School Finances

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

School budgets will be a big issue facing legislators upon their return to Sacramento. 

In 2012, voters passed a ballot measure entitled “Temporary Taxes to Fund Education” that, when combined with a rising stock market, sharply boosted school funding (“Proposition 98 Funding”):

But even that sharp increase in revenue could not keep pace with the torrid rate at which school pension spending grew. E.g., pension spending at the Sacramento City Unified and Fresno Unified School Districts grew two and three times faster than revenues:

By 2019, the two school districts were spending $174 million on pensions, nearly $1500 per pupil. In addition, the districts spent $69 million, or nearly $1000 per pupil, on OPEB (“Other Post-Employment Benefits”) subsidies for retirees. At nearly $250 million per year, the two districts are now diverting nearly $50,000 per active teacher to retirement costs.

Even before COVID19, school districts were under pressure from retirement costs despite record funding. SacCity was already laying off teachers (last-in, first-out, per current state law). Now, funding for schools is likely to slow or decline while, absent reform, retirement spending will continue to rise. Caught in the middle are students and teachers. GFC looks forward to working with the legislature to protect them.

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