California school districts facing cuts due to pension costs

January 23, 2017

California school districts will soon divert billions of dollars from classrooms in order to backfill pensions, education officials say. The skyrocketing pensions costs are expected to eat up much of California’s increased spending on education. [SF Chronicle]

The school district workers whose pensions require the most backfilling are non-certified employees, such as office workers, custodial staff and cafeteria workers. Most non-certified employees are members of the California Public Employees Retirement System (CalPERS), the state’s flagship pension system, whereas teachers and administrators primarily belong to the California State Teachers Retirement System (CalSTRS), the state’s second largest pension system.

Last month, CalPERS decided to lower its discount rate, or projected return on investment, from 7.5 percent to 7.0 percent. The change will be phased in over a period of a few years, but it will cause pension costs to spike for state and local government agencies, including school districts.

State estimates show school districts’ CalPERS contribution costs will likely double within six years.

School district officials say, due to the rising pensions costs, there may be larger class sizes, stagnant worker pay, fewer counselors and librarians and less art and music. Insolvency and state takeover are possibilities for some districts.

“It’s like an OMG moment of, ‘How are we going to cover this?’” said Dennis Meyers, the assistant executive director of governmental relations for the California School Boards Association. “It’s scaring districts right now. A lot are questioning whether they can stay afloat.”

Factoring in CalSTRS as well as CalPERS, rising pensions costs are expected to eat up more than a third of proposed increases to next year’s state education budget. The state education budget is expected to expand by $2 billion next year to $73.5 billion. At the height of the recession in 2011, the budget was $47.3 billion.

All seven cities in San Luis Obispo County are also CalPERS members. They, too, will face rising pension costs as a result of CalPERS lowering its discount rate.







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44 Comments

  1. c.d.cox says:

    For years the military brass would say make a career of the military and receive free medical for life.We are keeping your pay low because you will be able to work after you retire from the military. When they stopped our medical the SCOTUS said OH promises are meant to be broken.So break the promise all Cal workers. Cannoncocker

    (0) 0 Total Votes - 0 up - 0 down
  2. Rambunctious says:

    California needs a public sector Unionexit….Or renegotiate everything, it’s the only way to save the state.

    (4) 4 Total Votes - 4 up - 0 down
  3. womanwhohasbeenthere says:

    California’s public employee pensions are a mess. Period. There should be a cap on wages and a cap as was suggested elsewhere here. Anyone making six figures in the public sector should be able to save some money for his own retirement.

    And speaking of saving money, how DARE the SL Coastal USD Board give their overpaid district superintendent a 2% loan, no down payment, to buy a house! This wasn’t part of the contract. Now every other employee will see this as a precedent and want the same.

    This is a guy making over $200K a year who can’t save for a down payment? The bank won’t loan him money -why not??? If he isn’t good enough for the bank, why should the taxpayers take money from kids to finance his house?

    This really stinks…

    (14) 14 Total Votes - 14 up - 0 down
  4. John Bosch says:

    I’m concerned about unionized teachers capabilities to teach simple math….The pension funds are seriously underfunded but they turn a blind eye….Every election cycle taxpayers are told that unless they cough up more money their kids education may suffer….and every election cycle taxpayers approve spend more money on education…but nothing improves….what’s happening in IMHO.. teachers unions buy thus own the very politicians they collectively bargain with behind closed doors which is nothing less and an end run around democracy….It’s a scam….

    (25) 29 Total Votes - 27 up - 2 down
    • Rawhide says:

      Tenured Teachers in our Public Schools:

      Granddaughter 16 is having a difficult time with Core math…grades.
      I asked her if her teacher could help her after school…she said NO…that
      the teacher goes home after school because she isn’t paid overtime to help her students.

      (6) 12 Total Votes - 9 up - 3 down
  5. grayotter1 says:

    I’ve read that our school system is the least effective most expensive school system in the United States!!! IT”S BROKEN! Superintendents make our State Governors wages. Cal Poly President makes 50% more than President of the United States considering his perks and side benefits. How do their responsibilities relate? Doesn’t it feel good to have your money slide down the “pig trough”.

    (35) 39 Total Votes - 37 up - 2 down
    • MrYan says:

      You are correct in your assessment, it is not the teacher’s who are bankrupting the system, it is the Administrative level that wastes the most money. Yes they make more than our Governor.

      In our desire to have “local control” we’ve set up thousands of individual, independent, cost centers that need “administration”. Each district receives money from the state, it’s funding locked to attendance, yet they operate their own budgets– which in effect merely “pretending” to have local control when it is really dictated by the state.

      Each district must pass financial audits, submit reports to the state, etc. Report after report required simply because we run them as local entities. Most of the reports go unread as well–just make sure they are submitted and check off the box.

      All of these layers of control built in, so we can pretend we have local control of our schools.

      Sure put a principal at every campus to ensure that students are educated properly and the school runs well, but a Superintendent at each district to keep the books is a waste of money.

      When school administrators and athletic coaches make more than they Governor or President of the United States then something is out of whack.

      Coughing up a few more bucks for the retirement package of those who work in the trenches educating our kids is not hard to do. Coughing it up, so someone can retire at 80% pay scale for an Admin job that didn’t need to be there to begin with is another story.

      (12) 16 Total Votes - 14 up - 2 down
  6. ConfedOfDunces says:

    How about pension cuts.

    (20) 30 Total Votes - 25 up - 5 down
    • SLO_Johnny says:

      The unions and their Democrat allies in Sacramento passed laws that make that impossible. They don’t work for us. We work for them. Our paychecks belong to them; if we are good boys and girls they will let us keep some of the money.

      (16) 22 Total Votes - 19 up - 3 down
  7. isoslo says:

    No one should be surprised here, except those of you who flunked basic math and independent thinking. The state of California retirement system has always been a ponzi scheme. The system assumes an ever increasing pool of state employees to finance the underfunded retirement of the existing employees. The only solution is to change the entire government retirement system to a defined contribution plan (401k) and get rid of the unreal defined benefit plan. How can anyone plan to pay for forty years of retirement payments with a fraction of the funds needed?

    (19) 23 Total Votes - 21 up - 2 down
  8. standup says:

    Time to rethink compensation and benefits instead of raising taxes.

    (13) 17 Total Votes - 15 up - 2 down

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