Fast-rising spending on pensions and other retirement costs is crushing teacher staffing and pay in California. As an example, retirement spending at San Francisco Unified School District grew 3x faster than district revenues over the last five years, absorbing $35 million that could have gone to current teachers. Worse, that happened despite record stock market gains and school revenues. Absent reform, teacher staffing and pay will decline further.

Imagine the following: A candidate for elected office in California says to donors and voters that, if elected, he will innovate state services so they are as consumer-friendly and digitally-available as, say, Apple’s services. But the candidate also seeks the political support of government employees (eg, school district and DMV employees) for whom such innovation would likely mean fewer jobs and stricter performance measures. Given that government employees are the largest contributors to political campaigns in California, what do you think the candidate, if elected, will actually do? The answer: Not innovate.

School starts today in San Francisco but according to an article in the San Francisco Chronicle not all classrooms may have teachers because of “a rash of departures over the summer.”

Until 1910, the dominant political force in California was the Southern Pacific Railroad. According to the San Francisco Chronicle, SP “manipulated much of California’s political life, buying city supervisors, mayors, judges, the state legislature and even members of the California delegation to the U.S. Congress.” Eventually California enacted a railroad commission and other reforms to reign in SP’s power.

The State of California’s 2017–18 Enacted Budget confirms an ominous trend as state spending on retirement costs continues displacing state spending on the University of California and California State University.

Some angry California Republicans are up in arms about eight GOP state legislators who voted for cap and trade legislation to reduce greenhouse gas emissions. (Full disclosure: I supported the election of one of those legislators.) Describing the eight as “sell-outs,” the angry Republicans characterize the legislators as “willing to vote for legislation that goes against core GOP principles.”

Yesterday the California Public Employees’ Retirement System reported excellent earnings for its 2016–17 fiscal year, earning 11.2 percent. Yet CalPERS’s Funded Ratio (the ratio of assets set aside to meet pension liabilities owed by governments) improved only three percentage points, from 65 percent to 68 percent.

Despite historic revenue gains, California’s public schools are in financial trouble. While California’s public schools often suffer financial distress during recessions, their current plight is alarmingly taking place during an economic recovery and after a large tax increase. The principal cause is exploding spending on pension and retiree health care obligations.

Last week the Sacramento Bee published a guest op-ed by Yvonne Walker, who leads an employee association, that likens public pension deficits to droughts fixable with a good winter of rain. But that’s not a valid analogy.

I received notes from yesterday’s briefing of legislators about Governor Brown’s proposal for a special fund (SMIF) to lend the general fund $6 billion so the general fund can put that money in CalPERS, a state pension fund. The briefing was led by CalPERS, the beneficiary of the cash infusion. Four items stand out…

Potential profits could’ve been used for government services

Yet Governor Brown promises savings

What Awaits California’s Next Governor

Every California legislator should read The Healing of America by T.R. Reid. An informative and entertaining world tour, Reid’s book would make crystal clear the deceptions being proffered by some proponents of a bill (SB 562) that they misleadingly characterize as similar to single payer systems in other countries. 
It’s not. 

Hint: It’s not about health

California proposes to issue a pension obligation bond to finance extra contributions to the state pension fund, CalPERS. It would also cover up wealth transfers from citizens to state employees. Here’s how it works…