Penny Whys

There's something for everyone in the billion-dollar, 1-cent sales tax increase for education. Is that such a good idea? Few are asking.

The group leading the fight against education Initiative 884 is the state chapter of a national antitax, antiregulation organization called FreedomWorks. Its co-chairs are three prominent Republicans: former U.S. House majority leader Dick Armey, former U.S. Rep. Jack Kemp, and onetime White House counsel C. Boyden Gray. It's a well-connected national conservative group seeking to influence our election, reminiscent of the primary last month, when the U.S. Chamber of Commerce spent big money on negative advertising about Attorney General candidate Deborah Senn.

But this time, the big money and bigger guns are on the other side. The pro I-884 Citizens for the Education Trust Fund has raised more than $2 million. Donors include Microsoft Chairman Bill Gates and his father, corporate attorney Bill Gates Sr.; Paccar board member and investor James Pigott; Aldus software founder and philanthropist Paul Brainerd; Starbucks; and a bevy of other technology millionaires, venture capitalists, and well-known civic types. I-884 would raise the sales tax by a penny per dollar to pump a billion dollars a year into preschool through higher-education programs, and it's got momentum. Besides the $2 million, I-884 is backed by a broad coalition of education advocates from all the constituencies it would benefit, as well as labor groups and the business community.

"We've never seen anything like this," says Lisa Macfarlane, a lawyer who is co-president of the League of Education Voters, the organization that gave birth to the education trust fund idea. Nick Hanauer, the organization's other co-president and a venture capitalist who has put $300,000 of his own money into the campaign, calls it "the most significant thing that could happen to public education in this state."

In contrast, Washington FreedomWorks, chaired locally by former Republican state House Speaker Clyde Ballard, has raised a mere $20,000 to oppose the measure. Theirs is a voice outspent and overwhelmed, which might be one reason few are questioning I-884.

What comes with getting everybody on board is doling out something to everyone—the kitchen-sink approach. Twenty-three pages long, I-884 aims money at too many programs to fully list here. Half the money would go to K–12 to lower class sizes, improve before- and after-school programs, beef up Advanced Placement offerings, give teachers the raises they were promised by an initiative passed earlier by voters, and disperse new bonuses to teachers at "high need" schools. Higher-ed institutions, which would receive 40 percent of the I-884 money, would be able to increase financial aid and add 32,000 enrollment slots, including 7,000 in fields deemed "high demand," such as nursing and engineering. The remaining 10 percent of the I-884 money would go to the preschool arena, creating new Head Start–like programs for 10,000 poor kids.

"Sometimes it's easier to sell a big idea than a small one," Mcfarlane says, adding that the initiative had to be big enough "to make a difference."

While that does make the initiative attractive, there are so many things in it that nobody outside of the campaign staff has analyzed them all. For instance, few realize that in the first two years of initiative funding, $100 million per year would go to higher-ed research—just as much as that slated for preschool. After that, research would get a little less than $76 million per year. Sixty percent of that money would go to the University of Washington. The university, though, hasn't informed the public how the money would be distributed. What would be considered "high priority" research, as specified in the initiative? Who would decide?

"There's no plan," the university's associate provost for research, Malcolm Parks, says impatiently. "If this thing passes, then we'll figure out what we're going to do."

When pressed, Parks speculates that the university might use an existing "internal review process," in which a committee of about a dozen administrators sometimes judges grant proposals before sending them out. Researchers aren't crazy about this process, which is considered more political than external reviews by peers at other institutions. Parks also allows that the university is particularly interested in four areas of research: biotechnology, information technology, nanotechnology (involving molecular manipulation), and environmental protection through such fields as "green chemistry."

Any inventions in these hot fields would quite likely lead to private enterprise; the university frequently licenses patents and technology derived on campus to researchers or others who spin off businesses. While the university makes money on the licenses, and the economy might benefit, such subsidies to private business raise questions that aren't being discussed. "That's a lot of money," state Rep. Marilyn Chase, D-Bothell, says of the proposed research money. "Why aren't we talking about it?"

An even bigger question is how that research money, and all the other money in the initiative, would be raised. The state's sales tax would jump from 6.5 percent to 7.5 percent, which, combined with local taxes, would put the overall sales tax in many cities at nearly 10 percent—the highest in the nation. The opposition camp, FreedomWorks, asserts not unreasonably in the Secretary of State's voters guide: "We all know how politicians manipulate us: putting essential services on the ballot while they fund their pet projects with our existing taxes." Initiative proponents counter that they had no choice; the Legislature refused to step up and fully fund education with the General Fund. Its campaign literature speaks of "K-12 funding erosion."

How true is this? Total per-student funding on K-12 operating expenses—including state, federal, and local sources—actually rose by about $1,900 in the past decade, to $7,436 in the 2002–03 school year, according to the state Office of the Superintendent of Public Instruction. That has almost exactly kept up with Seattle-area inflation for that time period. So it's a bit of a misnomer to speak of an erosion. Still, it is true that schools today are being asked to do more. For one thing, the education reform movement has given us high-stakes testing in the form of the Washington Assessment of Student Learning (WASL), and it has become painfully clear that students are ill equipped to pass it. The Legislature promised to back education reform with new money, and it has not, even while other states have been increasing their spending on education. Consequently, Washington's national rank in terms of per student spending on education has dropped, according to the U.S. Census Bureau, from 23rd place 12 years ago (with first place spending the most), to 33rd place two years ago (the most recent ranking).

Perhaps the most persuasive argument for new spending is the staggering racial and economic achievement gap, so evident in WASL scores. That's something to consider when weighing I-884's increasing burden on the poor through a regressive tax. Macfarlane says that the initiative campaign wanted to come up with a fairer revenue source. But in two years of traveling the state, conducting focus groups about possibilities, it concluded that other forms of taxes were not going to fly. "When we realized we were going to end up with a sales tax, we really worked hard to load up the benefits for low-income folks," she says. The initiative would provide extra money for "at risk" students, for example. Hanauer points out that a single mother making $20,000 might pay a little under $100 in extra taxes, according to one estimate, but would receive thousands of dollars in value just through the initiative-funded, all-day preschool.

It's a cost-benefit calculation voters now have to make.

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