Sunday, July 13, 2014

UCLA Collective Bargaining Symposium (1990)

The Rodda Project: Dr. Rodda presents some history

The election in 1983 of Albert Rodda to the Los Rios Community College Board of Trustees gave him an opportunity to continue his public service by sharing his deep knowledge of state law—particularly in terms of the Education Code—and helping people to appreciate the historical record. The Senator gave a presentation in February 1990 at a symposium at the University of California, Los Angeles. Here are his remarks, taken directly from his prepared text. The only change that I made in transferring the original 12-page document to this post was to embed a footnote at the point in the text where it was cited.

Paper Presented at UCLA Symposium
Collective Bargaining

February 23, 1990

Albert S. Rodda, PhD
Member, Los Rios Community College District
Board of Trustees

Collective Bargaining for Educators Under SB 160

The progress which has been achieved in the enhancement of the professional status of teachers since the thirties of this century is remarkable. More progress needs to be made and the current problem is essentially that of delineating the issues which confront public education and developing and implementing the changes appropriate for the enhancement of the status and professionalism of public educators.

When I began teaching in a local high school in 1934, the teachers had no status outside of the classroom as far as the school district was concerned. Teachers were hired by the district superintendent at a salary level determined by the superintendent in an arbitrary manner. There were no fringe benefits and there was no salary schedule and salaries varied among the teachers without regard for any meaningful criteria. There was no tenure and teachers could be terminated at the will of the superintendent and the school board. I taught in the district for four years and took a leave in order to pursue a PhD at Stanford University. Frankly, 1 was annoyed at the low level of the professional status of the faculty.

I remained in teaching, obtained my doctorate, served as a gunnery officer during the Second World War, and in 1946 became an instructor at Sacramento Junior College. My subjects were economics and history. I became active in faculty affairs and affiliated with Local 31 of the AFT and the college Faculty Council. Faculty relations with the administration and school board were not as negative as they had been in the high school district, but faculty involvement in educational matters outside of the classroom was quite insignificant, and decisions affecting educational programs were usually made in an inconsiderate and arbitrary manner.

The City Unified School Board, which governed the college, was almost disdainful of the faculty, especially those of an independent perspective. For example, I was requested by the Superintendent to present several resolutions to the Board which Local 31 of the AFT had adopted. One of the resolutions requested that a faculty member be placed upon the school district's Budget Advisory Committee. When I appeared before the Board, I was “badgered” by several members who ignored the resolution and demanded information about Local 31, its members, its purpose, and a justification for its involvement in district policy matters. After about fifteen minutes of unfriendly questioning, I told the board of my disappointment and displeasure and left the “non-hearing.” No action was taken, of course, on the proposals that I had submitted to the Board.

Several years later I was elected to the State Senate and represented the County of Sacramento. The legislature met every other year during the Spring semester and I was granted a semester leave. A former faculty member, Senator John Swan, served from 1946 to 1950 and the Board refused his request for a leave, which created an almost impossible situation and contributed to his decision not to seek reelection to the Senate.

An interesting court decision rendered in 1950 provides some understanding of the status of teachers at that time. A Sacramento High School teacher, Ed McGrath, refused to attend a football game held on Thanksgiving Day in the Hughes Stadium and discipline the students at the game. He claimed that the assignment was not an appropriate assignment to impose upon a teacher and that it was an infringement upon his rights and his free time. McGrath was disciplined for his refusal to comply with the assignment and he then entered an appeal on his behalf in a Sacramento Superior Court. The case was decided against him and the decision rendered was that the members of the faculty did not have a contract relating to their responsibilities and, therefore, a school board could assign district teachers a non-teaching responsibility as long as the duty was in accord with the law and local ordinances and that such duties could be imposed upon the faculty any time in the day, any day in the week, and any month in the year. The decision was upheld on appeal and became the law of the state.

Obviously, the decision was most disturbing to local teachers. It was further evidence of the lack of professional status on the part of the teaching profession.

Because of a serious funding problem and the demand for new sites for state colleges and university campuses in 1959, a resolution was approved by the Legislature which called for the development of a Master Plan for Higher Education in California. In 1960 the legislature responded with the enactment of SB 33X, Miller-Rodda, in a Special Session of the Legislature. It became the Donahoe Higher Education upon the demise during the session of Assemblywoman Dorothy Donahoe, who had been significantly involved in the development of the legislation. A significant provision was the creation of the California State College system which was placed under the management of a newly created State College Board of Trustees. The state colleges were changed from being primarily teaching colleges to general education institutions and were authorized to grant the Masters Degree and the Doctorate if the doctorate degree was developed as a cooperative program with the University of California or a qualified private institution of higher education.

The junior colleges remained under the direction of the state Superintendent of Education and the Board of Educator.

Being aware of the importance of shared governance as practiced in the University system through the Academic Senate, I expressed an interest in the establishment of an Academic Senate in the State College system. Senator George Miller also supported the idea and he authored a resolution, of which I was the principle co-author, which required the State College system to establish an academic system and to encourage shared governance. The concept of shared governance, however, did not develop to the degree it had in the University system, where years of practice and experience resulted in an Academic Senate system which gave the faculty a great deal of influence in the determination of issues relating to the University's involvement in education and research. It was recognized at the time that the State College system would have a great distance to travel to achieve a comparable program of shared governance, but the creation of the Academic Senate was a significant step in that direction.

In the mid-sixties the Legislature became concerned about the governance of the junior colleges and that concern led, after a number of interim hearings, to the enactment of the Stiern Act in 1967, which created the Board of Governors for the Community Colleges and removed the junior colleges from the jurisdiction of the State Board of Education and the State Department of Education. The new Board of Governors was granted nominal powers. In 1969 legislation was enacted which clarified the role of the Board of Governors and gave it power to coordinate and advise the independent junior college districts and to establish educational standards and to administer certain functions and state programs. The legislation further clarified the role of the district boards and directly gave them the responsibility of administering the junior colleges.

While these changes were being introduced into the state's system of higher education, significant educational reforms were implemented in the schools, K-12. There had developed in the state in the fifties a strong feeling of public dissatisfaction over the impact of what was referred to as “liberal or progressive” education or “learning by doing,” a reflection of the educational philosophy of John Dewey, which was having a strong influence upon the departments of education in the colleges and universities, especially in the West. The result was the authorization of a massive study and review of public education in California which was undertaken in 1957. The recommendations of the study were made available for the Legislature to consider in 1961 and the outcome was the enactment of three basic reforms.

They were: (1) the Fisher Act, which significantly modified the teacher credentialing law, (2) the Casey Act, which changed the curriculum requirements in the schools, K-12, by placing more emphasis upon fundamentals, and by the elimination of “folderol” courses, as one of my Senate colleagues commented, and (3) the Winton Testing Act, which mandated that schools administer a statewide testing program each year.

In the same year, the Winton Collective Bargaining Act was signed into law. It authorized education employees in grades, K-14, to meet and confer with district administrators on educational issues. There was no exclusive negotiation and the scope of negotiations was very broad. The act contained the language which the judiciary had traditionally interpreted to mean the denial of the strike, but the act did not define or provide for the settlement of an impasse situation, nor did it require a written contract. In addition, there was no agency created to interpret and administer the act. The law merely authorized the employees to meet and confer with the representatives of the school district. Because of its lack of clarity and a meaningful definition of scope and its failure to provide for exclusive negotiation and a modus operandi for the settlement of an impasse situation, I voted against the bill when it was presented in the Senate for consideration.

Known as the Winton Act, the law governed faculty and non-certificated employee relations until the enactment of the Russell-Rodda amendments in 1970, as I recall. The Russell Act represented a significant improvement over the original act; however, it failed to provide for a written contract, exclusive negotiations, nor did it adequately define the scope of negotiations. It did provide for mediation and a limited fact-finding procedure and the traditional language with reference to the right to strike. Negotiations were to be engaged in a “conscientious effort to achieve an agreement.” It did not establish an agency to interpret and enforce the act. Despite its improvements over the original legislation, it contained a number of deficiencies which surfaced within a short period of time.

As a consequence of the problems which related to the act and a serious teachers' strike which occurred in the Los Angeles District, as Chairman of the Senate Education Committee, I held a number of interim hearings on the issue of collective bargaining. My staff and I also met with two local school board members and several local, school administrators and evaluated from their perspective the deficiencies in the law and the features needed for the enactment of a more comprehensive act.

Their concerns were several, of which the major ones were the lack of an exclusive bargaining agency, the vagueness of the definition of scope, an inadequate mechanism for the resolution of impasse, the lack of a state administrative agency, and the lack of a written contract requirement.

The local educators submitted a model collective bargaining proposal and my staff rewrote the proposal and submitted it for review to those involved in school district negotiations-administrators, school boards, and employee organizations. The outcome was a proposal which became the model for consideration by the Legislature. It contained the following elements: (1) application to grades, K-14, (2) provision for a more precise definition of the scope of negotiations, (3) language to provide protection of the role of community college Academic Senates, (4) creation of a state agency to administer the act, (5) definition of impasse and provision for meaningful resolution of the differences, (6) elections which would identify the organization authorized to engage in exclusive negotiations, (7) inclusion of the traditional language which had been interpreted by the judiciary to prohibit the right to strike, (8) embodiment of negotiation agreements in the form of a written contract, and (9) inclusion of a responsible statement of management rights.

At the time there was a determination on the part of a number of special interest groups in public education to achieve the enactment of legislation which would constitute a more comprehensive change in the law and one which would include, not only the schools, K-14, but also the two segments of higher education and state government.

It is interesting that the Office of the Legislative Analyst published a document on “Collective Bargaining in California Public Jurisdictions” in February, 1975 in which the recommendation was made that the legislation enacted should be a “single comprehensive law applicable to all state and local public employees with as few exemptions as practicable.” The Office reasoned that such a “comprehensive law would minimize confusion and misunderstanding.” It also suggested the enactment of a law which would be sufficiently “general to enable public employers and employee organizations to develop innovative approaches and solutions keyed to their specific problems and circumstances.”

