My turn: Politicians must stop ignoring pension crisis
California’s public schools have a crisis when it comes to funding pensions. California must do a better job of balancing the need to attract the very best workforce in the country while meeting the needs of our students in their classrooms.
The unfunded liability for the California State Teacher Retirement System is over $100 billion. And the obligations continue to grow.
Sacramento politicians passed legislation requiring school districts to pay more to fund these growing liabilities. The failure to address this issue is having a growing and negative impact on our public schools.
In 2013, school districts contributed 8.25 percent of teachers’ payroll for pensions. Today, that number is 16.28 percent and it will grow to 19.1 percent by 2020.
Those contributions come directly from school budgets that would otherwise fund smaller class sizes, more programs for students, more counselors, more pay for teachers and other areas that directly improve the education of children.
Not surprisingly, when I speak to superintendents, they identify increased pension costs as one of the most significant obstacles they face. Yet Sacramento politicians kick the can down the road.
As State Superintendent of Public Instruction, I will make addressing this crisis a top priority. I will work immediately to launch a commission focused on developing a solution that doesn’t make our kids carry the burden.
I will work closely with the next governor, the Legislature, education, and labor leaders and others. Leadership at all levels will be needed to meet this challenge. While a comprehensive solution needs to be developed collaboratively, any successful reform plan should include these principles:
- Urgency. Every day we ignore this crisis it gets bigger, and it puts the quality of education for future generations in greater jeopardy.
- Transparency. Most people are unaware of the magnitude of the problem. Californians need to know the impact this issue is having on public education.
- Learn from others. We should closely analyze and learn from other states that have had more success in managing sustainable pension plans.
- Be realistic. We need to be more realistic when estimating the rate of return on pension fund investments and be sure our actuarial assumptions are right, so we can better plan for the future.
- Don’t burden students. We can’t ask districts to increase their contributions any further unless the state provides the resources to do so.
- Preserve benefits already been earned. Benefits that employees already earned should not be adjusted.
- Creativity. We need to look closely at variables such as at state contributions, commitments to new hires, size of unearned benefits and employee contributions in order to make our pension programs sustainable.
This crisis has a direct and negative impact on our students but politicians have avoided this issue for years. This must change. For the sake of our students, we need to come together urgently and find a solution to this crisis.
Marshall Tuck is a candidate for Superintendent of Public Instruction, marshall@marshall
My turn: Let's bring both sides of the table together on pensions
Working people who have dedicated their lives to a profession should be able to retire in dignity and not insecurity.
But employers are sounding the alarm over the rising cost of providing their employees with the pensions they’ve earned. It’s a problem that is hitting the K-12 education system particularly hard. The overall cost for school district pensions is approximately $107 billion and is expected to increase in coming years.
Even with increased direct contributions from state employees to offset pension costs, it’s predicted that over the next three years, districts will use over half of the new money received to meet their pension obligations. That’s less money for improving education for our students.
All education stakeholders have a responsibility to identify solutions that can help address rising pension costs. Teacher unions are frequently demonized by critics for problems that districts face, but when I was a Richmond School Board member during the height of the recession in 2008, I witnessed our district’s union employees make sacrifices to help the district.
Educators and administrators came together to reduce the district’s pension costs by over $400 million.
Not only did we significantly reduce the pension costs, our board also brought together all sides to pay off – 4 years early – the state debt we inherited and restore local control to the district.
Only by sitting down with all sides and reaching constructive solutions, as Mayor Darrell Steinberg did in Sacramento, will we be successful in addressing this issue – it is too bad that there are those who seek to politicize this issue for their own ends.
California’s overall budget and education budget have been stifled by decades of underfunding due to the passage of Proposition 13, which shielded corporations from paying billions in property taxes that could have gone to public education.
This year, my colleagues and I in the Legislature worked with Gov. Jerry Brown to find $1.1 billion in the state budget that school districts can use to offset pension debt. Since 2014-2015, we have provided districts with more than $5.7 billion for this purpose. Yet there’s still work to be done to find a long-term solution. California will need to pursue new permanent funding sources for public education – an effort I hope to lead if I am elected Superintendent of Public Instruction.
I’m in the process of convening a special task force to help identify ways to address pension reform. This task force will include pension and finance experts, actuaries, educators, business leaders, and anyone else interested in finding solutions that allow classroom teachers to retire in dignity and give schools the resources they need to provide the best education for our students. Those interested in joining the task force should contact me at email@example.com.
Assemblyman Tony Thurmond is a candidate for Superintendent of Public Instruction, firstname.lastname@example.org. He wrote this commentary for CALmatters.