Sacramento is flush, but cities and school districts can’t keep up with rising public pension costs.
Nine years into a bull market, housing prices in California have reached record highs. Investors are enjoying soaring capital gains, which in turn has created a windfall for the state budget. California is now sitting on $16 billion in budget reserves while many states struggle to balance their budgets. But beneath this patina of prosperity, many cities are careening toward bankruptcy. Schools are laying off employees and slashing programs. Some districts complain they are having trouble retaining teachers. What gives? Read More
Yesterday my political party (Democratic) incorrectly tweeted that California was “paying down debt.” Nothing could be further from the truth.
Enabling a cancer to grow.
Sometimes political philanthropy produces bad outcomes. One example is the latest parcel tax increase for San Francisco Unified School District, the campaign for which was financed by political philanthropists and approved by voters June 5. Using a loophole to lower the threshold for voter approval and sold falsely as a sustainable solution to inadequate teacher salaries, the regressive tax covers up a growing financial cancer, reduces pressure to address that cancer, and burdens SF’s shrinking middle class. Read More
One giant leap for the next generation.
Earlier this year the City of Palo Alto’s Finance Committee hired an independent actuary to produce a budget scenario reflecting a more realistic return on pension assets than the unrealistically-high return assumed by CalPERS, the city’s pension fund manager. As explained here, unrealistically-high assumed rates of return allow governments to artificially suppress upfront (“Normal”) pension costs for current services at the expense of larger costs for citizens down the road who didn’t receive the benefit of those services. The independent actuary reported that a realistic assessment of Palo Alto’s Normal Cost is $8 million higher than CalPERS’s assessment. Read More
Where is the outrage?
Spending on California schools is nearing $100 billion per year, more than $16,000 per student. School revenues have never been higher. Yet some school districts are making cuts. Imagine you are the parent of a child in the Oakland Unified School District, which serves nearly 50,000 children. Read More
As much as we wish it otherwise, two recent bills illustrate how far our state legislature still has to travel to be fully liberated from special interests. Read More
With passage of the new state budget by the legislature last night, per pupil spending in California will exceed $16,000 in the next fiscal year… Read More
Most political reporters know that the California Legislature is a co-equal branch of government but few know much about the legislators themselves. As a result, all too often they place legislators in traditional categories — eg, “pro-business, “pro-labor,” “pro-environment” — when California’s political world has moved well past those old and uninformative designations. Read More
Most everyone knows the names of the two people vying to be California’s next governor. Hardly anyone knows the names of the two people who more than anyone else will affect the success or failure of the next governor. Read More
Governor Jerry Brown is negotiating yet another salary increase for state prison employees, the fourth in seven years. Read More
Well-informed Californians can get a glimpse of poorly-informed journalism about their state legislature with a peek at an article by Washington Post reporter Dan Balz, who writes that Top Two Primary’s ”promises remain mostly unfulfilled” and that “even in Sacramento, the differences are minimal.” Oh, really? Read More
Govern For California’s Primary Election Slate consists of 21 people who meet five tests: intelligence, financial literacy, legislative temperament, ability to win, and courage, by which we mean they toil for something greater than themselves. Read More
California’s unemployment rate exceeds the national rate… Read More
On May 11 California Governor Jerry Brown released the May Revision to his proposed budget for the next fiscal year, which starts July 1. It’s a must-read for anyone who wants to understand California’s budgets. Read More
Lunch isn’t free.
California’s General Fund operates like a waterfall. Programs protected by constitution (principally K-12, community colleges, and debt service on General Obligation Bonds), statute (principally Medi-Cal, the state single-payer health insurer for low-income Californians) and contract (principally pensions and subsidies for retired employee health insurance) get first dibs on tax revenues. Only after those programs are satisfied do funds become available for unprotected programs such as UC, CSU and courts. Read More
The California legislature is a co-equal branch of government. Governors are not CEO’s but rather more like committee chairs with veto power. They cannot enact legislation without the consent of at least 62 members of the state legislature. To get to those members they must go through two people: the Speaker of the Assembly and the President Pro Tem of the State Senate. Despite their power, few Californians even know their names*. Read More
Good governance requires good citizenship.
One of my tasks as president of Govern For California is to help grow our network of political philanthropists. The bigger our network, the more courageously our legislators can act. Most prospects respond favorably. But some choose instead just to grumble. They fall into the following categories… Read More
Nearly always too soon to tell.
When asked by Henry Kissinger in 1972 for his thoughts on the French Revolution, Chinese Premier Zhou En-Lai reportedly answered that it was “too soon to tell.”* The same may be said about gubernatorial performance in California. For example, who knew in 1968 that the granting of collective bargaining rights to public employees by Ronald Reagan would lead to public employee domination of California’s politics today? Or that Jerry Brown’s support for California’s Determinant Sentencing Law in 1976 would lead to an explosion in California’s prison population decades later? Read More
California school boards are prevented by the state legislature and governor from offering disproportionate pay to employees willing to work in high-poverty zones, cutting pension spending, altering tenure rules or granting principals the power to fire poorly performing employees. The outcome: poor student performance and shaky finances despite a big increase in spending. Read More
Classrooms should be fully staffed with adequately compensated teachers. But that is not the case in California despite a >50 percent increase in spending since 2010. The principal reason is the diversion of school dollars to pensions and other retirement costs. Governor Brown reports annual spending of $16,000 per student but only about half reaches students. Read More