Originally published in the Sacramento Bee.
The recession deserves most – but not all – of the blame for the 1,200 layoff notices mailed to Sacramento area teachers this year.
You can also blame California’s public pension system, which drains at least $3 billion from state coffers that could be saved if prison guards, California Highway Patrol officers and Caltrans workers retired with benefits comparable in value to those provided by Cisco, Chevron and Safeway.
Proposition 98, which guarantees a level of school funding, would make sure schools get their share. Teachers’ jobs would be saved and program cuts would be less severe.
The California Foundation for Fiscal Responsibility released a study earlier this month showing that private and public employees earn comparable salaries for comparable jobs, but that state and local governments provide retirement benefits that are three times as generous as those provided by California’s largest companies.
This year, a 45-year-old state employee earning $60,000 annually will accumulate retirement benefits valued at $19,000. A comparably paid employee of a large private company receives retirement benefits worth less than $6,000.
The disparity in retirement benefits among different classes of workers is also striking. Prison officers and Highway Patrol officers, for example, can retire seven years earlier than teachers – with benefits that are 77 percent higher.
Prison and CHP officers also collect larger benefits than FBI agents and other federal law enforcement officers. A 53-year-old California public safety employee with 26 years service and an annual salary of $140,000 will be entitled to employer-funded retirement benefits valued at $2.2 million. A federal agent’s benefits would be worth $1.6 million.
Teachers’ retirement plans were designed for teachers who retire after a full career in the classroom. Today’s teachers more typically work 10 years and leave to start a family or a new career. Some enter the teaching profession in the middle or later stages of their careers. A teacher who spends eight years in the classroom early in his or her career leaves with retirement benefits that are worth less than the teachers’ own contributions. In the same period, a comparably paid local government employee has accumulated tax-funded benefits worth $58,000.
In general, salaries and benefits paid to local government employees are higher than the salaries and benefits paid to state government and private sector employees. A local government employee who begins a career at age 27 with a $45,000 starting salary and who receives normal raises can retire at age 57 with employer-funded retirement benefits totaling almost $1.2 million. A similarly situated teacher will receive $500,000 in benefits, and an employee of a large corporation will get less than $400,000.
It is indefensible that San Francisco city retirees received a $170 million cost-of-living increase this year while 400 teachers got pink slips. The University of California system threatens another tuition increase, but UC continues to pay retired professors and administrators full-time, six-figure salaries on top of their six-figure pensions.
CSU claims it needs to raise tuition 32 percent, but its non-safety employees pay only 5 percent of their salaries to their retirement plans, while other state employees in the same classification contribute 8 percent.
Pension reform doesn’t mean retirees must lose benefits. Public employees will keep what they’ve earned, although they should contribute half the costs.
Reform is desperately needed to reverse the course that has produced pension debt that our grandchildren’s grandchildren will be paying for. A state constitutional amendment aligning public and private retirement benefits will save billions of dollars now and into the foreseeable future.
The Little Hoover Commission has a plan to fix state and local pension systems. More than 70 percent of voters support reform, and that number is likely to increase as classrooms become more overcrowded, and parks, fire stations and libraries close.
It’s hard to imagine a more attractive return on the investment it would take to reform California’s public pension system. Someone needs to step up.