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California teacher pension debt overwhelms school budgets (calmatters.org)
63 points by prostoalex 7 months ago | hide | past | web | favorite | 135 comments

Fortunately for the teachers, Californians have a very short memory.

All the teachers need to do is survive for the four-to-five years it takes Californians to forget what they have voted for. Then they can roll out a Proposition or local bond measure scolding voters for not funding education. Techies and other knowledge workers in particular respond very well to this kind of prodding which is why these measures pass reliably every four to five years but tend to fail if done too frequently. The unwise teachers in my town, Los Gatos, recently tried to shake down voters before the buildings promised by the previous bond measure were constructed.

The same is done with transit funding...I can't remember how many times a Measure or Proposition has passed that has promised to "finally" address transit funding...until four years pass and it is time to "finally" address it again.

Do you really think of teachers as a community of people who try to perpetrate scams on the general public? I'm trying to count on one hand all the teachers I know who are sitting fat the money they bilked from the voters, but I'm just not getting very far. Perhaps a more plausible explanation is that education funding measures reoccur repeatedly because public education is chronically underfunded as a standard budget item?

I'm sorry, but my mom made $125,000 pre tax as a teacher every year in NY and retired with a very similar pension payable to her and her husband until death.

I am their son. I am college educated, I make $50,000 per year on average and I've been laid off 3 times over my 6 years of post college employment. I have never been offered a 401k, which is a particularly ineffective retirement tool anyway.

How are teachers underfunded again? Maybe in certain underfunded neighborhoods, but not all. And their employment is pretty secure.

I don't have a problem with the salary. What I have a problem with:

1. Pension spiking. Happens for teachers, though not as much as other public employees.

2. The pension should be funded from investments, not some optimistic guess as to the return on those investments.

3. It should be easier to fire a bad teacher. I realize this is hard, but we've all heard the stories. In my excellent school district, you apparently have to be caught sexting teenagers to get fired, even though a lot of people had reported the offensive behavior, many times over many years. While most of my son's teachers are excellent, a few of them shouldn't be anywhere near students of any sort.

"...It should be easier to fire a bad teacher.."

This is a problem with most public employees though. It's not necessarily unique to teachers. Try to fire a bad cop for instance. Just won't happen. Or a bad database analyst at your State's Department of Administration or whatever. You just can't do it.

A DMV employee slept several hours a day every day for years and wasn't fired.


The salary is excellent and well above US GDP per capita. The benefits, of course, are even better.

But the pensions are driving housing prices and property taxes through the roof around here. I luckily found 2 other roommates to live with me in a 1br apartment far outside the city, and we're all paying $650 each. Property tax accounts for 33% of our rent contribution.

> The salary is excellent and well above US GDP per capita.

GDP per capita is a stupid measuring stick for salary (except that an annual one below it is bad), since you are averaging eco onic activity across everyone, including those not working and outside the labor force (children, prisoners etc.)

> But the pensions are driving housing prices and property taxes through the roof around here.

I'd like to see your argument for how pensions are driving those two things (especially given that California has limits on the latter.)

While a number of retirees move to Florida permanently, a number of New York pension recipients remain on Long Island because their house is paid off and their pension is tax exempt from everything but Federal tax. So 80k in pension payments is equivalent to 120k in salary roughly (which is taxed heavily in payroll and state taxes).

So, they stay in NY for the good doctors and paid-off house and soldier through the cold weather. All of this wouldnt be a big deal if NIMBYism wasn't a thing, but it is.

Population on Long Island continues to explode as people commute by train to NYC to avoid exploding rents there. Building a house or remodeling a house on Long Island is extremely, mind-blowingly expensive and regulated due to the local town governments in Huntington, Oyster Bay, Manhasset, Babylon, Brookhaven, etc. I have tried really hard to get any town to permit me to build a 100k house on a 40k lot of land- nope, sorry, we only allow massive houses built out of expensive materials here because we want you to pay as much property tax as possible.

"...my mom made $125,000 pre tax as a teacher every year in NY..."

Holy MOLY that's a lot of money!

Out here in "Flyover Country", (Wisconsin), most teachers wouldn't even make half that much. And I'm assuming by the way you described her salary, that none of that included any of the benefits! That's an incredible amount of money for a teacher. I would think a lot of teachers would like that salary.

I'm pretty sure you can safely assume that your mother is nowhere even CLOSE to being the norm for teachers across the nation. There are many, many teachers out there who are very much underfunded.

Anecdotally, six years in and I make just north of 40k salary (upper Midwest).

Sounds like you should be contacting "anoncoward111" to find out where his mother taught school at in NY. That district probably has at least one new opening since she has apparently retired.

Haha, her position was filled by the principal's niece. Nepotism is alive and well.

Any school district on Long Island NY will have minimum salaries of like 60-70k I think. 90% of property taxes here (~10k USD per house) go to the school district.

It unfortunately shouldn't be a surprise that someone in Wisconsin paying $600 in property tax per year also has a school district with teachers making 40k, which, once again, isn't even a bad salary for the profession and value delivered. Maybe I'm just jaded, but 13 years of schooling qualified me for barely gainful employment. I could have home-schooled myself for way cheaper and with the same outcome.

