Willie Sutton, Milton Friedman and CA’s Budget

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Here’s one way we look at General Fund spending in the context of what the legislature can and cannot do:

You’ll notice K-14 education and General Obligation Bond debt service are absent from that chart. That’s because those two items are constitutionally protected. K-14 is entitled to 40 percent and debt service this year will consume 3.1 percent of the General Fund. Battles in the legislature are largely over the remaining 57 percent, which is what’s represented above. Here’s more detail of that $88 billion of spending this year:

Willie Sutton provides one reason we devote so much attention to Medi-Cal, Retirement and CDCR (Corrections): That’s where the money is. Together those three categories consume more than half of the pool. Milton Friedman provides another reason: there’s no free lunch. Every dollar needlessly subsidizing health insurance for retired employees already covered by Medicare is a dollar that could’ve gone to Social Services. Every ineffective dollar spent on a Medi-Cal provider that doesn’t improve health is a dollar that could’ve improved the Judicial Branch. Every dollar of salary increase for prison guards is a dollar that could’ve benefited CSU students.

Of course, we also care about K-14. As layoffs of teachers in Sacramento’s school district (SacCity) are illustrating right now, every dollar spent on retirement costs is a dollar taken from teacher staffing or salaries. SacCity will devote nearly 15 percent of its revenues to retirement costs this year, up 50 percent in five years. That’s why we keep encouraging the legislature to liberate and encourage school districts to reform retirement spending. And likewise we care whenever the legislature proposes a new General Obligation Bond, but voters do get a say in those decisions.

As the presidential election gets underway we hope you will keep some focus on California. States provide ~90 percent of domestic services. No matter who is president, Californians need an effective state government.

 

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