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About this blog: I am a native of Alameda County, grew up in Pleasanton and currently live in the house I grew up in that is more than 100 years old. I spent 39 years in the daily newspaper business and wrote a column for more than 25 years in add...  (More)

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A necessary, but large budget hit for schools

Uploaded: Jul 10, 2014
School districts received a healthy boost in funding with the 2014-15 budget that Governor Brown signed last month.
There was another important change so teachers should not expect too much more in their paychecks despite years of stagnant or reduced pay because state revenues had plunged in the recession and its aftermath. To their credit, the governor and the Legislature tackled one of the pressing long-term debt issues—the underfunding in the State Teachers Retirement System.
The shortfall is estimated at $74 billion with actuarial studies showing that the system, that pays a defined benefit to retired educators, could run out of money in 33 years. Thanks to the convoluted law, instead of a board determining contributions as it does with the public employees' pension plan, the Legislature is required to set the rates.
For years, teachers have contributed 8 percent of gross pay and that was matched by the school district plus the state was supposed to add 5.5 percent. To deal with the shortfall, contributions are going to be raised across the board over the next three years.
The state's share will grow from 5.5 percent of salary to 8.8, while the teachers' contribution will increase modestly from 8 percent to 10.25 percent that will be offset by a 2 percent raise. For districts (and teachers' salaries moving forward the contribution grows from 8.25 percent to 19.1 percent, more than doubling. Districts will bear about 70 percent of the overall cost.
That will be a major, but necessary budget hit to ensure that the state keeps its promise to educators. It should be noted that unlike many city and county agencies, where the government started picking up both the employee share and its share of pension contributions, educators have steadily paid 8 percent, regardless of the state of the stock market or other pension fund investments.

The traffic jams on Interstate 680 on weekends during the county fair accurately reflected the attendance. Overall, attendance was up a very healthy 22 percent (after a sub-par 2013) and hit 473,472. The record attendance came in the 100th year fair when 524,577 flocked to the grounds.
The Fourth of July attendance, which welcomed back fireworks after a long hiatus on that Friday, saw 57,294 folks spin the turnstiles.
The fair entered a new partnership with non-profit Oak Tree Racing to enhance horseracing purses across the board. The track attendance showed a 10 percent increase, while the overall handle at the track was up 2 percent. As the Oak Tree partnership matures, officials on both sides will be looking to for the handle to climb much more than 2 percent annually.



Comments

Posted by Arnold, a resident of Another Pleasanton neighborhood,
on Jul 11, 2014 at 11:19 pm

"There was another important change so teachers should not expect too much more in their paychecks despite years of stagnant or reduced pay because state revenues had plunged in the recession and its aftermath."

Tim, the teachers exchanged fewer hours of teaching for fewer dollars. That was there choice and it wasn't a pay cut. Nevertheless, it has already been reversed in the current year. They are paid extremely well for the number of hours they work. We can agree to disagree if you like. On top of the current pension dollars taxpayers are about to pay 150% more toward teachers pensions. Those dollars will come from the districts General Fund and will impact class size, after school programs, sports, the music department, etc... That is the same GF that the district has been claiming is going broke. The PUSD has known for several years that this day of reckoning was coming, or they should have.

"For years, teachers have contributed 8 percent of gross pay..."

Tim, From 2001-2012 teachers have only contributed 6 percent of their pay toward a pension plan that requires 8% or more (plus) of pay to cover the cost of their pensions (based on a 7.75 percent rate of return). The 25% of those diverted funds (2% of pay) are guaranteeing a plethora of benefits that are in addition to pension benefits, and are substantial. I find it disappointing that you're perpetuating a myth forwarded by the teachers unions.

In fact, the Teachers union pension plan, CalSTRS, would be 88 percent funded, instead of the current 67 percent funded, if they hadn't abused their own pension plan. Unfortunately they have abused their own pension plan and they now want us dumb taxpayers to bail them out. From a blog on this topic:

"Much of the CalSTRS funding gap, now being painfully closed by squeezing school funding, is due to state and teacher contribution cuts and benefit increases enacted around 2000, when a booming stock market gave CalSTRS a brief funding surplus.

