Strike or no strike, pen­sions prob­lem­atic for LA schools

The Tribune (SLO) (Sunday) - - News - BY CHRISTO­PHER WE­BER

Strike or no strike, af­ter a deal is ul­ti­mately reached on a con­tract for Los An­ge­les teach­ers, the school district will still be on a col­li­sion course with deficit spend­ing be­cause of pen­sions and other fi­nan­cial obli­ga­tions.

School sys­tems across Cal­i­for­nia are ex­pe­ri­enc­ing bur­den­some pay­ments to the state pen­sion fund while strug­gling to im­prove schools.

The prob­lem is es­pe­cially acute for dis­tricts like Los An­ge­les Uni­fied that will see a fi­nan­cial hit in part be­cause of steadily de­clin­ing en­roll­ment.

As fewer stu­dents en­roll, pub­lic schools get less in per-pupil fund­ing from the state, said He­len Creg­ger, an an­a­lyst and vice pres­i­dent at the fi­nan­cial ser­vices com­pany Moody’s.

“Then comes the trade­off be­tween mak­ing good on pen­sion prom­ises and what you’re ca­pa­ble of of­fer­ing in salaries,” she said.

The down­ward trend in en­roll­ment is due to sky­rock­et­ing hous­ing costs that keep fam­i­lies with school-age kids out of the city and the growth of char­ters — pri­vately op­er­ated pub­lic schools that com­pete for stu­dents and the funds they bring in.

Los An­ge­les is among the school dis­tricts across Cal­i­for­nia that are not well-po­si­tioned to man­age the com­ing con­flu­ence of slower rev­enue growth, de­clin­ing en­roll­ment and ris­ing pen­sion con­tri­bu­tion rates, ac­cord­ing to a Moody’s study pub­lished in Septem­ber 2018.

The LA district’s con­tri­bu­tions to the state’s two large pen­sion plans — Cal­i­for­nia State Teach­ers’ Re­tire­ment Sys­tem and the Cal­i­for­nia Pub­lic Em­ploy­ees’ Re­tire­ment Sys­tem — amounted to about 5.5 per­cent of the bud­get in the 2014-15 school year. By last year, that num­ber had climbed to nearly 8 per­cent, ac­cord­ing to an As­so­ci­ated Press anal­y­sis.

The con­tri­bu­tions ramped up quickly to chip away at plan un­der­fund­ing and be­cause of de­mo­graphic trends: As re­tirees live longer, their life­time pen­sions cost more. Mean­while, the district is spend­ing more on spe­cial ed­u­ca­tion pro­grams and see­ing climb­ing health care costs.

Gov­ern­ing bod­ies in some places — though not LA Uni­fied — have skipped pen­sion con­tri­bu­tions al­to­gether to deal with other more im­me­di­ate bud­get crunches, com­pound­ing the short­falls. Cal­i­for­nia’s ma­jor plans are short largely be­cause they did not reach lofty in­vest­ment re­turn tar­gets.

David Crane, pres­i­dent of the ad­vo­cacy group Gov­ern for Cal­i­for­nia, said there’s noth­ing an in­di­vid­ual school district can do about its ris­ing pen­sion costs. He said state aid — like a plan that new Gov. Gavin New­som in­tro­duced Thurs­day in his bud­get pro­posal — could re­duce the bur­den for dis­tricts, though.

New­som, a Demo­crat, wants to make a $3 bil­lion one-time pay­ment to Cal­i­for­nia’s teacher pen­sion fund on be­half of schools to help dis­tricts that are see­ing more of their bud­gets eaten up by pen­sion obli­ga­tions.

Crane said dis­tricts can reach deals with teach­ers unions to elim­i­nate or scale back pay­ing for re­tiree health care. He said those costs are not needed be­cause they’re sub­si­diz­ing care largely for peo­ple al­ready el­i­gi­ble for sub­si­dized cov­er­age or Medi­care.

“It’s com­ing out of cur­rent teach­ers’ pock­ets,” Crane said, and will only get more ex­pen­sive in the fu­ture. Cut­ting the post-re­tire­ment ben­e­fits, which cost the district $343 mil­lion last school year, could mean raises of more than $10,000 for each of the district’s 26,000 teach­ers, he said.

LAUSD Su­per­in­ten­dent Austin Beut­ner said he’s “de­lighted” by the new gov­er­nor’s com­mit­ment to pub­lic ed­u­ca­tion and added that it’s the district’s obli­ga­tion to make good on cur­rent pen­sions.

“The work’s been done, the ben­e­fits have been earned,” he said. “We wish the state would give us a lit­tle more money to cover the ac­tual costs of those ben­e­fits but we’re com­mit­ted, of course, to main­tain­ing the pen­sion sys­tem that’s in place.”

Many ed­u­ca­tors say they chose teach­ing over more lu­cra­tive pro­fes­sions be­cause of the prom­ise of a se­cure re­tire­ment, and they ham­mer at the moral ar­gu­ment that pen­sions are prom­ises.

Walk­outs by teach­ers last year in Ken­tucky schools were largely over the gov­er­nor’s plan to cut fu­ture pen­sion ben­e­fits there. For­mer New Jersey Gov. Chris Christie and his state’s largest union spent nearly his en­tire eight years in of­fice bat­tling over pen­sions.

Teach­ers are pre­par­ing to strike in Los An­ge­les on Mon­day.

FRANCINE ORR TNS

Par­ents, teach­ers and stu­dents rally Fri­day in sup­port of teach­ers in Wood­land Hills.

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