Most teachers in New York have a low base and a 30-step path, with 1.5-3% raises in each step. Most pay 2-5% of salary into the pension fund, which in New York is administered at the state level, so you don't have the gross mismanagement that you see in California. 125k implies she was a long tenured teacher who did significant afterschool work -- and the district paid about 20% of her compensation to the retirement fund.

I live in the #2 salary district in upstate NY. The 50th percentile salary is about 75k and the 95th percentile is 95k. Pensions are usually (final average salary over 3-5 years) * (years of service / 60), and are free of state tax. If you retire, you have different options, and full payments to both spouses reduce your benefit by 15-35% depending on age of your spouse.

My cousin is a high school teacher with 15 years of work. He makes ~$65k and gets a $5k stipend for coaching two sports. (ie. working 12 hours days September-March)

She did after-school work during her last 3 years to artificially raise her salary. Not only is the pension free of state tax, it is also free of payroll tax.

So, at 55 she retired with an after tax pension that was quite literally equal to her after tax salary. When you factor in commuting costs, she was paid to retire early.

The whole point here for me is the guaranteed nature of this employment. It's incredibly hard to be fired. If teaching children is such a valuable societal tool, we shouldn't be restricting the number of teachers to x and their salary to y.

We should encourage 1000x people to be teachers and pay them 0.03y

Uh... education is ~52% of California's current enacted budget and ~52% of the proposed budget for the next year. It's the largest item on the largest budget of any state in the US. Prop 98 was passed in 1988 guaranteeing a percentage (~40%) of the state budget be spent on education. How exactly is that "chronically underfunded"?

As for individual teachers "sitting fat [on] the money"... of course they aren't. Average teacher salary in California (according to California Teachers Association) is $78k -- and California is a very expensive place to live. FWIW, the CTA chiefs are making $300-400k+ and CTA controls a $300+ million annual budget. There's definitely plenty of money sloshing around the system, it just doesn't make its way to the teachers.

Education isn't underfunded. The U.S. spends more per student and more as a share of GDP than most other OECD countries: https://www.cbsnews.com/news/us-education-spending-tops-glob... https://www.politifact.com/ohio/statements/2016/sep/21/donal....

Teachers and other public workers have definitely created for themselves a bubble where they're insulated from the competition and stresses of the private sector, and they've done that at the public's expense. It's not a scam, but it's not innocuous either.

At the end of the day, tax money is a scarce resource. Money that goes to providing retirements for teachers more comfortable than what people with similar qualifications could get in the private sector is money that doesn't go to school lunches for hungry kids, etc. Teachers use the plight of disadvantaged kids to get more funding for schools. But that funding goes primarily to paying teachers, who are relatively privileged to begin with (being college educated and disproportionately white).

(Which is not to say that everyone shouldn't have a comfortable retirement--I'm all for raising taxes to Norway levels and funding a proper welfare state. But until we have Norway levels of tax dollars rolling in, our current expenditures on public employees is a misallocation of resources.)

Using the plight of disadvantaged kids to get more money diverted to you, and keeping the kids disadvantage because tax money is a scarce resource as you said - pure genius! A self maintaining scam that can be milked as needed (well, every 5 years as indicated by the OP, to ensure voters have forgotten)

No wonder why some people fight to maintain the status quo!

I don't think they are trying to perpetrate a scam. But I do know local educators that spiked their pensions by working overtime right before they retired. The vast majority of the local school district budget goes to support pensions, not fix peeling paint or removing weeds which are visible on almost all local school grounds. This isn't an issue of underfunding. This is a problem that has resulted from mis-management.

Why are pensions not based on base salary? That seems like an easy and obvious fix.

> public education is chronically underfunded

It's not, though.

The systems needed to deal with the social problems outside of schools that create difficulties for schools are chronically underfunded (and often designed poorly, as well), and teachers in many districts have impossible jobs as a result, but education itself isn't underfunded.

But “the schools are broken” is a more mentally manageable idea than “the entire socioeconomic system is broken”.

Its not that one teacher is sitting fat. Its that all teachers both current and retired are receiving paychecks which are not sustainable in the long term.

Consider a scenario where there are two retired teachers for every working teacher. To the working teacher they are underpaid. To the voters they are overpaid. The problem lies in the middle. If you stopped paying retired teachers you could triple the salaries of working teachers. Both parties would be satisfied with this arrangement.

Of course retired teachers would hate this and rightfully so. They were promised a pension and now you're denying it to them.

It calls into question the structure of compensation. Throw their money into a 401k rather than giving them 80-100% pay for the rest of their lives.

Teachers are certainly not underfunded as a budget item. They're 1) well paid[0], and 2) there's no evidence that paying them more results in better outcomes.[1] That's mostly because teachers have almost no effect whatsoever: even the very best only improve student outcomes by a small amount, and the effect fades after a few years.[2]

On the other hand there's evidence that teacher collective bargaining wastes hundreds of billions annually.[3]

Just because they're not conspicuously wealthy does not mean that they're blameless or virtuous or unsuccessful as a special interest group.

[0] https://www.city-journal.org/html/no-teachers-are-not-underp...

[1] http://econweb.ucsd.edu/~kamurali/papers/Working%20Papers/Do...

[2] http://slatestarcodex.com/2016/05/19/teachers-much-more-than...

[3] https://www.nber.org/papers/w24782

I see your cherry-picked articles, and I raise with my own cherry-picked articles.