The state contribution was cut from 4.6 percent of pay to 2 percent. For 10 years, a quarter of the teacher contribution, 2 percent of pay, was diverted to a new individual investment plan. A half dozen small benefit increases included a longevity bonus.

CalSTRS would have 88 percent of the projected assets needed to pay future pension obligations if it had had continued to operate under the contribution and benefit structure in place in 1990, a Milliman actuarial report said last year.

Now CalSTRS is only 67 percent funded. A Milliman actuarial report in April showed CalSTRS received $5.8 billion from the state, school districts and teachers last year, while spending $11.3 billion on pensions and administrative costs."

Web Link


Posted by Tom F., a resident of Castlewood,
on Jul 14, 2014 at 10:50 am

Crime rate in town should drop to normal levels now that all that fair trash has moved on.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 14, 2014 at 11:14 am

Formerly Dan from BC is a registered user.

...and with all that financial variability in teacher benefits and pay, student scores have remained stabilized (sometimes slightly better or worse) over the duration.

How can this be? What on earth could explain how our students have been able to maintain high performance with all the issues facing teacher salaries/benefits and -GASP!- classroom size?

I wonder if high performing parents might be the main reason?

Just a guess, but what do I know...


Posted by Lois Lipps, a resident of Another Pleasanton neighborhood,
on Jul 14, 2014 at 2:08 pm

I can answer that, Dan, based on an ample sample of postings: "practically nothing."


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 14, 2014 at 6:38 pm

Dan,

The larger class sizes affect mainly younger (kindergarten, first grade). They don't take standardized tests in those grades, so you can't make the comparison. Sure high performing parents are a major factor in kid's academic success, but so are small classes in early grades.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 14, 2014 at 8:57 pm

Formerly Dan from BC is a registered user.

Good one WYNIT!

Now go make me a sandwich.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 14, 2014 at 9:00 pm

Formerly Dan from BC is a registered user.

John,

We've tangled on this before. If CSR was indeed a factor we would have seen spikes several years after implementation. It didn't happen.


Posted by Arnold, a resident of Another Pleasanton neighborhood,
on Jul 14, 2014 at 9:26 pm

The just approved pension bailout of the Teachers Retirement system (CalSTRS) will soon impact the PUSD budget. Those PUSD costs will adversly impact class size, sports & music programs, etc ... the 150 percent Pension increase which will soon be phased in will reduce funding for basic educational services (Teaching). The impact on the PUSD general fund, which has very little in the way of discretionary funds to begin with, is about to go broke.

People should forget about class size reduction, sports programs, and nice to have perks going forward. Discretionary dollars are soon to be diverted toward Teacher pension costs. You can accept it or vote to approve a parcel tax. The phased in cost will reach full steam about the same time prop 30 funds end. It's a perfect storm!


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 14, 2014 at 10:42 pm

"We've tangled on this before. If CSR was indeed a factor we would have seen spikes several years after implementation. It didn't happen. "

Not true. There were many other factors including shifts in demographics, students entering and leaving the school.


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 14, 2014 at 10:44 pm

Hey Arnold,

Maybe we should do what Dublin is doing. It seems their class size is falling and test scores are rapidly rising.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 15, 2014 at 7:16 am

Formerly Dan from BC is a registered user.

John,

"Not true. There were many other factors including shifts in demographics, students entering and leaving the school."

You're saying that test scores have stagnated due to demographics? You can't have it both ways John. We had CSR and after some years the test scores didn't seem to rise and now you're saying its because of demographics?

I don't understand what you mean.


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 8:21 am

Dan,

I just mean that you can't take one measure, test scores, that depends on many variables (class size, demographics,...), and draw a conclusion regarding one of the variables (class size). Many variables changed. You simply can't say that there was no effect in changing one variable when many variables changed.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 15, 2014 at 11:38 am

Formerly Dan from BC is a registered user.

So in your world, if we only get the variables 'just right', we'll have success no matter what?

Do I have that right?


