California’s Racial Inequality: What Can The State Do With $31 Billion?

California is a state of contrasts. On the one hand, it is flush with a $31 billion budget surplus from the gains of the rich, enabling the state to spend record amounts on schools and health care. On the other hand, a new study reveals that despite a progressive tax system, severe racial inequalities remain.

The study, Portrait of California by Measure of America, found that Native Americans’ average lifespan is 67 years, a decrease of more than seven years since 2012. Black youths are more than twice as likely than their white counterparts to be out of both school and work in the years following high school. And, in the city of San Jose, Latinos earn $0.46 for every dollar white workers earn.

“These inequities didn’t come out of nowhere, they are the result of policy choices,” said Laura Laderman, chief statistician at Measure of America, a project of the Social Science Research Council.

She referred, in part, to segregation and redlining that kept minority communities from taking out bank loans and accessing quality education. “That means that we can make different policy choices that lead to different outcomes.”

Democrats’ budget visions in California call for greater spending on social programs, education and healthcare, but advocates say that, based on the study’s findings, the state should specifically target marginalized populations.

Policy experts are hopeful about Gov. Gavin Newsom’s commitment to adding $300 million for public health in the budget he will propose to the Legislature in early January. That funding will allow counties to identify and address specific racial inequities in their regions and potentially create an Office of Health Equity to offer further funding through state grants. Some counties, including Orange and Alameda, already have health equity programs targeting racial inequities.

The study’s authors broke from standard measures of economic success such as gross domestic product or the unemployment rate. Instead, they used the American Human Development Index, which assesses the level of education, life expectancy and income of different populations, and assigns a score from one to 10 that signifies a group’s access to a “freely chosen life of value.”

While the typical Californian ranks higher than the average American on the index, the disparities within the state are wide. The top 1% of Californians score a nine or higher, while more than 30% of the population scores below five — lower than the average American.

Researchers further broke down life expectancy, education and income by race. White and Asian Californians can expect to live to 78 years old, while Latino and Native American life expectancies lag at least three years behind. Both Native American and Black life expectancy have decreased since 2012, with the latter dropping by 1.5 years to 74 years.

Democrats in the state Senate and Assembly are proposing to strengthen existing safety net programs that indirectly target inequality, such as CalWORKs, the state’s welfare-to-work program, and Medi-Cal, the state’s Medicaid program for the poor.

Democrats aim to increase spending on universities and community colleges, with the chairperson of the Assembly Budget Committee proposing $10 billion for improving school facilities. Senate leaders want to close academic learning gaps in schools through more education spending.

“California is in good fiscal health,” Senate President Pro Tem Toni Atkins of San Diego said in a statement. “It’s time to build on the progress we’ve made: more access to education and health care.”

Next step: Targeted spending?

But progressive policy experts want to go one step further. They want targeted spending for specific groups, because as Measure of America points out, support isn’t getting where it needs to go. Whites and Asians, for example, were three times more likely to have a bachelor’s degree as Latinos, the index noted. Similarly, Black women’s college enrollment rate is almost 4% points lower than that for white women.

Progress has already been made, the report points out, with public schools in disadvantaged communities receiving more state and federal funding. But the scales could be weighted more, said Chris Hoene, executive director of the California Budget & Policy Center. Some advocates are pushing for an idea called "targeted universalism," in which government support would focus on specific groups such as Native Americans or Latinas, not just low-income individuals.

“The paths are pretty clear: We need to provide more cash assistance, healthcare and childcare services,” said Hoene, “and it has to be better targeted because the current systems aren’t reaching the communities of color.”

White and Asian workers earn a median income above $51,000 annually, while Black, Native American, and Latino workers earn less than $37,000. In every rural and urban area in California, White workers make above the median income and Latino workers earn below the median, according to the report.

Democrats acknowledge that more work needs to be done. “California’s progressive revenues are funding the state at record levels, but inequity remains,” said state Sen. Nancy Skinner of Berkeley, who supports increased investment in affordable housing and infrastructure.

In recent years, California has authorized additional cash aid for the poor through programs such as the Golden State Stimulus (the statewide cash assistance program to support low-income households during the pandemic) and guaranteed income. Advocates want to see more because there are no strings attached to that financial help — and it gets into the hands of the groups most in need of support.

While Laderman said she is concerned that “all of these gaps that we have seen will have widened” during the pandemic, she is optimistic that “there are certain opportunities in these moments in the pandemic to invest in the interventions that are necessary.”

This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.