I rejected the comprehensive approach because I perceived a number of problems which I believed should be addressed on a separate basis in the language of the relevant collective bargaining legislation. My concerns related to two significant issues: one, the different funding concepts which related to the financing of agencies of government on a statewide basis, and on a local or district funding basis, and, two, the need for meaningful language within the legislation to promote the role of the academic senates of the three segments of higher education as a means of encouraging shared governance.

1 was aware of the different procedures involved in funding the state of California, the two segments of higher education, and the schools, K-14, and this knowledge convinced me that a separate approach should be adopted: or one for the state, one for the two segments of higher education, and one for the schools, K-14. Incidentally, during the lengthy negotiations which were involved in the development of a reasonable approach to the collective bargaining issue, I discovered that my colleagues, most of whom had not served on the Senate Finance Committee, were unaware of the procedure involved in determining annually the level of compensation for employees of the state and the two segments of higher education.

For example, the relevant language in AB 1781, Z'Berg, 1975, provided that collective bargaining agreements between state employee negotiating organizations and the Governor which authorized state expenditure increases and, therefore, had to have legislative approval were to be presented to the legislature for its action prior to March. The legislation contained no language which delineated the conditions under which the Legislature would respond, or how any action taken by the Legislature would relate to the state budget, the approval of which was required before July 1 and which was not usually approved until the last week in June.

It was the vagueness in the language of the legislation which concerned me and prompted me to prepare and distribute a paper in which I briefly outlined the steps necessary to act upon expenditure augmentations which traditionally were a part of the annual state budget Incidentally, this problem was addressed specifically in the Dills and Berman bills which became law and applied to state government employees and the employees of the two segments of higher education.

In 1975, after all of the comprehensive collective bargaining bills under consideration by the Legislature were defeated, I took up SB 160, which was in the Senate Finance Committee, and gained its approval of the Senate and the Assembly and also the Governor's signature.

The first version of the K-14 legislation was SB 1857, 1974, and it was defeated in the Assembly as a consequence of the opposition of the CTA, the AFT, and the California Professional Teachers Organization. In 1975 I reintroduced the legislation as SB 160, and it was opposed by the same organizations. It was supported, as was the previous legislation, by the United Teachers of Los Angeles, the Classified School Employees of Los Angeles, the School Administrators Association and the School Boards Association. Both of the Los Angeles employee organizations were determined to modify the Winton-Russell Act because of their disappointment over the negative impact of a strike by school employees in the Los Angeles District in l973 and their hope that a change in the law would improve the situation in the future.

When it was obvious to the AFT and the CTA that SB 160 had excellent prospects for enactment, they requested two amendments and then gave the legislation their support. The amendments added class size to the definition of scope and provided for an agency shop if it were made a part of the contract and approved by a vote of the affected employees.

John Bukey, the Senate Education Committee consultant, was assigned by me, the Committee Chairman, the responsibility of drafting the legislation. He was involved in all of the interim hearings and in the negotiations with the affected organizations, employer and employee. Mr. Bukey focused upon several problems which were regarded as of importance and about which there was some disagreement in the field of education. The following are the issues which were considered in the development of the legislation.

(1) Scope. In developing the language relating to this aspect of collective bargaining care was taken to provide as reasonable assurance as possible that the community college academic senates or faculty councils were protected in so far as their involvement in shared governance was concerned. It was a difficult objective because of the then ambiguous role of the senates within the community college system.

Prior to this effort I had authored SB 1147 in 1969 to achieve that goal. The legislation was vetoed by Governor Reagan. The protective language in SB 160 was Article I, Section 3540, and was very broad and general. It provided much less precise protection than was included in the Higher Education Collective Bargaining Act authored by Assemblyman Berman in 1978. The intent was clear, but because of the lack of preciseness in the language in.the collective bargaining act, the Academic Senates in some of the community colleges are being practically eliminated and the issues normally resolved or addressed through shared governance procedures are being subsumed as part of the collective bargaining negotiations. The development is partly attributable, of course, to the broad interpretation of the provisions of SB 160 by PERB and the judiciary.

That issue might be addressed through an amendment to SB 160, or the enactment of special legislation directly focusing upon the scope definition as it relates to the community colleges. Unless such a course of action is taken there is a real possibility that a further erosion of the role of the Academic Senates will occur, especially in those districts where such a transformation is taking place and has the support of the faculty and the administration. Of course, in those districts where there is a commitment to shared governance, there is no such issue. In those districts progress has been made in the implementation of reasonable programs of shared governance. The Los Rios District is such a district and through the cooperation of the administration and the faculty, a responsible program for involving the Los Rios Academic Senate in decision-making in areas of concern not relating to the collective bargaining is being implemented. It is a program well received within the District.

Another scope issue was that relating to the role of the non-certificated employees in the collective bargaining process. It was clear, as the collective bargaining legislation was being developed, that the definition of scope needed to be more specific as it related to the noncertificated employees. Unfortunately, that segment of the public education, which was represented by 'the California School Employees Organization, rejected the invitation to be meaningfully involved in the development of the collective bargaining legislation. As a consequence, a meaningful definition of scope as it related to the non-certificated was not incorporated into the legislation. In 1980, my last year in the Senate, the classified employees came to me with a request to enact a clarification in the scope definition. I introduced the bill with the understanding that unless a compromise was worked out between the interested parties, I would not further involve myself in the legislation. No agreement was achieved, and so the bill perished, and, as far as I know, the controversy with respect to the scope language remains in the law.

(2) Strike. It was my determination that teachers should not be granted the right to strike. For that reason the language which traditionally had been interpreted by the judiciary to deny the right to strike, was incorporated into the legislation. At that time, it was generally accepted as not authorized and that opinion had been sustained in interpretations of the original Winton Act and the Russell-Winton Act The issue related to Labor Code Section 923 (West, 1971) which had been incorporated in all of the collective bargaining legislation that had been enacted into law as it affected the public schools. At the time, I received a Legislative Counsel's Opinion in which it was stated that even in the absence of language with reference to Section 923 of the Labor Code, strikes would be unlawful and that under specific conditions the termination of employment would be an appropriate penalty to impose upon those involved. [Enclosed is an Addendum in a letter which explains how the strike issue was interpreted at that time.]

(3) Impasse. While the collective bargaining legislation was being developed, my staff was in serious communication with the School Boards Association, the School Administrators Association, and the United Teachers of Los Angeles. All three organizations supported the concepts being embodied in the legislation. The AFT and the CTA, as previously noted were opposed, since they favored a comprehensive approach to the collective bargaining issue and desired that the legislation be silent on the right to strike. All three groups with which we were in serious communication desired a responsible mechanism for the settlement of impasse situations. As a consequence the legislation defined the circumstances which were interpreted as an impasse and provided that two approaches to resolution of the impasse would be available. The first was that of mediation and the second was fact-finding with public notification of the results of fact-finding. At the time, there was pressure upon the Legislature to amend into the Meyers, Milias. Brown Act, which applied to local governments, a provision with respect to safety officers and those involved in fire fighting which would require mandatory arbitration with binding award if an impasse were not resolved. This was an entirely unacceptable option from my perspective and was not included in the legislation as an amendment to the Meyers, Milias, Brown Act, it was defeated in the Senate Industrial Relations Committee. It was hoped that as a consequence of the approach to the settlement of impasse, success would be experienced in bringing disputes to the table for meaningful negotiation and resolution. To a significant degree I believe that has resulted, though there are school situations in which a resolution of differences has not been achieved and resort to the strike has occurred, a consequence it was hoped to minify through the enactment of the legislation.

(4) Administrative Board. It was generally recognized that the success or effectiveness of the legislation would be enhanced through the creation of an independent board which would have the responsibility of advising school districts with respect to the law, negotiating review negotiation procedures, making rulings with respect to the appropriateness of procedures, and ruling on issues when there seemed to be a course of action taken which was contrary to the statute. When the legislation was being enacted and the language which created the Education Employment Review Board was considered, no consideration was given with respect to the qualifications of the members of the Board. The responsibility for the appointment of members was given the Governor with legislative approval in the Senate required. The original legislation would have created a five person Board, but Governor Brown indicated that only a three person Board would be acceptable; so the legislation was amended to comply with the Governor's request.

The Board, now PERB, has performed well over the years, though there is some criticism of its failure to act quickly enough and there has been severe disagreement with respect to some of his decisions, especially those in relation to the strike issue. If a change were made, perhaps, professional experience in the practice of law should be required as a qualification for appointment to the Board.

An issue which developed as a consequence of the authorization of agency shop was the determination of the dollar service fee payment required as condition of continued employment by an employee who refused affiliation with the organization recognized as the exclusive bargaining representative. It has been interpreted by the judiciary and PERB that the service fee may not include payment for activities beyond the organization’s representational obligations, or lobbying and electioneering expenses and costs involved in the recruitment of new members. This interpretation of the act by PERB was upheld by the Supreme Court in 1989 and the decision related specifically to the provision in the act that the service fee that may be imposed upon a non-member of the exclusive bargaining representative must be an amount not to “...exceed the standard initiation fee, period dues, and general assessments of such organization for the duration of the agreement, or a period of three years from the effective date of such agreement, whichever comes first.” The language is in Section 3540.1 (i) (2).

Despite this interpretation of the Educational Employment Reasons Act, which is more restrictive than the language in the State Employer-Employee Relations Act, some districts are experiencing difficulty in precisely determining the amount which may be deducted from a nonmembers salary compensation as a payment for the services provided by the bargaining organization. At the time of the enactment of the legislation, it was not perceived that the language relating to this issue would be subject to such disagreement and controversy.


