The $1.84 Billion Deal

The 1.84 Billion Deal

In 2001 the state of California had a budget surplus of $34 billion. California had the fifth largest economy in the world, ranking ahead of France and behind England. California public schools did not reflect this wealth. California had nearly six million K-12 students, nearly 40% lived below the poverty line and 20% were not proficient in English. The state despite its wealth ranked 37th in class size and 40th in per pupil funding. The quality of California public schools had declined markedly from the 1960’s when they were considered among the best in the nation. The decline had begun with the governorship of Ronald Reagan. Reagan was an advocate of Milton Friedman’s neoliberal theory of economics. He began a program of cutting taxes and cutting every public service program he could find. Schools had been one of the Reagan’s main targets and he did a great job. By 2000 our schools were in bad shape.
With the $34 billion surplus the California Teachers Association and our 330,000 members felt it was time for the state to give our schools a funding increase.

In October of 2000, as President of the California Teachers Association, I proposed a two billion dollar addition to the state education budget. The media picked up the story and it was reported in the LA Times, SF Chronicle, and just about every radio and TV station in California. I did many interviews on the subject from San Diego to Redding. Many of the interviewers were hostile but this only fired the debate. I spoke of our proposal at several speaking engagements and our teacher leaders around the state were advocating it to their teachers and local media. California Governor Gray Davis had proposed a 500 million dollar increase in funding in his budget proposal. CTA’s counter proposal of $2 Billion set off a prolonged public debate. Negotiations between CTA, the legislature, and the governor began almost immediately. Most of the negotiations took place in the media. CTA’s governmental relations staff in Sacramento negotiated with the legislators for support of the two billion dollar proposal. The governor began to understand that the public understood that the schools were under funded and most agreed with the proposal to give extra money to the schools.

Mr. Davis was an interesting man (when it came to raising money)…. He appeared to enjoy squeezing his friends and supporters and give them as little as he could and still retain their support. I’m sure he thought that two billion dollars was an outrageous figure. He kept raising his offer through the fall and spring from 500 million up to about 700 million. Preliminary numbers showed that California tax revenues were going to be substantial. That good news in January of 2001 made us realize that a large addition for education was possible. Carolyn Doggett, CTA’s Executive Director, and a strong and talented CTA staff began to organize a rally at the state capitol in May of 2001. We did not fully realize that the idea of a large addition to the state education budget had really struck a cord with our members. The CTA staff began organizing a rally that would bring thousands of teachers to Sacramento to attend the rally. Teachers rode in busses, caravans, trains and planes to the Capitol. John Hein, the CTA director of Governmental Relations, directed the lobbying of the legislature. Hein is one of the best political minds in California and he did an incredible job. Two people that were vital to our effort were Bob Hertzberg, the Speaker of the California State Assembly and John Burton, President Pro Tem of the California State Senate. Hertzberg, a Democrat, is conservative, but a nice guy with a social conscience and we were confidant he would deliver the votes in the Assembly. We were patricianly right in our assessment and in January Hertzberg announced that he favored adding a billion dollars to the guaranteed funding for education. John Burton leader of the Senate was very supportive. John has a concern for his fellow human beings that is unmatched by any politician I have ever known. He was very liberal and profane in a funny way. I had great admiration for him then and have more for him today. Burton and Hein did the majority of the Sacramento negotiations. I did the public negotiations with the governor in my speeches and interviews with the media.

As spring progressed, the public negotiations continued. CTA maintained our two billion dollar demand and the governor kept raising his offer. I am sure he was reading the polls and hating every increase he felt he had to make. Davis did not like holding a losing hand, but he was not about to make a political blunder. In late spring his offer reached one billion dollars, but I kept saying no. A lot of people in CTA thought I was crazy for turning down so much money. I wanted that two billion dollars for public schools. The state had been short changing kids and teachers for years and now was the time to do something positive for public education.

