CA Can’t Blame Trump For This Problem

Donors and voters should hold governor and legislature accountable.

One of the consequences of Donald Trump as president is that he distracts attention from California’s own failures to govern successfully. Nowhere is that distraction more costly than in public education.

Nine million students attend California’s public schools, colleges and universities. The governor and state legislature write the Education Code, including rules governing teacher tenure and teacher dismissal, and allocate funding for colleges and universities. Surely most Californians would consider public education a central responsibility of the state government — and they would be right. Yet despite massive revenue increases California is systematically defunding classrooms. That’s because the governor and legislature refuse to address exploding spending on pensions and other retirement costs.

Ten years ago the state allocated more money to the University of California and California State University than to retirement costs:

But this year UC and CSU will receive only 60 percent of what the state will spend on retirement costs, which rose 85 percent, the consequences of which fall disproportionately on UC and CSU:

Reduced state spending on UC and CSU means higher tuition costs and fewer resources for students. In the absence of reform, worse is on the way.

The same cruel story is unfolding in K-12 school districts. In 2012 San Francisco Unified School District spent nearly 4x more on teacher salaries than on retirement costs:

But just five years later that ratio had fallen nearly in half as retirement spending by the district more than doubled:

Exploding spending on retirement costs means fewer teachers, lower salaries and a worsening student-teacher ratio. Absent reform, worse is yet to come. Just look at the expected growth in spending on pensions in the Los Angeles Unified School District:

LAUSD Pension Cost Projections

Worse, that schedule is based on an aggressive investment return assumption that in all likelihood will not be met, portending even greater increases in pension costs.

And that’s not all. On top of that spending is the projected growth in LAUSD spending on another retirement benefit, retiree healthcare:

LAUSD Retiree Healthcare Cost Projections

None of these problems was caused by Donald Trump or the federal government and all of them are happening despite a nine-year bull market and major tax increase that have produced historic state tax revenues. And bull markets don’t last forever. Absent reform, the next market downturn will produce even more catastrophic budget outcomes for schools, universities and other public services.

All students are dreamers. California’s elected leaders are letting them down.

High quality education is a pre-requisite for success in a competitive world. While elites can send their kids to private schools, live in pricey suburbs or subsidize their individual schools, those escapes are not available to the vast majority of Californians. Their only protection takes the form of a governor and legislature who care about protecting their classrooms and teachers from the rising tide of retirement costs. Absent reform, California students will continue to underperform despite massive revenue injections.

The retirement cost problem in California was easy to solve a decade ago but self-serving pension fund board members and elected officials blocked that path. That made the problem much more expensive and difficult to solve. Innocent students, teachers and taxpayers have already been harmed and will continue to suffer huge negative consequences. Now the governor and legislature must turn to more difficult solutions and political philanthropists and voters must hold them accountable.

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