Copyright© 2005 by School Services of California, Inc.

                                      Volume 18                   For Publication Date: December 2, 2005             No. 24

Study Predicts Declining Incomes for State Residents

In contrast to standard economic models, which generally predict rising personal income as a result of productivity gains, a study released by the National Center for Public Policy and Higher Education predicts that per capita personal income in the state will fall from $22,728 in 2000 to $20,252 (adjusted for inflation) in 2020. This 11% decline stands in contrast to a 30% increase between 1980 and 2000. The report points to the low levels of educational attainment among Latinos, the state’s largest and fastest growing ethnic group, as a primary cause for this decline.  

The report cites U.S. Census figures that show 52% of Latinos aged 25 to 64 do not hold a high school diploma. This compares to 8% for non-Latino whites. Similarly, only 12% of Latinos have college degrees in contrast to 46% for whites.  

The implications of this educational disparity are particularly troubling, not only for Latinos, but also for the state as a whole. The report indicates that the non-Latino white population will continue to shrink as a share of the overall state population, dropping from 71% in 1980 to 39% by 2020. The Latino population, in turn, will constitute a growing majority of the state population. The overall level of educational attainment of state residents will therefore drop according to this scenario.

Implications for Proposition 98  

If per capita personal income, after adjusting for inflation, were to fall over the next 15 years, as predicted, school funding under Proposition 98 would lose ground. This is because funding under Test 2—the long-term growth target—is based on this measure of economic growth. Such an outcome would be devastating for public education. We hope that state policymakers heed this warning, increase resources and access to the state’s K-12 schools, colleges, and universities, and pay special attention to the needs of Latinos and others whose educational attainment is lagging.

—Robert Miyashiro