Molly Munger's Prop. 38 Is Spoiling Jerry Brown's Prop. 30. She's Not Sorry.
PHOTO BY NANETTE GONZALESJerry Brown's $6 billion to $8.5 billion tax measure has been hurt by his team's amateurish and self-inflicted mistakes.
Molly Munger, whose Proposition 38 tax increase is up against Gov. Jerry Brown's Proposition 30 tax increase on the Nov. 6 ballot, was sitting in her beautiful Pasadena home one fall day last year when her private pollster emailed her some fresh survey results. To her great surprise, they showed a major shift in the state's anti-tax zeitgeist, with 57 percent of California voters willing to back a tax hike to fund schools.
For months, Munger had been quietly working with her close friend, Los Angeles civil rights attorney Connie Rice, and the Advancement Project, a 14-year-old civil rights advocacy group that Munger and Rice co-founded, on ideas to raise new money for California's troubled schools. They drew up a "mock" ballot initiative and tried it out on focus groups in cities like San Diego, Riverside and San Jose, and the detail-oriented Munger watched the discussions live from her home via a computer feed.
The Advancement Project group became convinced they had a winning idea: Modestly increase state income taxes for all Californians on a sliding scale so that everyone has skin in the game, then funnel those billions of dollars directly to classrooms — explicitly bypassing the widely distrusted California Legislature, whose approval rating hovers at 21 percent.
Munger was an utter unknown on the California political scene, but her mock initiative wasn't just a dreamy exercise in "what-ifs." The self-assured, 64-year-old lawyer, who looks far younger and sports a platinum-blond coif, is fantastically rich; her billionaire father, Charles T. Munger Sr., is billionaire Warren Buffett's business partner.
If multimillionaire Molly Munger felt like it, she could take that mock ballot before voters. She could be the first woman in California history to underwrite a key statewide ballot measure, a longtime tradition among the state's very rich.
Munger had an "a-ha" moment as she read the email from her seasoned pollster, Mark Mellman. Californians, who for years have rejected every statewide tax placed before them, were changing their minds — as long as the taxes actually went to public schools, which lost $7 billion between 2007 and 2011, thanks to state cuts.
"There was almost a stewardship that settles down upon the mind," recalls the casual and elegant Munger. "Like, 'Do you really want to have been in a position to move this forward at a time when it's desperately needed — and you didn't?'"
Munger and her husband, Steve English, a top litigator, knew that trying to pass a statewide measure would cost the two political neophytes tens of millions of dollars (they've spent $33 million so far). But Munger and English were all in. "People who are fortunate enough to have a higher income," English says today, "have a particular responsibility for that blessing to be given back."
However, just days before the election, Munger's $10 billion tax plan has the support of only 41 percent of voters. Only one of the two competing tax measures, Gov. Brown's Proposition 30 or Munger's Proposition 38, can become law. To pass, one measure must be approved by more than 50 percent of voters, as well as winning the most total votes.
Brown's measure is stumbling, suffering in part from amateurish and self-inflicted wounds. Munger officially filed her tax plan in November 2011, far ahead of Brown, who was fighting off a powerful teachers union that wanted him to hit the rich harder. Brown eventually compromised with the union — but the delays left him filing his tax plan quite late, in mid-March. He then slyly got the legislature to pass a custom-designed law that changed the rules, placing his late tax, instead of Munger's early one, at the top of the November ballot. Munger tried to reverse that in court but lost. (History shows that lazy voters often choose the first ballot measure they read.)
But then, Brown had let the entire summer slip by without putting his face on Proposition 30, and he's now being quietly criticized within stressed-out Democratic circles. David Townsend, a veteran Democratic consultant in Sacramento, says Brown had no choice: "As soon as the [legislative] session was out, he had to veto a couple thousand bills, so once he finished that, he [was] on the campaign trail. I don't think it's a lack of commitment on his part, but ... he had to do his governor job."
Perhaps. But by late September, Proposition 30's support had eroded to a bare 51 percent in the Field Poll. (This despite $52 million pouring in from huge special-interest backers as of mid-October. No on 30 has raised $32 million.) Just after that poll, the governor's camp made a poor judgment call, airing TV ads that plainly lied about who would control Brown's $6.8 billion to $9 billion in new tax revenue annually.