After the enactment of SB 160, two collective bargaining acts affecting public employees were signed into law. The first was the Dills Act which applied to state employees. The second, the Berman Act, applied only to the two segments of higher education.

SB 1839, the Dills Act, gained legislative approval and was signed by the Governor in 1977. The Dills legislation applied to state government and state employee organizations which qualified for employer-employee negotiations in matters relating to their employment and compensation. The Dills bill was essentially an extension of the Meyers, Milias, Brown Act, which covered local government employees, to state government, excluding the two segments of higher education. The administration and interpretation of the Dills legislation was made the responsibility of EERB, which was renamed the Public Employment Relations Board.

The Dills legislation required that agreements relating to state costs or expenditures which were achieved through the bargaining negotiations were to be presented to the Legislature in the form of a Memorandum of Understanding and that when submitted to the Legislature, authorization for all such expenditure would require approval by the Legislature in the annual State Budget Act, as did changes in any matters within the scope of negotiations which required legislative action. This requirement provided a time schedule and a definitive procedure for the ultimate approval of any agreement that the Governor's Office and the employee bargaining organizations had achieved through the collective bargaining negotiations.

The Dills Act did not authorize a written contract or an agency shop agreement, and the definition of the scope of negotiations was much more limited than that defined in the public school legislation, SB 160. It virtually eliminated the historic role of the State Personnel Board in matters relating to employee compensation. In the event of a failure to achieve an agreement the establishment of an impasse situation was authorized with a requirement that mediation be undertaken. While the negotiations are taking place, a “sunshine clause” provision in the law required that all initial proposals and counter-proposals were to be made public within seven days.

In 1978, the year following the enactment of the Dills Act, legislation authored by Assemblyman Berman, was enacted after considerable deliberation in the Senate before the Education Committee. The deliberation related to the view that the Assembly version failed to protect the role of the Academic Senate and would, as a result, create a situation in which the issues traditionally resolved through the exercise of shared governance would be subsumed under the scope of matters subject to collective bargaining negotiations and would result, as a consequence, in the ultimate demise of a meaningful role for the Academic Senate. After amendments were approved, basically as a condition for approval of the legislation by the Senate Education Committee, the Berman legislation proceeded to the Governor and was signed into law. The University of California was only nominally interested because shared governance had become such a strongly established and entrenched aspect of University affairs that it was not regarded as threatened. The California State College and University, however, was deeply involved and totally opposed to the Berman legislation absent the amendments.

The legislation created the Higher Education Employment Relations Act and withdrew the two segments of higher education from the provisions of the Brown Act. The law prohibited the Academic Senates from performing as exclusive negotiating organizations and provided for a definition of scope of negotiations which was so worded that it was certain that the two systems would reserve certain educational matters for resolution through the shared governance procedure.

The Berman Act had many similarities to the Dills Act, a similarity easy to understand since they both dealt with collective bargaining within state government, though with different segments of government.

There was no written contract mandated and similar use was made of the concept of a Memorandum of Understanding and similar language was utilized to define an impasse condition, though under the Berman Act mediation, followed by fact finding, if necessary, was authorized. Also included was the language with respect to the right to strike which was included in SB 160. Because of the effectiveness of shared governance in the University of California, collective bargaining remains practically non-existent. It was an option largely rejected by University employees when the law became effective. Within the California State College and University system, however, it has become a useful mechanism for resolving employer-employee differences.


In 1976, Attorney Lee T. Patterson, who was involved in collective bargaining issues, commented at a conference held by the Institute of Industrial Reasons, UCLA, on the provisions of SB 160 in a rather positive manner, though he did indicate that despite the enactment of the law, there were still serious problems to be addressed. He concluded his comments with the following observation:

“...the Rodda Act is neither a panacea nor a poison. It is neither a management bill nor a labor bill. It is neither a solution nor a cause. It is neither the beginning of a brave new world nor the end of a glorious era. The Rodda Act is quite simply the opportunity for change and a challenge to employers and to employee organizations.”

His statement was certainly correct; there are issues yet to be resolved and hopefully they will be addressed by the employer and employee groups in a constructive manner.

I must observe that the history of collective bargaining indicates that much progress has been made in bringing about an improvement in the status of teachers in the public system of education. If you reflect upon the conditions that I described as prevailing in the thirties and fifties, you will recognize the positive achievements that have been made. Today, the faculties in the various segments of education are meaningfully involved in making many critical education decisions and their professional status, therefore, has been enhanced. Hopefully, they will recognize this remarkable change and in the future act realistically and constructively in manner in which they perform their enhanced role.

From my perspective, the most serious issue confronting the state and the public schools is the tendency, when the impasse experienced during employer-employee negotiations is not resolved through the utilization of mediation and fact-finding, the employees resort to concerted action, or the strike, and contend that in so doing they are conforming to the provisions of the law and, therefore, are engaging in a legal course of action. Their justification for this contention, of course, is the interpretation of the law as it-relates to the strikes.

I would appreciate it very much if the impasse situation were more effectively resolved, though I would not approve of the resolution of impasse through mandatory arbitration with binding award. Perhaps, the fact-finding phase of impasse negotiations should be abandoned and total reliance placed upon mediation as a means of resolving differences. Significant evidence, 1 am advised, indicates that fact-finding has not proven effective and has weakened, because it is an option, mediation as a means of resolving an impasse situation.

1 am definitely convinced, however, absent a change in the response of PERB and the judiciary to strike action resorted to by the employees, consideration should be given to an amendment to the law - an amendment which would strengthen the non-strike provision, but precisely delineate those conditions under which strike action would be acceptable. I will admit that such action by the legislature will not be easy to achieve.

Interpretations by the judiciary of the meaning of the collective bargaining act for K-14 with respect to the issue of the right to strike have so consistently concluded that the right to strike is not in violation of the collective bargaining act that employees today consistently affirm that there is within this state a right to strike. This is, from my perspective, a clear denial of the original intent of the law and the meaning of the law as enacted.

In 1974, or as I previously commented, when the collective bargaining legislation was under consideration, I received an opinion from the Legislative Counsel's Office to the effect that the language in the bill, SB 157, which precluded the application of Labor Code Section 923 constituted a prohibition of the right to strike and that opinion, which was relevant to SB 160, was very influential in convincing those of us involved in the legislation that it did prohibit the right to strike.

The Opinion contained the following language:

“In the absence of express legislative authorization, or implied authority such as the right to engage in other concerted activities for the purpose of collective bargaining, public employees do not have a right to strike.”

It was also concluded that injunctive action could be applied to those involved in an illegal strike action, though such action was interpreted under California law as not constituting criminal behavior. The willful disobedience of an injunction which restrained unlawful strike activities was regarded as criminal contempt, a misdemeanor, punishable as such by the court which issued the injunction.

As previously stated, despite this-interpretation or understanding of the meaning of the language in the collective bargaining act, the law has been interpreted commonly under given conditions to accept the strike as legal. That being the case, the only realistic option to keep the use of the strike within responsible limits is through the enactment of appropriate legislation.

Perhaps, however, the most constructive approach to the problem is the implementation of more effective procedures for conducting collective bargaining negotiations on the school district level. Such a course of action, accompanied with a determination on the part of school districts to make available objective and accurate fiscal data during the negotiations, would contribute to more amicable resolution of issues. Another option is the implementation of three year contracts and the utilization of what is referred to as the “bucket and trombone” approach. Under this procedure revenues recognized as certain and ongoing are divided according to a percentage distribution formula among the various segments involved—the district, faculty, and non-certificated. In other words, the “bucket” revenues are divided on the basis of an agreed upon formula. With respect to other district revenues, those which are not certain and vary consistently from year to year, the “trombone” concept is applied. In other words, given all circumstances, the uncertain or variable revenues are divided on the basis of agreed upon needs within the district, with those of the greatest need given the highest status or priority.

Hopefully, a responsible implementation of such a course of action would make the negotiations non-adversarial and therefore more constructive. It is an approach utilized in the Los Rios District and it has enhanced the ability of the District to resolve difficult fiscal problems and to address in a constructive manner the fiscal issues confronting the District. It also has the effect, of strengthening the policy that the Los Rio's District is pursuing with respect to the implementation of shared governance.

The action taken to implement a meaningful shared governance program resulted from the collective bargaining negotiations in 1984 and resulted in the creation of a Faculty/Administration Shared Governance Committee. The Committee consists of faculty union representatives, faculty senate representatives and administrators. Closely affiliated with the Shared Governance Committee is a District Goals and Budget Committee and its goal is to provide a broad base for district-wide participation in the process at the district level.

The utilization of the two, constructive and responsible collective bargaining negotiations and shared governance, is contributing to the development of an improvement in the relations between the faculty leaders and the administration. It has enhanced the self-image of the faculty and has been, therefore, a significant step in the growth of the professionalism of their activities outside of the classroom.


August 3, 1989

Peter Schrag, Editor Sacramento Bee

I was distressed over the letter written by Ed Foglia, President of the California Teachers Association, in which he contended that the Rodda Act was purposefully silent on the strike issue as a means of achieving a compromise and with the intent that the judiciary should determine the issue.

That is not an accurate statement. The Rodda Act contained the language with respect to Labor Code Section 923 (West, 1971). Similar language was included in the Winton and Russell-Rodda Acts, which preceded the Rodda Act. It was not silent.

Labor Code Section 923 was enacted in 1937 and legalized the right for employees in the private sector to engage in concerted action and to strike. The exclusion of public employees from the provisions of the act was traditionally interpreted by the judiciary as a purposeful decision by the state to exclude public employees from the strike authorization.

