Pension costs rise higher than teacher salaries in MUSD
Retirement costs, led by pensions, are expected to go up by 70 percent over the next three years in the Manteca Unified School District.
A district forecast in February project teacher pension costs will rise at least $13.9 million by 2019-20 while salaries will increase $8.1 million
Scheduled hikes in contributions to the California State Teachers Retirement System (STRS) and the California Public Employees Retirement System (CalPERS) threaten to sink general funds as school districts throughout California scrambled to deal with rising costs associated with unfunded pension liability.
The only way the pension funding gap can be made up is increasing assessments on school districts as well as what the covered workers contribute.
Every time the percentage of a teacher’s salary that the district has to pay into retirement funds it sets up a dicey ripple effect. That’s because roughly 90 percent of every dollar Manteca Unified spends from its general fund goes to cover employee salaries, benefits, and retirement.
Many educators have been warning that the situation is likely to get to the point where it will impact the ability of schools to maintain staffing levels. The most likely scenario in such cases is not replacing 100 percent of staff lost to retirement for other reasons should retirement funding bumps starting cutting into the financial bones of general funds.
Manteca Unified last school year contributed 12.58 cents on every dollar of salary for a teacher enrolled in STRS. The cost for those covered by CalPERS in the fiscal year ending June 30 was 13.88 cents for every dollar it pays a teacher who elected to be covered by CalPERS.
In real numbers the district last fiscal year paid $39.4 million to staff covered by CalPERS with an additional $5.4 million going into the retirement fund. For STRS the salaries came to $167.8 million with the district’s share of the retirement contributions costing $21.1 million.
Manteca Unified in February projected the t 12.58 percent STRS contribution would ratchet up to 14.43 percent for the 2017-2018 school year, 16.28 percent for the 2018-2019 school year, and 18.13 percent by the 2019-2020 school year.
As for CalPERS it is projected to go from 13.88 percent last fiscal year to 15.8 percent in 2017-2018, 18.7 percent in 2018-2019, and 21.6 percent in 2019-2020.
By 2019-2020 Manteca Unified will be paying $40.4 million toward retirement costs as opposed to the $26.5 million they are paying this year. That represents a jump of $13.9 million.
Meanwhile, overall salaries are projected to go from $207.2 million this year to $215.3 million by 20192020. That represents a jump of $8.1 million.
The dollar cost of the district funding retirement costs will increase almost 70 percent more than what teachers will be paid.