One important piece missing from the settlement of the Los Angeles school strike was reforms of the pension and health benefit systems.
Teacher salaries were increased; promises were made to hire new nursing and counselor staff and reduce class size. There was talk of the need for finding new revenue and dealing with charter schools. But no mention of wrestling with the benefits packages that caused district officials to fear insolvency.
In a larger sense, the agreement without benefit reforms could reverberate throughout local governments around the state. The strike settlement could be precedent setting in the sense that when other public unions demand more revenue or change of working conditions, retirement and health care benefit reforms could be kept off the table reflecting the agreement made by the LAUSD with the United Teachers of Los Angeles.
Last month, Stanford lecturer and Govern for California president David Crane made a compelling case for the Los Angeles school district to address the benefit problem that appears out of control.
Here’s some of what Crane reported:
Los Angeles Unified School District collected $7.2 billion in revenues in its 2017–18 fiscal year, 24 percent more than four years earlier. But spending on teacher salaries rose only 5 percent over that same period. And the number of teachers declined 13 percent.
The principal reason is that retirement spending — including retirement spending under UTLA’s control — surged. In LAUSD’s 2013–14 fiscal year, 9.9 percent of district operating expenses went to pensions and other retirement costs.
Four years later, spending on retirement costs had surged 84 percent, 3.5x more than revenues grew, boosting retirements’ share of operating expenses nearly 50 percent to 14.6 percent — nearly half as much as the district spent on teacher salaries.
One-third of that retirement spending is for unnecessary, duplicative or excessive health insurance subsidies provided to retirees entitled to Medicare or ACA coverage. UTLA controls the Health Benefits Committee that authorizes those subsidies. Terminating those subsidies could provide an immediate pool of more than $300 million for hiring more teachers and shrinking class sizes. Alternatively, that $300 million could provide an immediate $10,000 salary boost for each LAUSD teacher.
Now is the time for UTLA to terminate unnecessary, duplicative or excessive retirement subsidies and to redirect that money to reduce LAUSD class sizes and/or raise teacher salaries.
Reforms to the benefit packages were possible but were not tackled. A precedent may have been set.