Dozens of media outlets immediately labeled the ads "misleading" after the spokesman, 2012 California Teacher of the Year Tom Collett, claimed that Brown's taxes would go to schools and "can't be touched by Sacramento politicians." Brown suffered days of bad press.
Only Munger's tax revenues, not Brown's, would be safeguarded from legislative meddling — a popular idea voiced by the Advancement Project's focus groups. Worried about competing against Munger's plan, with its hands-off-the-money element, Brown months ago beseeched Munger to drop it. Brown's wife, Anne Gust Brown, a former executive of the Gap and a powerful adviser to her husband, repeatedly pressed Munger, in an exchange reported by the media to have been testy.
Now Proposition 38 may be doing exactly as Brown feared, acting as a spoiler and drawing away a small but significant band of voters. Both proposals could fail, leaving Brown and the Legislature to grapple with huge budget cuts they've threatened to make to schools and other government programs.
Munger isn't apologizing. "We're very uncomfortable with the idea that Proposition 30 is being presented to voters as something that helps schools," she says, "when it is really the opposite."
Yes on 30 campaign spokesman Dan Newman calls Munger's charge "fundamentally dishonest" and "absurd," and describes Munger as an "ultra-wealthy dilettante." He adds, "You have to wonder about her motivation. ... It's honestly baffling."
But as Election Day nears, Munger's history of working with the underserved through the Advancement Project — which trained gang interventionists, expanded early-education programs and helped ensure the construction of new schools in poor neighborhoods — is making it harder for the Brown camp's broadsides to stick.
Molly Munger tells a story about being a precocious teen in the early 1960s, studying French, singing in Latin and wearing saddle shoes with her pastel uniform at the elite Westridge School for Girls in Pasadena. As the civil rights movement gathered strength during the Kennedy years, Munger yearned for something different and convinced her parents to let her transfer to the local public school.
"It just changed me forever," Munger recalls of attending John Muir High School. "I saw for the first time the wide variety of people that live in my community, instead of just seeing a narrow little slice."
She graduated from prestigious Radcliffe College in Cambridge, Mass., about the time that her future husband, Steve English, also a product of California public schools, graduated from UCLA. English comes from a military family — his father was a naval officer who moved his clan to Buena Park from Pennsylvania. Munger and English both got their law degrees at Harvard, but they didn't meet until they ended up as newbie attorneys at the same Los Angeles firm in 1977.
The couple's motivation for underwriting Proposition 38, she says, is simple: to give back to California's public schools. "This opportunity happened to land at the feet of two people who were just very, very motivated to pick it up and take good care of it," Munger says.
She regularly references her husband in her campaign speeches, and says that marrying him is "probably the most important fact of my life."
Thrown together as young attorneys at the firm then known as Agnew, Miller & Carlson, the two "were always having very lengthy conversations," English says, about movies and current affairs. They married in 1978, a year after they met. "It's been a very fulfilling marriage," he says. "Having a spouse you're very compatible with is a great blessing in life." They have two grown children and recently became grandparents.
In the early 1980s, Munger became a federal prosecutor, handling many bank robbery and tax-fraud cases. The thieves and scam artists she dealt with helped inspire her to include a hard-hitting protection in the fine print of Proposition 38: If politicians or anyone misuses the tax funds meant for schools, they can face jail time.
Wearing a knowing grin at a campaign meet and greet in Altadena, Munger tells a small group of parents: "Because I was a federal prosecutor, I have those protections [in the ballot measure]. It's too bad you have to do that, but you need some teeth in there."
English says that after their success as lawyers, and after billionaire Charles Munger Sr. gave Molly, her half-brother Charles Munger Jr. and her other siblings untold millions, the couple came to realize, "We should do what we [want] to help people in California. ... Our general aim is extending the ladders of opportunity to people who didn't have the same opportunities we had."
English has presided over the boards of organizations serving the poor and disadvantaged, including the Legal Aid Foundation of Los Angeles, the Inner City Law Center and Public Counsel Law Center. For Munger's part, she went to work for the NAACP Legal Defense and Educational Fund, where she met tough-edged minority-rights activist and attorney Connie Rice soon after the 1992 Los Angeles riots. Six years later, the three — Munger, English and Rice — founded the Advancement Project, with offices in Washington, D.C., and in a tall, nondescript building on Sunset Boulevard in Echo Park.
