When Gov. Jerry Brown labeled the state budget a "pretzel palace of incredible complexity," he almost certainly had in mind the budget's largest, most complicated piece – financing schools.

Proposition 98, a measure that barely won voter approval in 1988, supposedly dictates what schools and their 6 million students are to receive from state and local taxes, but it's so dense that only a few analysts profess to understand it, and they rarely agree.

Rather than take politics out of school finance, therefore, Proposition 98 invites political manipulation.

Typically, after much gnashing of teeth, the governor and the Legislature agree on a number each year and then interpret Proposition 98 to justify it.

Over the last half-decade, a recession-wracked budget could not be stretched to cover what Proposition 98 required, so shortfalls were placed on what insiders call "the credit card." The state booked the money as a debt, now more than $13 billion.

School Services of California, which advises school districts, recently generated a chart showing the gap between what schools should be receiving in unrestricted state and local funds under Proposition 98 – roughly three-fourths of their total revenues – and what they are actually receiving.

According to the chart, those unrestricted funds amounted to $5,700 per pupil five years ago for the average unified school district and should be $6,748 today but actually are $4,804. However, spending may not have dropped as much as those numbers indicate because some districts have borrowed against money owed by the state and federal "stimulus" funds briefly narrowed the gap.

Brown says that if voters pass his tax increase in November, he'll repay the $13 billion owed to schools over several years and they'll eventually see multibillion-dollar increases in state aid. But it's also clear that the schools would see almost no immediate increases, as the California School Boards Association has pointed out.

Conversely, if taxes are rejected, his contingency plan would cut K-12 schools by $5 billion, half of it in real money, roughly $440 per pupil, and half in postponement of debt repayment. However, most districts appear to have already built that reduction into their 2012-13 budgets.

It's not clear that if Brown's tax plan does fail, he and the Legislature will follow through with the schools cuts, but he's making the threat the centerpiece of his tax campaign, saying last week, "The kids standing behind me have their future at stake.…"

The presence of a rival income tax measure, Proposition 38, that pledges all revenues for schools will complicate the political dynamics even further.

Voters will be challenged to sort through the claims and counterclaims on what is easily the state's most complex fiscal issue, a "pretzel palace" indeed.

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