Everyone must chip in to solve pension and OPEB crises.
It’s not news that exploding spending on pensions and retiree health care is crushing public services in California. It’s a problem that didn’t have to happen, as explained here. But it did — and the result is $1 trillion being diverted from schools and other public services in CA.
Nowhere is the crisis more evident than in public schools, as illustrated in San Francisco and Pasadena. Schoolchildren and teachers are feeling the pain as money gets diverted from staffing and salary increases to retirement costs. Ditto taxpayers, who are paying more but the money goes to past debts instead of new services. None of those victims caused the crisis. It was caused by dishonest pension fund board members and elected officials. Those who knew better should be in jail. But that wouldn’t solve the problem.
Retired employees didn’t cause the problem either but they have not yet shared in the pain. Also, they were beneficiaries of the dishonest actions that kept retirement contributions artificially low. It’s time they chipped in.
First, school districts should stop subsidizing expensive health plans for retirees, who should get their insurance from Covered California, the state health care exchange, until they are eligible for Medicare. That could also help the exchange. That step alone could allow San Francisco Unified School District to redirect $40 million per year to current teachers. Second, school districts should not be forced to grant automatic pension increases to retirees until pension funds are in better shape. Together the two steps would free up billions of dollars to improve current staffing and teacher salaries.
It’s not fair to anyone but California classrooms need to be fully staffed with adequately compensated teachers.