Classrooms should be fully staffed with adequately compensated teachers. But that is not the case in California despite a >50 percent increase in spending since 2010. The principal reason is the diversion of school dollars to pensions and other retirement costs. Governor Brown reports annual spending of $16,000 per student but only about half reaches students.
CA’s retirement cost crisis did not have to happen, as explained here. But it did, and the consequence is ~$1 trillion being diverted from schools and other public services. The guilty parties are self-interested pension fund board members and elected officials who enabled the theft of 20x more than Bernie Madoff stole. The principal victims are schoolchildren, teachers and taxpayers, as illustrated by San Francisco and Pasadena. They didn’t cause the problem but they have been carrying the burden. Retired employees also didn’t cause the problem but they have not shared in the burden and they were beneficiaries of lies that kept retirement contributions artificially low during their work years. They should share the burden.
First, school districts should stop subsidizing expensive health plans for retirees, who should get their insurance from Covered California, the state health care exchange, until they are eligible for Medicare. That step alone could save San Francisco schools up to $40 million per year. Second, school districts should stop granting automatic pension increases until pension funds are in better shape. The two steps would free up billions of dollars for current teachers and classrooms.
The math is inescapable. There is no way CA can sustainably boost teacher compensation without addressing unfunded retirement promises.
