Smart. Sharp. Funny. Fearless.
Saturday, February 23, 2019

April 24 (Bloomberg) — Most Californians would be surprised to learn that 100 percent of education’s share of the tax increase proposed by Governor Jerry Brown will go to pensions instead of classrooms. But that would be no surprise to longtime observers of the California State Teachers’ Retirement System, which administers teacher pensions.

Here’s why: After retirement, teachers are unconditionally guaranteed lifetime pensions by their school districts. Everything works out fine if Calstrs, as the retirement system is known, earns the investment returns it forecasts and from which upfront contributions are derived.

But if they fall short, school districts must make up the difference. Because of compounding, the failure to earn forecasted earnings translates into huge deficiencies down the road.

Unfortunately, “down the road” is where school districts are now. Because Calstrs has earned only 60 percent of its forecasted investment return since 1999, it needs school districts to boost contributions by more than $100 billion. Worse, Calstrs waited so long to seek more contributions that its request is now for an extra $4.5 billion a year, almost double the $5 billion a year it already receives in contributions.

School districts can’t come up with such a large amount of money without harming classrooms. And while they could defer the request (Calstrs has enough cash to meet current pension obligations for now), doing so would be very expensive because every year that a contribution is deferred increases the required contribution amount by 7.5 percent, compounded. For example, for every $4.5 billion not contributed now, more than $9 billion would be required 10 years from now. Thus it’s much cheaper, and much fairer to future generations, to increase contributions now.

  • Share this on Google+0
  • Share this on Linkedin0
  • Share this on Reddit0
  • Print this page
  • 15

44 responses to “New California Taxes Pay for Pensions, Not Schools”

  1. Catskinner says:

    Public employee unions have to go if America is going to survive as a country.

    • ObozoMustGo says:

      Cat… You have hit the nail on the head! Public employee unions are an absolute SCAM!

    • sonorasue1 says:

      If you were a Public employee, you would be singing a different song. Public employees start out at much lower pay than their cohorts in the private sector. It is only after years of working their jobs, that they finally get good salaries. Which, incidentally still do not compare to the same jobs in the private sector.

      • Catskinner says:

        I probably would have been singing a different tune 15 years ago. Now promotion up through the ranks in the private sector is pretty much a thing of the past.

        • sonorasue1 says:

          Well, the economy certainly hasn’t helped anyone. However, it also depends on where you live, and what career you are in.

          • Catskinner says:

            That’s true, sonorasue. I must say it’s a pleasure to have an on-line discussion where everyone isn’t polarized and unpleasant.

          • sonorasue1 says:

            I agree. I have been called a few unmentionable names for my remarks at times.

  2. Pomonaute says:

    @Catskinner….If America’s going to survive we need to ditch the all or nothing attitude!

    • ObozoMustGo says:

      Pomo…. Public employee unions weren’t even allowed by FDR. Even that scumbag knew what every other sane person knows. They are a SCAM!!!

      Here’s how it works….. Politicians pass the laws that allocate budget to pay public employee unions with taxpayer dollars. Public employee unions then force dues upon those union members, taking some of their taxpayer paid dollars. Union bosses line their own pockets and then bribe those same politicians with campaign contributions of taxpayer dollars. So the politician, seeking more campaign money, passes ever more increasing benefits to the union workers who in turn take some of their benefit and give it back to the politicians who continue to bestow lavish benefits. THIS IS CALLED MONEY LAUNDERING! And it’s paid for by the taxpayers who do not have a seat at the negotiating table with the unions. The pols and the unions are on the same side, and we all get screwed! There is not a single example in America where this is not the case. Everywhere there are public employee unions, governments, state and local, are in trouble. Conincidence? NO!

      PUBLIC EMPLOYEE UNIONS SHOULD BE DISBANDED IMMEDIATELY!

      • Pomonaute says:

        We need unions because many out there would treat employees like dogs if they could! Look at the state of Wisconsin. Since the end of collective bargaining districts have imposed many rules on teachers that have NOTHING to do with saving money.It’s all about power. Unions give power back to the people. Now I’m not saying that unions haven’t grown too powerful in many sectors, but again it’s this all or nothing attitude that’s killing this country. I think people like you lack common sense. Maybe you should read Upton Sinclair’s The Jungle.

        • ObozoMustGo says:

          Pomo… you must learn to read. I wrote of PUBLIC employee unions, not private industry unions. It’s public employee unions that MUST BE ELIMINATED. This fantasy that workers are treated like dogs is bullsheet, and you know it. Upton Sinclair’s “The Jungle” is a typical socialists tomb that had more impact on food safety than social policy back in the 1900’s. It is not at all relevant to today or PUBLIC employee unions.

          Have a nice day!

