Soaring Pension Costs Are Choking SD Schools

San Diego Unified School District will be grappling with major budget cuts this week and over the coming year. Much of it will be from increases to the pension contributions the district has to make for current and future retirees.

District contributions to teacher pensions will total more than 19 percent of salary costs by 2020-21, up from less than 13 percent this year and less than 9 percent in 2014-15.

Just two years ago, the district spent $75.7 million on contributions to the California State Teachers’ Retirement System. This year, the cost is nearly $124 million, budget documents show.

Amplifying the costs are new contribution demands from the teacher pension system aimed at reducing unfunded liabilities that have piled up statewide. District contributions to teacher pensions will total more than 19 percent of salary costs by 2020-21, up from less than 13 percent this year and less than 9 percent in 2014-15. Districts must also account for pension costs on their balance sheets differently today than they did years ago.

City of San Diego leaders have grappled with pension costs for more than a decade since a controversial plan in 2002 boosted benefits for city employees while reducing the city’s funding of the pension system. The resulting scandal pushed the mayor to resign and led to several efforts over the years to cut guaranteed pensions entirely for most future city employees.

But the state as a whole and other major cities are now facing their own problems. Recently, CalMatters and the Los Angeles Times dove into how the state and former Gov. Gray Davis enhanced pension benefits for state employees, a decision that is now having major impact across the state:

This year, state employee pensions will cost taxpayers $5.4 billion, according to the Department of Finance. That’s more than the state will spend on environmental protection, fighting wildfires and the emergency response to the drought combined.

And it’s more than 30 times what the state paid for retirement benefits in 2000, before the effects of the new pension law, SB 400, had kicked in, according to data from the California Public Employees’ Retirement System.

The L.A. Times recently found that 20 percent of Los Angeles’ general fund dollars go to fund pensions.

Correction: An earlier version of this post said that two years ago, the district spent $47.8 million on contributions to the California State Teachers’ Retirement System. That figure represented the district’s estimated costs for 2014-15; final numbers show the actual costs were $75.7 million.