Cutting pork could close CalSTRS funding gap

April 9, 2013

By Wayne Lusvardi

The California Legislative Analyst recently reported that the funding gap for the California State Teachers’ Retirement System was $4.5 billion per year in additional funding. There’s no proposal on the table anywhere on how to fund that.

In California’s education budget, pork barrel programs or earmarks are known as “categorical programs.”

Gov. Jerry Brown has recently proposed a radical reform to the funding formula for public schools.  School districts with a higher proportion of advantaged students and fewer English learners would actually have their funds per student cut.  Those funds would be shifted to schools with a greater proportion of disadvantaged students.  What Brown is mostly proposing to shift to more disadvantaged schools are not core educational funds but categorical funds.

Categorical funds for K-12 public schools were deregulated in 2009 under Assembly Bill ABX-4-2 to avoid budget deficits at the local school district level due to the economic downturn.

Deregulating “categorical” public school funds

The 2009 State K-12 Grade Education Budget put categorical programs into three “tiers.”  The purpose of the tiers was to prioritize programs that eventually might have to be put into a discretionary fund or even de-funded. Tier I was considered the highest priority; Tier III the least.

Next, $7.5 billion was allocated to Tiers I and II, which kept in their existing categorical status.

Then, 40 other non-essential programs were put into “Tier III” to compete for $4.5 billion in discretionary funding.  Local school districts — not the state legislature — would determine which programs would get funded.  By 2012 it was determined that this deregulation of school funding ended up saving public schools from massive budget deficits, without hurting disadvantaged students.

Under Tier III deregulation, many jobs no longer had their funding protected by the legislature. These jobs included extra school librarians, summer school teachers, teacher trainers, school counselors, arts and music teachers, day school caretakers, English tutors, extra physical education teachers, staff development consultants, staff mentors, credentialing consultants, high school exit exam coaches, school safety monitors, extra building maintenance personnel, and instructional materials consultants.

State Sen. Liu’s proposed counter reforms

State Senator Carol Liu, D-La Canada, chairs the Senate Education Committee. She authored Senate Bill 223 in an effort to extend Tier III funding for another five years.  SB 223 would assure that Tier III funds are not subject to the diversion proposed under Brown’s school funding reform cutbacks.  SB 223 would take effect in 2015, when the current provisions under the deregulation bill AB-X-4-2 (from 2009) expire. Liu also wants to restore Adult Education and Regional Occupational Center Programs to their former protected categorical status so they would not be “part of any flex approach.”

Several civil rights groups, such as Public Advocates, Inc., reportedly supported Liu’s advocacy.  Apparently, non-essential education jobs have reached the status of a civil right.

Despite the state budget revenue shortfall starting in 2009, core teachers and education programs were never really threatened with cutbacks or teacher layoffs, despite misinformation of teacher layoffs.  The fight all along has been over cutbacks to political pork programs that have been around so long that many consider them essential.

This is why Brown wants to reform school funding formulas.  But he wants to do it not by necessarily having to cut back political pork but by cutting suburban school district budgets.  This would force local suburban school districts to raise taxes.

American publisher Steve Forbes once wrote, “Once a pork barrel scheme is started, nothing in heaven or on Earth is likely to stop it.  Like barnacles on a ship, too many vested interests will glom onto it and fight to protect it.”  Neither Brown’s proposed school funding reforms nor Liu’s counter-reforms will touch California’s entrenched public education pork barrel. Both proposals would just shift the pork around to one pet special interest group or another.

Pension gap is a choice 

If California were serious about meeting the $4.5 billion unfunded pension fund gap for core teachers, it could merely do so by shifting the $4.53 billion currently budgeted for luxury Tier III Categorical Programs to meet that gap.

This will never happen.  But it demonstrates that the $4.5 billion in annual unfunded liability in CalSTRS is a choice — not due to Proposition 13, stingy taxpayers, or necessarily even the structural economic recession.