Munger operated below the media radar while Rice acted as the well-known, oft-quoted face of the Advancement Project. "I have spent almost 20 years working with Connie Rice, who is one of the most brilliant and charismatic figures that our country has right now," Munger says, "and I have been completely content to be utterly obscured while Connie has been the star of the work we have done together.
"I don't know why that is comfortable for me. I can't tell you. ... It's been about the work. I've always been interested in the work."
"That was a huge jump right there, to go from a big corporate lawyer to a nonprofit," Rice says of Munger. Their unofficial mission statement has been, "We're lawyers who are following the same mandate as Thurgood Marshall, which is to make the Constitution work for everyone."
In early 2011, Munger was inspired to find new money for the public schools after hearing Dennis Cima, senior vice president of the Silicon Valley Leadership Group, raise the idea of a broad-based, sliding-scale income-tax hike paid by all but the poorest.
"We just thought, Let's learn by doing," Munger says. "Let's write an initiative and just do it, and that way it will exist and something will exist. ... We're an advocacy group, so it's the kind of thing you do."
Yes on 30's Newman has hinted that Munger is driven by questionable motives. Some critics have accused her of secretly working with her wealthy, conservative half-brother, Charles Munger Jr., a Stanford University physicist, to bring down Brown's tax measure. (Charles has given $20 million to a committee working to both defeat Gov. Brown's Proposition 30 and win approval of Proposition 32, a measure to prevent unions from taking automatic payroll deductions from union members to finance political campaigns.) Others accuse Munger of undertaking a vanity project.
To theories like these, Rice declares, "That's the stupidest thing I've ever heard! They know nothing about Molly. This is not about her. She gains nothing from this. In fact, she only loses money. She knows kids need this."
Franklin D. Gilliam Jr., dean of UCLA's School of Public Affairs, says it's not surprising that Munger's and English's $32 million investment fed a backlash.
"People look a lot at money and where the money is coming from," Gilliam says. "And if they believe [a ballot measure] is being driven by one person, like Munger, they get nervous. It becomes an idea that it's a vanity project, and it doesn't matter whether that's true or not. It's the perception that matters."
Newman goes much further, calling Munger's millions a threat to democracy. "To have wealthy people tip the scales so drastically is a tragedy," he says. "It takes spectacular hubris for these two Mungers to think they know more about our schools than teachers and principals."
Another multimillionaire who spent part of his fortune trying to fix the schools via the ballot box — former L.A. Mayor Richard Riordan — has known the Munger family for three decades, and he says these critics don't understand either Munger sibling. The rich brother and sister who in middle age have rocketed into the public consciousness "have not become interested in 'politics,' but in making things happen," Riordan says.
Last spring, Riordan was preparing to write an op-ed against Gov. Brown's tax plan. As a courtesy, he called Anne Gust Brown to let the couple know. The governor was concerned enough to meet Riordan at his palatial Brentwood home, but he couldn't win him over. Riordan decided to back Munger's tax measure. "If you're interested in getting more money into the schools," he argues, "Molly's is infinitely better."
While Munger and English are true believers in their cause, Jerry Brown is trying to sell a measure that he probably does not love.
Brown wrote Proposition 30 with two major special-interest groups — the California Federation of Teachers and the Courage Campaign — along with Democratic leaders, including state Senate President Pro Tem Darrell Steinberg, after the two powerful campaign-fundraiser groups refused to support Brown's own tax plan and threatened to take theirs to voters.
Under Proposition 30, Brown has promised that $5.4 billion in pending cuts to public schools — which he and the state Legislature have approved but not yet enacted — would be averted. However, billions also would flow to the General Fund controlled by the Legislature — and there's no guarantee any of that new money would end up in classrooms.
Brown's measure would hike the state sales tax for four years by one-quarter of a cent, making California's the nation's highest and bringing in $1 billion or so annually. The plan also would boost income taxes for seven years for the roughly 150,000 people among California's 37.7 million residents who earn more than $250,000 annually. The narrowly focused income tax would produce a highly unpredictable pot of annual money estimated at perhaps $5 billion — but that's give or take a billion, or more.
A whiff of panic has set in among high-powered proponents of Proposition 30 such as teachers unions and county governments, who are relying on the tax hike's passage. In October, the governor finally began appearing at rallies at UCLA and other public universities to warn students that, if the measure fails, young people will suffer further tuition hikes.
