CA Budget Still Needs Fumigation

Feb. 22, 2011

By JOHN SEILER

As Gov. Jerry Brown and the state Legislature continue crafting a budget, skunks keep being thrown into the room.

The biggest skunk is that the $146 billion California State Teachers’ Retirement System, CalSTRS, is effectively insolvent. Funded at 80 percent of liabilities today, CalSTRS calculations show that its funding will drop to 0 percent of liabilities by 2042, just 31 years from now. Reported the San Jose Mercury News:

The threat isn’t to teachers who have retired or plan to, but to the people of California. Taxpayers, who already pick up 23 percent of CalSTRS expenses, will be increasingly burdened as the giant pension system fails to meet its obligations.

“The governor is ignoring that they need another $4 billion a year, every year, for CalSTRS,” Marcia Fritz told me; she’s president of the California Foundation for Fiscal Responsibility, which keeps track of the state’s pension problems.

To make the system solvent, she said, about $11,000 per teacher will have to be put into the system. “That will have to come from the state budget, school budgets or teachers’ pay.” Taxpayers fund the state budget and school budgets, so they could be on the hook for higher taxes.

She said that Brown “included in his budget exactly what the law requires,” but that state law doesn’t require enough to be put into the system. It didn’t take the governor long to forget the promise in his Inaugural Address of January 3: “First, speak the truth. No more smoke and mirrors on the budget. No empty promises.”

Fritz said that a way to get reduced pension costs would be to require all public employees, including those in public safety, to work five years longer before retirement. Doing so “would cut overall retirement costs in half.”

Alternatively, she said, pensions payouts could be cut in line with the reduction in the value of private-sector 401(k) retirement funds. “It shouldn’t be any different,” she said, with those living off the taxpayers’ money having to reduce their budgets the same as taxpayers have been forced to by economic reality.

Right now, she warned, governments across the state are encouraging workers to retire early, thus getting high-paid workers off the budget, while putting the cost on the pension system.

Fritz pointed to an updated list on her group’s Web site of retired teachers that pull in more than $100,000 a year from teacher pensions. The number of such retirees now is 5,309. Here are those at the top of the list:

Name Monthly Annual District
ISAACS, DANIEL M $29,580.00 $354,960.00 LAUSD
FISHER, ROBERT J $27,926.73 $335,120.76 LAUSD
ENOCHS, JAMES C $24,712.95 $296,555.40 MODESTO CITY ELE.
WENTWORTH, FREDRICK $24,207.07 $290,484.84 SAN JOAQUIN COUN.
HERNANDEZ JR, EDWARD $23,866.35 $286,396.20 RANCHO SANTIAGO.
SHATTUCK, VIRGINIA J $23,564.19 $282,770.28 NORWALK-LA MIRAD.
JAQUE-ANTON, DONNALYN E $22,811.40 $273,736.80 LAUSD

Of the top seven, three were in the Los Angeles Unified School District, one of the worst-performing districts in the country, with only 41 percent of students graduating high school. No wonder the costs to school a child in LAUSD, as I have reported, are an incredible $30,000 per student.

Fritz added that 25,000 retired teachers receive $75,000 or more a year in CalSTERS pensions.

Federal budget slashing

A second big hit to the state budget could be the loss of $1.5 billion from the federal government. The new Republican majority in the House of Representatives approved the cuts in the budget it passed on February 19. The budget still will have to be approved by the Senate and President Obama. Negotiations are ongoing. And most of the cuts would be across-the-board, affecting other states as well.

But the position of California at the bargaining table has eroded since Rep. Nancy Pelosi, D-Sacramento, stepped down as House speaker.

Among the cuts, reported the Los Angeles Times:

$55 million in Pell Grant reductions

$100 million in biomedical research for the University of California system

$125 million for K-12 schooling

$15 million for the Presidio Trust in San Francisco, Pelosi’s home base

Budget maneuverings

As to the state budget itself, the passage of Proposition 25 last year is making things go much more smoothly — so far. Prop. 25 reduced from two-thirds to a majority the threshold for passing a budget in each house of the California Legislature.

Prop. 25 effectively freezes minority Republicans out of budget discussions. Their only remaining leverage is holding out on Brown’s call for them to join the majority Democrats in putting a $12 billion tax-increase vote before voters in a June special election. For that, a two-thirds vote in each house still is required.

Reported the Los Angeles Times on the smooth budget approval:

The legislators made relatively minor changes to the governor’s $84.6 billion spending proposal. Some differences remain on cuts in home healthcare services and healthcare for the developmentally disabled, as well as on Brown’s proposed elimination of redevelopment agencies.

