Howard Blume, Chris Megerian
May 20, 2014
California’s public school districts could face difficult cutbacks if state officials move forward with a plan to bail out the retirement fund for teachers, officials and educators say, but even those painful steps may fall short of curing the pension deficit if investments don’t meet expectations.
Under a proposal released last week by Gov. Jerry Brown, more money will flow into the California State Teachers’ Retirement System to begin closing an estimated $74-billion shortfall. But addressing that problem creates a different one: School systems would have to quickly pare back spending for next year, and they would face steeper diversions of dollars in later years.
“It has a lot of school districts reeling in terms of how to grapple with this unanticipated expense in the coming school year, throwing a major wrench into everything,” said Kevin Gordon, president of Capitol Advisors Group, a Sacramento company that lobbies on behalf of school districts.
California’s school systems still will see overall funding rise, but not as much as they’d been planning after several years of reductions. Under the governor’s plan, the pension contribution from school districts will rise next year to 9.5% of payroll from the current 8.25%This will increase to 19.1% over seven years. In other words, for a teacher who earned $50,000 a year, a district would have to set aside an additional $9,550 annually for that instructor’s retirement.
Paying that much to the pension program “could be devastating,” Perris Union High School District Supt. Jonathan Greenberg said.
To make matters worse, officials said, the highest contribution rate takes effect after the expiration of a temporary tax increase that is now boosting school revenues.
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