          • Pomonaute says:

            I did and I support public unions! It’s not B.S., but thanks for the nice day wish! I hoping it wasn’t sarcastic because I’m truly sick of the lack of respect for others opinions! My hope is that we as a country can learn to find a middle ground on most topics.

          • ObozoMustGo says:

            Pomo… my wishes for your having a nice day are not sarcastic. It’s my way of saying “even if we disagree and poke fun at each other, I still wish you a pleasant day”. Some dont take it that way, but that’s how it’s meant.

            As to middle ground, I agree with you in concept, but in principle there is no compromise with socialism. It is evil! And the great assault on capitalism and individual freedoms that is underway these days IS the battle of our time. There is no compromise with those on the side against freedom. Those are DemocRATS. Not all of them, but the party has been taken over by 60’s radicals and Marxist/socialists.

            Have a nice day, Pomo!

  3. montanabill says:

    Sounds like the historically Democrat controlled Assembly and Senate are about to reap the whirlwind.

    • Pomonaute says:

      We need to ditch this partisan attitude in this country! Don’t act like Republicans would have done any better. Republicans historically have spent just as much as Dems! On a better not…you ever fish Rock Creek?

      • montanabill says:

        When it is not too crowded. Terrific stream. Also highly recommend the Bighorn, the Missouri, Yellowstone, Madison and many others. I sure wouldn’t say for certain that the Republicans could have done any better, but, in general, Republican lead states are in much better shape than Democrat lead states.

        • sonorasue1 says:

          Could it be that those states have more Professional jobs, and wealthier people. And, don’t forget the “Rednecks and Tea partiers”

        • msgwdn says:

          “Republican lead states are in much better shape than Democrat lead states.” Look West and try to say that with a straight face.

      • sonorasue1 says:

        Historically they have spent more while they are in charge. But, yell foul, as soon as the Democrats are in charge. Although, the structure of the California Senate makes it difficult to make the needed changes. Remember when Jerry Brown was the Gov. before? We had plenty of money. They managed to kick him out, because he had not spent enough on the med fly. As soon as Pete Wilson got in office. All the money was spent, and we had a deficit. Then, the insane prop 13 was passed! not that I blame the people. Property taxes were excessive. But, a more moderate solution should have been put in place. Prop 13 was so extreme that it gutted most of Californias necessary projects. It took some time to affect things. Also, the courts in Calif. tend to be too lenient, and give money out to the indigent like it is going out of style, with no requirement in many cases, that they should be entitled to it.
        Remember when Clinton was in office? Plenty of money. As soon as the Republican Congress and Senate were in. They spent the money like it was going out of style. Then, when President Obama got in office, he was saddled with having to prevent another depression, by spending money. Which incidentally was also recognized by the previous Administration. Paulsen, Bernanke, etc. More people should read up on just how close we came to total economic collapse.

    • cal says:

      Sounds like the ‘cut taxes, never raise ’em again, and put off paying for anything that doesn’t profit a contributor’ Republicans are trying to blame everyone else for the toilet flush they created in California. Call Joel, dig Howard up, line up the Djuke, Pete, and Arnie, and hold those clowns responsible for destroying California.

      After all, The GOP is the party of adults, of accountability…yea, and Junior Bush never made a mistake in 8 years. Call me when you have a real idea of how to fix anything besides the results of an election.

      • montanabill says:

        Not to worry. The Dems are still in charge and I’m sure they will have the problems cured in no time. All it takes is more taxes and more spending.

  4. ObozoMustGo says:

    Why would anyone give a damn about those stupid and greedy children and their parents? How could they be so selfish to put their needs ahead of our suffering teachers? Dont they know their job is to work so that those caring and most gracious teachers deserve lavish pensions and lifestyles for the rest of their lives as a result of their oh so difficult sacrifices?

    Taking money out of the classroom? I call BS on this article. Those poor teacher union workers poured their lives into the system, giving it their all. The least we could all do is insure their continued rewards and comfort. When is everyone going to realize that the teachers lavish retirement is for the greater good? huh? When?

    In other news, the sun will be rising in the west from now on!

    • Pomonaute says:

      Lavish? So you believe that teaching should be a good paying job rather than a career?

      • ObozoMustGo says:

        Pomo… teachers should not be allowed to participate in legalized extortion of public funds. The people paying their lavish benefits and salaries dont even make near what the teachers do. What’s right about that?

        No need to argue over this point, though. It’s clear that the math does not work and the teachers will have to take a haircut on their lavish pensions.

        Have a nice day!

        • Pomonaute says:

          I grew up in the house of a California public educator and it was anything but lavish!