But as Bob Morris of the California Independent Voter Network noted:

The effective deadline for this to happen would be March 7, as the state needs three months to prepare for the election. But it’s simply not possible for the governor to implement sweeping public pension reform in a couple of weeks. Plus, even if he could, it’s a certainty that CalPERS and public unions would sue to block it, tying it up in court for years…

Last Thursday, Republicans upped the ante saying they won’t vote to put taxes on the ballot even if Brown does magically slash pension benefits and impose a spending cap.  Republican Sen. Bob Dutton of Rancho Cucamonga said, “They [Democrats] really don’t need us to govern at all. They just need us if they want to raise taxes.”

Morris then described the tactic Republicans are using as one derived from activist Saul Alinsky and called “Eyes, Ears and Nose”:

Eyes: “If you have a vast organization, parade it before the enemy, openly show your power.”

Ears: “If your organization is small, do what Gideon did: conceal the members in the dark but raise a clamor that will make the listener believe that your organization numbers many more that it does.”

Nose: “If your organization is too tiny even for noise, stink up the place.”

It’s worth adding that President Obama himself, as a community activist in Chicago early in his career, was influenced by the techniques of Alinsky, who also hailed from Chicago.

Alinsky died in 1972 out here in Carmel. As the budget and pension debacles continue, it’s worth keeping in mind a quote of his from his well-known 1971 book, “Rules for Radicals”:

In this world laws are written for the lofty aim of “the common good” and then acted out in life on the basis of the common greed.

John Seiler is a reporter and analyst at CalWatchDog.com.

His email: [email protected].

16 comments

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  1. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 23 February, 2011, 07:43

    Fritz pointed to an updated list on her group’s Web site of retired teachers that pull in more than $100,000 a year from teacher pensions. The number of such retirees now is 5,309
    ================
    There you have it-teachers making $100K per year with their age 61 reitement pensions.

    SS is $30K MAX at age 67.

    No wonder we are BK!

    Reply this comment
  2. Charles
    Charles 23 February, 2011, 08:52

    Alternatively, she said, pensions payouts could be cut in line with the reduction in the value of private-sector 401(k) retirement funds. “It shouldn’t be any different,” Marcia Fritz

    Okay Marsha, in keeping with your “fairness” doctrine “it shouldn’t be any different” let’s make another comparison.

    The Director of Caltrans is responsible for a $13.8B yearly budget (larger than the GNP of about half of countries), is responsible for more than 20,000 employees and oversees more than 50,000 miles of California’s highway and freeway lanes.

    And gets paid about $150K per year. If he was a private CEO with that kind of responsibility $3M per year would be more like it. In the interest of “it shouldn’t be any different” a 2000% raise is in order here.

    Reply this comment
  3. John Seiler
    John Seiler 23 February, 2011, 10:54

    Charles: You made a great argument for totally privatizing all Caltrans roads. Then the Director of Caltrans would head a private, for-profit company. The Director would be paid according to his performance meeting the demands of consumers.

    As things stand now, California has the most clogged roads in the country. Every day, millions of hours of productive time are waste as citizens sit on parking-lot “freeways.”

    Here’s a slogan: Free the Freeways! Privatize them.

    Reply this comment
  4. JoeS
    JoeS 23 February, 2011, 20:55

    Right on Mr Seiler,

    Privatize the management. Contract out the work.

    Cut the Education Do Nothing Bureaucracy. State and County bureaucrats cause more harm than good.

    Cut services to people in the country illegally.

    Cut taxes, bring back businesses.

    Bring back prosperity!

    Reply this comment
  5. StevefromSacto
    StevefromSacto 24 February, 2011, 12:13

    Old Communist proverb: “My neighbor has a cow that provides milk for his family. I don’t have a cow. Please shoot my neighbor’s cow.”

    New CalWatchdog proverb: “My neighbor has good health insurance and a decent pension. I have a 401(k) amd lousy health insurance. Please get rid of my neighbor’s pension and health insurance.”

    Note that I did not say: “Please shoot my neighbor.” Only a few Tea Party nut cases (and the Deputy Attorney General of Indiana) would do such a thing.,

    Reply this comment
  6. StevefromSacto
    StevefromSacto 24 February, 2011, 12:15

    Gee, John, I thought outsourcing government work was supposed to be cheaper for taxpayers. You’d rather we pay someone $3 million to do the work that pays a government employee $150K?

    I also love your complaints about how bad our roads are (you might mention schools as well). Yet you want to reduce funding to fix our roads and improve our schools.

    Reply this comment
  7. SkippingDog
    SkippingDog 24 February, 2011, 21:14

    Seiler and his buddies think “starving the beast” and outsourcing will be the answer to all their libertarian prayers. We’ve now had about 30 years of “starving the beast” and our schools and roads reflect the effort. I guess they don’t focus much on the consequences of reckless action at Hillsborough College.

