Good morning, California.
“We need to repeat that performance year in and year out, on average, over the next 30 years.”— Christopher Ailman, chief investment officer for California State Teachers’ Retirement System, announcing a return on investment of 8.96 percent in the last fiscal year.
School pension crisis is upon us. Who'll pay?
Teachers' pension debt could swamp school budgets.
California’s public schools are facing a grave financial threat as they struggle to protect pensions crucial for teachers’ retirement, CALmatters’ Jessica Calefati reports.
Numbers: Retired teachers’ pensions average $55,000 a year. The California State Teachers’ Retirement System pension fund sits at $223.8 billion. The unfunded liability is $107 billion, Calefati reports.
In years to come, schools may need to use more than half of all new tax revenue to cover growing pension obligations, leaving little extra for classrooms. The situation exists even after school districts, teachers, and the state agreed four years ago to pay more to reduce the unfunded liability.
Dennis Meyers, executive director of the California School Boards Association, told Calefati: “We simply need more revenue, and we’re out here waving the white flag, looking for relief.”
Translation: The next governor, Legislature and Superintendent of Public Instruction will have no choice but to focus on pension debt. More school districts will turn to voters for help. Some school districts will fall into receivership.
P.S. I asked the two candidates for Superintendent of Public Instruction for brief statements about what they’d do about unfunded pension debt.
Marshall Tuck: “We need a great teacher in every classroom. That means paying teachers fairly and living up to our obligations. But it also means confronting this challenge, not ducking it. A fair solution will require shared sacrifice and creative thinking.”
Assemblyman Tony Thurmond: “School districts are struggling to cover rising pension costs. It’s a problem we have to address to get more money in our classrooms and protect the retirements that teachers have earned. I’m creating a working group, that includes pension reform experts, educators, and business leaders to come up with solutions.” (Updated to include Thurmond’s statement.).
Strategic. Persuasive. Effective. Working at the intersection of business, politics and policy.
Brown fills some final parts to his judicial legacy
Gov. Jerry Brown moved to fill six appellate court openings on Friday but still hasn’t nominated a replacement for retired California Supreme Court Justice Kathryn Werdegar, who stepped down 11 months ago.
Why it matters: State courts of appeal decide the vast majority of civil and criminal appeals, disposing of 22,931 matters in the most recent year.
In his first stint as governor, Brown took flak for some of his judicial appointments. This time, he has taken a more traditional approach. State Supreme Court Chief Justice Tani Cantil-Sakauye chairs the three-member panel that confirms nominees.
Numbers: 37 of the 41 Brown appointees had been judges. Average age, 57. Men 22; women 19. Half worked as local, state or federal prosecutors. Brown appointed three justices twice, elevating previous appointees to presiding justice positions.
Law schools: UCLA 9; UC Berkeley 5; Yale and UC Hastings 4 each; Harvard and Stanford 3 each.
Oldest: Elwood Lui was 76 in 2017 when Brown appointed him as a presiding justice of a San Francisco court. Lui was a Brown-appointed justice in the 1980s but left for private practice.
Youngest: Lamar Baker was 37 when he was appointed to an LA appellate court in 2015. He worked in the Obama White House, the U.S. justice department, and is a Yale graduate, Brown’s alma mater.
What next: Brown has four court of appeal openings left to fill. He probably won’t fill the Supreme Court vacancy until after Aug. 30. That would ensure the new justice won’t face voters until 2022.
Air Resources Board machinations
The California Air Resources Board will vote Thursday on a reorganization that would extend the tenure of the Jerry Brown-appointed chair until 2020, halfway through the next governor’s first term.
And five and perhaps six of the 16 members would serve until December 2022, the end of the next governor’s first term.
So what: Chairwoman Mary Nichols, a Brown confidante, is a driving force behind state efforts to reduce greenhouse gas emissions and the cap-and-trade program, one of Brown’s proudest achievements. Cap-and-trade revenue helps pay for high-speed rail construction, a project championed by Brown.
Nichols was air board chair during Brown’s first stint as governor. Gov. Arnold Schwarzenegger re-appointed her in 2007, and Brown re-re-appointed her.
Why it matters: Brown’s influence would continue beyond his years in office if the board approves the reorganization. The plan would limit the ability of the next governor, either Democrat Gavin Newsom or Republican John Cox, to put his imprint on the board.
The air board is one of the most important bodies in state government. Its regulations have forced automakers to clean tailpipe emissions.
P.S. Three board members would be out at the end of this year, including two legislative appointees. One, former Sen. Dean Florez, a Kern County Democrat, has dissented from time to time on board actions.
Walters: Politicians must do more than talk about poverty
CALmatters commentator Dan Walters points out that Democrats who dominate California politics are quick to denounce economic disparity.
They raise minimum wages and take other steps that help on the margin. But higher housing costs and regressive taxes consume any gains. The California Democratic Party just endorsed a ballot measure to make rent control ordinances easier to enact, at the expense of new housing investment.
Walters: “Cowardice and tokenism cannot and will not erase California’s shameful status as the nation’s most poverty-ridden state.”
Addendum: Correctional officers’ pay
Last week, I wrote a WhatMatters item about the 5 percent pay raise for correctional officers approved by the Legislature in June. Some of you wondered what the wage is. Figures became available Friday: Top annual pay rose to $88,932 as of July 1, up from $86,340. It will rise again next July to $93,378 a year.
See you tomorrow.