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Taxing and tactics should be questioned in California universal preschool debate
By Shikha Dalmia and Lisa Snell
Hollywood film director turned political activist Rob Reiner believes that he ought to be exempt from accountability because of his good intentions. That was the clear message from his press conference on Tuesday, called to address accusations that he violated a state ban when he diverted taxpayer dollars from First 5 -- an unelected commission to promote children's health that he's headed for six years -- to run an ad campaign promoting his latest ballot initiative called Preschool for All. A bipartisan group of senators has ordered an audit of the commission's funds. Mr. Reiner, who first rose to fame when he played Meathead, Archie Bunker's liberal son-in-law on "All in the Family," vowed not to resign, because he wants to do "right by the four-year-olds."
This is not the commission's only questionable contract. First 5 has received to date $800 million -- about 20% -- of the tobacco proceeds that Mr. Reiner convinced California voters to impose on themselves in a 1998 referendum. Of this, the commission has awarded contracts totaling about $230 million to firms or individuals known to Mr. Reiner -- some of them without competitive bidding. Meanwhile, the Sacramento County District Attorney's Office is mulling whether to launch its own investigation to determine if there was any cronyism involved in awarding the ad campaign contract to a firm with long-standing ties to Mr. Reiner.
Mr. Reiner is unfazed by all of this. The commission's ad campaign, he says, was perfectly legitimate because it was merely informing parents of the benefits of preschool -- not telling them how to vote on his new initiative. No doubt this is the kind of creative thinking that has made him such a successful Hollywood director. If state authorities buy this logic, however, they will effectively legitimize a scheme to leverage the tax proceeds from one referendum to support another involving still more taxes.
But now that Mr. Reiner has succeeded in putting his Preschool for All initiative on the ballot, the most immediate issue for voters is not how he financed it, but what he is selling them. The initiative sounds like a great bargain: By imposing a 1.7% tax on couples making over $800,000 ($400,000 for individuals), it seeks to generate $2.4 billion to fund three hours of free preschool every day for California's four-year-olds.
Yet even the Reiner folks don't expect to enroll all four-year-olds in the program -- just 70% of them. However, 66% of California's four-year-olds already attend some form of preschool. This means that $2.4 billion will fund 22,000 new kids -- about $109,000 per new preschooler, according to a recent analysis by the Reason Foundation. For this kind of money, a lot of poor parents could put their kids through a good state college and graduate school and still have some change left for a family field trip to the Galapagos.
Mr. Reiner's spokesman Nathan James disputes Reason's cost estimate on grounds that although 66% of four-year-olds currently get preschool, only about 25% get "quality" preschool. "It could be baby-sitting or throwing a kid in front of a TV set," he told the New York Sun. The proof of the pudding, however, is in the eating -- and what's coming out of Oklahoma and Georgia, two states that implemented universal preschool over a decade ago -- is not particularly appetizing. Last year, the gains in reading scores of fourth graders in both states ranked among the bottom 10 on the National Assessment of Education Progress tests -- the premier benchmark for comparing student performance across states. Even more stunning, not one of the 10 best performing states had universal preschool programs.
Even before Mr. Reiner went on the offensive this Tuesday, some California Democrats were beginning to wonder about the wisdom of his scheme. Two of them, Tom Torlakson of Antioch and Don Perata of Oakland, have publicly withdrawn support from his initiative, citing concerns that it would only subsidize kids who already have preschool, not those who most need it. Indeed, because universal preschool programs are by definition not means-tested, they help not the poor so much as middle-income or wealthy families who are better at negotiating the system. In Quebec, for instance, which implemented the most ambitious universal preschool program eight years ago, about half of the government-funded day care spots are taken up by families in the top 30% income bracket who can well afford to pay out-of-pocket.
But this is not the only way that Mr. Reiner's attempt to play Robin Hood would end up back-firing on the poor. An analysis by LECG, an economic consulting firm in California, has found that the Reiner tax-hike would actually result in more than $4 billion in general fund losses over the first five years as rich taxpayers either flee the state or report less taxable income. This would either mean cuts in health, welfare and other programs for the poor -- or an even bigger fiscal deficit. There is a better way to help poor parents without soaking taxpayers or jinxing the budget. California already spends $3 billion on preschool. It would make far more sense to hand this money to lower- and middle-income families in the form of targeted preschool tax credits.
Mr. Reiner's ad campaign mentions neither the indifferent results of universal preschool nor its budgetary consequences. This, in itself, would not be a problem, because a democracy counts not on any one person's script, but many partial ones from numerous interested parties, to get the full story across to voters. But there is a problem when someone has unfair access to taxpayer dollars to bankroll his script over others. This is why California authorities need to give close scrutiny to Mr. Reiner's tactics -- and California voters to his grand taxing plans. As Archie Bunker would say: Hands off my fridge, Meathead.
Ms. Dalmia is a senior analyst and Ms. Snell the director of education policy at the Reason Foundation.
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