Of note, teacher salary comparisons should be made to those with similar education attainment and should take into account the many hours they spend working outside of the school day.

I didn’t read the articles and my point is not to agree or disagree with either side. Also, my mom is a retired teacher so take that bias as you will. I’m just adding another data point.

Teaching does have its downsides, but I know a lot of people who became teachers or stayed teachers (like my mom) because it can give you a great work life balance. You’re off during the summer when your kids are out of school and your holidays mostly correspond with thiers.

When we got married, we were an “instant family” - my wife had two kids. We also got laid off at the same time before we got married - we worked together. I ended up with a contract job and she ended up with a job with crazy hours (nights and some weekends). That didn’t work for us. She took a significant pay cut to work in the school system at a job she liked a lot more and she had the same schedule as our sons.

She has a stable job with good - expensive benefits. That allowed me to jump around from contract to perm back to contract and chase jobs solely for the money without worrying about benefits or the stability of the company.

I know a small business owner whose wife works in the school system for the same reason - benefits.

There are other non monetary benefits to being a teacher - especially in a two income household.

I personally like the school voucher idea Trump was proposing during his campaign... Each student is given a voucher, as good as cash, and schools compete for students, leaving the decision to families on which school to go to. This also brings students that live in poor neighborhoods the opportunity to travel to a better school perhaps outside their district. Schools might even buy new buses and pick up students further away if it means getting their voucher money.

And that leaves poor, sometimes young kids taking long bus rides to other parts of town. The more affluent districts are already well funded enough. Those parents are going to do everything they can to keep “them” from thier schools.

I would rather take a bus a half hour to school rather than get stuck in a poor school district with bad teachers and students in similar conditions. It would be nice to have the option to take your kid out of that environment.

You’re not six years old and catching a bus from the side of my metro area - where the school system lost accredition to the side where the median income is over $100K - takes over an hour and a half in traffic. Both districts are considered in the same MSA (metropolitan statistical area).

If there's demand for something close by, then the market will provide it. The key point is, parents can make a decision with vouchers, rather than being forced to go to a particular school based on your district.

How much of the reason behind a failing school district is because of the the school and how much of it is because of the environment, home life, etc?

If another school came in the same environment with the same socio-economic issues would the outcome be that much different?

The whole charter movement at least in the south is an attempt to funnel public money into private either for profit schools or “faith based education”.

Man, if you could cash that voucher in for other educational materials, that would be an idea. What a library I could have had... Even in the broke, rural, low-cost-of-living area I came out of, the last school budget works out to more than $14k/year per student, mostly funded by local taxes.

It would be competitive too, and certain schools could target special needs children or problem children. Online schools could be possible too. I could see it being VERY economical.

The cool new thing is capitalizing the interest on the bond for decades. https://www.voiceofsandiego.org/topics/education/where-borro...

This was huge news in San Diego in 2012 when it was revealed. The worst of these types of deals are now outlawed as of 2013.


Holy cow. I can't believe this is a thing and that municipalities would agree to this. The Consumer Financial Protection Bureau should start creating laws to protect the government from making decisions like this.

> The Consumer Financial Protection Bureau should start creating laws

The CFPB can’t make laws (that's Congress’ job) and neither the current administration (including the current CFPB leadership) nor the current Congress even support the general mission of the CFPB.

What else should they do, when the representatives in government have little to no incentive to actually fix these issues?

When you're being underpaid, work a second job along with teaching, and have no savings for retirement because you are underpaid with the guise of a "pension"... you're gonna make a sign, and you're gonna try and get some funding bills passed.

Teachers have to participate in the broken system today, and I think categorizing their efforts to get more funding as a "shakedown" isn't representative of their motivations.

I'm not damning them - they are working the system to their advantage. Voters could put a stop to it anytime they wanted to, but choose not to.

It would be wonderful to have a list of all these propositions including their initial selling points, how much money they raised and where the money actually ended up.

> All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

-- Franklin D. Roosevelt, 1937 http://www.presidency.ucsb.edu/ws/?pid=15445

Unfortunately, we haven't figured out how to make teaching career-worthy without collective bargaining. Perhaps the best case study for non-union teaching is the workforce of adjunct teachers at universities. Talk to some adjuncts about their "careers." Disclosure: I was an adjunct for one semester at a big ten university, many years ago.

>adjunct teachers at universities

There is a glut of adjunct candidates with a PhD and a postdoc who can't get TT but there are relatively few with teaching degrees. The oversupply of adjuncts happens because they are the unsuccessful seekers of a much better job -- tenured professor -- but there is no similar situation for teachers. The economic analogy therefore won't fit, because the supply of teachers will respond to price signals more than the supply of adjuncts.

Indeed, but the requirement for a teaching degree is actively defended by the union, and is on a tenuous footing. It's not required for private K-12 schools, where pay and benefits are in fact drastically lower. The government of my state (Wisconsin) has moved to relax teacher licensing requirements for public schools.

When I was an adjunct, I had no interest in getting onto the tenure track, or in teaching as a career. I was simply new in town and needed a job.

I don’t think unions are necesssry, the less attractive teaching is because of the (false) promise of pensions, the fewer people will be willing to enter the profession - forcing wages to rise.