    Reply this comment
  8. JohnB
    JohnB 24 February, 2011, 21:43

    I am tired of the pay comparisons for executives. The real pay determiner in a capitalist system is the profit available to fund salaries. That would be after bank loans are payed, dividends to the stock holders that provided the capital and the employees that produce the product get fair compensation. Then there needs to be a mandate to fund R&D for new products and retirement, and finally fund a buffer fund used to sustain facilities and infrastructure, pay insurance and liability claims not otherwise covered, especially during slow times or recessions. After those items are covered, top management can get a few 100K in salaries and have a pensions sytem that is the same as employees, assuming they are not Union. bonuses are payed into a management compensation fund that will only payout if the ccompany is healthy at the time the management and leadership retire. If company is unhealthy, bonuses revert to rmployees to cover any employee retirement shortfalls.This vote yourself a pay raise and bonus bullshit that goes on results in the runaway salaries, bonuse, and stock compensation while pension funds for employees are underfunded and employees laid off at every economic downturn. Governments generate no economic wealth, but make it possible for companies that do to have a working background infrastructure such as road, airports, trucks, trains, communications, ports,etc. As government size must generally remain consistent in size and scope regardless of economic conditions, jobs are secure moreeso than private industy. However, since government is this country is public service, Where is the serve in service if salaries have to be equal. Capitalism means varying compensation based on the financial success of the company, but lately, corporations have continued to pay the big bucks in spite of the failing corporate policies and or failing corporate product, simply based on the notion of someone holding a certain position of leadership within the corporation. A captain on a ship may be master of all he surveys, but if the ship sinks, he is just another ‘Joe’ in a lifeboat with the responsibility to make sure all his shipmates survive. Wisdom from a Navy Chief Petty Officer. Do you get it now…are you listenin?

    Reply this comment
  9. Tylerle13
    Tylerle13 25 February, 2011, 10:58

    Steveo your little commie comparison fails to mention that the “Good Health Insurance & Decent(?) Pension” are all paid for with with money that private sector employees worked hard for, then were robbed of with ever increasing taxes. If it wasnt bad enough that we have to fund these over-inflated & spiked
    pensions once, the unions blow the money on “finders fees” Kickbacks and horrible investments, then make the taxpayers pay for the losses again. (and of course this is where you come in and site some union supplied statistic about how the average pension is only $30K/year, which is crap since the number includes the people who only worked a few years then go to another profession and only get a few dollars from the pension system which, fortunately for you, drastically decreases the “Average” for each individual and masks the 6-figure pensions that are robbing us blind)

    Maybe our 401Ks wouldnt pale in comparison to the Public Union pensions if we were able to keep & invest the thousands of dollars (Double that with Employer Match) that have been stolen from us every year to fund union corruption & payoffs.

    Maybe our employers would be able to offer better Health Care options if they werent being bent over a barrell & screwed by some of the highest taxes & a never ending stream of redundant regulatory hacks.

    Steveo Im sure the unions have supplied you with a list of responses to every objection to union corruption, but the truth is that unions kill every industry they are involved in. Manufacturing is pretty much gone. Car makers had to be bailed out & most cars arnt build on American soil because of unions. The construction industry has pretty much collapsed. The trucking industry is abbout to collapse at the hands of CARB, yet the unions did nothing to protect their members. There is no industry that is Union controlled that will thrive in the long term, the unions will end up killing off companies and costing their members jobs. Despite what they say, the unions could not care less about their individual members, they only care about expanding their membership base to collect more dues to pad their political war chest.

    Since you get paid to defend unions/ union friendly individuals, you are alway going to spew some BS statistic meant to disguise the corruption & abuse carried out by Unions. In reality, Unions have outlived their usefullness since working/living conditions are not even close to what socialist leaders & Upton Sinclair displayed to the public over 100 years ago. In their current form, unions are basically the Socialist Model Society. They prevent the truely talented workers from making what they should make since they are lumped in the same group as incompetant slackers. Teachers that actually do their jobs and teach our children are fired when times get tough because Unions make it impossible to fire the horrible teachers & teachers who have issues “Touching” students, since they got there first and got “Tenure” after 4 years. Tenure was meant to protect College Professors from being fired for Political or Idealogical reasons, not to protect a 3rd grade Math teacher from being fired for hitting a student, or a 10th grade PE Teacher who was snapping pictures in the girls locker room.

    Unionization of an industry is the first sign of eventual collapse. The only reason unionized public entities havent collapsed yet is because they just treated the taxpayers as a personal ATM machine, but that seems to have come to a breaking point. Taxpayers dont have anymore money that corrupt politicians can steal. It looks like public employees have finally pushed our government to the same point they pushed the Auto Makers & Manufacturing Companies to.