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 15, 2014 at 11:39 am

Formerly Dan from BC is a registered user.

Sorry...that was directed at John.


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 1:50 pm

"So in your world, if we only get the variables 'just right', we'll have success no matter what?"

I think you misunderstood me. You were isolating one variable, class size, and saying that it didn't affect test scores, when there were many other variables that changed. I said that you could not conclude from those circumstances that k-2 class sizes had no effect on future test scores of the students in those classes. There were way to many variables.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 15, 2014 at 4:42 pm

Formerly Dan from BC is a registered user.

Ok John, let me use your variable argument.

If our kids perform at the same high levels with or without CSR, would that not mean that CSR is NOT a variable to the whole equation?

And if there is no change in the outcome once you insert a variable, then you can definitively say it did not work and move on to the next.

CSR did significantly increase or decrease performance of our students and no amount of debate will change that fact.


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 15, 2014 at 4:43 pm

Formerly Dan from BC is a registered user.

"CSR did not..."

fixed


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 5:15 pm

"If our kids perform at the same high levels with or without CSR, would that not mean that CSR is NOT a variable to the whole equation?"

No, it would not mean that. One variable increases other measure, while a countervailing variable decreases a measure, and they cancel out.

"CSR did significantly increase or decrease performance of our students and no amount of debate will change that fact."

That simply isn't true. Once again, there are far too many variables in this case to isolate just one of them and say it didn't correlate.


Posted by To: John, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 7:28 pm

What variables would change if we could rid ourselves of the teachers union?


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 7:43 pm

To "To: John",

I would say a number of variables would change if we got rid of the teachers union. It would be a tall order for Pleasanton, though. Seems like a statewide issue, no?


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 15, 2014 at 7:45 pm

correction:

"No, it would not mean that. One variable increases other measure, while a countervailing variable decreases a measure, and they cancel out. "

That should say "One variable increases some measure, while ..."


Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Jul 16, 2014 at 9:50 am

Formerly Dan from BC is a registered user.

John,

You are being either willfully obtuse or breathtakingly ignorant. <---this is not a slam

Either way, there's no point in discussing this anymore.

Sincerely.


Posted by john, a resident of Another Pleasanton neighborhood,
on Jul 16, 2014 at 11:10 am

Didn't take it personally. Maybe it is just one of those agree to disagree things.


Posted by Arnold, a resident of Another Pleasanton neighborhood,
on Jul 23, 2014 at 10:27 pm

"Posted by john, Hey Arnold,

Maybe we should do what Dublin is doing. It seems their class size is falling and test scores are rapidly rising."

I wouldn't recommend it. Dublin has failed to adequately manage growth and it's about to cost them substantially (or the taxpayers when huge bonds are promoted to build new schools while others are closing). Why is that development precedes planning? Planned growth could have avoided the problem, IMO.


Posted by Arnold, a resident of Another Pleasanton neighborhood,
on Jul 23, 2014 at 10:44 pm

Tim said, "The state's share will grow from 5.5 percent of salary to 8.8, while the teachers' contribution will increase modestly from 8 percent to 10.25 percent that will be offset by a 2 percent raise."

Tim, I wanted to address this statement but it took me a while to find this page. I want to make it clear that the increased teachers contribution, "from 8 percent to 10.25 percent" doesn't go toward the teachers contribution to their pension fund. They aren't paying anything additional toward their pension formula (ZERO). What they are paying toward with their additional 2.25 percent increased contribution is an additional pension benefit. That benefit guarantees them a 2 percent cost of living allowance.

So, for a 2.25 increase in contributions, which you claim has been offset by a raise, an employee retiring next year will pay 2.25% of salary for one year while receiving upto a two percent COLA for life. That is a retroactive pension benefit and, supposedly, retroactive pension benefits are illegal under the Governors new pension laws. Apparently not! So, in closing, the teachers aren't contributing anything more toward their pensions, but they are helping to pay for an additional benefit with a guaranteed 7.5% rate of return. If history proves anything taxpayers will be stuck paying even more based on this illegal perk.

I have much more to say on this topic but I'll leave it that for now.


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