What the Measure Would Do

Proposition J would repeal a $320 annual parcel tax approved by the voters in 2018 and replace it with an annual parcel tax of $288 beginning July 1, 2021, and continuing for 17 years. The 2018 measure is being challenged in court over its required voter threshold (see the Backstory section). Prop. J is intended to repeal the 2018 measure and create a new parcel tax revenue stream that is protected from litigation. The revenue would be transferred to the San Francisco Unified School District (SFUSD), which would use the funds to:

• Maintain the salary increases for teachers and paraeducators (aides) negotiated in 2018 and increase the compensation or benefits of other school district employees
• Increase staffing and funding at high-needs schools
• Increase staffing and funding at community schools¹
• Provide additional professional development to teachers and paraeducators
• Invest in technology to support educators, students and families
• Fund public charter schools
• Provide oversight to ensure the proceeds from the tax are spent for only the purposes described above

The measure would exempt the principal residences of individuals who are 65 years of age or older before July 1 of the tax year. The amount of the tax would be adjusted annually for inflation and is estimated to raise $48 million a year. It would expire on June 30, 2038.

Per prior negotiations with the teacher’s union, the funds would be used to pay for 7% salary increases for district teachers and paraeducators (see the Backstory section). However, Prop. J does not specify what percentage of funds will go to each of the other expense categories. The measure would require an independent oversight committee to ensure that the tax revenue is used for the purposes outlined in the measure. In addition, the city controller is required to produce an annual report including the amount of monies collected and spent, the status of any project required or authorized to be funded, and any other information deemed relevant by the controller.  

The Backstory

The San Francisco Unified School District serves nearly 54,000 children annually and employs a staff of over 9,500 educators and administrators.² Teachers have been hard hit by the housing affordability crisis in San Francisco, and the district has struggled to attract and retain educators in recent years.³ Despite the high cost of living in San Francisco the average teacher pay in 2018–19 was $75,872, putting San Francisco at 410 out of 828 California school districts who reported salary data for that year.⁴ In 2018, as part of negotiations with the teachers’ union, SFUSD agreed to support Prop. G, a parcel tax on the ballot to fund a 7% salary increase for teachers and paraeducators.

The previous year, the California Supreme Court ruled that tax measures placed on the ballot by signatures required only a simple majority to pass, instead of the two-thirds majority required for special taxes in California. Prop. G passed with 61% of the vote, but not a two-thirds majority. Prop. G is currently in litigation over the voter threshold used to approve it, and while the city has been collecting the parcel tax, it is unable to spend the funds until the lawsuit is resolved. As a result, SFUSD has used rainy day reserves and funding appropriated from the City and County general fund to pay for the raises for three years; however, these funds will not be available after this year (fiscal year 2020–21).

In September, a California appellate court ruled that citizen-initiated taxes only require a simple majority to pass. While the decision represents a major step toward affirming the legality of prior ballot measures, including Prop. G, it may be further appealed. Prop J is intended to avoid any further legal uncertainty by repealing Prop G and replacing it with a tax requiring a two-thirds majority.

Prop. J is identical to 2018 Prop G, with two exceptions: 1. The measure is a lower tax ($288 versus $320) because polling indicated that voters would be more supportive of a lower amount; and 2. The measure removed an exemption for parcels classified as parking spaces that are contiguous with exempted residential parcels because the designation is uncommon.  

Teacher salaries are one of a number of serious financial challenges the district faces. SFUSD expects an $82 million budget deficit for the 2020–21 school year, which is estimated to grow to $107 million the following year. The district also has a high unfunded liability for other post-employment benefits (not including pensions) such as health care benefits and life insurance: It’s the second highest of any California school district in total and the eighth highest on a per-pupil basis. Similarly, between 2012 and 2017, teacher salaries at SFUSD increased approximately 25% while the cost of providing pensions and other retirement costs skyrocketed by over 100%.⁵ 

These financial conditions are only exacerbated by the COVID-19 pandemic and the resulting loss or deferment of state funding. At the same time, the district now needs resources to improve distance learning and acquire masks and other supplies to bring students and educators safely back to school. In late July, Mayor London Breed announced an additional $15 million in General Fund support to help fill in the current gaps.⁶ Despite this, SFUSD faces cuts to curriculum development, layoffs and deferred hiring over the next several years.  

Prop. J was placed directly on the ballot by Mayor London Breed. As a special tax, it requires a two-thirds majority to pass.

Equity Impacts

SFUSD serves a racially diverse student body, but the majority of students are from socioeconomically disadvantaged backgrounds.⁷ In addition, disparate outcomes for students of color have been a continued challenge. For example, the percentage of students considered proficient in mathematics is far lower for African American (12%), Filipino (42%), Latino (21%) and Pacific Islander (23%) students in comparison to white (70%) and Asian (72%) students.⁸ Research shows that investing in teachers and reducing turnover can improve student outcomes, particularly for students of color. Investments in SFUSD educators, like those funded by this tax, could benefit the city’s public school students, who are disproportionately low-income and children of color.⁹ However, teacher pay increases alone would not be enough to close the district’s significant disparity gaps.

The measure addresses socioeconomic equity by specifying increased funding for both high-needs and community schools, however it does not put a process in place to direct funds specifically toward teachers of color or teachers who serve primarily students of color — who would particularly benefit from the additional resources. New York City, for example, operates programs to recruit educators of color and incentivizes teaching in high-needs schools with pay increases.¹⁰ 

Another consideration is the means of revenue generation. Parcel taxes are criticized for their regressive impacts, because the tax is levied as a flat amount regardless of property size or value. This measure would tax a commercial landlord the same amount it does a middle-income homeowner.

Pros

• Prop. J allows SFUSD to continue providing agreed upon pay increases to teachers and paraeducators while the city is in litigation over Prop. G.  
• Paying educators more can reduce turnover, increase workplace satisfaction and improve student success.
• The measure includes funding for high-needs and community schools, which are historically and currently underserved.
• This replacement tax is smaller than the original proposal, giving taxpayers modest relief during an economic recession.

Cons

• Absent other significant investment, this measure will expire in 17 years and is not a permanent fix.
• While Prop. J would provide needed pay increases, it does not address the other significant structural issues that SFUSD faces, including multi-year budget deficits and growth in pension and healthcare liabilities. Nor does it directly address the racial disparity in student achievement.
• In light of COVID-19 and the additional resources needed to provide distance learning, acquire masks, reduce classroom sizes and make other necessary changes to the educational environment, the proposed uses of these additional funds may not be the most urgent or highest priority.