Few of us realized it at the time but a perfect storm was forming for our battle to increase school funding. The money was there and everyone knew the schools needed it. The teachers realized this was not just a CTA propaganda campaign but was attainable. The CTA staff was doing an amazing job of organizing thousands of very supportive teachers to go to Sacramento and fight for increased school funding.
Once the May 8th rally was announced the negotiations really heated up. The negotiations were going on behind closed doors in Sacramento with the legislature while the governor and I negotiated in the media. This debate was great material for the editorial writers for California’s news papers. Most of the papers came out against CTA’s quote “money grab”. CTA had started a petition drive to qualify an initiative that would require California to fund its public schools at the national average. At that time California ranked 40th out of the 50 states in per pupil funding. CTA would secure enough signatures to qualify the initiative for the California ballot. That proposed initiative was so unpopular with Democratic legislators that they would rather give schools a large funding increase than have it on the ballot.
Through February and March, we continued to negotiate with the governor. Our position was always the same more money and the funding must be on going with no restrictions on spending. No restrictions meant the state or local districts could not designate the money for programs only and not teacher salaries.
The May 8th rally was going to be a major show of strength. May was the month that the state budget was revised and most budget items are finalized. On May the 7th as my wife and I drove to Sacramento from Los Angeles, the governor and I talked on the phone three times. The first call was general conservation. The second call, he offered 1.2 billion dollars above the 40% of the state budget guaranteed to education. He demanded that we not submit our initiative and to call off the rally. I told him that we could not do that. On the third call, he increased his offer to $1.5 billion if we would rethink the initiative and turn the rally into an anti voucher event. Again I told him that we could not do that.

The May 8th rally was a huge success. It was an incredible experience where 10,000 teachers and students showed up on the west lawn of the capitol. It was the largest rally in Sacramento since the Vietnam War and it sent shock waves through the Capitol.
At the rally, Speaker Hertzberg sent me a note asking if I would meet with him and the Governor that evening. At 7 PM, John Hein and I met with Governor Davis, Sue Burr (the Governor’s education advisor), Lynn Schenk (the governor’s Chief of Staff), Rick Simpson (Hertzberg’s policy director) and Tim Gage from the department of Finance in the governor’s office. The governor offered $1.7 billion and again asked that we withdraw our initiative proposal. We asked what guarantees would we have on his proposal and he said, “Their word.” I did not take anyone’s word. I had negotiated for six years with the Los Angeles USD and if it was not in writing it was not a deal!
The CTA Board of directors met that night we only had one more day before the deadline to submit the signatures for the initiative. The officers and board agreed we had to have a guarantee in writing or the next day we were going to submit the initiative qualifying signatures. Lynn Schenk, the governor’s chief of staff, called me that evening and asked us to delay submission for 24 hours, and then she asked, “What do you want?” At that point I knew that we were close to the $2 billion deal that we had been fighting for. We told her we would hold the initiative signatures until the next afternoon but we wanted a written guarantee, not a verbal promise. Later that evening, Senator Burton called and asked if he could meet with me and Hertzberg the next morning. At that meeting, Hertzberg and Burton offered $1.84 billion and made it clear that was as high as they would go. If I agreed the Department of Finance would write a letter that guaranteed the money would be added to the budget, I agreed. That afternoon, Davis, Burton, and Hertzberg held a press conference to announce the deal. I was not invited to participate in the announcement of the deal.

The $1.84 billion was the largest increase in school funding in California history, a deal that gave schools 18 times more money for the 2000-01 than we had received in 1999-2000 school year. The money was ongoing and unrestricted which means extra money for schools in the years to come. That afternoon we pulled our initiative and Davis and the Democrats were very relieved. In my opinion, this was the first time in my memory that California public schools had received funding that was any where near adequate to meet the needs of its millions of students. The next year many teachers reported to me that they had received a 10% pay raise for the first time in their careers.

Wayne Johnson
President of the California Teacher’s Association
1999-2003