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There’s an interesting article today in the U-T about public educator pensions and how their costs statewide could echo city pension problems. Here were its key findings:
The state teacher’s pension system faces a $40.5 billion shortfall over the next 34 years, in part because it owes payments for life to people such as Rudy Castruita, the retired superintendent of the San Diego County Office of Education.
Castruita receives the region’s top educator pension of $281,034 a year, or 107 percent of his final salary. …
The average retired educator in San Diego County is paid $40,633 per year, or 58 percent of final salary. That’s more than the average general city worker at $37,442 but less than the $67,428 for firefighters or the $62,098 for police officers.
About 5 percent of educators receive pensions that pay them 100 percent or more of their final salary.
Some 254 receive pensions of $100,000 or more, or 1.7 percent of the retirees. That compares to 3.4 percent of city retirees.
The question of whether school pensions are sustainable reminded me of one wrinkle in this issue that I find especially revealing: Double dipping. That’s when an employee is earning their pension and their salary at the same time. I’ve delved into this a few times when San Diego Unified schools rehired employees who were paid to leave the district:
The phenomenon also raises questions about protections against gaming the teachers’ pension system. Retired employees who go back to work in public schools must get approval to earn above a roughly $28,000 limit while keeping their pension. …
But CalSTRS spokeswoman Sherry Reser said the pension system doesn’t police who gets the exemptions. While the system has guidelines about when school districts can grant exemptions, it doesn’t judge whether employees meet those criteria, “only the completeness of the paperwork,” Reser said. School districts decide which employees are eligible to keep their full pensions while earning above the limit.
Exemptions are “fairly routine, and I’m not sure it’s a good idea,” said school board member John de Beck. “I can’t remember the state ever telling us no.”
Because school districts have already paid for pensions when retirees return, they have little stake in stopping abuses of the pension system, said University of Arkansas economics and education reform professor Robert Costrell. …
“You push these expenditures onto the system as a whole, and it has some impact for individual [districts] — but a very small one,” said Costrell. “The problem is when everybody ends up doing it. … Double dipping is a rational response to an irrational system.”
Costrell summed it up well. And since rehiring retirees can often be good business for schools, districts actually have an incentive to shift costs to the pension system to save themselves money:
Retirees cost an estimated 17 to 20 percent less than ordinary workers because they don’t get benefits or pension contributions, said Chief Human Resources Officer Sam Wong. And if nobody in the school district can do the work, hiring a retiree costs the same as hiring an outside employee or group, Knott said.
This is an issue that goes way beyond San Diego or even California. For a national take on how pensions could pose financial problems, watch this 60 Minutes about states’ pension woes.