Then, in mid-October, after Munger announced on NBC4 Los Angeles that she was about to air a TV commercial that would "compare and contrast" Proposition 38 with Proposition 30, Democratic heavyweights, including the president of the State Board of Education, the California Teachers Association and Steinberg, sent Munger a highly unusual warning letter, telling her to "rethink this destructive course of action."
Republican consultant Jonathan Wilcox, who was involved in the campaign to recall Gov. Gray Davis, found the warning letter sent to Munger "incoherent and panicked. ... They keep hitting the mute button, but Molly Munger is still talking."
Jon Coupal, president of the Howard Jarvis Taxpayers Association, which has spent $440,000 attacking Brown's tax proposal, says, "It does not surprise us that the simmering war between the two camps broke into the open. Did Jerry or Anne ever think that Molly would back down? I don't think so. The snippy communication from Darrell Steinberg was incredible. And Molly's response was, 'Thank you for providing us with strategy [suggestions] but we'll go our own road.' That is a big 'fuck you' to Jerry Brown."
Indeed, Munger promptly began running her 31-second campaign ad — and it was a mild one. The most controversial moment of the colorful, childlike animation is a two-second depiction of money flowing from a schoolhouse into politicians' hands.
Brown's camp began pulling in serious favors to get Munger's ad yanked off the air. Munger soon heard from her key endorser, the California State PTA, asking her to pull the ad, and from her close political friend, state Superintendent of Public Instruction Tom Torlakson, who asked the same.
Munger let the ad run for a week, getting widespread media coverage and sharing the one message Brown's team most feared — that the Legislature will get its hands on the governor's new tax revenue.
"The thing that concerns us most this year is that our schools are 47th in the nation [in funding, by some measures] and we have lost a third of our early-childhood education system," a defiant Munger says. "And it's really worrisome that we might have a once-in-a-generation opportunity to fix that, and that we wouldn't try to do it."
Outside the cavernous auditorium at Charles W. Eliot Middle School in Altadena, mothers huddle in groups of three or four, talking about their kids and waiting for Munger to arrive. Some wear "Yes on 38" buttons, but many of them plan to vote for both Proposition 30 and Proposition 38.
"We need more money at the schools," says Becky Thyre, whose daughter attends Eliot Middle School. "We need to turn everything around. The budget cuts are just ridiculous."
She adds, "I don't see why it has to be a choice between the two. We need at least one of them."
Barbara Pettit, another Eliot Middle School mom, says, "We just need to invest more in our schools. Education is a right, and should be available to all."
Both mothers say their friends are not talking about, and don't even know about, the two big tax measures on the Nov. 6 ballot.
Susan Schwartz, a parent activist and member of the Pasadena Education Network, worries, "If we fail our public schools, then we fail our middle class. If our middle class fails, we're on our way to being a Third World country."
At this auditorium, which can hold hundreds, 40 or 50 people show up. In a dark gray power suit, Munger takes the parents through a PowerPoint presentation. It could have been an incredibly boring affair, but Munger talks with an easy confidence and a practical intelligence that keeps the parents interested. She seems made to order to run for public office herself.
Volunteers hand out small pencils and slips of paper for the parents to write their questions. Munger, who seems to prefer informality, tries to wave them off. "I don't think we need to do all this," she says.
Several parents want to know if Munger's proposed tax revenues can be raided by the state Legislature. "If legislators start to play with Proposition 38, someone would be suing about it," Munger responds, then pauses for a beat. "And you're looking at her." The crowd erupts with claps and a few hearty laughs.
Under Munger's measure, people would pay 0.4 percent on taxable earnings of $7,600, equaling a few dollars per year in new taxes for very low earners. But it would rise to 2.2 percent for those with taxable earnings of more than $2.5 million. Munger estimates that those earning $1 million and up** would pay an average of $77,000; somebody earning $25,000 to $50,000 would pay $54 or so per year.
It seems strange to some that Proposition 38 isn't doing better. Field Poll director Mark DiCamillo says the "odds are not great" for Proposition 38 to pass, and even worse given that it needs to outdo Brown's ballot measure in total vote count to survive. UCLA dean Gilliam says if he were a betting man, he "wouldn't take Proposition 38 and the points. You'd have to give me 20 points. Literally."
