February 26, 2010

James Illingworth explains how the budget crisis got so bad in California--and describes the development of a movement that is challenging the cuts.

ON MARCH 4, thousands of students, workers, and teachers will take action across California to resist the ongoing attack on public education. The scale of the fightback in education has inevitably focused attention on the cuts in that sector, but the crisis extends into every area of the state government.

How did things get so bad in California?

Budget crises are hitting states across the U.S. According to the Economic Policy Institute, state governments entered the 2010 fiscal year with a collective budget shortfall of $156 billion. This was partially overcome with $68 billion in federal stimulus spending and about $1 billion in rainy day funds. That left $87 billion to be accounted for through spending cuts and tax increases.

The crisis is sharpest in California for several reasons. First, its economy was the most reliant on construction and financial services, two of the sectors hardest hit in this recession. California lost half a million jobs in 2009 alone.

Over 2 million Californians are out of work today, and the unemployment rate stands at more than 12 percent. Statewide, construction, manufacturing and business services have each lost well over 150,000 jobs during the last 18 months. And, of course, tax revenues have slumped as a result of the downturn.

Some 4,000 students, faculty and staff demonstrated on Sproul Plaza at UC Berkeley last September

Second, California's peculiar political character exacerbated the crisis. One key factor is the 1978 Proposition 13 ballot measure, which put a strict limit on property taxes and mandated a two-thirds majority vote of the legislature to raise any state taxes.

For a decade, Republicans in Sacramento refused to raise taxes, forcing the majority Democrats to fund the state government through massive borrowing. This strategy worked fine while the economy kept growing, and cheap credit stayed available. But the financial meltdown of late 2008 caused both a huge drop in state tax revenues and also the drying up of credit.

Now, almost 5 percent of the state budget is dedicated to servicing California's massive debts. That's $4.5 billion this year, and it's projected to rise to more than $9 billion, or 6 percent of the budget, before the end of the 2010s.

From the beginning of the crisis, therefore, the state government consistently sought to make poor and working-class Californians pay the price. Rather than introduce publicly funded jobs programs to replace employment lost in the private sector, the state used the crisis to attack social welfare programs, privatize whole parts of the public sector and attempt to break the back of the teachers' union.

THE SCALE of the attack to come became clear in November 2008, when Gov. Arnold Schwarzenegger responded to the Wall Street meltdown by proposing a furlough program for state workers, elimination of some paid holidays and restrictions on overtime.

By early 2009, Schwarzenegger and California Democrats were proposing to fix the $42 billion budget deficit with ballot measures that would have raised indirect taxation on working people and capped spending on education. Voters went to the polls in May 2009 and overwhelmingly rejected these measures--so Schwarzenegger and the Democrats were forced to take a different tack.

After many delays and much political wrangling, the legislature managed to pass a budget in July 2009 that included $15 billion in cuts--including more than $6.5 billion slashed from K-12 education and community colleges, and $2 billion taken from the California State University (CSU) and University of California (UC) systems.

Democrats in the legislature voted unanimously for the cuts. They were able to secure passage of the budget when state Sen. Abel Maldonado--who has since gotten Schwarzenegger's endorsement to serve as lieutenant governor--defected from the closed ranks on the Republican side, and voted in favor.

At $20 billion, the projected budget deficit for 2010-11 is smaller than last year's. But Schwarzenegger clearly intends to continue his strategy of cuts, privatization and war on the unions.

In January of this year, he announced plans for state workers to take a further 5 percent cut in wages, and to pay 5 percent more into their pensions out of their paychecks. The proposed budget also calls for privatization of those pensions, which would strip many workers of any protection for their retirement benefits.

For good measure, the governor wants to curtail seniority protection for teachers. And he wants to do all of this without sitting at the negotiating table with public sector unions.

If education took the biggest hit last time around, it's now the turn of Health and Human Services, which the governor is targeting for 8 percent cuts, totaling almost $3 billion. Included in this is an attack on In-Home Supportive Services (IHSS), which cares for more than 430,000 of the poorest elderly and disabled Californians.

Despite the fact that a federal judge issued an injunction to stop the state government from implementing similar cuts during the 2009-10 budget year, Schwarzenegger now proposes to eliminate this service entirely for 87 percent of recipients, which could destroy more than 300,000 union jobs.

The governor's latest budget also proposes to end public assistance for legal immigrants, which would save a paltry $300 million, but leave thousands of elderly and disabled people at the mercy of the recession.

If his plan is approved, the CalWORKS welfare program, which provided $723 for a two-parent family of three in January 2009, will now pay out only $585 to the same family. The budget also proposes a $750 million cut to Medi-Cal--California's version of Medicaid--as well as cuts in day care services.

ALTHOUGH EDUCATION will take a smaller hit in the new budget, this sector has become the main symbol of the California budget crisis. It's also the area that most clearly demonstrates the "shock doctrine" approach of the California ruling class in the current crisis--it's become a testing ground for a policy of austerity and privatization.