On second thought, what will probably happen is that they will flee to private schools, the more affluent will lobby for “private school tax deductions” and leave only the worse teachers in public schools and only the less affluent will go to public school.

So logically thinking your conclusion through, why are unions not necessary then?

are the unions really helping now? The unions are forcing the government to make unrealistic promises. The government is kicking the can down the road and the taxpayers aren’t willing to pay more in taxes now to either fully fund the pensions or pay the teachers more to make the profession more attractive without the promise of pensions later.

Everyone is complicit - the union, the politicians, and the taxpayers. If the unions were honest and told the teachers that the pensions they bargained for were illusory, the teachers would demand more pay now.

I get this wistful feeling every time I read a nuanced observation from an ex-president.

Maybe we can sum this up in 140 characters?

Government employees negotiating with government employees over the compensation of government employees is not a formula for fiscal prudence.

Take the money and run...

While this quote makes a good point that the Government is not like other employers, I am not sure what exactly is implied about the role collective bargaining for government employees. The government can't serve as neutral party to moderate negotiations with public sector employees because they are themselves are the employer. Does this imply that public sector employees should be allowed to organize and negotiate for their interests? I think not.

We see this in California. The public employees unions are highly politically active and of course support candidates who will do their bidding.

It's like if private sector unions got to choose the board and executives at their company. While that would doubtless be good for union employees (or at least leaders), it would be quite deleterious to the interests of shareholders.

I agree that public sector unions becoming politically active is problematic, but it's problematic is same way that wealthy individuals throwing money into politics is. Wouldn't this better handled through campaign finance law rather than an outright crippling of public sector unions? Teachers shouldn't be allowed to buy politicians, but they I do think they should allowed organize and petition to better their working conditions. If you deprive labor of a voice then only money speaks.

It's observably true that public policy in the USA is for sale to the highest bidder[1]. A corollary is that campaign finance law is absolutely ineffective, because if it were then the current state of affairs would not hold. Furthermore the system is robust to political interference, since it absolutely controls the political process.

Public employee union dues are especially odious since the government is effectively collecting a payroll tax to bribe itself by way of a colluding intermediary. This is morally even worse than politicians being bribed by some private sector party.

Fun aside: given the empirical proof that only money speaks already given, the statement "If you deprive labor of a voice then only money speaks" is always true, regardless of whether or not labor has a voice.


I think this gets to public sector unions saying (or implying) "we won't vote for you unless you approve a certain amount of $ for X". The politicians then approve the $ as they'll be gone when the money runs out.

California progressives have a sort of "feast the beast" strategy. Provide massive benefits on loan. When those loans come due, raise taxes to pay for them. Repeat until the government fails due to overconsumption.

Why can neither side just follow a sane general strategy of setting taxes and choosing the best benefits to fit under the revenue generated?

It is worse than that: teachers are given paltry salaries with the promise of a nice pension to make up for it. So to the local governments, they can “pay for it later” unless they actually don’t.

Parents are just as culpable as they want a great education for their kids but don’t really want to pay for it, coupled with proposition 13 many schools in california are a mess.

Exactly. Let’s get rid of pensions and let the market sort it out - and this is coming from a teachers kid.

If you get rid of pensions and try to pay the teachers the same amount as you pay them now, there will be a teacher shortage forcing the government to pay more. They will have to raise taxes to cover it but at least all sides will know the true costs.

I don’t think the pension system in my state is too out of whack. It’s only 2% every year worked of your final salary up to 60% (80%?).

I think more than a few districts nationally are already moving to 401ks like private industry is, but paying now is a bitter pill to swallow. And how do you convert existing pensions to a 401k when the money doesn’t really exist?

It doesn't make sense to do that. You grandfather in the existing pensions, and switch the incoming teachers to a 401K.

That means your pension costs don't go down for 30+ years meanwhile your 401k costs keep rising with everyone you add to the 401k system.

The only way to switch is to put more money aside than you 'need' so you have a pool of money to pay for each teachers pension on the day they retire. At that point you can then swap new teachers to 401k's without added costs.

But at that point you understand pensions when fully funded actually cost less than 401k's, assuming similar investments. Because 401k's end up with some dead people having large surplus's and pensions don't.

> But at that point you understand pensions when fully funded actually cost less than 401k's, assuming similar investments. Because 401k's end up with some dead people having large surplus's and pensions don't.

a) 401(k) and 503(b) plans are expensed and accounted for in the present. You may have the best actuaries in the world but if your current pension-expecting workers beat the odds you're in a world of hurt, even without over-promising and under-funding pension benefits. (No less than Warren Buffett himself famously warned of this problem back in the 1970s, and if there's one thing Buffett knows it's risk assessment and insurance.)

b) 401(k)s are only more expensive than pensions assuming everyone retires at the same age and gets the same benefit on retirement between the two investments. However, as is common, pension retirement age can be as low as age 50. Paying out those pension benefits for those extra 10-15 years (vs. retiring at age 60-65 for 401(k)) probably adds up to paying more for pensions than 401(k)s, especially given that some employees can apparently goose their pension eggs by working overtime in the last few years of employment.

A) The problem is not that this is hard, the problem is their are incentives to get it wrong. If you accept saving to much is a net benefit as it reduces future spending, then you can operate very safely.

B) This just comes down to discounting the pension properly or limiting retirement age to 65.