During the lengthy legislative negotiations over collective bargaining. Senator George Moscone authored SB-400, in 1973. It was opposed by the local school boards and school administrators, and also by both systems of higher education, since they were included in the bill. One of the reasons for the opposition was the fact that the legislation was silent on the strike issue. Those who sponsored SB 400, basically the employee organizations, were convinced at the time that the judiciary would resolve the strike issue in favor of the employees if the law were silent. The bill was placed on the desk of Governor Reagan and he vetoed it.

The United Teachers of Los Angeles and the Los Angeles Classified School Employees supported the Rodda legislation, SB 160, despite its rejection of the Labor Code Section which authorized the right to strike for employees in the private sector. Section 3549 of the Rodda Act specifically provided that “...this chapter shall not be construed as making the provisions of Section 923 of the Labor Code applicable to public school employees...”

The legislation was opposed by the CTA and the AFT for a number of reasons, including the strike issue, until it was obvious that SB 160 was the only viable legislation under consideration. At that time, they shifted their position to one of support and the bill was approved by the Legislature and signed into law by Governor Jerry Brown.

Since the enactment of the Rodda Act, the judiciary has interpreted the law to authorize the strike under limited conditions, basically when a school administration has acted contrary to the law in the conduct of collective bargaining negotiations.



Sunday, December 18, 2011

0001: Sen. Rodda in Wikipedia

In 2011 the on-line encyclopedia Wikipedia added a biography of Sen. Rodda to its entries. The original article declared that Rodda was appointed to the Commission on State Finance by Gov. Jerry Brown, but in reality the appointment was at the disposition of State Treasurer's Jesse M. Unruh. The writer also seemed to think that the Los Rios Community College board of trustees named Rodda Hall on the Sacramento City College campus in recognition of his service as a fellow Los Rios trustee; in fact, the naming of Rodda Hall in the Senator's honor preceded his tenure on the Los Rios board. Both of these oversights in the Wikipedia article have been corrected and we can now await further developments as others may contribute to the Senator's biography. A more extensive account of his life is presented here, on this blog.

Friday, August 27, 2010

The Gann Limit & Proposition 13 (1987)

The Rodda Project: Echoes of the tax revolt

In 1987, Albert Rodda was a member of the board of trustees of the Los Rios Community College District. Back in a academic environment that included Sacramento City College, where he had once been a faculty member, Albert became accustomed to people calling him “doctor” more often than “senator.” Nevertheless, it was his political experience even more than his academic background on which he drew in analyzing the affect of the Gann limit on local government agencies. As a system of public education, the Los Rios district was naturally concerned by the likely negative impact of the Jarvis and Gann initiatives on its ability to find the budgetary resources necessary to maintain its growing education program.

The Senator's paper was published in October 1987 as a 23-page booklet for the use of his fellow trustees and other interested parties. The following text comes unmodified from the booklet's pages, except that I converted Rodda's footnotes into endnotes and recreated two one-page graphs that the Senator originally drew by hand.


Gann Limit & Proposition 13:
Negative Effects on Local Government Agencies, Including School & Community College Districts

Albert S. Rodda, Ph.D.
Los Rios Community College District
Board of Trustees
October, 1987

Part I — Gann Limit Deficiency
Part II — Impact of a Prudent Reserve
Part III — Gann Limit and Revenues
Part IV — Gann Signature Petition

You are informed, I know, about the problems relating to the Gann Limit. This paper includes an analysis of problems which relate to Proposition #13. The relation between the two is discussed and might be of interest to you.

Part I — Gann Limit Deficiency

In the Fall of 1978, Paul Gann, who worked with Howard Jarvis to gain voter approval of Proposition #13 in June of 1978, sent out a letter of solicitation for signatures to qualify a second constitutional amendment initiative for the ballot in 1979. The objective of the initiative was to place a constitutional limit on government expenditures, state and local, in California. It qualified and was approved in November 1979 and is identified as Proposition #4.1 In his solicitation, he stated that 1978-79 would be the base year for the limitation and that annual increases in the Appropriation Limit, as it was defined, would be no greater than the "changes in the Consumer Price Index (U.S.) plus population," and this language was interpreted by the voters to be the essential provision of the initiative when they approved it on November 6, 1979. It was expected, therefore, by those who signed the initiative petition that the future per capita government expenditures would be equal in real dollars to the level which was provided in fiscal year 1978-79, since the annual adjustments would reflect the change in the cost-of-living.

Inadequate attention was given to all of the material that Gann circulated, including a draft of the proposed initiative which contained the following language: “... cost-of-living shall be...the Consumer Price Index for the U.S. as reported by the U.S. Department of Labor or successor agency of the U.S. government; provided, however, that for purposes of Section I, the changes in the cost-of-living from the preceding year shall in no event exceed the change in California per capita personal income from the preceding year.”

Since that language was identical to the initiative approved by the voters, the initiative placed a restriction on the annual increase in the Gann Appropriation Limit which has failed to conform to the intent as stated in the "Spirit of 13, Inc." signature solicitation petition. The reason for that deficiency is that for three years, 1980-81, 1981-82, and 1983-84, the increase in per capita Personal Income was lower than the percentage increase in the Consumer Price Index and the annual growth in the Appropriation Limit, therefore, was lower than the increase in the cost-of-living and the increase in population promised in the solicitation.

In 1986-87, six years after the initiative became effective, the Gann Limit factored out at $23.8 billion and reflected a 90% increase over the 1978-79 base year. In the same year, if the formula used to determine annual increases had been, as stated by Gann in his letter of solicitation, the CPI and Population, the Appropriation Limit would have been $25.3 billion or a 102% increase. The net difference between the two amounts to $1.5 billion, which means that had the changes in the CPI been utilized in the calculation the dollar amount of the 1986-87 Gann Appropriation Limit would have been 6% more than the Gann Limit which became effective in that year.

If the Gann formula had been adjusted for changes in Personal Income and population growth alone, the state's Gann Limit would have equalled $28.7 billion for 1986-87, an increase equal to 130% and the net dollar difference would have been $4.9 billion. Such a level, if established for the Gann Limit, would reflect, not only inflation and the population increase, but the 1mprovement 1n the state s economy because of economic growth, since the Index of Personal Income is a measurement of changes in the personal income experienced by the citizens as a consequence of changes in the state's economic productivity.

Another meaningful index is the Implicit Price Deflator for State and Local Government Purchases, which is a measurement of annual changes in the cost of purchases made by the state and local segments of government. If the Gann Limit formula had been adjusted annually to reflect the Implicit Price Deflator (IPD), the limit in 1986-87 would have amounted to $26.1 billion, or 3% greater than the Gann Limit, or a difference in the amount of $800 million.

When calculated on a per capita basis, the Gann Appropriation Limit factored out at $882 in 1986-87 and when calculated on the basis of increases in the CPI and population, it amounted to $937. An even more dramatic difference prevails, however, when a comparison is made between the Gann formula and annual increases based exclusively upon annual percentage changes in Personal Income and the population. On the basis of such a calculation, the per capita Gann Limit would have been to $1,060. If the Implicit Price Deflator were used, the per capita Gann Limit for 1986-87 would have been approximately $974.

It must be recognized that fiscal year, 1986-87, was a critical year, since it was the first year that the state was required to comply with the Gann mandated tax rebate, a rebate in the amount of approximately $1.1 billion. It is interesting, however, that while the state, because of a favorable revenue situation, is spending at the Gann Limit level, many agencies of local government and local school districts, including community college districts, will have to operate under 1987-88 budgets which will be below the appropriations authorized by the Gann Limit. The Los Rios Community College District, for example, is estimating that the district will be compelled to operate under a 1987-88 budget which will authorize expenditures approximately 7.2% less than allowed under the district's Gann Limit. In dollars, the difference amounts to approximately $5.3 millions. This problem, one of a revenue deficiency, is proving quite serious, and I will discuss it in detail in Part III of this paper.

Absent voter approval of a constitutional amendment which changes the Gann formula, this situation with respect to the state and local agencies of government will become even more severe in the future, and it will become even worse if the economy experiences another period of stagflation, which is the term used to describe an economic condition in which there is an economic recession during a period of price inflation. During such difficult economic circumstances the Gann Limit will not increase at a rate equal to the depreciation of the dollar, or inflation as measured by the Consumer Price Index.

In considering a change in the formula, the minimum correction should be one that provides a formula which will, in the language of the Gann solicitation, adjust each year's Appropriation Limit so that it reflects “... changes in the Consumer Price Index (U.S.) plus population.” The enclosed charts reflect the difference between the Gann Limit as calculated on the basis of different measurements of changes in the economy—inflation and economic growth.2

Part II — Impact of a Prudent Reserve

An interesting aspect of the impact of the initiative is that it allows agencies of government to maintain prudent reserves against unforeseen economic circumstances and contingencies but it does not allow the reserves to be maintained outside of or above the Appropriation Limit. The result is, therefore, to accentuate the adverse effect of the Gann Limit upon real dollar state government expenditures. The reason is that when the base year, 1978-79, was determined, the state was involved in the Proposition #13 bailout of local governments and the schools in an amount equal to about $4.4 billion, which provided a partial offset of the $7 billion lost because of the effect of the initiative upon local property tax revenues. The slate did not include a Prudent Reserve in its budget appropriations, and, therefore, the surplus it carried forward into the next year was not a part of the base year Gann Appropriation Limit calculation. The calculations for the base year resulted in a Gann Limit equal to $12.5 billion which was equal to the state's total appropriations for that year. Today, when the state budget includes a surplus or Prudent Reserve, it is considered apart of the state budget and is included in the state appropriations which are subject to the Limit. The result is that the state Prudent Reserve reduces the appropriations which may be authorized to fund government services under the Limit by an amount of dollars equal to the dollars set aside as a reserve.