Schwarzenegger has had a grudge against public education ever since he took office. In 2004, he agreed to a "Higher Education Compact" with the heads of the CSU and UC systems, under which student fees would rise at an average of 10 percent a year.

With so much cheap credit available during the debt bubble of those years, Schwarzenegger and university administrators figured that students and their families could fund the increase in fees through ever-more student loans, based on the equity from rising house prices. The idea that higher education should be a luxury for the wealthiest Californians reached its logical conclusion when the UC Regents raised tuition by 32 percent in November 2009.

At the same time, state authorities have gone on the offensive against public schools in the K-12 system. Schwarzenegger stacked the State Board of Education with advocates of privatization. The result has been a steady push towards charter schools, which often employ non-union teachers and are run by private business interests.

At first, public-sector unions were slow to react to the attack. In early 2009, the California Teachers Association even made the extraordinary decision to back Schwarzenegger's ballot measures, though they were hugely unpopular with California workers and would have led to an increase in regressive taxation.

Soon after, however, the first sparks of a fightback appeared on university campuses.

On September 24, the first day of classes in much of the University of California system, two campus unions--the Union of Professional and Technical Employees (UPTE) and the Coalition of University Employees (CUE)--organized a one-day strike, and found a deep well of support from students and faculty. Professors and lecturers throughout the UC system signed on to an open letter calling for walkouts against the cuts. At UC Berkeley, as many as 5,000 students and workers rallied against the cuts on September 24, and thousands took action elsewhere.

September 24 also saw the beginning of the student occupation movement. At UC Santa Cruz, some two dozen protestors took over the graduate student commons and remained barricaded inside for almost a week. The tactic spread--occupations took place on UC campuses at Davis, Berkeley and Los Angeles, plus San Francisco State and Fresno State, among others.

On October 24, some 800 students, workers and teachers gathered in Berkeley for a conference to coordinate the fight against the cuts, and voted for March 4 to be a day of strikes and actions to defend public education at all levels.

The movement took another big step forward when the UC Regents met in November for their vote to raise tuition by 32 percent. When they were meeting, students and their allies occupied buildings at half a dozen schools across California. Some of the occupations involved hundreds and even thousands of people, and led to confrontations with riot police at UC Berkeley, UCLA and UC Santa Cruz. Authorities only regained control on these campuses after several days of protests.

THE SCALE of the November protests and the inspiration they gave to many rank-and-file workers in the public sector finally forced union leaderships to take the movement seriously.

One by one, during December and January, the teachers' unions endorsed the March 4 actions. Even if their organizing efforts were often top-down or half-hearted, this development demonstrated the depth of anger among union members and showed how a radicalized and mobilized membership could shift the direction of labor officials.

So far, the movement against cuts in education has won mostly symbolic victories. In early January, Schwarzenegger proposed a constitutional amendment to guarantee funding for education and stated that California "can no longer afford to cut higher education." Hours later, the governor's chief of staff called campus protests "the tipping point" in producing this partial reprieve for schools.

In mid-February, a California state legislature committee responded to student and worker anger about UC spending priorities by announcing an audit of the entire system.

But simply demanding more money from Sacramento isn't enough. The movement is also calling for the democratization of education--an end to the system where political appointees and bureaucrats, many with an ideological predisposition to privatization, make decisions that affect millions of students, workers and teachers. We need to stand up against charter schools and all other attempts to introduce market relations into our basic social services.

Meanwhile, activists' demands have gone on to focus on a radical change in the distribution of wealth in California.

Today, working-class Californians pay a higher share of their income in taxes than some of the wealthiest individuals and corporations in the state. Many profitable companies actually pay no state taxes at all--overall, the share of state taxes paid by corporations in California has shrunk to about 7 percent. Many activists are also demanding an end to regressive taxation and the repeal of Proposition 13.

The crisis in California should serve as a warning to workers and students in other states. Because of its unique tax structure and political make-up, California is feeling the effects of the credit crunch first. But almost every state in the country--particularly those where the boom and bust of the housing market hit hardest, like Nevada, Arizona and Florida--face a similar crisis. The Obama administration's decision to call a three-year freeze on non-military spending is a signal of the austerity measures that lie in wait for students and workers everywhere.

No matter how inspiring they are, the March 4 Day of Action won't be enough to stop the cuts by itself. This is a long-term struggle, and the movement needs to prepare for that.

Where the fightback has already begun, activists must strengthen and broaden existing organizations--the networks of rank-and-file teachers, campus unions and student assemblies. These forces should attempt to bring into action still greater numbers of workers and students, while remaining independent of the educational bureaucracy and the Democrats in Sacramento, who have tried to corral the protest at every turn.

At the local and statewide level, we need to strengthen the cooperation and coordination among different sectors of education.

But we also need to broaden the struggle. We need a movement that unites students and teachers with other public sector workers and the poor people who are losing vital services. The activism and protests we've seen so far show the potential to move forward.