Pensions Could Hold Kids Hostage

Pensions Could Hold Kids Hostage


Once again, smoke alarms are going off regarding California’s under-funded pension programs.
This time they are sounding at CalPERS. The fund managers were anticipating a chimeric 7.5 percent annual return on its portfolio of investments.

That estimate was revised marginally downward to 7.0 percent in December — hardly a conservative estimate. If we only knew which equities and assets these fund managers are betting on, we could then back-up their bets with our own savings. Only two people have sustained such high returns on investments in recent times: Warren Buffet and Bernie Madoff.

CalPERS’ hopes for another legislative bailout — like it received in 2014 — have been dashed. Without more budget cuts, the state is already staring down the barrel of a $2 billion deficit. As expected, some people are going to have to make sacrifices. Obviously 1.8 million current and former city, state and school district employees are not going to take a haircut; public employee unions pass thick envelopes to get their benefits and perks. They’ve paid their dues; they are entitled. 

While 16 percent of Californians have union protection, public-service unions account for 80 percent of all Californians who are unionized. The majority of taxpayers do not enjoy a defined benefits retirement package; they rely on the vagaries of the stock market to fluff up their 401Ks. It will be a hard sell for CalPERS to wring commiseration — more importantly money — from non-CalPERS workers via the state.

If CalPERS can’t rely on the munificence of a grateful state, how will CalPERS extort the required funding? In its Jan. 29 edition, the San Francisco Chronicle predicted that the tribute might have to be extracted from education. To quote, the current CalPERS shortfall “could force many districts to dedicate less and less money to student services like counselors, libraries and class-size reduction.”

While no one would call this a hostage situation, it does seem as though the under-18 crowd may be called upon to make the necessary sacrifices if Sacramento remains parsimonious. The threat seems to be, “Make the best pension in California flush or your kid won’t know what the inside of a school library looks like.”

Kids may soon be asking, “What’s a counselor?” Or the class sizes will be bumped up to the point where classroom management is focused on safety at the expense of maintaining a learning climate.

Such threats to quality of education are much more effective extortion tools than austerity elsewhere in public education. Imagine threatening Alameda with: “You either fund CalPERS or we will relocate the school district headquarters from $30,000 a month digs in Marina Village to City Hall West at Alameda Point; won’t you be embarrassed then?”

Or how about, “Fund CalPERS to its satisfaction or we furlough every edu-crat who makes over $100,000 a year.”

Or, “Don’t want to fund us? Well then, say good bye to assistant superintendents.” Given that CalPERS is only 69 percent funded, AUSD might be looking at some tough choices; let’s hope that all goes well for the Puzzle Palace. Who wants to drive all the way to Alameda Point just to chat-it-up with an indispensable cog in public education?



Jeffrey Smith teaches math at Encinal High School. Reach him at