Because of Governor Deukmejian's experience with the 1982-83 state budget revenue shortfall in his first year as Governor, he has been adamant in his determination to set aside a minimum of approximately $1 billion in the form of a reserve against unanticipated contingencies. Since this $1 billion reserve has been provided in the 1987-88 budget and is calculated under the Gann Limit as a state expenditure, it compounds the problem the state is experiencing in adjusting to an expenditure control which, as I have calculated, is approximately $1.5 billion below what it would be if measured against a Limit which reflected changes in the CPI and population.

When these two negatives are added together, it is clear that the Gann Appropriation Limit is approximately $2.5 billion less than the amount necessary to assure the state that the per capita real expenditure in 1978-79 is maintained in 1987-88, nine years later. It amounts to about a 10% erosion in 1978-79 dollars.

It is only reasonable to argue, therefore, that the Gann Appropriation Limit should be changed in order to permit the maintenance of a responsible Prudent Reserve Against Economic Uncertainties which is outside and not within the Appropriation Limit. In fact, such a change is now being supported by Gann and his associates.

Part III — Gann Limit and Revenues

An interesting aspect of the current fiscal situation is the relation of government revenues to the Gann Limit, one which varies significantly among agencies of local government, cities and counties, and school districts, K-14. Some are close to their limits and others are significantly below their limits.

And while this fiscal confusion prevails at the local level and can be expected to continue into the future, the state, because the elasticity of its revenues3 exceeds the elasticity of the state Gann Limit, can be expected to experience revenue surpluses in the future which may not be utilized to finance state government programs. Many school districts, cities and counties, however, will be mired in an impossible situation—inadequate Gann Appropriation Limits and revenues below those necessary to finance educational and government services authorized by the Gann Limit levels.

The problem confronting local governments, of course, is directly related to the fact that their revenues, especially property tax revenues, are less elastic than their Gann Limits, which despite the acknowledged deficiency in the Gann formula in adjusting for inflation and population changes will increase at a more rapid rate than revenues, unless, of course, some changes are made in the state's fiscal and revenue structure, state and local.

Revenues at the state level are currently exceeding the Gann Appropriation Limit, a change from the pattern which prevailed during the first seven years of the Gann Limit, 1979-80 through 1986-87. In the first year of the implementation of Gann Limit, 1980-81, the state was meeting its budget expenditures through the use of carryover surpluses to supplement tax revenues which were not producing a level of state income equal to the Gann Limit—a condition which continued during the early eighties because of the adverse effect upon tax revenues of the recession experienced by the economy. As late as last year, the state's revenue deficiency was expected to continue through 1986-87 and possibly into 1987-88. To the surprise of the Deukmejian administration experts in state finance, who were making such predictions, the economy improved and generated a substantial increase in state revenues over the amount projected for 1986-87 and 1987-88. Unfortunately, because of the inability of the Legislature and the Governor to agree on the way in which the revenue increase should be utilized in the 1987-88 budget, appropriate legislation was not enacted, and the state, therefore, was confronted with a situation in which revenues in fiscal year 1986-87 exceeded the estimated Gann Appropriation Limit in the amount of approximately $1.1 billion dollars, including a reserve in the amount of $571 million. It is estimated that the state budget for 1987-88 will be within the Gann Limit and will include a Prudent Reserve of about $1.0 billion.

Had a compromise on the issue been achieved, a substantial portion of the state Gann Limit excess could have been allocated to local agencies and local school districts, K-14, in the form of state subventions which would be included in the local and not the state Gann Appropriation Limit.

As a consequence of the partisan political impasse, significant state tax revenues are being returned to the taxpayers, beginning in November of this year, while many agencies of local government and school districts, K-14, will have to cope with serious, if not almost impossible, budgetary problems.4 The history of the current fiscal situation for state and local governments is interesting. Unfortunately, the problem is not only serious, but it is quite complicated, and any substantive reform will prove controversial.

During the seventies a powerful tax revolt movement developed in the state and, as a consequence of the desperate need for the state to respond, the Legislature placed before the voters a property tax relief-reform statute which would have reduced property taxes thirty percent across the board, provided greater relief for senior citizens who were home owners or renters, and required the state to assume the local costs of SSI-SSP, Medi-Cal and AFDC. The proposal was rejected by the voters in favor of Proposition #13, which imposed upon local governments and the schools, K-14, a $7 billion reduction in property tax revenues. Since the result would have been devastating for fiscal year 1978-79, the state committed itself to a one-time bailout of local government and school districts. In the following year, the bailout was made ongoing through the enactment of AB 8, Greene. As apart of that legislation I approximately $800 million in local property tax revenues were shifted from the schools, K-14, to other local agencies of government.

One of the consequences of that action was to make the schools, K-14, more dependent upon the state for funding and to increase local governmental dependence upon the local property tax revenues. In those areas where there has been growth and development the fiscal situation has been favorable to the cities and counties; however, in those areas where there has been an absence of such development, the fiscal consequences of Propositions #13 and AB 8 have been unfavorable and current statistical data indicate that local agencies of government are suffering financially, and many now have annual revenues which are significantly below their Gann Appropriation Limits.

This, of course, is a result of the fact that under Proposition #13 when new construction is taxed, the property is assessed at the current market value, which is true also of property which changes ownership, but all other property is assessed annually to reflect only a 2% increases, the base year being the 1975-76 assessed value. Local revenues, therefore, in slow growth areas are increasing only at a modest rate and one which is not equal to the rate of increase in the Gann Limit.

Absent a determination on the part of the state to recognize this problem, local public services in areas of the state where there is a slow rate of growth will suffer seriously.

Voters may, under the provisions of Proposition #4, increase the local Gann Limit, but a voter approved expenditure limit increase may continue only for four years unless approved a second time by the voters. Any such action taken by the voters, therefore, will amount to a band-aid approach to a serious fiscal issue confronting those segments of government which are not experiencing favorable economic growth.

A change in the Gann Limit formula, though warranted, will not benefit local governments in slow growth areas, since the current problem is not a deficient expenditure authorization. It is a deficient revenue source. Unless the revenue situation improves, a greater annual increase in the Gann Appropriation Limit, resulting from a change in the formula, will merely widen the gap between revenues and the Gann appropriation authorization. Of course, those agencies of government in rapid growth areas will benefit, since they will be able to spend revenues they receive but may not appropriate under the current formula.

The fact of reality is that whereas the state will exceed the Gann Limit this year, 1986-87, and will return $1.1 billion to the taxpayers, most local agencies of government and school districts, K-14, are receiving cumulatively revenues, on the whole, below the Gann Limit. The difference varies, of course. Some counties and cities are spending at a level close to their Gann Limits and suffer primarily from the inadequacy of the Gann Limit formula to reflect adequately changes in the real value of the dollar. They would benefit from a change in the Gann Limit formula which made it reflect more realistically annual changes in inflation.

The state of California is fairly immune from this adverse fiscal circumstance in view of the fact that its revenue situation has not suffered a serious deterioration since 1978, the year Proposition #13 was approved by the voters.

The reason is that the state is not dependent upon the property tax for revenues. One adverse effect of Proposition #13 upon the state, however, was the fiscal burden it had to assume in order to bailout the schools and local agencies of government. Subsequent to Proposition #13, the voters approved two initiatives which virtually repealed the Inheritance and Gift tax and required the full indexation of the Personal Income tax. That action reduced the annual rate of growth of state revenues, but it has not been significantly adverse, at least as of now. State revenues are now less elastic than they were in the seventies but they still exceed an elasticity of unity, or 1.0, when the condition of the economy is favorable. And, of course, because of the reduction in the level of authorized state expenditures resulting from Proposition 114, the Gann Limit, state revenues are adequate to finance the state budget. During a period of economic recession, there is a potential for a revenue deficiency and that aspect of state finance warrants the maintenance of a Prudent Reserve, but the situation is not one which may be referred to as “Gloom and Doom,” as is the case with respect to a number of counties and some school districts.

During the seventies state revenues increased at a rate greater than that of Personal Income and the elasticity was greater than 1.0, sometimes as high as 1.1. Excluding several exceptional years during the seventies, revenue calculations indicate an elasticity in the magnitude of about 1.35. During the early years of the Reagan administration, however, when the national economy was in recession, the elasticity declined to about .7, or became inelastic. Today, because of improved economic conditions, state revenue elasticity is greater than unity, approximately 1.1, and is estimated to remain at that level until the economy experiences a decline with the onset of a recession, at which time it can be expected to decline below unity, possibly, depending upon the severity of the cyclical change in the economy, to a level of .7 or .8.

Different revenue sources have different elasticity. The state personal income tax tends to be more elastic than other state taxes. The corporate income tax tends to be elastic but it is a much smaller revenue source. The general sales tax is elastic during periods of economic growth, but sin taxes, those on alcohol and tobacco products, are inelastic, as is the gasoline tax per gallon. The revenues from these taxes are directly related to the number of units sold and that accounts for the lower elasticity.

Since the personal income tax and the tax on corporate income together constitute a large percentage of the revenues received by the state, state revenues tend to be relatively elastic and to provide a reasonable source of total revenues, especially during a period of economic expansion and inflation.

These conditions do not prevail at the local level of government, especially counties and school districts, where tax revenues are related to the local property tax. Prior to Proposition #13, the local property tax tended to be moderately elastic, but because Proposition #13 limits annual increases to 2% of the value of the property, the base year being 1975-76, property tax revenues have lost considerable elasticity, especially in those areas where there is not a high rate of property transfer and modest real estate development.5 In such areas local governments do not have a tax or revenue base which increases annually at a rate which reflects inflation and normal increases in the cost of providing government services. It is largely because of this condition that cities, counties, and school districts are experiencing difficulties: one, due to the inadequacy in the Gann Appropriation Limit, and, two, due to the failure of property tax revenues to increase at a rate adequate to finance government services. As indicated above, the problem is worse, in fact very serious, in those geographical areas where there is a low rate of economic development, primarily agricultural and timber producing regions. In areas where enrollment declines are experienced by the schools, K-14, the fiscal situation is made even more negative because revenues from the state are based upon average daily attendance, ADA, as is the Gann Appropriation Limit. Thus, when ADA declines, total school revenues will decline or become stable, depending upon the cost-of-living or COLA adjustments provided through the state funding formula. Of course, the situation varies from area to area; nevertheless, the fiscal situation confronting many school districts and non-growth counties is quite critical. Unfortunately, the local agencies of government and the schools have no power to respond to the situation.