    Reply this comment
  10. stevefromsacto
    stevefromsacto 25 February, 2011, 12:39

    Not enough hours in the day to respond to Tylerliar’s latest screed. As usual, he has no idea of what he is talking about or what I do for a living.

    One other thing:Tylerliar and his right-wing buddies are fond of blaming Democrats who bring up the huge disparity in this country between the poor and the wealthy for encouraging “envy” and fomenting “class warfare”. So how come it’s OK for you to do the same between public and private employees?

    Reply this comment
  11. Tylerle13
    Tylerle13 25 February, 2011, 15:35

    And which of my “Right Wing Buddies” would you be reffering to steveo? I dont recall having mentioned anything regarding “Class Warfare”, so you must be throwing out a broad generalization in an attempt to fit me into a box with people I dont even associate with so you can go off on a tangent without actually addressing the fact that you shamelessly defend the corrupt & abusive actions of Union Heads and the Politicians they put in place, despite the fact that their actions have been a major factor in the deterioration of this State.

    The gripe between Private Sector workers and Public workers is A valid issue. First off, Private Sector workers are the ones that have to work longer & harder for less money in order to pay for the bloated costs of public workers. If a Privater Employer has less money coming in, they stop hiring people and cut back costs to the bare minimum. The public unions just pull the strings of their puppets and have them take more money from the taxpayers so the union employees can continue on as usual. If a Private Sector Worker is found to be incompetant, breaking the law, or abusing their power, they will be fired right away and wont keep getting a paycheck, but the public unions waste taxpayer money to put some of the worst offenders on “Paid Administrative Leave” for years so they can either sit at home or in a teachers lounge and continue to collect their check. If a Private Sector Worker is unhappy with their compensation, they can prove to their employer why they are worth more, or they can go find another job. The public unions determine their members pay by making a deal with a politician whose campaign was funded by the union, then paying the union members based on them simply just being present, not on how good they are at their job. All of this waste is being paid for by taking more and more money away from the Private Sector Workers, despite the fact that we are barely able to get by since we have already been hit with a record tax increase, a 10+% Unemployment rate, and a regulatory environment that is driving all of our jobs out of the state. There is resentment because the Private Sector workers that break their backs every day for $30-40K (of which they see $20K) dont see why they should give up even more money to fund unneccessary government agencies, “Paid Leave” for child molesters, spiked pension benefits, or any of the other shameful things that CA blows our tax dollars on. Everybody is able to see how bloated & out of control Californias public sector is, the unions just keep getting their members to march in lock step by spewing propoganda and telling them that they are entitled to better healthcare, bigger pensions, more raises, and iron clad job security. In reality, the unions only care about recruiting more members so they have more members paying monthly dues and more sheep to march when their gravy train is threatened.

    Steveo, your attempt to equate the “Class Warfare” to the resentment of unneccessary public union workers is just like the union hacks in Wisconsin trying to compare their slumber party to the Protests in the Middle East. Nice try, but you missed your target once again. Go back to your Union Provided Cheat Sheet and see if you can find some other irrelevant comparison to deflect attention away from the waste & abuse that is bankrupting our state.

    Reply this comment
  12. stevefromsacto
    stevefromsacto 25 February, 2011, 15:56

    And you wonder where fools like the Deputy Attorney General of Indiana get the idea that they should use “lethal force” against public workers protesting at the Capitol. It is from the hateful stuff such as your total b.s. about “Paid leave” for child molesters.

    With friends like you, private sector workers don’t need enemies. You’ve succeeded in making Wal-Mart the role model for American labor, now you want to bring the rest of American workers down to that level.

    Rave on, Tylerliar! I’m done with you. StevefromSacto out.

    Reply this comment
  13. Tylerle13
    Tylerle13 25 February, 2011, 16:56

    Haha yes steveo, its that damn rhetoric on a comment board for a website dedicated to CA issues that caused some irrelevant midwest politician to make a stupid comment on twitter. What is this world coming to!?

    So are you denying the fact that public union workers get put on paid leave for committing offenses that would get anyone else fired immediately?

    I appreciate your attempt to credit me with the success of such a large company, but the reality is that Walmart is responsible for the working conditions of walmart. The people who willingly work for Walmart are responsible for the working conditions at walmart. Employment at walmart is not a mandate, if people do not like it, they are free to persue employment elsewhere. If Walmart cannot attract enough employees under those conditions, they will offer more money. I know you hate it when people are given freedom to choose where they work and when businesses are given the freedom to pay people according to their ability, but thats how us taxpayers pay for your lavish collective bargaining terms. That ability to eliminate waste is also why companies turn profits. The inability to do so is why governments are running budget deficits and begging for more money from the productive members of society.

    By the way, nice sign off! A little more fine tuning and you will be one of the greats, like Ron Burgandy!

    Reply this comment

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