Capitol Alert Insider Edition


January 7, 2014
Editorial: Start eating pension elephant one bite at a time

ha_kings_sign.JPG(Jan. 7 - By the Editorial Board)

Senate Democrats announced legislation on Tuesday to expand kindergarten to help 4-year-old children get off to a strong start in school, at a cost of $198 million a year. It's a great idea.

So is this: Paying the debt Californians incurred by promising to provide public school teachers with secure pensions.

The California State Teachers' Retirement System estimates that the cost to fully fund the teachers' pension debt will be almost $4.5 billion in the coming year, $4.6 billion the year after that, and more in each subsequent year.

CalSTRS calculates that 30 years from now - and many veteran teachers who retire now will live another 30 years - the annual cost of fully funding the system will be $13.9 billion.

The Bee's editorial board last wrote about this issue in December 2012. The total unfunded liability stood at $65 billion then. Now, the amount is $71 billion. Like a mortgage, taxpayers in the form of the state, school districts and teachers will need to pay $235 billion during the next 30 years to make good on that $71 billion liability.

The cost is real. The state and school districts - primarily using state funds - have a moral and contractual obligation to pay it.

To the benefit of no one, policymakers have been shortchanging teachers and taxpayers by paying less than 50 percent of the amount that would fully fund pensions in each of the last three years. Indeed, the state has shortchanged the system by paying less than 100 percent of its obligation in each fiscal year since 2001-02.

At some point, however, that has to stop.

Gov. Jerry Brown has been the adult in the room on many issues; he should assert his leadership on this issue, too. The public will get a glimpse of his plan - or lack of one - when he releases his budget proposal for the 2014-15 fiscal year on Friday.

To their credit, Speaker John A. Pérez and Senate President Pro Tem Darrell Steinberg say they recognize the need to make good on teacher pension obligations. But to make good on their promises, they and other legislators may need to forgo accolades that surely would accompany creation of new and innovative programs.

Individually, teacher pensions are hardly exorbitant. The average monthly check is less than $3,700 per year. For many teachers, that's their only retirement pay. California teachers don't pay into Social Security and don't collect it when they retire.

Public school teachers contribute 8 percent of their pay to their pensions. They likely will end up paying a greater share for their retirement; the amount will be subject to bargaining. Newly hired teachers also will need to pay a larger share.

No bread-and-butter issue is more basic than pensions.

The California Teachers Association, probably the most influential public employee union in the state, should use its clout to persuade lawmakers to focus on the unfunded pension liability, rather than waste its political capital on side issues, such as defending job protections for criminals masquerading as teachers.

The amount, $4.5 billion, is daunting, as is $71 billion and $235 billion. But the sums aren't shrinking. Promises were made. Policymakers need to figure out ways to make good on those promises.