For some counties and special districts, the situation is quite negative because the state does not automatically compensate for property tax revenue declines or inadequacy.

Such a condition can compound over time and, as a result, controlled expenditures which are funded significantly from local revenues may increase at a much lower rate than the rate of increase authorized by the local Gann Appropriation Limit. This can account for the development of a sizeable gap between authorized expenditures and the revenues available to finance them, an unfortunate circumstance which a number of counties have experienced.

Statistical data indicate this situation to prevail in some areas of the state. For example:
  • Siskiyou in 1984-85 was funded at 66.5% of its Gann Limit and is estimated in 1986-87 to be at a 61.5% level.
  • Stanislaus in 1984-85 was funded at 63.5% of its Gann Limit and is estimated in 1986-87 to be at a 59.9% level.
  • Yolo in 1984-85 was funded at 59.9% of its Gann Limit and is estimated in 1986-87 to be at a 57.3% level.
  • Lassen in 1984-85 was funded at 63.5% of its Gann Limit and is estimated in 1986-87 to be at a 57.8% level.
Similar data relating to counties located in growth areas indicate expenditures equal to a higher percentage of the Gann Limit.

1984-85   1986-87
San Francisco95.1%86.9%
San Bernardino   87.9%99.5%
San Mateo86.2%92.3%

Shasta County has closed and terminated its countywide library system. The County Supervisors are claiming a $2.6 million shortfall in the county's 1986-87 budget. Butte County is planning to take the same course unless the cities in the county agree to contribute to the support of the library system. Butte County is calculating a revenue shortfall equal to $7.3 million in 1987-88 or 23.6% of its Gann Limit. Tehama is interesting since it has announced that it is bankrupt and that it will be unable to continue providing basic county government services. In 1984-85 the Tehama county limit was $11.7 million and appropriations were $9.6 million, or 82% of the Limit and a shortfall of $2.5 million. In 1985-86 the Tehama County Gann Limit was $12.5 million and appropriations were $10.1 million or 81% of the Limit. The shortfall was $2.37 million. There is no current data available, but it is evident that the fiscal situation is even more negative.

In 1986-87, the aggregate dollar deficiency was serious for those counties which were well below their Limits. The deficiency for El Dorado was $12.6 million and its Limit was $40.1 million; for Siskiyou, it was $2.8 million and its Limit was $14.1 million; for Trinity, it was $3.3 million and its Limit was $7.8 million; for Tuolumne, it was $9.5 million and its Limit was $21.7 million; for Yolo, it was $19.6 million and its Limit was $46.4 million and for Alpine, it was $2.1 million and its Limit was $3.5 million.

Sacramento County had a Limit of $201 million and a revenue deficiency of $31.7 million, or 15.8% below its Limit.

For the year, the total of the fifty-eight county appropriation limits equaled $6.37 billion; total revenues available to finance expenditures, however, equalled $5.59 billion. The revenue shortage for all counties amounted to $783 million, or a deficiency of 12%.

Similar fiscal problems confronted school districts which had revenues less than or below the Gann Limit, including community college districts.6

The percentage of revenues to district Gann Appropriation Limits for 1985-86 for community college districts indicated the following:

North Orange was 58%; Victor Valley was 57.5%; West Kern was 55.1%; Fremont-Newark was 54.7%; Gavalin was 51.8%; Yuba was 50.8%; San Jose was 45.8%; Yuba was 50.8%; Butte was 42.8% and Mt. San Jacinto was 34.1%.

Of course, some districts were experiencing more favorable fiscal situations: Merced was 97.1% of its Limit; Imperial was 95.6%; Palo Verde was 95.5%; Riverside was 92.0%; Allan Hancock was 87.6% and Los Rios was 88.3%.

What these statistics for the community colleges fail to indicate is the disparity that prevailed then and continues to prevail with respect to district revenues per student. For example, the difference, not counting the small districts which have greater expenditures per student, was $870 per student or 35% of the average, which was $2,430 per ADA. West Kern, a wealthy and small district, for example, was spending $6,684 per ADA.

When the entire community college system was taken into consideration the statistical data for 1985-86 indicated that revenues available to all of the 70 districts were equal to approximately 70% of the aggregate Gann Appropriation Limit. The Limit authorized approximately $2.3 billion in expenditures, but the revenues available to the districts equalled approximately $1.6 billion. The shortfall was in the amount of $700 million and it is evident that a similar fiscal situation will confront the community college districts this year, 1987-88, though it will be less serious because of the increase in ADA. The Los Rios shortfall is expected to decline from 12% in 1985-86 to 7.2% in 1987-88, which in dollars amounts to $5.28 million.

The statistical data provide an argument for greater equalization in the financial support provided community college districts, which .1 previously discussed in another paper, but the data also argue strongly for a change in the funding formula—a change which would provide a more adequate revenue base in that it would enable the community college districts to fund educational programs equal or close to their Gann Appropriation Limits. Obviously, the issue is complicated, and the important fact of reality is that the districts not only suffer from the effects of an inadequate formula for determining their annual spending limits but from revenue deficiencies which deny them the ability even to fund at a level authorized by an inadequate expenditure limit.

Cities are not being as adversely affected by of a revenue deficiency as are the counties and community colleges since they have a broader local tax base. Furthermore, judicial interpretations of Proposition #13 have allowed cities to increase local tax revenues. Proposition #13 property tax rates, for example, may be increased if the revenues are to finance retirement benefits contracted prior to voter approval of the Jarvis-Gann Limit. The decision was Carman vs. Alvord. In the San Francisco vs. Farrell Decision it was ruled that the two-thirds vote required by Proposition #13 to increase special taxes did not apply if the tax revenues were to finance general fund expenditures, since such taxes would not be classified as “special taxes” as defined under the initiative. As a consequence of this ruling, a number of cities have been able to raise taxes as a means of generating additional revenues. Fewer counties have taken advantage of this court decision because there are more strict statutory limits upon the taxing power of counties than upon city governments.

An interesting fact of California history is that in the early sixties a Governor's Commission on Metropolitan Urban Affairs produced a study relating to local government structure and organization and concluded that there was a need to reduce the number of city incorporations and the creation of special districts and simultaneously to encourage the creation of regional government units. representing the cities and counties in the area for responsible planning. The object of the Commission's recommendations, of course, was to encourage more meaningful planning and development in such areas as transportation, fire and police protection, land conservation, park and recreation development and public education. One outcome was the creation of Local Agency Formation Commissions and because of that action for many years the state has benefitted from a constructive program to provide reasonable and responsible control over the organization and structure of local governments. The effort, however, has not measured up to the goals and objectives of those who were evolved in implementing the concept as an important approach to the issues of conservation and responsible environmental protection.

Unfortunately, because of the negative impact of Proposition #13 on local government revenues, the fiscal benefit of the general sales tax to California cities, and the Supreme Court decision re increases in special taxes, there is an incentive for local communities to seek city incorporation. In the early sixties, for example, Sacramento County had five incorporated areas—North Sacramento, Isleton, Folsom, Sacramento and Galt. Today, after the annexation of North Sacramento by the City of Sacramento, there are only four, and there is the drive to incorporate Elk Grove, Carmichael and Citrus Heights, and in Yolo County, West Sacramento has incorporated. The contemplated incorporation efforts, if successful, will, it appears, deprive Sacramento County of much needed revenues and result in a duplication of government services.

Sacramento County is already suffering from a revenue shortfall because of Proposition #13 and the unrealistic expenditure limit imposed by Proposition #4. Because of these conditions, one can only conclude that community planning will be more difficult and the provision of county services restricted, though the local communities in which incorporation occurs may experience an enhancement of local government services with a potential for tax increases. The future is uncertain. It is clear, however, that community planning and environmental protection have a lower priority today than they had during the sixties and seventies.

In 1986-87 fifty-five cities were within ten percent of their Gann Limits and eighty-one were within 20%. For counties, the statistics were not so favorable. In 1985-86, of the 58 counties, 19 were within 10% of their Gann Limits and 31 were within 20% of their Gann Limits.7

It seems apparent that there are at least three changes in California's fiscal situation that are warranted. They are as follows: (1) a formula for calculating annual Gann Limits which more meaningfully conforms to the stated purpose of the designers of the initiative, (2) the exclusion from the Gann Appropriation Limit of budget reserves set aside to protect agencies of Government and the schools from the negative impact of a serious decline in revenues, and (3) some adjustment which would enhance revenues received by agencies of government whose revenue base consistently proves inadequate to finance the Gann Appropriation Limit level of services.

Some thought might be given to a program under which state surpluses above a prudent reserve level might be distributed on a formula basis to agencies of local government and school districts suffering from a serious revenue shortfall—revenues less than the appropriation level authorized by the local Gann Limit.

Another concept worthy of consideration is the enhancement in local government revenues. If such a change were to be achieved, of course, a major modification in the Proposition #13 amendment will have to be implemented. It must be recognized, however, that a substantive and realistic change in the basic provisions of Proposition #13 will be unpopular with important elements in the state and that an unrealistic and very idealistic change will result in local revenue losses and, therefore, only compound the negative character of revenue structure upon which local governments are so dependent. Significant and constructive reform will not be easy.

Historically, California has had a fine reputation for the quality of its public services and the character of its infrastructure. The question today, unfortunately, is: Will that tradition be continued? It cannot be preserved under Proposition #13 and #4 as they were approved by the voters.
1 A copy of letter of solicitation is on the last page of this paper.

