Pension rollback carries risk to teachers, schools
(Calif.) In addition to making a host of sweeping changes, a proposal aimed at curbing the cost of public pensions could create significant labor troubles for schools because teachers would no longer be free to carry their retirement benefits to new jobs in other districts.
According to analysis from the California State Teachers’ Retirement System, the Voter Empowerment Act of 2016 would also throw into question last year’s carefully crafted agreement to fully fund the teachers’ pension system, which had an unfunded liability of $73 billion as of June, 2012.
Opponents of the measure say it would destabilize the entire teacher pension system.
“What is certain is that it would undermine the retirement security of our state's current and future teachers, particularly women,” said Assemblyman Rob Bonta, D-Oakland, in a statement last week.
“At a time when there already is a crisis in attracting and retaining teachers, this measure would be a major disincentive to attract our best and brightest to educate our children, and would cause irreparable harm to a system on which retirees and current teachers depend,” said Bonta, who authored AB 1469, which will adjust contributions rates through 2020 to help eliminate the unfunded liability.
Supporters of the measure, which include former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio, say public pensions have become too costly and need to be reined in.
“Government union bosses are desperate to protect their gravy train at taxpayers’ expense,” the campaign said in a statement. “That’s why they are spinning a web of lies about the measure.”
They also pointed out that a recent evaluation from the non-partisan Legislative Analyst found that if adopted, the pension measure would reduce government cost “significantly in the future.”
The initiative is currently pending before the state Attorney General’s office, awaiting an official title and summary that would be used for the circulation of petitions. If the sponsors can get enough signatures, the measure would go before voters in November, 2016.
Although the measure will have specific impacts on schools, its overall reach includes retirement benefits to all employees of government agencies, both state and local levels.
Perhaps its most dynamic feature is the requirement that voters approve all increases to the value of a defined benefit pension offered by government employers. If approved, workers hired after Jan. 1, 2019 would not be allowed to enroll in a new or existing defined pension plan unless the voters of the jurisdiction approved it, according to the LAO.
There is also a provision that voters must approve benefits in which the government employers pay more than half of the total cost. The LAO pointed out that if approved, the measure would require new government employees to pay one-half of all costs – both normal cost and unfunded liabilities.
Under current law, educator retirement is unified and administrated by CalSTRS with uniform eligibility requirements, vesting rules, benefit formulas, contribution rates, retirement ages, and beneficiary and survivorship allows.
The LAO noted there would also be significant ongoing uncertainties. Voter actions in individual jurisdictions would vary and thus compensation packages would likely be different from city to city, county to county and school district to school district.
According to the CalSTRS analysis of the proposed pension measure, the “portability” of benefits that teachers now enjoy when moving to new jobs in other parts of the state would be eliminated.
Under the new system, a veteran teacher that takes a job in a new district would be defined as a Pension rollback carries risk to teachers, schools :: SI&A Cabinet Report :: The Essential Resource for Superintendents and the Cabinet:
