met English standards in 2012; today the figure remains stubbornly below that peak. Math proficiency has recovered only partially and still sits under 40 percent. Meanwhile the public-school system has lost roughly half a million students since the original temporary tax passed. Fewer children. No clear gains in mastery. Larger tax bill for Californians. And there is no certainty that standards haven’t been lowered to avoid embarrassment.

Where did the money go? Classroom teachers saw nominal salary growth that modestly outpaced inflation. The average for a tenured teacher now sits just above $103,000. Good money for a tough job of which California has many. Median teacher pay – which includes a summer holiday – is 40% more than California’s median income.

Yet this is not the main story.

Bureaucrats and Administrators Win Again

The dominant beneficiaries of billions in tax revenue have been administrators. Their ranks and pay expanded even as enrollment shrank. Principal and district-level salaries commonly reach $250,000 in most California districts to well over $500,000 in others.

For example, since the passage of Prop 30 in 2012, the Cajon Valley Union school district academic outcomes have continued to decline. The results for this district are currently among the lower-performing mid-sized districts in California. Less than a third of the district students read at grade level. Less than a quarter of the students are proficient in math.

Yet poor outcomes have not stopped district administrators from becoming richly compensated. Superintendent David Miyashiro who has presided over much of his district’s academic decline since 2012 took home $592,416 in total compensation in 2024.

This is the Boy Who Cried Wolf in institutional form. First the wolf was a recession shortfall. Then it was the risk of “devastating cuts.” Now it is the expiration of a tax that was never supposed to last. Each time the shepherds—CTA union leadership, school administrators and their political allies—have “sounded the alarm,” and each time a majority of voters were suckered in.

The flock (student enrollment) grows thinner.

The shepherds (bureaucrats) grow fatter.

No one (be it the voters or the students) is the wiser.

The CTA’s interest is not mysterious. More revenue means more leverage in contract negotiations, more positions, more dues, and more power over an increasingly undereducated electorate.

More of everything except higher educational outcomes.

If the goal were higher reading and math scores, the last fourteen years of elevated revenue would have produced visible results.

They have not.

If the goal were simply to keep the lights on for a shrinking student body, the scale of the haul would still look excessive. Institutional growth and excess compensation have absorbed the resources that voters had intended to be used to improve student outcomes.

California voters have been patient. They have accepted the “temporary.” They then accepted the extension. The question before them now is whether they will accept the permanent version of the same fairy tale. The fable warns that the boy who cries wolf eventually loses the trust of the village. Prop 3 proponents have lost that trust. Don’t be fooled a third time.

The permanent tax increase of Prop 3 will be wrapped in the soft language of “protecting the vulnerable.” Look under the innocent flower to the “serpent under’t”. The record is clearly visible in test scores, enrollment figures, and salary schedules.

Vote NO on Prop 3