2The Gann Limit estimates do not conform to those made by the Department of Finance because of the fact that the Department added dollar amounts to its Gann Limit calculations which have been questioned by the Office of Legislative Analyst and which I excluded. Because of the dollar augmentations, the Department of Finance has established state Gann Limits at a higher level. The disagreement over the appropriateness of the dollar augmentation has not been resolved as of yet and may ultimately be decided by the judiciary.

3 Elasticity is the percentage increase in revenues compared to the percentage increase in Personal Income. If the increase is the same, elasticity is unity, or 1. If it is greater by 10%, the elasticity is 1.1; if it is lower by 10%, it is .9, or inelastic.

4 Legislation was enacted during the closing hour of the session which authorized a modest dollar allocation to urban school districts. The school allocation was $86.6 million. Prior to that action, the Governor vetoed a school apportionment bill which would have granted an additional $700 million to public education, K-14.

5 Between 1984-85 and 1985-86 county appropriation limits increased at a more rapid rate than county revenues in twenty counties. The appropriation limit placed a restriction on eleven counties.
6 Sacramento City Unified School District had a 10.1% revenue shortfall; all K-12 districts in the county experienced a 4.6% shortfall and the county office shortfall was 21.9%, or $3 million below the Gann Limit of $15.9 million. ADA declines could be a critical factor with respect to some school districts.

7 Rough calculations indicate that in 1981-82 the City of Los Angeles raised approximately 43% of its local revenues from the sales tax and local taxes; whereas, in 1982-83 the County of San Diego generated only 11% of its local revenues from the sales tax and other local taxes. Fees and miscellaneous sources provided 33% of local revenues for the City of Los Angeles in 1981-82 and fees generated 28% of local revenues for San Diego County in 1982-83.

The statistical data for these calculations were derived from a California Tax Foundation Study entitled, “California Local Government Finance: Issues for the 80's.” Part I Summary, April 1984. Caution should be exercised in using the data since there is a wide diversity among the cities and counties, as well as between counties and cities.

Sunday, August 15, 2010

Benjamin Franklin and 18th Century Economic Thought (1939)

The Rodda Project: An early essay on American economics

The title page of Sen. Rodda's paper on Benjamin Franklin and his views on economics carries an interesting information block:

Winter, 1939
Albert S. Rodda

One assumes, therefore, that Albert wrote this paper back in 1939 in response to an assignment in Professor Barker's winter quarter class on the colonial mind. Was Albert on sabattical from his high school position, taking a seminar at Stanford—or was it elsewhere? He had already earned his bachelor's degree from Stanford in 1933 and would not return for graduate studies until after World War II. This essay, therefore, remains something of a mystery.

However, the Senator was clearly fond enough of the essay to include it in his collection of papers and to make copies of it available. The version I possess was clearly typed professionally by the Senator's office staff rather than by the Senator himself (Albert's own typing is rather distinctive) and my copy is a photocopy of a comb-bound original. Since he often tinkered with and fussed over his papers, it's likely that the following essay is not exactly as it was in 1939. Nevertheless, it gives us a peek at an early stage of the Senator's thoughts on economics and presents his analysis of a Founding Father's perspective on economic theory.

One small technical note: The number 20 occurs twice as a footnote reference, but this is probably a typo. The reference for the first footnote 20 appears to be missing.

Benjamin Franklin in Relation to the Economic Thought of the Eighteenth Century

Albert S. Rodda
Winter, 1939

Europe in the eighteenth century was in a state of intellectual revolt against tradition and authority. Institutions, religion, philosophy, the sciences, morals, all were under the examining eyes of the rationalistic philosophers who were busy tearing down, patching up, and rebuilding European civilization according to an architectural pattern which would harmonize with the discoveries of inductive science and which would conform with the “eternal” laws of the natural order.

Men like Hume, Bayle, Locke, Voltaire, Diderot, Rousseau, scoffing at everything which was upheld by the sanctity of tradition, directed the vanguard of the attack on the ancien regime. With reason their weapon, humanity their cause, they drove relentlessly against every stronghold of old order.

Colonial America, though situated on the periphery of the struggle, was able, nevertheless, to contribute in no small degree to the spread of the principles of enlightenment. European traditionalism had been established only weakly on this side of the Atlantic, and a careless British government had allowed heretical institutions to take shape, with the result that the colonies served, somewhat unconsciously, as an experimental laboratory where the social theories of the intellectual dissenters were put to test.

Prior to 1700 the colonials were carefully nourishing such innovations as religious toleration, local self-government, social equality, constitutional government, and other significant departures from the social experiences of. the past. A few colonial philosophers had risen to leadership—Roger Williams and William Penn, for example— but none had approached the stature of their European contemporaries. Before the turn of the century American participation in the cause of liberty and freedom had been an important one, but it had been clearly more institutional than personal in character.

In the eighteenth century, however, Benjamin Franklin emerged from the American scene to occupy such an important position in the intellectual world as to force even the Europe of Voltaire to acknowledge him. Without a doubt, Franklin was the dominant intellectual light in the colonies and he was their great contribution to the cause of philosophical rationalism. Though less the destructive critic than most of his contemporaries, he was a true representative of that group of learned men. Truth, justice, peace, and order on earth were the goals sought by the apostles of enlightenment, and this was true of none more than it was true of Franklin. The impelling ambition of Franklin's philosophy was the betterment of the spirit of man and of the spirit of the world.

Not a creator of abstruse philosophical systems, Franklin gave the world no treatises on science, no monographs on government, no essays on philosophy and religion. For these things he was not famous. His greatness lay rather in the versatility of his knowledge, in his understanding of men, in the sobriety and depth of his character, in the breadth of his tolerance, and in his vast knowledge of the world and of the people in it. In these things Franklin showed a maturity of wisdom, perhaps, unequalled by anyone in his time.

Notwithstanding the fact that Franklin never wrote a treatise on economic theory, he must be credited with being the first American economist.1. His writings are full of intelligent opinions on the economic problems of his century, such as paper currency, free trade, taxation, population, slavery, interest and capital, labor, and many others. It is impossible, however, to say that he belonged to a particular school of economic thought, though he subscribed to the fundamental tenets of the Physiocrats.

Born in 1706, Franklin grew to manhood at a time when mercantilism, the theory of political economy which flourished in the seventeenth century, was on the defensive. The history of mercantilism had been closely interwoven with the social fabric of the ancien régime, and for this reason it was under suspicion and its doctrines were being rudely examined by the philosophers. Particularly in France, where commerce and industry had long experienced the suffocating restrictions of “Colbertian” mercantilism, was this true. In that country economic theory was being directed into new channels by a group of rationalists—the Physiocrats.

These men were the predecessors of Adam Smith in the attack on mercantilism. Their ideas were antithetical to the mercantile system, which they opposed because it violated the natural order of things,2 and it was from their doctrines that Smith developed the laissez-faire principles, so ably presented in his book The Wealth of Nations, which led to the complete discrediting of mercantilism.3 Between the extreme of laissez-faire and mercantilism must be placed the Physiocrats and Benjamin Franklin; they bridged the gap which separated the two.

Franklin came into first contact with the Physiocratic school of thought during his visit to Paris in 1767. At that time he met and became a personal friend of Quesnay, Mirabeau, Du Pont de Nemours, Turgot, and others.4 The exchange of ideas which took place naturally had a strong influence on Franklin's opinions, and his economic writings after that time reveal his inclination towards the Physiocratic way of thinking. However, it must be admitted that Franklin's own personal ideas and views, which he had developed independently of the Physiocrats, had made him a person who was almost a Physiocrat before he became familiar with their tenets.

Resenting British interference in colonial trade and industry, Franklin had become a believer in free trade as early as 1747.5 The Physiocratic objections to the mercantile restrictions on French commerce and their insistence on world-wide free trade served to convince Franklin of the correctness of his own views and caused him to become more firm in his opposition to British mercantilism.

At the same time, the relatively significant position occupied by agriculture in the colonial economic system had long absorbed Franklin's attention, and had made him a sincere and understanding friend of the farmer. He soon became quite won over to the idea of the Physiocrats that the only creators of real value were the agriculturists and those engaged in the extractive industries.6

He, therefore, subscribed to the theory of the “produit net” and supported the Physiocrats in their demand for the single tax on land, or the “impôt unique.”7 Franklin was considerably more sensible to the limitations of this principle than were the Physiocrats, however, and he suggested that in practice there doubtless would be countries in which the exclusive use of the “impôt unique” as a source of revenue would prove impossible. For this reason, he consented to a restricted use of indirect taxes on trade and industry where conditions adverse to the single tax prevailed. It was on the basis of this opinion that he later considered his conduct in support of a low import duty in Pennsylvania completely in accord with his original views. The American colonies, in his belief, presented an environment unfavorable to a successful application of the single tax principle.8

In respect of the question of value Franklin had again adopted the Physiocratic concept. In his early years he had adhered to the “labor-time” theory of value which he had learned from Sir William Petty, but he soon abandoned it for the value theory as conceived by the Physiocrats.9

He wrote to Lord Kames, in February, 1769:

Food is always necessary to all; and much the greatest part of the labour of mankind is employed in raising provisions for the mouth. Is not this kind of labour, then, the fittest to be the standard by which to measure the values of all other labour, and consequently of all other things whose value. depends on the labour of making or procuring them?10
This definition of value was a correlative to the theory of the “produit net.” For it was by the use of this value concept that the Physiocrats demonstrated the sterility of manufacturing. To labor engaged in manufacturing was attributed, by Physiocratic theory, a wage equivalent to the needs of living at a bare subsistence level. According to this proposition it was clear to the Physiocrats that during the process of manufacture labor would consume the entire reward for its efforts so that its work would not be productive of any addition to the sum total of social wealth. It must not be supposed, however, that either the Physiocrats or Franklin were of the opinion that manufacturing did not serve a social purpose. They merely maintained that manufacture produced no new wealth and that its service to society was in changing wealth to more desirable forms.11

Franklin also agreed with the Physiocrats in their opinion that commerce was merely an exchange of equal values and, therefore, was unproductive and was of benefit to society only insofar as it created place utility. According to this belief the only way a nation could secure wealth by foreign trade was through unfair commerce, or the exchange of commodities for foreign goods of greater intrinsic value—determined, of course, according to the Physiocratic value theory.12

Doubtless, Franklin favored the principles of the Physiocrats because of the emphatic support they gave to the movement for free trade and because of the significance they attributed to agriculture in the economic scheme of things. It is my opinion that the close similarity between the views of Franklin and the Physiocrats can be explained further as a natural outcome of the fact that they experienced the same feeling of humanitarian idealism. The philosophical outlook of the Physiocrats was predicated upon a spirit of altruism and upon an unselfish devotion to the task of improving society. They were seeking to design a social order in harmony with the “natural” scheme of things which they were certain would be more fitting to man's needs. In so doing, they struck a particularly responsive chord in Franklin, for they appealed to his strong sense of justice and to his implicit faith in a divine creator.

