Sunday, August 19, 2012

College Tuition and Public Pensions

On Aug 18, 2012, at 12:52 PM, xyz  wrote:

"I also not sure why everyone is talking about the increases in College costs over the last 40 years as if it's some problem particular to California and it's evil unions. Costs have skyrocketed everywhere, in public and private universities. It might be worth thinking about a little more before immediately assigning blame to the unions. 

I don't think anyone is saying it is purely a California problem.  It is a problem around the country and for pretty much the same reasons in every state.  No state is immune and California is by no means the worst off (probably in the middle) in regards to pension's unfunded liability cutting into support for services.  And for the same reasons - the end of the housing & stock market bubbles and union's inability to face that reality. 

Limiting my discussion to pensions, it is true there are overall funding problems with the end of the bubbles but whereas the state is cutting services to the poor and middle class in all sorts of ways to make up for the loss in revenue, pension costs keep escalating - and dramatically so.  So, the cuts to services and increases in fees are much worse than they would be with sustainable pension costs.  The state budget alone has gone from $3B last year to $7B this year (out of a state budget of around $90B) for CalPERS and CalSTRS (the teacher's pension fund).  This is due to their inability to make 7.75% annual returns.  I don't know what the additional bill will be for all the cities and counties but it was over $7B last year and has gone up by about $1B every 2 years.

Is it anti-union to say "retiring on 90% of your final year's income (counting overtime & traveling expenses in some districts) is unsustainable - 60% is doable - can you accept that" ?  Is it a liberal position to say the poor, college students, and everyone else should receive less and pay more so some public employees and school administrators can retire on $200,000 and above?  In this, one of the most liberal of states, most people don't think so which is why it is so hard to get a tax increase through.  Fix the pension problem and you can get a tax increase.  "Taxes are what we pay for civilization" according to Oliver Wendell Holmes, Jr.  Maybe in his day, but not right now.

There are over 21,000 public retirees getting over $100K/year with annual increases for cost of living.  147 of them from Sunnyvale city & schools.

12,338 public retirees (87 from Sunnyvale) getting over $100,000/year in retirement benefits = total at LEAST $1.3B - top 3 over $300K/year.

6,609 public school retired administrators (27 from FUHSD, 5 from Sunnyvale SD, 28 from CUSD) getting over $100,000/year in retirement benefits = total at LEAST $0.7B - top 4 over $290K/year.

2,129 retired University of California Employees getting over $100,000/year in retirement benefits = total at LEAST $0.2B - top 3 over $300K/year.

When the bill finally comes due and all the crazy bookkeeping tricks can't hide it any more, there is a major fiscal train wreck coming around the US and public employees will be hit worst.  Denial is not a viable problem-solving strategy.  

A man is falling from a 100 story building.  Someone shouts out as he goes by the 50th floor - "How are you doing?"  He answers with a smile - "So far so good!"

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