Despite a bright economic climate, voter-approved state tax hikes and $74.5 billion that California will devote to K-12 education and community colleges in 2017-’18 — a $3.1 billion year-over-year increase — schools are in financial distress. . . . With a currently healthy state budget, the biggest threat to balanced school budgets is the growing bite taken by public retirement systems — CalSTRS for teachers and CalPERS for support staff. Next school year, those taxes will be about 15 percent of employer payroll. In four years, the CalPERS payroll tax will exceed one-quarter of salaries and is scheduled to continue growing in an effort to enable it to better cover its projected retirement payouts. CalSTRS also will also grow.
Union dues take a large bite out of the paychecks of California teachers. We estimate that newly hired, full-time teachers will pay $37,000 in dues over a 30-year career. Further, if new teachers could fully opt out of the union and instead save their dues in an Individual Retirement Account, they would each have $228,000 extra in after-tax retirement savings.
But despite the upbeat rhetoric, a crisis is looming in the nation’s second-largest school district as enrollment falls from a projected 514,000 in 2017 to 480,000 in 2020. Since the state’s main education funding formula is based on average daily attendance, this could force mass layoffs of teachers or even drastic measures like shortening the school year. A $422 million deficit is anticipated in 2019-20, with red ink after that for as far as the eye can see. None of this comes as any surprise. A blue-ribbon commission’s report issued in November 2015 said L.A. Unified was facing fiscal disaster because of the enrollment declines, which are primarily due to falling birth rates, and because of the cost of pensions and retiree health care benefits. Employee retirement benefits will claim 8 percent of the school budget in 2017-18 and more than double that sum in coming years as the state’s 2014 bailout of the California State Teachers’ Retirement System ratchets up required payments from districts and as more of the district’s aging workforce retires.
University of California President Janet Napolitano has been under siege since March 2016, when state Auditor Elaine Howle released a report that showed that the UC system wasn’t honoring the principle that California students come first. Howle documented how, over the course of nearly a decade, budget-strapped UC had chosen to increase out-of-state students who pay far higher tuition by more than 400 percent – and that some were admitted ahead of nearly 4,300 California students “whose academic scores met or exceeded all of the median scores of nonresidents whom the university admitted to the campus of their choice.” At least initially, Napolitano and some regents dismissed the criticism before finally giving in and capping nonresident admissions last week. But the Golden State’s other giant higher education system – California State University – got the message loud and clear: In-state students must be the highest priority. Last week, CSU formally guaranteed that a qualified California high school graduate will be offered admission to at least one of CSU’s 23 campuses.
California’s new system for funding public education has pumped tens of billions of extra dollars into struggling schools, but there’s little evidence yet that the investment is helping the most disadvantaged students.
A CALmatters analysis of the biggest districts with the greatest clusters of needy children found limited success with the policy’s goal: to close the achievement gap between these students and their more privileged peers. Instead, results in most of those places show the gap is growing.
The test scores echo a broader and growing concern about the four-year-old Local Control Funding Formula from civil rights groups, researchers and legislators. They also raise concerns about whether the $31 billion invested so far in foster youth, kids learning English and students from low-income families has been well spent.