          • ObozoMustGo says:

            Your parent(s) apparently did not “get theirs” which is hard to believe, although it depends on where you grew up. The fact is that the pension system in CA and in many other areas are going broke because they cannot keep up with the promises made for lifetime pay with defined benefit plans. So, who gets screwed? The teachers or the taxpayers? Why should I have to work until I’m 80 so I can retire while I’m paying for their lazy butts to retire early on full pay? This brings me to my original point. Public employee unions should be immediately banned. They are inherently evil! No good comes from them. NONE!

          • Pomonaute says:

            Hey this America! Stop crying and go get a teaching credential if it’s so easy! Wah…I don’t work till I’m 80! Wah…these teachers have it so easy…you sound like a beeach!

          • ObozoMustGo says:

            No need to teach. I can do. You know what they say… if you cant do, you teach. I’ll take it a step further…. if you cant even teach, you go into HR. If you cant even do HR, you go work for the government in a public employee union. That’s the low of the low on the professional food chain my friend. I love how they make fun of Wal-Mart shoppers. I’ll bet 80% of those people in the pictures are government employees in a public employee union. hehehehehehe

            Have a nice day!

          • Pomonaute says:

            If you can do, stop crying like a little girl with a skinned knee and get out there and do it! Maybe if you do more of what you do you can retire before your 80!

  5. ObozoMustGo says:

    Isnt it odd…. everywhere that DemocRATS control the levers of government for a long time, there is massive financial problems? California, Illinois, NY, Detroit, Philadelphia, etc. etc. etc. hmmmmmmmm Why is that, I wonder?

  6. Pomonaute says:

    When a billionaire makes less money to pay for benefits and raise wages that’s not socialism!

  7. Pomonaute says:

    Adjustments from the status quo that allow people to earn a decent wage is not socialism!

  8. Pomonaute says:

    Wouldn’t the Regan era better fit the definition of socialism?

  9. quinn732 says:

    The problem is not unionized workers, it is scamming politicians. New Jersey is having similar problems due to the politicians “borrowing” from the pension funds and, at the same time, failing to make the required contributions annually. They kicked the can down the road as they always do. Now, the public turns on the employees instead of turning on the politicians who put the funds in the holes they are in.
    Here is one example of why a union is necessary in public employment. In the next town over from mine, the high school football coach retired after coaching the team for 50 years. Rather than promoting one of his assistants to take over, the Board of Ed decided to conduct a search of outside candidates and hired a friend of mine. The retired football coach was very upset by this and in retaliation ran for the BOE solely to have the new coach fired. He partnered with several others on his election ticket to ensure that his vengeful pursuit would be backed by other BOE members. They were all elected and ousted the new coach the following year. Immediately upon getting his way, he resigned from the BOE. The BOE had also hired the new coach as a teacher. To attain his services, the BOE agreed to pay him at the top of the salary guide, as he is a veteran teacher and coach of 20 years. Now that he has been removed as coach, the BOE has terminated his employment at the end of this year with his salary stated as the reason. This leaves a man with 6 kids and an excellent reputation out of a job for the upcoming school year, all because of political games. The teacher/coach now has no choice but to seek assistance from the state teachers association through a lawsuit for unlawful termination (he was recommended for rehire by the superintendent, but it was overridden by the BOE).
    Another reason, I am a principal. The principals and administrators are currently negotiating a new contract with our BOE. This newly elected BOE would like to lower our salaries, reduce or eliminate our benefits, and increase our workloads, which are already very heavy due to previous cuts to administrators in the district. Being a part of a collective bargaining unit allows us to join together to protect our pay, benefits, and maintain reasonable working conditions. Without those protections, I would leave the profession because it would not be worth it to stay. I love what I do, but I also need to feed my family.
    Finally, without the protections of “unions” in public employment, all of these jobs would be given to either friends and relatives of the local politicians, or to the “highest bidder” who pays off the politicians for influence in gaining these jobs. When the politicians are not re-elected, the pols who take their places will clean house and put their own people in. That is bad news for education particularly.

    • sonorasue1 says:

      Well, I am not sure that I agree that all politicians are corrupt, but I do agree it is who you know, when it comes to getting the job. I think Unions are necessary period; to keep the status quo. However, the Republicans have gutted many of the labor laws, and backed the organizations who work on gutting Union members, and replacing them with illegal immigrants in many cases. I particularly beleive that the American Public does not value Education as they do in many other Countries. In my view, the good teachers are important to our very foundation. Our jobs market. The large companies go off shore for employees, and they establish schools in other Countries where they can get cheaper labor. Their excuse is,” there aren’t enough Technicians, etc. ”

      You are definitely right, that they use this ruse about Public Employees to distract the public from the real issues.

  10. sonorasue1 says:

    The system should be revamped, and the teachers if not in the Social security system should be, and if they are, a larger portion of their retirement should be in the social security system

  11. montanabill says:

    Wonder why they have more professional jobs and wealthier people? And you have never been to a ‘tea party’, so you are simply parroting demagoguery.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.