In the real world doing pensions correctly has not worked out. My point is simply they have an innate mathematical advantage not that it's directly applicable.

In a way they are screwed. The pension system like social security is a pyramid scheme.

But didn’t the private sector basically contribute the value of the pension to the 401K using some type of present value calculation?

I know this discussion is focus on California, but for context this is not true in all states. Yes, many states have extremely underfunded pensions (Illinois sounds like a disaster) but others (like neighboring Wisconsin) are fully/nearly fully funded.

Can you explain why you think that pensions and social security are Pyramid schemes. I view them more like insurance, but maybe you have an insight that I don't have.

A social insurance system, in which one generation pays for the previous generation, begins to look more like a pyramid scheme when demographics shift and benefits aren't adjustable downward.

Current social security taxes go to pay current beneficiaries and any surplus is spent just like any other tax money and the federal government issues IOUs to the SSA. That’s fine as long as thier are enough workers paying taxes to pay beneficiaries. But as the working age population gets smaller and life expectancy gets longer, either the government will have to raise taxes or decrease benefits.

There is one other fix - make immigration easier. But in the current climate, a politician could never suggest that.

I'm not sure there really is a market....

School districts are local so bad schools / poor areas will just suck more, good ones might do ok. Nobody will fill the gap where education is needed but there is no money....

That’s a completely different discussion - at what level should we as a society fund public schools to ensure equal access? At the state level? At the federal level?

It’s so bad in some places that the more affluent parts of a district are trying to break off and form thier own district so they won’t have to fund the poorer parts.

What’s really bad is that California in particular pays the federal government more in taxes than they receive. The new federal tax laws made it even worse.

It’s not fair and I live in a state that sees net inflows of federal tax money.

You said let the market sort it out... there is no market. That seems like the same conversation.


That isn’t true. In most states, the local district sets their own budget and legislators might provide some additional funding/oversights. Prop 13 in California gave state legislators more power (since school districts had to rely on less property taxes and more direct state funding) but that is unique to California.

Prop 13 has nothing to do with it, the 1971 California Supreme Court decision mandating statewide equal per-pupil funding is the issue.

While obviously that court decision is unique to California, the broad idea of statewide funding equalization is not a policy that exists only in California, and, in fact, the vast majority of states have most school funding driven by state-set formulas.

How well will a state based funding system work in states like Mississippi?

> Why can neither side just follow a sane general strategy of setting taxes and choosing the best benefits to fit under the revenue generated?

Why be reasonable when you can get benefits for yourself and have someone else down the road pay for them?

I wonder when this will break though. California has had it comparatively easy with a surging economy (at least in the Bay area), but the next recession will likely send all the pensions even further into the red.

"When the public discovers they can vote themselves money from the public treasury, the [American] experiment will be over"-Tocqueville 1838

> Why be reasonable when you can get benefits for yourself and have someone else down the road pay for them?

The only reason someone down the road has to pay for them is because the state/municipality reneged on its half of the bargain to actually fund the pension at the time, counting on future earnings to skate by. The teachers unions accepted lower pay raises or frozen wages in exchange for a good pension. Don't blame them for the malfeasance of the counterparty.

They were both malfeasant. Accepting a bad deal because you thought taxpayers would just foot the bill doesn't absolve you of blame.

They didn't accept a bad deal. They deferred current compensation in a scheme that's been known to work properly for a century when the managing side of it doesn't underfund its obligations. This is not, in any way, a "both sides are to blame" issue.

Hardly just a California thing; see Social Security. (Which is actually quite easily fixable, if we had the political will). But also posted today was an article about surging bankruptcy filings among the very group (baby boomers) that benefited MOST from a successful economy. Subsequent generations are being saddled with their excesses, and yet we still have a looming crisis.

> But also posted today was an article about surging bankruptcy filings among the very group (baby boomers) that benefited MOST from a successful economy.

The oldest baby boomers were still fairly early in their working life when the gains from the economy stopped broadly reaching the working class.

The generation who benefitted the most from the long post-WWII economic boom with wide distribution of gains were the Boomers’ parents.

> The oldest baby boomers were still fairly early in their working life when the gains from the economy stopped broadly reaching the working class.

They were just the right age for reaping all the benefits from rising land and real estate prices, despite the real wage flat-lining at the end of 1970s

Not to mention that advancement and career progression were far more expedient in their day, allowing them to reap benefits earlier in their life than millenials today, who might still be working entry level jobs by their 30s.

> The generation who benefitted the most from the long post-WWII economic boom with wide distribution of gains were the Boomers’ parents.

And guess who inherited that wealth, since that generation is mostly dead now?

> And guess who inherited that wealth, since that generation is mostly dead now?

By that standard, Millennials are the eventual beneficiaries, too.

I'm afraid this will sound like a taunt, but I don't mean it to be.

What is the easy fix, given political will, for social security?

It's difficult to separate political fact from fiction. But nearest I can tell, the "insolvency crisis" of Social Security (where it's said to be trillions of dollars in the red) is generally a fiction; we can wish the President and Congress hadn't raided the trust fund in the 80s, but it seems generally accepted that a few tweaks would immediately fix it.

Considering how easily we fund a war here, a tax cut there, Social Security could be made self-sustaining again fairly easily. We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). We could adjust the retirement age (say, indexed for lifespan changes to provide some midpoint/average number of 'working years'). That's all without even changing the tax rate, which of course is always another option.

