File this one under "I am Jack's complete lack of surprise": yet more agencies of government in California are about to run out of money. First,
Voice of San Diego reports that the San Diego Unified School District is on the
edge of insolvency. The reasons for this should be familiar to observers of this state's politics; salaries and benefits have continued to escalate while funding from Sacramento has shriveled, and the
education trailer bill in the state budget prevented the district from laying off teachers in advance of mid-year "trigger" cuts. As such, a takeover by the state may be in the works. In exchange for a loan from California's taxpayers to keep its bills paid, the district will relinquish all local control of its schools to Sacramento. The superintendent will be fired and the school board stripped of all real authority, and parents and students will have to trust that an unelected state administrator will be more responsive to their needs. In other words, it's pretty much a losing proposition for everyone save a few bureaucrats in the state capital.
That's pretty alarming, but it's nothing compared to the noises coming out of the nation's second-largest pension fund, CalSTRS. If the Governmental Accounting Standards Board goes through with new rules for reporting
unfunded liabilities, the retirement fund for California's public school teachers could see its 30-year unfunded liability triple from $56 billion to roughly $150 billion. Mind you, CalSTRS officials don't see that as a serious problem; to their thinking, they're well on their way to closing the gap back up. But they're worried people might be freaked out by the size of the number. Says Alan Milligan, CalSTRS' chief actuary, "There's going to be a perception problem – what is the cost of the pension system?" Um, yeah. Local governments, and ultimately taxpayers, are going to have to make up whatever shortfall the fund's investments don't. If that shortfall gets massively larger, it's going to break the budgets of those governments. It's actually slightly more serious than a "perception problem."
8 comments: