VOUCHER INITIATIVE FLUNKS BALLOT TEST

Drug Treatment, Rules On School Bonds Leading

SACRAMENTO -- A school-voucher initiative, Proposition 38, which attracted
national attention and triggered one of the most expensive ballot-measure
battles in state history, was defeated last night -- trailing by a ratio of
2-to-1.

Another education-related initiative, Proposition 39, which would make it
easier to pass local school bonds, was holding onto a small lead after a
full-blown campaign financed by wealthy Silicon Valley businessmen and
chaired by Gov. Gray Davis.

Picking their way through a relatively slim ballot pamphlet with eight
measures, voters approved high-profile Proposition 36, which would require
treatment instead of jail for minor drug violations.

Voters also approved a measure placed on the ballot by the Legislature,
Proposition 34, that will limit campaign contributions to political parties
and candidates for state office.

Strong approval was given to a $500 million bond issue placed on the ballot
by the Legislature to continue offering low-interest home and farm loans to
veterans with no direct cost to taxpayers.

One business-backed initiative held a significant lead: Proposition 35,
sponsored by private engineering firms, would allow state and local
governments to contract with private engineering firms and architects for
highways and other projects, rather than using state employees.

Another business-backed initiative was trailing: Proposition 37 would
require a two-thirds vote of the Legislature, rather than a majority vote,
to impose taxes or fees on businesses to monitor hazardous products such as
lead paint.

By a wide margin, voters rejected Proposition 33, a measure placed on the
ballot by the Legislature to allow the 120-member Legislature, whose
retirement benefits were ended by a term-limits initiative in 1990, to join
the state pension system by paying about 5 percent of their salary.

Reports compiled by the California Voter Foundation show that wealthy
Silicon Valley businessmen, concerned about California's low-performing
public school system, spent heavily from their own pockets on the two
school-related initiatives that have been previously rejected by voters.

Tim Draper, a venture capitalist, spent about $26 million of his own money
on Proposition 38, which would give all parents the option of using a
$4,000 taxpayer-paid voucher to send their child to a private school.

The California Teachers Association, which spent heavily to defeat a
similar proposal in 1993, spent about $26 million in the campaign to defeat
Draper's voucher plan.

Spending by both sides in the battle over the voucher initiative totaled
$60 million, second only to the $96 million spent on an initiative two
years ago, Proposition 5, that authorized casino-style gambling on Indian
reservations.

About $80 million was spent in 1988 on initiatives that resulted in state
regulation of the insurance industry. But in that high-spending struggle,
four initiatives were placed before voters, who chose a measure backed by
consumer advocate Ralph Nader, Proposition 103.

The voucher initiative, trailing in the polls going into the election, was
criticized by longtime voucher advocates who feared that another
overwhelming rejection by California voters would set back the
school-choice movement.

Some of Draper's critics praised another wealthy businessman, Dick DeVos,
president of Amway, who helped place a voucher initiative on the ballot in
Michigan that was backed by black and Catholic groups and limited to
children in low-performing schools.

But the Michigan initiative, Proposition 1, also was being rejected by a
margin of 2-to-1, according to an exit poll conducted for the Detroit News.

Another Silicon Valley venture capitalist, John Doerr, spent $6 million on
the campaign for Proposition 39, a proposal to lower the requirement for
approving local school bonds from two-thirds to 55 percent of the vote.

Doerr spent $5 million on an initiative narrowly rejected by voters in
March, Proposition 26, that would have lowered the requirement for
approving local school bonds to a majority vote. Total spending on
Proposition 39 reached $32 million.

Most of the money was spent by the backers of Proposition 39, including
Wal-Mart heir John Walton of National City, who contributed $2 million.
Opponents of Proposition 39, led by the Howard Jarvis Taxpayers
Association, had spent $4.3 million by late last month.

The initiative requiring probation and treatment rather than jail for minor
drug violations, similar to a law in Arizona, is part of a drive by several
wealthy businessmen to reduce drug penalties in a number of states. Drug
law changes were on the ballot in five other states yesterday.

The main funding for Proposition 36 came from three businessmen who reside
in other states. Contributions of about $1.2 million each came from Wall
Street financier George Soros, John Sperling of the University of Phoenix
and Peter Lewis of Progressive insurance in Cleveland.

Soros was a main backer of an initiative approved by voters in 1996,
Proposition 215, that authorized the medical use of marijuana in California.

The initiative allowing state and local governments to hire private
engineers and architects, Proposition 35, is the second round of a battle
between the private engineers and state employee unions.

An initiative backed by Caltrans engineers that would have prevented the
state from hiring private engineering firms, Proposition 224, was rejected
by voters in June 1998.

The private engineering firms had raised $13.5 million for the campaign for
Proposition 35 by late last month, compared with $7.7 million spent on the
opposition campaign by public employee unions.

Relatively little money was spent on the initiative limiting campaign
contributions to candidates for state office, Proposition 34. The backers
had raised $437,000, mainly from unions, and the opposition received
$601,000 from Max Palevsky, a Los Angeles investor.

Opponents said the Legislature hurriedly placed Proposition 34 on the
ballot in an attempt to avoid the stricter contribution limits in
Proposition 208, an initiative approved in 1996 that has been tied up in
the courts.