CalSTRS bailout will be CA version of budget sequester

CalSTRS bailout will be CA version of budget sequester

brochure04_MyCTAOn 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?

CalSTRSSo 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.

19 comments

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  1. Steele, Ted, When only the very best will do!
    Steele, Ted, When only the very best will do! 27 May, 2014, 11:19

    Seems to the Ted System that dumpong the train is a good thing and helping the teachers is also good.

    Reminds me of what the Reagan-Jesus did with the arms/Contras ™ thing.

    Reply this comment
  2. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 May, 2014, 12:43

    “…dumpong the train ..”

    What does dumpong mean tedstir?

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  3. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 May, 2014, 13:11

    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.

    It is a two tiered matrix, and all unions do it, like the construction trade unions; you get step increases every 6 months for 3 years usually. While with teachers the grad school units are not stepped, only the years of service are, so if you have the required 100-120 grad units at hire (teaching certificate schooling counts, that is 30 units right there) you have topped out on that matrix. You probably will NOT get hired with that many post grad units.

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  4. John Seiler
    John Seiler 27 May, 2014, 16:14

    Then why don’t we use the high-speed rail system to take K-12 kids to school?

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 27 May, 2014, 22:37

    These repeater articles make doomers choke on their corn dogs. Pity.

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 28 May, 2014, 21:10

    Bottom line is CalSTRS needs $5 BILLION!!! With a B!!!! Every year for the nest 30 years to remain solvent, and that is pretty much impossible even in a period of growth like today. It is NEVER going to happen in a recession, and recessions are cyclical and will come.

    And that is with the state achieving the 7.5% discount rate, which is not going to happen.

    Haircuts are coming, Detroit style.

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    • Bud Led Ted S.
      Bud Led Ted S. 29 May, 2014, 06:52

      LOL

      BIG time

      Reply this comment
    • S & P 500
      S & P 500 29 May, 2014, 12:56

      Haircuts are coming, Philly style. Last year their schools opened with no nurses, custodians, librarians, aides, or music and arts classes. Or how about Chicago–50 schools closed. Even that blockhead Karen Lewis of the Chicago teachers’ union realizes that raising property taxes again isn’t possible.

      Reply this comment
  7. Queeg
    Queeg 28 May, 2014, 21:56

    The Poodle and the Donkey going to get skinned big time…..taxes all around.

    Reply this comment
  8. S & P 500
    S & P 500 29 May, 2014, 12:53

    Teachers fighting against firemen and cops for pension money–that should be interesting. The Kochs said they will spend $125 million in ads against lawmakers who favor using Michigan state money to help bail out Detroit–I’m beginning to think they’re not such bad guys after all.

    http://money.cnn.com/video/news/2014/05/20/n-koch-brothers-profile-charles-david-money-politics.cnnmoney/

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