Ultimately, just by basic logic alone, there's no reason we can't fund X amount of benefits with Y amount of receipts by setting the numbers properly -- UNLESS AND UNTIL we have a massive greying crisis like Japan has.




The US Treasury puts out a financial report that paints a bit less of a rosy picture. So long as the dollar is the world reserve currency there is not going to be much appetite to make significant changes. Any shortfall in benefits after 2035 could likely just be financed with debt. If the appetite for US debt would ever change we would then see likely see changes in standard of living, but not in nominal benefits paid, as dollars would need to be created probably on the Fed's balance sheet. I could see some other mechanism coming along though that would actually handle the mechanics of creating large amounts of money. Given how far off any of this is likely to be I can't conceive of how spending could actually be cut on an absolute basis, or even just indexed to inflation. Ultimately healthcare is likely to be a larger driver of US debt than social security.


Your points are really interesting. I wonder how successful it would be to tax higher wage earners more. Many of the truly wealthy receive their money via means that are largely not subject to payroll taxes. Hence, we are only over taxing the upper "working class" who then might have less incentive for their high wages. Many higher wage earners and their employers are finding clever ways to avoid salary increases through the conferral of non-cash benefits. Though these are technically required to be taxed by reporting them to the IRS, I would bet many people aren't reporting the vacation their company sponsored or their gym memberships. Additionally, many contractors form corps and are using creative ways to reduce their payroll burden (among other tax relief.) The current wage cap is around $118k. What kind of cap do you think would be effective? Or are you saying we should remove caps?

> We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying).

Note that Social Security already has “bend points” in the benefit formula, so one or more additional bend points doesn't change the basic design.

Increasing the payroll tax (from 12.8 to 14.4%) and removing the wage ceiling (but not the benefit ceiling) so that high earners who have accounted for most of the wage growth recently contribute a fairer share

> so that high earners who have accounted for most of the wage growth recently contribute a fairer share

I don't disagree with removing the wage ceiling, but if you word it like that you're pretty much guaranteed to fail, because the equal and opposite to that is "Cut the payroll tax so I don't have to fund the bozos that decided to party all through school instead of working their tail off like I did."

California progressives have a sort of "feast the beast" strategy

Why is this just a progressive thing?

Because public employee unions are the only reliably effective voting bloc in California. Democrats know full well that public employee compensation is a Ponzi schema in the state but won't bite the hand that feeds them.

It's in contrast to the conservative strategy "starve the beast".

IIRC conservatives don't have a great track record of following through with this.

Because a "starve the beast" strategy, like in Kansas, is a product of conservatives. Though school funding in Kansas was fine, despite the hysteria created by the media. There can NEVER be enough money for schools, per the article:

"Some districts are predicting deficits and many districts are bracing for what’s to come by cutting programs, reducing staff or drawing down their reserves—even though per-pupil funding is at its highest level in three decades and voters recently extended a tax hike on the rich to help pay for schools."

Maybe CA should work on it's illegal immigration problem, which is probably a big drain on the schools. Funny to read about all the economic woes in CA despite it's supposed great economy. In reality it's a dump.

Yet somehow the California economy is massive and thriving. So, apparently you're leaving something out or shading your analysis. I'll wait for peer review of your theory.

So long as public schools are treated as places that exist to provide guaranteed jobs to members of the teachers' unions, do not be surprised to see American students continuing to score lower on international tests than students in countries that spend a lot less per pupil than we do.

- Thomas Sowell

What kind of “guaranteed job” are you talking about? As a teacher, I could be let go without cause for my first three years and, subsequently, after two poor performance reviews. Tenure merely requires the district to attempt to coach the teacher before firing them. I’ve seen teachers forced out of the classroom simply because they don’t mesh with the personality of management.

Whatever horror stories about rubber rooms come out of NYC are not indicative of the reality on the ground most places.

How long did it take to fire Mark Berndt? His behavior had been flagged for decades but the school couldn't take action. Why did the school district choose to pay him $40,000 to drop his appeal when he finally was fired? Because even a case where a teacher was found to be feeding semen to blindfolded students, the job protections were so strong that that the district knew it was the cheapest and easiest way out to just pay him off.

I left California 3 years ago, so maybe this has changed, but at that time there were countless stories about "teacher jails" where Los Angeles would send teachers who should have been fired, but the process is so expensive and fraught with appeals and obstructions that it was cheaper and easier to keep them on the payroll - permanently. They would isolate them so they couldn't have contact with students, but they'd go on paying them to go sit in empty offices - for years.

The argument that tenure only adds requirements for coaching sort of whitewashes over the practical challenges presented when a district needs to let a teacher go.

> How long did it take to fire Mark Berndt? His behavior had been flagged for decades but the school couldn't take action. Why did the school district choose to pay him $40,000 to drop his appeal when he finally was fired?

Because of management negligence (and worse) in dealing with, documenting, and preserving documentation of earlier incidents, including the district at one point systematically destroying records relating to sexual abuse at district schools.

The problem was not the rules requiring documented cause for firing, the problem was management repeatedly covering for him and other abusers, including by destroying evidence.

Management misconduct doesn't justify giving more arbitrary power to management. Though, of course, that's what management likes to argue for whenever its own misdeeds are at issue.