In their rebellion against the “positive” order created by the arbitrary enactments of governments, the Physiocrats, as we have observed, carried on their attack by extolling free competition among men and free trade among nations. However, their support of competition and of free trade was a subordinate part of their doctrine. They laid greater stress upon the importance of agriculture and the “produit net” concept, and in so doing they took up a blind trail and marched off into oblivion.

Quite the contrary, Adam Smith gave greater emphasis to the idea of free economic activity and elaborated a theory of political economy which rested upon a more comprehensive concept of the social order than that of the Physiocrats. Accepting the Lockean assumption of the natural order, so important to the Physiocratic analysis, Smith explained an economic system which operated naturally and spontaneously as a result of the competitive action of individuals working for their self-interest within the framework of a system of free economy.13

Predicating his investigations, then, upon the hypothesis that the social order operates according to fundamental natural laws, that free economic competition is necessary if society is to benefit from the spontaneous operation of these laws, and that individuals are governed in their action by the consideration of their own self-interest, Smith brought forth in The Wealth of Nations what he considered to be a detailed analysis of the dynamics of man's economic activities. His conclusions concerning the nature of wages, rent, value, money, taxation, production, distribution and other economic phenomena constitute the world's first scientific treatise on economic history and principles. In so doing, he unconsciously gave direction to the course that economic reasoning was to pursue during the nineteenth century, and although many of his ideas have been proven erroneous and have been abandoned, the essence of modern laissez- faire reasoning has its genesis in Adam Smith's basic assumptions and conclusions.

Concerning Franklin's attitude on the ideas put forth in the Wealth of Nations, we have little positive information. That Franklin knew of Smith's work is certain. In fact, Franklin was personally acquainted with Smith and was in touch with him in London (1773-1775) , while he was finishing his book. A Mrs. Deborah Logan stated in the memoirs which she wrote of her husband's life that Franklin told her husband that Smith had accepted certain suggestions of criticism made by Franklin with respect to particular chapters in the Wealth of Nations.14 It seems, though, that Mrs. Logan's statement exaggerated the influence that Franklin may have exerted on Smith while he was in London.15 Undoubtedly, Smith was familiar with Franklin's writing and thinking concerning certain politico-economic problems which had reference to the colonies, and Lewis Carey in his work entitled Franklin's Economic Views expresses the opinion that Smith embodied in his work some of Franklin's ideas with respect to the effect of abundant land on wages and population in a frontier society, certain population tendencies in the colonies, and the colonial point of view in regard to the British imperial system.16

Whenever Adam Smith's reasoning was in line with that of the Physiocrats, Franklin found it easy to agree with him. For example, in the case of free trade there existed a close similarity between the two men's opinion; although neither of them was in complete accord with the French economists. Both Franklin and Smith agreed that free trade was the most desirable situation with respect to the carrying on of commerce between nations, and yet both admitted that there were occasions when mild revenue tariffs and other restrictions, if not excessive or extreme, were justifiable. The Physiocrats, of course, could not agree with this mild departure from their doctrine.

Franklin would have approved of the implication of the “natural” order in Smith's system. He would also have favored Smith's forceful demonstration of the validity of the doctrine of free competition. The principles of extreme individualism, however, which exerted such a forceful influence on nineteenth century laissez-faire reasoning were not Smith's. Smith was suspicious of the social effects of unrestrained individualism and favored government regulation of the freedom of the individual when the better interests of society could be served by so doing.19 Franklin would have certainly agreed to this. Although a believer in free trade and the principle of “Pas trop gouverner,” he was aware of the weaknesses of human nature and would have questioned the wisdom of granting compete license to the individual. On minor points of doctrine Smith and Franklin found occasion to disagree quite widely. In their conceptions of a theory of value, for example, there was a wide divergence in the thinking of the two. Franklin, as we observed, expressed a belief similar to the Physiocratic idea; this was rejected by Smith, who, though somewhat uncertain about the real nature of value, suggested that it was determined by the amount of labor or of a combination of labor, land and capital which had gone into the productive process.20[?]

Again in the case of money Franklin subscribed to a different principle. Throughout his life he was consistent in supporting inflation in the colonies through the emission of paper currency. Though at all times moderate in his demands, he was, nevertheless, on the opposite of this issue from Adam Smith, who regarded the printing of paper money with a suspicious eye and a procedure to be utilized with discretion.20

Smith refused to accept the Physiocratic principle of the “produit net,” while Franklin gave every indication in his writing to a belief in this concept, and made the mistake, along with the Physiocrats, of exaggerating the importance of agriculture to the economic system. Smith, in fact, was the first important economist to assert that commerce and manufacturing were productive of economic wealth, and to emphasize the importance of the division of labor and the accumulation of capital in effecting increases in social income.21

As a philosopher, Benjamin Franklin belonged to the eighteenth century. He was a rationalist and believed that the human mind could solve most of the problems of living. He was a deist and sympathized with the idea of a “natural” law which governed human society. He was an optimist arid was convinced that society could be bettered. He was an individualist, but advocated some restraint of the individual on behalf of the interests of society. As an economist, he also belonged to the eighteenth century. His reasoning paralleled closely that of the Physiocrats, though he was less dogmatic in insisting on the infallibility of the Physiocratic tenets. And in striving for a solution to a practical economic problem of the day, he was quite willing to use whatever theoretical approach seemed the most reasonable. For this reason he accepted several of Adam Smith's most fundamental arguments. However, he could never have become a whole-hearted believer in the nineteenth century philosophy of laissez-faire. He was too much the sociologist and too little the scientific economist.

1 V.L. Parrington, The Colonial Mind (New York, 1927), p. 170.

2 Lewis J. Carey, Franklin's Economic Views (New York, 1928), p. 140.

3 Ibid., p. 160.

4 Ibid., pp. 137-9, B.A. Wetzel, Benjamin Franklin as an Economist (Baltimore, 1895), p. 31.

5 Carey, op. cit., pp. 134, 161-2; Albert H. Smyth, ed., The Writings of Benjamin Franklin (New York, 1907), II, 313-4, IV, 469.

6 Frank L. Mott and C.E. Jorgenson, eds., Benjamin Franklin (New York, 1936) , 345-7.

7 Carey, op. cit., pp. 154-5.

8 Franklin to Small, September 28, 1787. Smyth, op. cit., IX, 614-5.

9 Carey, op. cit., p. 147; Arthur E. Monroe, ed., Early Economic Thought, Selections from Economic Literature Prior to Adam Smith (Cambridge, 1930), 211-2.

10 Franklin to Kames, February, 1769. Smyth, op. cit., V, 102; Carey, op. cit., pp. 142-3.

11 Franklin to Evans, February 20, 1768. Smyth, op. cit., V, 102: Carey, op. cit., pp. 142-3.

12 Franklin's “Position to the Examined, Concerning National Wealth,” April 4, 1769. Mott, op. cit., pp. 345-7.

13 Encyclopaedia of the Social Sciences, IX, 15; Glen R. Morrow, The Ethical and Economic Thinking of Adam Smith, (New York, 1923), pp. 79-80.

14 Carey, op. cit., pp. 106-7.

15 Ibid., p. 130.

16 Ibid., pp. 124, 131.

17 Franklin to Small, September 28, 1787. Smyth, op. cit., IX, 614-5; Charles Gide and Charles Rist, Histoire des Doctrines Economiques Jusque Nous Jours (Paris, 1909), p. 117.

18 Ibid., p. 110.

19 Wetzel, op. cit., pp. 52-3.

20 Adam Smith, Wealth of Nations (New York, 1937) Edwin Cannan, ed., pp. 47, 48, 51; Gide, op. cit., p. 87.

21 Morrow, op. cit., p. 165.



Franklin, Benjamin. Autobiography. Goodman, Nathan, ed. New York, 1932.

Smyth, A.H., ed. The Writings of Benjamin Franklin, 10 vols. New York, 1907.

Smith, Adam. An Inquiry into the Nature and Cause of the Wealth of Nations. Cannan, Edwin., ed. New York, 1937.


Carey, Lewis J. Franklin's Economic Views. New York, 1928.

Gide, Charles and Rist, Charles. Histoire des Doctrines Economiques Jusque Nous Jours. Paris, 1909.

Morrow, G.R. The Ethical and Economic Thinking of Adam Smith. New York, 1923.

Mott, F.L. and Jorgenson, C.E. Benjamin Franklin. New York, 1936.

Parrington, V.L. The Colonial Mind. New York, 1927.

Wetzel, B.A. Benjamin Franklin as an Economist. Baltimore, 1895.