This morning in the Capitol, the Assembly and Senate committees on public employees and retirement will meet to debate the future of our generation: the nearly 40 percent of Californians under 25. The issue will be the funding of CalSTRS – the currently unfunded teacher’s pension fund – to which the state of California owes no less than $240 billion over the next 30 years.
The room will be full of lobbyists – all representing various pensioner interests – and perhaps a few pensioners themselves. There may not be a single young person in attendance.
Why? Why aren’t we showing up en masse to object to the utter lack of long-term thinking in Sacramento, a lack that threatens the ability of our generation to achieve and aspire?
Because we’re all either currently in school or attempting to pay off, or save up for, the truly unfathomable burden of student debt placed on us by increased tuition and decreased financial aid – a burden which is a function of the perverse shift toward short-term thinking in the Capitol.
So our request is that the honorable legislators on the committees consider us, California’s future, in their thinking and decisions today. It’s not a request that we really should have to make. But the fact is that the regime of quick fixes is alive and well in the Sacramento, and our generation is being pilfered on a regular basis with no institutional mechanism to protect us.
There is no question that these pensions must be paid: They represent a series of promises made to our teachers, and a failure to pay into the fund would only bankrupt local school districts in the long run and detract from the pool of teaching talent. But the series of promises made were entirely unsustainable, conceived at the time to satisfy short-term concerns of politicians and pensioners over the long-term interests of the state and students.
Warren Buffett recently called unsustainable public pensions a “gigantic financial tapeworm,” and the parasitic comparison, while harsh, is not far from the truth. The conservative debt estimate of $240 billion – based on CalSTRS’ optimistic assumption of 7.5 percent annual investment returns – is a tremendous amount of money, and paying off that debt is going to require sacrifice from all Californians. Our generation is comfortable making some sacrifice to future priorities to honor the state’s existing promises, but there is a limit to what we consider fair.
Any plan that attempts to extend CalSTRS payment for 30 years unacceptably shifts the burden of sacrifice to our generation alone. CalSTRS debt should be paid off much sooner than that, particularly because many teachers will retire long before then. As the debt accrues interest at over 7 percent per year, it doesn’t take a $20,269 college degree (the average college debt of a Californian graduating today, according to The Project on Student Debt) to see that delaying any longer is a fiscally brain-dead solution meant only for political expediency.
So where does our generation wish to see that funding come from? Public pensioners have accepted a certain level of sacrifice in accommodating a slight increase in employee pension contributions, but we ask that they do more to ensure that they are not the last generation of pensioners California will ever see. A shift toward more evidence-based medical practices and preventative care will ensure that our generation is the healthiest California has ever seen – for a fraction of the price to the public. And policies meant to bring down the rates and duration of incarceration will mean less spending on locking young people up for nonviolent crimes, and more opportunity for those same young people to contribute to California’s future.
While it is a bit ambitious to speak on behalf of 12 million Californians, we think it is safe to say that this is an existential priority for our generation. We’re interested in a solvent California by the time we reach retirement age, and we’re interested in the future of our unborn kids and grandkids. We hope that the members of the legislative committees will share these interests in the hearings today.
Nuriel Moghavem is a second-year medical student at Stanford School of Medicine and a Public Service Fellow of the Haas Center for Public Service at Stanford. Adam S. Sieff is a third-year law student at Stanford Law School and chair of the Stanford Law Democrats.