But once it came out, once he was actually caught feeding semen to students, it was STILL hard to fire him.

Sure, you can make a case that management failed to document his previous behavior so they had to start over from zero and document, counsel, coach, whatever the contract requires, but once he was actually busted for ejaculating in kids food - how is it reasonable that they couldn't fire him on the spot?

> But once it came out, once he was actually caught feeding semen to students

He wasn't actually caught (or even formally accused of by the district in its dismissal charges) doing that. Everything that came out and was cited as the basis for his dismissal was the result of a photo lab reporting pictures, and in the charges for dismissal what is identified as being on the cookies is “an unidentified milky-white substance”. Notably, none of the reports of sexual abuse that students identified were made around the same time to school officials, or even the reported sexual context of the events in the photographs used as the basis for dismissal charges, were even referenced in those (exceedingly nonspecific) charges.

The management failures continued into the suspension and firing process.

I have no idea about that story, and it’s directly contradictory to my experience teaching in several Midwest states.

I assumed you were a CA teacher. It is truly a maddening situation there, and I have a feeling most of it is fairly unique to California. Teacher pay varies considerably between districts - some pay six figures while others top out at 65k. The pension benefits largely depend on pay, but usually it's something like 2% of salary for each year of service, which they can collect starting at 62.

“To be clear, these numbers do not answer the fundamental question of whether more teachers should be dismissed. They also don’t include ineffective teachers who leave the profession of their own volition or who are counseled out by administrators without going through the formal dismissal process. And they do not include tenured teachers dismissed for reasons unrelated to performance. Finally, such stats can’t show whether or not the processes for dismissing tenured teachers across the country are overly cumbersome.”

Listen, I don’t have a problem with firing teachers. I just don’t think the common perception of “infinite job security” for teachers is accurate.

A much larger and more concerning issue - in my opinion - is that we have very poor measures for teacher effectiveness. This is problem in at least two major ways. It inhibits districts from dismissing poorly performing teachers. It likewise prevents teachers from improving their performance because it often isn’t clear what problems might exist in their curriculum and instructional practices.

I also believe that if we were able to make teacher designed and administered assessment more universally trustable (as their results are now only [sometimes] trustable within the context of that specific teacher’s coursework) we could start to address some of these problems.

"Listen, I don’t have a problem with firing teachers. I just don’t think the common perception of “infinite job security” for teachers is accurate.

A much larger and more concerning issue - in my opinion - is that we have very poor measures for teacher effectiveness."

If bad teachers, by your own admission, are not being fired, teachers have the very job security you claim they lack. If being fired for bad performance is unlikely and schools are much less likely to run out of funding than a company (if run even semi-responsibly), these jobs may not have "infinite job security" but they're as close to that as can reasonably be found. After all, what is job security if not confidence you will not be fired?

I’m saying that past a certain point good/bad performance is less clear than you’re claiming it to be.

Elaborate systems have been made measure and quanitfy teacher effectiveness; however, it’s not a solved problem. Obviously problematic teachers do get dismissed. Like I said elsewhere in this discussion, my first three years of teaching I could be fired without cause. After that, I could be dismissed after two poor performance reviews or with cause.

You’re arguing that teachers known to be “bad” are being protected from firing. I don’t believe this is true - at least in my experience as a teacher in the Midwest.

I’m saying that once you get beyond a certain threshold for quality it becomes very difficult to separate teacher effectiveness from other noise in the process. Because of this, there are some teachers who may be more effective than others (and possibly some who are only marginally effective); however, we can’t accurately identify them or what makes them better/worse.

When I read articles such as this, where there are previous commitments that were not sufficiently backed by the committers, I cannot help but feel 1) Government services are ponzi schemes and 2) It seems only just to plunder the wealth of the those who made the commitments in order to hold them to their words.

A potential solution: make school year round, eliminate the unnecessary summer learning loss, and have new teachers pay into social security and a 401k like other workers do. No more separate system, students will perform better, and frankly I think parents will appreciate having more frequent short student vacations through the year rather than one large summer and winter chunk like we do now that causes problems with childcare and nutrition for low-income families. The big reason teachers don't get social security is because they do not work year round so the payout would be a fraction of what teacher pensions pay out - with year round school we no longer need to compensate in this way to make teaching a viable career.

That’s not remotely true. Even a full social security payout wouldn’t come close to the public employee union pension plans - in California it probably wouldn’t be 1/4 of it.

In CA, teacher can retire making ~100k/yr, and get 105% of that as a pension for life. Do you really think one of the most polioactive lobbying groups in the state would let that disappear?

[1] https://www.forbes.com/sites/andrewbiggs/2015/08/28/californ...

It looks like that 100k/yr number applies to teachers who have paid extra into their pension fund, such as the one mentioned in this article:


Additionally, they don't receive social security benefits.

My idea would be that they would not rely entirely on Social Security, they would be funding a 401K alongside some sort of reasonable match from the state instead, much like the deal people in the private sector get.

> they would be funding a 401K alongside some sort of reasonable match from the state instead, much like the deal people in the private sector get.

While it may be a surprise for people who have worked in high demand fields, lots of workers in the private sector have no 401k offered, and of those that do, lots don't have any employer matching offered.