One Democratic Party insider in L.A. who has worked with Munger says that she can be "difficult." Because of her wealth, he says, she's used to doing things her way, and becomes inflexible when asked to do otherwise. This could help explain why her measure is not connecting with voters, even though she has tapped a political brain trust, including Mellman, former California Teachers Association honcho John Hein, former Service Employees International Union boss Dean Tipps, veteran political strategist Nathan Ballard, political consultant Andrew Acosta and 2008 Obama pollster John Anzalone.
Gloria Romero, the hard-charging California director of Democrats for Education Reform, has not taken an official position on either tax measure. But the maverick Democrat, who openly criticizes teachers unions over hot-button issues such as the school districts' inability to remove bad teachers from classrooms, says Proposition 38 doesn't go far enough.
"Where is the bang for the buck?" asks Romero, who's glad Munger didn't back down to Brown but says, "There would be a greater appetite" for her tax if Munger had coupled it with serious classroom reforms.
Romero, of Los Angeles, was a powerhouse state senator as chairwoman of the Senate Education Committee. She believes Proposition 38 is "more honest" than Proposition 30 because it has a transparent school-funding plan. By contrast, she says Brown's measure is being sold largely as a way to beef up school funding when it's really about filling the budget hole.
"Proposition 30 is about debt," Romero says, "and it's on the ballot because of a dysfunctional Legislature that can't pass a budget with a two-thirds vote. The whole thing is a charade, and we continue to do budgeting by the ballot box."
Parent Revolution executive director Ben Austin, a player in education reform, who backs California's "parent trigger" law, charter schools and other innovations, usually is a close ally of Romero's. But he believes Proposition 30 will prevent major cuts to public schools. "We're supporters of both measures," he says, "but in a pragmatic way, Proposition 30 has a better chance of winning."
Many folks focused on California's failing schools or classroom budget cuts don't care which measure wins — as long as one becomes law. Pasadena Unified School District board member Ed Honowitz is pulling for both, but for the long haul he favors Munger's initiative, which guarantees billions to schools over a 12-year period.
"It will have a much more significant impact on stabilizing finances and better funding education, which is something we always worry about," Honowitz says. "If neither of them pass, the impacts will be frightening."
But Wilcox, the Republican consultant, says that would be a good thing.
"If both lose, as I expect, then we might see the return of the 'real' Jerry Brown," Wilcox says. "I would be hopeful that the failures would unleash creativity, bold thinking and nontraditional coalitions — and Jerry Brown is as likely as anybody to lead those efforts. That would come more naturally to the governor than his desperate blackmail campaign that says, 'Raise your taxes — or the kids and students get it.' "
At a wooden conference table in the Echo Park offices of the Advancement Project, Munger sits down to explain her vision. No personal assistant or press aide is attending her, although she has both. She speaks without notes, and with a perpetual smile that seems to work as a shield when questions get too personal.
"This isn't about me," Munger says. "It's not about Jerry Brown the person. It's about the governor but in a more abstract way."
"I try to ignore it," she says of the increasingly conflict-oriented media coverage of the two competing tax measures. "Totally, I just try to ignore it."
Joel Fox is a mild-mannered Republican fiscal expert and anti-tax advocate who is chairman of the No on 30 campaign, president of the Small Business Action Committee and a blogger at FoxAndHoundsDaily.com. He's also, interestingly, an admirer of Molly Munger, whom he met through his friend Connie Rice.
As a conservative, Fox opposes Munger's ballot-box tax but thinks it's more coherent than Brown's. He finds Munger so interesting, in fact, that he has asked her to speak to his state and local government class at Pepperdine University.
"She is up against the California establishment — a sitting governor, the most powerful unions in the state and the Democratic majority machine," Fox says. "She has stood up against the machine, and I think this is just the beginning. I believe that even if she doesn't succeed this time — I don't know how deep her pockets go — she will be back. Remember, Howard Jarvis tried three times before the voters approved Proposition 13 [property tax reform]. Trying again is a California right."
Reilly T. Bates also contributed to this story.
Contact Patrick Range McDonald at email@example.com.
**An earlier version of this story incorrectly stated that persons earning $1 million would pay $77,000 in new taxes.
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