California Democrats’ Never-Ending War on the Poor
Steven Greenhut
by

Sacramento

California Democrats frequently bloviate about helping the poor and downtrodden, yet two recent examples — a campaign by the nation’s second-largest public-school district to crush charter alternatives and new state legislation that will boost the cost of housing development — demonstrate how liberal policies can be a direct assault on the financial prospects of the state’s lowest-income residents.

California’s largest school systems are bureaucratic disasters that send the most incompetent teachers to those schools in need of the best teaching help. There’s a reason parents camp out overnight to get their kids accepted into various magnet and charter schools in Los Angeles, Oakland, and elsewhere.

And California has the highest poverty rate in the nation (24 percent), according to a newer Census Bureau standard that accounts for our inordinately high cost of living. If it costs $3,000 a month to rent a tiny apartment, that surely cuts into the cash available for other things.

The most obvious and immediate fix to these problems is to let the private sector do its job. Regarding education, the state is home to a vibrant and growing charter-school movement aimed at serving many of our poorest communities. Charter schools aren’t pure private alternatives given that they use public funds, but they have done yeoman’s work in providing solid alternatives and raising test scores in the toughest neighborhoods — and all for a lower cost.

Unfortunately, the teachers’ unions and school bureaucracies are doing whatever they can to hobble these alternatives. The bloated and ill-performing Los Angeles Unified School District (LAUSD), for instance, is facing a budget deficit of $600 million by 2019 if it doesn’t get its spending in order. An independent review panel from late 2015 noted that enrollments are declining, yet the district’s spending continues as if nothing has changed.

“If the district desires to continue as a growing concern beyond [Fiscal Year] 2019-20, capable of improving the lives of students and their families, then a combination of difficult, substantial and immediate decisions will be required,” according to the report. “Failure to do so could lead to the insolvency of the LAUSD, and the loss of local governance authority that comes from state takeover.”

As LA Weekly reported, the district “educates” 200,000 fewer students than in 2002, with about 100,000 of them high-tailing it to various charter schools. Instead of streamlining its massive bureaucracies, getting its spending in order or — God forbid — improving its educational product, the district is cracking down on the charters that operate under its purview.

The district’s Office of the Inspector General (OIG) has been conducting what some charter advocates refer to as a “witch hunt” against the charter schools, focusing on picayune expenses (e.g., fancy meals as part of the schools’ fund-raising efforts) as a way to drive out charter leadership, impugn the reputation of the schools, and crush the competition.

The OIG expends taxpayer dollars to conduct intrusive investigations and doesn’t typically release the reports — it just leaves a cloud of suspicion over high-performing alternative schools. Because charters use public funds, they need outside oversight. But this current situation is the perfect example of the “foxes guarding the henhouse,” given the district’s antipathy toward these competitors.

Last year, a bill that would simply have put some limitations on the timeframe and scope of such investigations died an expected death in the Capitol. So the nonsense continues. “Over the past year, more and more charters along with their management organizations have been raked over the coals,” explains K.W. Tulloss, a Los Angeles pastor who works with Al Sharpton’s National Action Network. “Is closing a school down too unpopular? Just leak a few bad items to the media.” He points to “a suspiciously timed raid” by federal agencies.

Regarding housing, even a few Bay Area lefties are recognizing that if you make it nearly impossible for developers to add new housing supply to the marketplace, the price of existing housing units will soar throughout the entire housing market. So what’s the Democratic solution? Assembly Bill 199 would expand the use of “prevailing wage” requirements for the construction of new housing.

Currently, such union-wage scales are required when a contractor builds a project that is funded by taxpayers as part of an agreement with a local housing agency or state agency. It’s the way unions get their teeth into public projects, which assures that less is built on the taxpayers’ dime. Personally, I oppose most of these publicly funded development projects, but it’s at least understandable. If you cut a deal with the Devil, you’ve got to play by his rules.

But this expansion of the requirements is, according to the building industry, so murky that it could require the payment of union wages on projects that aren’t really publicly funded. The bill would require prevailing wage payments on projects “that are built pursuant to an agreement with the state or a political subdivision,” according to the bill’s language. Unions insist they are only expanding these hiked-wage provisions to those portions of private residential developments that are publicly funded, such as related infrastructure.

But, as the San Diego Union-Tribune reported recently, “the San Diego Building Industry Association says A.B. 199 is purposely ambiguous and appears to be a play by the unions to extend prevailing wages to all residential development in the state, from a house with two bedrooms to a condo skyscraper.” That would be a shocking power play.

My sources confirm the validity of that concern. For instance, the state already interprets the term public funding in the broadest-possible way (including dollars developers must deposit in a public account to deal with any agency charges). This bill would remove the exemption that applies to private housing. One can imagine how the courts — or the state’s union-friendly Department of Industrial Relations — might interpret the “pursuant to an agreement” clause. Nothing gets built without such agreements.

Why does this matter? A University of California, Berkeley study of past prevailing-wage laws for subsidized-housing came to this obvious conclusion: “Econometric evidence based on micro data covering 205 residential projects subsidized by the California Low Income Housing Tax Credit since 1996 and completed by mid-2002 demonstrates that construction costs increased substantially under prevailing wage requirements. Estimates of additional construction costs in the authors’ most extensive models range from 9 percent to 37 percent.”

Opponents of the bill point to another, more recent analysis predicting a 46-percent increase in residential construction costs. Meanwhile, California’s home ownership rates already are near the bottom nationwide, and our monthly rents are 50 percent higher than in the rest of the country. The state’s median-priced home is around $500,000, and of course prices are far higher than that in major metropolitan areas.

In kowtowing to the state’s union interests, California Democrats are literally destroying the opportunities that lower-income people will have to educate their kids properly and afford a home of their own. These aren’t unintended consequences. They are direct, purposeful policies that put some of the state’s wealthiest interests (union members) above everyone else. Let’s at least dispense with the “helping the poor” nonsense.

Steven Greenhut
Steven Greenhut
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Steven Greenhut is a senior fellow and Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
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