I’m not saying it isn’t workable - heck, it’s what everyone else does - I’m saying the union, CalSTRS, and their paid off politicians would never allow it to happen.

Don't know about you, but I loved the summer off as a child/teen.

I did as well, but I do not feel it would be unreasonable to go to school year-round with 2-3 week breaks each season instead. There would still be free time and opportunities for families to travel, but it would not need to occur in a single 2-3 month period like what we do now.

I would have preferred this format as well.

3 weeks between each trimester, year round, maybe slightly longer in the summer (4-5 weeks)

Teachers don’t get social security, and unlike firefighters or police officers, most retirees earn modest pensions of about $55,000 a year.

This seems like the most important sentence in the entire article.

Why are California teachers paying into a separate pension system rather than Social Security like everyone else?

What would it take to decommission STRS for CA teachers?

> Why are California teachers paying into a separate pension system rather than Social Security like everyone else?

Lots of state and local public employees nationally don't pay into Social Security (and consequently don't qualify for SS benefits for the earnings while in public employment; these workers also get reduced Social Security benefits if they did qualify based on either other work of their own or as a surviving spouse.)

Nationally, this is true of the majority of police, firefighters, and other emergency workers, and a large minority of teachers, and smaller minorities of other public employees.

Many public employees, OTOH, pay into both SS and a public employee pension.

Public employers were originally completely excluded from Social Security, but were permitted (but not required) to participate after 1950.

Given the fact that they don't work a full year, their expected SS benefits would be a fraction of their teacher pension.

> unlike firefighters or police officers, most retirees earn modest pensions of about $55,000 a year.

That’s a very misleading statistic - it represents an average service time of about 24 years, barely more than half of a career. Full-career retirees average 105% of their final year’s pay in pension benefits, or about double what’s quoted here.

[1] https://www.forbes.com/sites/andrewbiggs/2015/08/28/californ...

> That’s a very misleading statistic

Is it?

It sounds like you're not arguing that "most retirees" don't get that amount, but that they don't deserve the amount they get.

In some states, they pay into both.

Hell, I'd love to get out of SS. My money would have much better growth without that ponzi scheme. The problem is letting the government (state or federal) manage you retirement "fund", then wondering why you don't have any.

Proposition 13 affects this situation in two ways: it reduces tax revenue and it drives up the price of land, both of which cost money for the school system.

Governments seem to be increasingly enamored with paying for shortfalls by issuing debt instruments such as bonds, then when the bonds come due issuing ever-larger bond packages to cover the previous bonds plus the new debt. When does this cycle break down? Is it when nobody is able to buy bonds any more? Especially at the federal level I really struggle to understand the bond market, particularly with such low returns. Who are these willing participants in poor returns with bonds?

Buyers like government bonds because they are low risk of default. At the federal level, the risk is nearly zero. The yield of a bond is a reflection of the demand (inversely proportional), which itself is a reflection of risk (also inversely, so yield is proportional to risk).

The federal government funds itself through bond sales and taxes. They could choose to do all of one or all of the other.

But they could just keep rolling over debt into more bond sales, in perpetuity, since the dollar is just a concept, and not a voucher for anything physical. There is essentially no risk, beyond the dollar itself becoming worthless. So if you need to park a million dollars for a few weeks, treasuries offer a nearly zero risk option.

So government could run completely off bond debt. It might even be fairer than taxes... the poor usually don't have a million dollars they need to park. Government funding would come from the rich.

The reason for taxes is power. You can use taxes to control and direct the population.

Before the US federal government believed they had the right to make drugs illegal, they controlled them through taxes. You had to buy a tax-stamp to move marijuana, but the government would rarely sell any such stamps. The drug itself was not illegal, but not having the stamp on it was. [1] Later they just went ahead and declared it "controlled" and didn't bother with the stamp shenanigans.

Also taxing removes the leverage that bond buyers have (which would be the decision not to buy). China owns a lot of us treasuries, and routinely uses that as a bargaining chip.

Ultimately the fed uses a mix. Bond sales for monthly adjustments in spending, taxation to control the populace. And there are various economic theories on which is better, but I doubt anyone with such pure motives actually controls any policy.

[1] http://www.druglibrary.org/Schaffer/hemp/taxact/mjtaxact.htm

Better title: Systemic Budget Mismanagement Comes Home to Roost.

"Teachers don’t get social security, and unlike firefighters or police officers, most retirees earn modest pensions of about $55,000 a year."

$55,000 is a modest pension? That is a lot more than social security is paying. Maybe we should move teachers to SSA?

> $55,000 is a modest pension?

Yes, it is, especially compare to public safety pensions it is compared to.

> That is a lot more than social security is paying.

Social security is a minimal safety-net pension designed to mitigate crushing old age poverty (and it's barely adequate even to that task) in the event of absence or failure of workplace-specific retirement plans, not a primary retirement vehicle.

> Maybe we should move teachers to SSA?

You want the Social Security Administration to take over delivery of classroom education from state and local agencies?

Nope, I want to fix broken system. I'm not saying teachers should get SSA and nothing else, like with many other businesses 403(b) should be available for them. Point is that their future pension should be paid with their current investment, not some future obligations.

Of course they do. As the article says, teachers don't get social security and sacrifice current pay for future pay.

This is California's voters not wanting to pay for promises they made.

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