CalSTRS bailout will be CA version of budget sequester

27 May, 2014 by Chris Reed

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On April 10, 2012, I wrote an op-ed for the L.A. Daily News with an unusual take on what ultimately would kill the bullet train. My theory was that the teachers unions would fight to keep a new mouth from the trough of the general fund because of the long-term need to maintain a status quo in which teacher pay usually went up year after year because of “step” raises for seniority and also because of “column” raises for completion of irrelevant grad school coursework.

My focus in 2012 was on cap-and-trade fees. But my larger point was that the California Teachers Association and the California Federation of Teachers and their 500,000-plus members played the long game. They’re not just interested in protecting Prop. 98 and getting their minimum cut of state funding. They want significantly more.

This month, the Brown administration’s unveiling of a proposed bailout for the teachers’ pension system brought this bullet-train end game fight much closer. But it isn’t just likely to dry up funds for Jerry’s folly. It also is a harbinger of perpetual junkyard-dog budget fights in which the CTA and CFT — determined to grab every last dollar to maintain the status quo of teacher pay raises — fight constantly over funding with every competing lobby or interest group.

Why? Because the bailout is going to cost so much, and in the zero-sum game of state budgeting, the question is whether the cost is absorbed in the larger K-12 state budget — or out of the hides of other state programs.

If Brown’s plan is adopted in its present form, eventually there will $5 billion more a year in state spending to cover CalSTRS’ unfunded liabilities. 70 percent of that will come from districts (and thus indirectly from the state); 20 percent will come directly from the state; and 10 percent will come from teachers.

Will $4.5 billion come from education budget? Or other programs?

So that’s $4.5 billion a year — a little more than 4 percent of the next proposed state budget — that the Legislature and the governor are going to need to find to fund the CalSTRS bailout.

The CTA and the CFT didn’t achieve their dominance of Sacramento by playing nice. Covering the cost of the CalSTRS bailout going forward is going to be the Sacramento version of the federal budget sequester for non-education budget categories. Spending on just about everything but  K-12 is going to be curtailed.

Of course, we’ll also see redoubled efforts to raise taxes and make “temporary” hikes permanent. But the day in which the Maviglios of the world could pretend the pension crisis was exaggerated or no big deal will soon be history. Pretty soon the pain is going to be shared by all users of California government services and programs outside of K-12.

Once you understand that the single most powerful imperative in California politics is protecting an education jobs program in which most teachers get automatic annual raises just for showing up, Sacramento is pretty easy to understand.