The Learning Curve: Unfunded Pension Liabilities, the Gift San Diego Keeps on Giving Itself

It’s like the uncomfortable and horrendous tube socks that keep finding their way under the tree each year: Big, ugly pension debt seems to be the gift that government officials can’t stop getting.

And arguably, it’s a gift given by themselves and their predecessors, who never put enough money in the retirement pot.

The season of giving delivered exactly such a tiding to San Diego Unified board trustees Tuesday night in the form of an audit that found $400 million worth of pension debt on the district’s books.

Pension debt is like a snowball rolling down a hill in a far-off forest. No one notices it until it crashes through the tree line and is heading straight for the ski lodge full of hundreds of people (or teachers’ jobs in this case).

But enough of winter metaphors! The news of this toxic spot on the district’s books does not come at a good time. On Tuesday, board members also learned they may need to cut $37 million from next year’s budget and an additional $38 million the following year, as KPBS reported.

Why, you might ask, are so many districts in the state facing perpetual budget cuts, even as the state has been making large spending increases in education each year for the last several years? Well, a few things:

One: The increases aren’t exactly increases like you might think. The state has actually been making these large “increases” to make up for post-recession cuts. This is the first year local school districts have received pre-recession levels of funding.

But two: That doesn’t totally explain it. School districts also made lots of cuts during the recession, so in theory they should only be adding back to their budgets now, not taking away.

Three: This is the real problem. Districts costs are increasing faster than the money coming from the state. Special education costs are going up. Mandated pension costs are going up. And to boot, lots of districts like San Diego Unified are shedding students. One less kid, means that much less money from the state.

Finally: There is one cost districts can control. It’s a cost they don’t want to talk about and they probably think I’m part of the alt-right for talking about it. (Will H. is funded by Michael Blooberg and Wal-Mart, they will say!) What I’m talking about is teacher raises. School districts have foreseen the mandated increases in special ed costs and pension liabilities and decreased enrollment. And yet many, including San Diego Unified, have given raises anyway. That’s great. I truly have no doubt that people deserve them. But districts must be mindful that whatever costs they add through raises could be taken away in layoffs later.

Back to this $400 million debt (which coincidentally is about 40 percent of San Diego Unified’s yearly budget) for a second.

Several San Diego Unified board members pointed out that a lot of this debt service is mandated by the state. Local districts are forced to pay certain amounts to pay for teacher’s retirement and health benefits each year.

But as board members heard Tuesday night, about one-third of that $400 million is totally under their control. It’s called Other Postemployment Benefits, or OPEB. It’s bonus coverage provided by San Diego Unified or any district that might, say, cover some medical expenses that a retiree’s insurance doesn’t cover. Total OPEB liability at the end of this year will be $127 million, according to the audit.

Gompers Charter Looks to Unionize

At least three-quarters of certified teachers at Gompers Preparatory Academy charter school have said they’d like to unionize, according to an excellent story in the Union-Tribune.

Gompers would join just eight other charter schools that have unionized in San Diego County, including Preuss School and Discovery Charter School. San Diego County schools massively lag behind the rest of the state in unionization, according to the U-T. Only about 6 percent of county charter schools are unionized. But around 25 percent of the 1,300 charter schools in the state have formed a union.

My Work

• This story out of Montgomery High School got lots of feedback. Police arrested four students under the cover of an active shooter drill at Montgomery High School in Sweetwater Union.
• And in other Sweetwater news (apparently, this is my full-time beat now) I broke down the unsustainable borrowing that’s currently keeping the district afloat. Here’s how I explained it: “Say your credit card balance was $5,000 two years ago – manageable, probably. Then say it grew to $36,000 the next year – things are getting a little scary. Now assume the balance has grown to $68,000 and the payments are huge – yikes. … Only instead of thousands of dollars, it’s millions.”

Other Ed News

• The story of this Louisiana private school, which became a viral internet sensation by helping get predominantly black, working-class students into prestigious universities like Harvard, is an engrossing (and not very long) read from the New York Times. That’s because, unfortunately, the school is not at all what it seemed.
• A four-part series from the Los Angeles Times examines the intersection of poverty and education – and also asks whether the latter can really solve the former all by itself. Here’s what I’d consider the thesis lines: “Sure, schools can and should do better, but we’ve unrealistically expected them to magically compensate for the burden of widening economic disparity … It’s not the schools that are failing — it’s everything else. Society, culture, politics, public policy.”
• State legislators are already pushing bills to expand pre-K – one of Gov.-elect Gavin Newsom’s campaign promises – according to my former KQED colleague Zaidee Stavely at Edsource.
• The superintendent of Fallbrook Union High School District got a fat payment for wanting to resign, according to Kristen Taketa at the U-T. Hugo Pedroza was already paid more than superintendents of comparably sized districts. When he wanted to resign, school board members fired him to help him collect the payout.
• The New York Times editorial board thinks the government should spend substantially more money on high school graduates, instead of funneling the vast bulk of resources to those that attend college.
• Three hundred Sweetwater employees have agreed to take an early retirement deal as financial struggles in the district continue, according to NBC7. But it’s unclear how much money the deal could actually save and whether Sweetwater’s board will approve it.