Proposition 49: The Energizer Bunny of the State Budget

One of the most striking findings from the CBP’s new report, Playing With Our Future, is this: Funding for afterschool programs as a share of total child care and development funding has jumped from just over 2 percent in 1999-00 to a projected 26 percent in 2012-13. How did this happen?

Two trends are at work. First, funding for afterschool programs has increased nearly ninefold since the late 1990s, rising from $69 million in 1999-00 to a projected $665 million in 2012-13, after adjusting for inflation. The primary reason for this increase was passage of Proposition 49 in 2002. Proposition 49 requires California to spend approximately $550 million per year on the state’s afterschool program without providing any new revenues to pay for that spending mandate; instead, the measure simply imposed a new cost on the state budget – a classic example of ballot-box budgeting. Proposition 49 prohibits the Legislature from reducing this funding without voter approval, even in years in which the state faces a substantial budget shortfall. Consequently, annual afterschool funding has marched on – year in, year out – with the consistency of the Energizer Bunny.

The second trend: State funding for child care and preschool programs has fallen sharply over the past decade. Funding for these programs peaked at $3.6 billion in 2001-02 and then declined to $2.4 billion in 2011-12 – a drop of nearly one-third (32 percent), after adjusting for inflation. Most of this decline occurred after the onset of the Great Recession, as policymakers cut funding for child care and preschool to help close budget gaps caused by the massive drop in state tax revenues. The Governor’s proposed cuts to child care and preschool – which a Senate budget subcommittee will review tomorrow at 9:30 a.m. in Room 3191 of the Capitol – would reduce funding by an additional $540 million in 2012-13, a 22 percent drop from the prior year, after adjusting for inflation.

In short, the increased emphasis on afterschool programs in recent years reflects not only policymakers’ deliberate choice to cut child care and preschool funding, but also Proposition 49’s inflexible, autopilot funding formula. Proposition 49 walled off one important area of the state budget – afterschool funding – and prevented the Legislature from examining that funding in the context of competing budget priorities, even as other important areas of the state budget – including child care and preschool – have been cut deeply to help close persistent budget shortfalls.

The CBP has consistently raised concerns about ballot-box budgeting. Our 2002 analysis of Proposition 49 argued that “setting state budget priorities through the initiative process encourages voters to consider spending for one area, such as afterschool programs, in isolation from other state spending.” We also pointed out that while many voters may support state spending on afterschool programs, “they might prefer to spend less than required by [Proposition 49] if they knew that it could result in cuts” to other areas of the budget. These concerns remain as relevant today as they were a decade ago.

— Scott Graves