In this new era of “fake news” and “alternative facts” challenging reality, one thing is very real: the cost pressures facing school districts from increased requirements to fund employee pensions and other benefits as well as maintain critical student programs.
Let’s look at the facts. Until 2013, required district pension contributions on behalf of employees were very stable. Districts contributed relatively the same amount per employee year after year, and the state made up the difference if increases were needed.
In 2013, the state decided that state pension funds were significantly underfunded, and they prescribed dramatic increases in required contributions to take care of the problem. The difference was that the state shifted the burden for paying these increased costs onto districts with no additional dollars to support them. That meant districts had to fund the added contributions out of funds that previously were available for student programs or employee wage or benefit hikes.
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State agencies did two other things that further added to local cost pressures. First, the California Public Employees’ Retirement System cut its expectations for interest and dividends earned from its investments, thus adding even more to districts’ obligations to contribute more to CalPERS’ bank account. The California State Teachers’ Retirement System is expected to follow CalPERS’ lead in the coming months.
Second, the state decided to launch a multibillion-dollar expansion of badly needed career-technical education programs with one-time dollars. Local communities, and especially the Sacramento region, jumped on this opportunity, and it has paid off with many more young people prepared for good jobs. The problem is that these one-time funds are going away, and districts must now find ongoing funds to keep these CTE programs going.
So what can districts do to thoughtfully plan to meet their obligations while remaining solvent over the next three to five years? First, it’s important to note that the increased pension and other benefit obligations (e.g., health benefits, retiree health care) are for the employees themselves. They are not dollars directed into some district reserve fund or student program. And second, it’s clear – not only in the Sacramento area but around the state as well – that districts that work openly and in collaboration with their employee representatives get to solutions that work for all parties involved.
In Sacramento, an excellent example of this can be found in the 63,000 student Elk Grove Unified School District. The district has formed a Partners in Education team made up of two leaders from each employee association, school site leader representatives, a member of the superintendent’s cabinet, a school board member and the superintendent. The group meets monthly and collaborates on everything from budget projections to leadership development to studies of health care services.
In the wake of the current cost pressures, the team jointly signed off on a letter to all employees explaining their agreement on how to handle the situation now and in the future.
And it’s the future that has to be key to these discussions in every district. While it may be tempting for some to say: “Let’s make a deal and get out of town; I won’t be here in a year or two anyway,” our families with children in kindergarten or first grade expect much more of us.
The long-term health of every school district depends upon its leaders making decisions that let their families – their customers – know that the district and its schools are positioned to thrive and deliver for their children now and into the future.
David W. Gordon is the Sacramento County superintendent of schools. He can be contacted at firstname.lastname@example.org.