Editorial: How to pay for teachers’ pensions

Gov. Jerry Brown deserves credit for finally proposing a solution to the long-festering fiscal problems at CalSTRS, the state teacher retirement fund. His revised budget includes a plan to eliminate CalSTRS’ unfunded liability over 30 years, at a cost of $237 billion. But by requiring school districts to cover most of that cost, Brown is asking too much of those who played little or no role in creating the problem.

The California State Teachers’ Retirement System offers uniform pension benefits to public school teachers and community college instructors, with the parameters set by the Legislature. The dot-com boom left the fund flush, prompting lawmakers to cut the state’s annual contribution in 1998. Two market crashes later, the fund is heading for insolvency.

The state is barred by law from reducing pensions for workers already on the payroll, although in 2012 it cut them for workers hired in the future. Besides, the benefits seem reasonable, considering that teachers aren’t eligible for Social Security or free Medicare. Brown’s proposal would raise teachers’ contribution to the fund from 8% to 10.25% of their salaries; to go any further, the administration believes, would require an increase in benefits. The rest of the gap would be filled by increasing the state’s contribution from 5.5% of the total state teacher payroll to 8.8% over three years, while upping school districts’ contribution from 8.25% of their payrolls to a whopping 19.1% over seven years. That’s potentially devastating for small districts, where teacher pay and benefits can constitute more than 80% of the annual budget. At least some districts are sure to respond by employing fewer teachers and packing more students into classrooms.

The state’s payments to CalSTRS and the school districts’ contributions come from the same place: taxpayers’ pockets. The question is how much should come at the expense of other state programs instead of schools and their students. The administration argues that local school budgets are expected to increase considerably more than their pension obligations, thanks to the growing economy and a temporary increase in state sales and income taxes. But districts can’t bank on either of those factors. Having waited too long to fix CalSTRS, lawmakers shouldn’t compound the problem by making the solution too costly for schools to manage.