TCS Daily

Silicon Valley: Still Politically Clueless

By James K. Glassman - November 8, 2000 12:00 AM

Move over, Hillary and Rick. The New York Senate campaign, where the two candidates raised a total of nearly $80 million, looks cut-rate compared with the campaigns for two education initiatives in California. Contributions for those two propositions totaled $95 million, making them the most expensive battles on Tuesday.

Proposition 38 would have provided $4,000 a year in state money for each student who wanted to leave a public school for a private one, while Proposition 39 would lower the vote requirement for approving local school bonds to 55% from a two-thirds majority.

Unfortunately for fans of education reform, Proposition 38 lost badly and Proposition 39 apears to have passed. If these results hold up, they can be blamed on the state's high-tech billionaires. Those businessmen mean well, but when it comes to education politics and policy, they're clueless.


Proposition 38 was launched by Tim Draper, a flamboyant venture capitalist who made his fortune from such companies as Hotmail. Mr. Draper put up $23 million of his own money, compared with about $27 million from the California Teachers Association. While Mr. Draper's heart was in the right place, his voucher proposal backfired. It was clearly too radical for the time and place, and its defeat was a blow to more sensible reforms. Even the Catholic Church, which stands to gain tens of thousands of students for parochial schools, didn't endorse the measure.

Mr. Draper might be forgiven for his boyish enthusiasm, but the technologists who backed Proposition 39 have no such excuse. Since the California constitution was ratified 121 years ago, the state has required a two-thirds' vote in a local vote for taxing authority to issue bonds to build or repair schools. In March, an initiative backed by the unions that would reduce the requirement to a simple majority failed in a close vote. Now, just eight months later, the unions successfully convinced voters that a 55% vote would do.

Proposition 39 will make it easier for California's failing education system to grow bigger. Since 1986, bond measures totaling $18 billion have secured votes of two-thirds or more. But more than $13 billion in bonds won votes of more than 55% but less than two-thirds. A burgeoning government-run system, fueled by taxpayers' dollars, is precisely what advocates of competition and choice should have opposed, yet Proposition 39 had support from an impressive roster of billionaires, many of them Republicans.

For example, John Chambers, CEO of Cisco Systems and a contributor to GOP candidates and causes, gave $270,000 to the Proposition 39. Cisco Chairman John Morgridge gave $471,000, while the company itself donated $250,000. Another Republican contributor, Henry Samueli, co-chairman of Broadcom, chipped in $168,000, while billionaire venture capitalist John Doerr and his wife gave $6 million. The sainted Gordon Moore, co-founder of Intel, donated $200,000; Scott McNealy, CEO of Sun Microsystems, a contributor in recent years to seven Republican (and zero Democratic) Senate candidates, has gave $125,000. Other donors included Marimba's Kim Polese, Novell's Eric Schmidt, Thomas Siebel of Siebel Systems, Intuit's Scott Cook and Reed Hastings of In all, the pro-Proposition 39 campaign raised $28 million through Oct. 27, a majority of it coming from rich tech executives and their companies.

TechNet, the organization started in Silicon Valley by tech CEOs to address public policy issues, has made education its top priority. The group earlier directed an admirable effort to expand California's charter schools - which are promised funding help in Proposition 39 but which are trivial in number (there are just 261, compared with 408 in Arizona, a state one-seventh the size). TechNet now wants to get more money to public schools in general.

But money won't cure the system's ills. The irony is that these tech execs don't recognize that what worked for their own companies is precisely what is needed in education.

The way to improve quality and drive down prices is to let parents pick the schools their kids will attend. Forget the intense injustice of billionaires being able to send their kids to good schools while poor Hispanics in East Palo Alto are stuck in pedagogic jail. Consider only efficiency: The main reason we have better computers is that consumers are free to choose among Compaq, Dell, IBM and Apple, and that those companies are forced to innovate to win and keep business. Yet nationwide, writes John D. Merrifield of the University of Texas in the Independent Review, "eighty percent of children in kindergarten through high school (K-12) attend their assigned public school."

While high-tech companies pride themselves on transparency and open architecture, a big reason Proposition 39 apparently won is deceptive advertising. A study by the nonpartisan Public Policy Institute of California found that the majority of voters did not understand that Proposition 39 would make it easier to raise taxes and issue bonds. In fact, many thought it toughened the current law. "These results," concluded the Institute, "reflect the fact that the ballot wording does not state that Proposition 39 would change the current vote threshold." Instead, the ballot simply said that a 55% majority will be needed. Voters can be forgiven their naïve belief that current law requires 50% plus one.

It's particularly galling that Proposition 39 passage means that average homeowners will foot the bill. State law limits increases in property taxes to pay for school bonds to $60 per $100,000 of a home's assessed value, but that still means that, over the life of a 20-year bond, the owner of a $200,000 house would pay an extra $2,400. How fortunate for high-tech billionaires, though, that the tax is based on real-estate values rather than financial holdings. According to Forbes, Mr. Samueli has a net worth of $10 billion, nearly all of it financial. His tax bill, under this more equitable scenario, would be $120 million over 20 years.

No wonder that Mr. Doerr, at a conference in July, urged tech entrepreneurs to lavish their wealth on Proposition 39. "A one-million-dollar investment will yield a billion dollars in support for the schools." In other words, big contributions will pay for ads that will generate votes to force middle-class California homeowners to pay billions in taxes to help shore up a decadent school system. Now, that's leverage.

Referendum Bazaar

Concern for homeowners prompted the only organized opposition to Proposition 39 - from the Howard Jarvis Taxpayers Association, founded by the late advocate of Proposition 13, a 1978 measure that put limits on California taxes and prompted a revolt around the country. But the anti-Proposition 39 group raised only abouyt $4 million, and the pro-Proposition 39 group had not just tech money but also the backing of politicians like current Gov. Gray Davis and former Gov. Pete Wilson (a Republican).

California's referendum bazaar is an absurd way to make policy in a representative democracy. Still, we're stuck with it. One can only hope that, as high-tech executives grow more politically sophisticated, they will devote their money and their time to passing more sensible initiatives such as a voucher system that aids low-income students stuck in the terrible schools which abound today in California, and which will only multiply with Proposition 38`s defeat and the passage of Proposition 39.

A similar column by Mr. Glassman also ran in the November 6, 2000 edition of The Wall Street Journal.

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