Sacramento

Threat of Sacramento Teacher Strike Spurs Criticism

Teachers in the Sacramento City Unified School District have?authorized?a strike, hoping to follow in the footsteps of teachers in Los Angeles Unified and Oakland Unified and secure substantial raises after a brief walkout.

But in key ways, the dynamics appear different. In?Los Angeles?and?Oakland, the public and the local media were clearly sympathetic. Teachers had not had significant raises in years, and with the cost of housing going up arguably have lost purchasing power in recent years.

In Sacramento, however, the argument that the local school district simply can?t afford raises because of the huge long-term increase in pension costs and loss in state funding because of declining enrollment has resonated far more than similar warnings did in Los Angeles and Oakland. Coverage in regular and social media has repeatedly emphasized three points:

The Sacramento City Teachers Association secured an 11 percent raise for most members in September 2017 after threatening a strike. The Sacramento County Office of Education warned at the time that without significant cuts, the district faced fiscal disaster. But the local teachers union has rejected calls to reduce the cost of health benefits that the state Fiscal Crisis & Management Assistance Team (FCMAT) says are the most generous in the Sacramento region.

The warning from school officials that even without having to provide new raises, the district faces a?$35 million?hole in a nearly $400 million annual budget and is on track to run out of money in November. At that point, under state law, the district could seek an emergency loan from the state Legislature, but on the condition that it accept an appointed administrator to make key financial decisions going forward, taking away most of the school board?s and Superintendent Jorge Aguilar?s powers. The primary goal of hose decisions would be ensuring the district pays back the state loan.

The fact that the four other employee unions in Sacramento City Unified have sided with Aguilar?s warning that a raise could seal state control of the school district for a decade or more, as has happened in other California districts that have been unable to pay their bills. They don?t buy the teachers union claim that the district has failed to honor the contract it signed in 2017, thus making a strike necessary even though state law says such a strike would be illegal since the teachers are still under contract.

Writing Monday, Sacramento Bee columnist Marcos Breton?warned?the teachers union that it risked disaster not just for the district and its 42,000 students but for a city that has built up civic momentum in recent years under Mayor Darrell Steinberg.

?Sacramento?s efforts to sell itself as a place for companies to invest would be damaged because a major selling point is good schools,? Breton wrote. ?How many investment opportunities would be lost if Sacramento became known as the city whose schools were bankrupt??

Aguilar arrived in 2017 at the district and is given good marks in most circles for his determination to avoid financial disaster. But a FCMAT?audit?released in December pointed out a vast array of problems in Sacramento City?s management that dated back many years. It cited incompetence and poor communications by the district?s business team and a failure to properly analyze budget data that indicated the headaches to come.

Union leaders say these management failings are not their responsibility and should not be held against their push for better pay.

The union?s hope that a strike authorization vote would lead to new concessions hasn?t happened so far. A union statement said the strike was coming ?at a date likely in the next month.?

This article was originally published by CalWatchdog.com

Is it time for California?s taxpayers to go on strike?

Around California, public school teachers are on strike seeking more pay, better benefits and less competition from charter schools. They are also demanding that the rest of us pay higher taxes. Indeed, as part of the agreement that ended the strike in Los Angeles, teachers forced a concession out of the school district to officially support the partial repeal of Proposition 13 as it applies to business properties. That would have the effect of raising California property taxes as much as $11 billion annually and would surely accelerate the well-documented business flight out of California.

It?s not as though Californians are currently under-taxed. With the highest income tax rate, the highest state sales tax rate and second highest gas tax in America, it?s tough to make that argument.

So, I?m curious as to what would happen if, in reaction to the teachers? strikes in L.A., Oakland and Sacramento, taxpayers decided to go on strike? The media seems obsessed with large, public demonstrations of crowds wracked with angst and victimhood. School districts lose millions of dollars when teachers go on strike because it impacts the Average Daily Attendance figures that provide the basis for disbursing tax dollars. But if taxpayers went on strike, how much more would they lose?

The reaction to a taxpayer strike would surely invoke claims that taxpayers are greedy, anti-education heathens. But, in reality, the vast majority of taxpayers are very much pro-education. They just don?t like the product they?re forced to pay for.

Let?s first dispel the urban legend that Proposition 13 ?starved? education in the Golden State.

To read the entire column, please?click here.

Watchdog group identifies ?financially sick? California cities

Irvine is the financially healthiest big city in America, while New York is the sickest, according to a new study by a nonprofit dedicated to financial transparency in the public sector.

California?s other big cities fall firmly in the middle, with Southern California burgs healthier than many of their Northern California counterparts, says Chicago-based?watchdog group Truth in Accounting.

The group doesn?t report on any cities in Yolo County since they are too small in population size. However, Bay Area cities as well as Sacramento were looked at.

The ?taxpayer burden? ? what each resident would have to pay to eliminate a city?s debts ? hit $7,200 per person in Anaheim, $6,000 in Los Angeles, $5,100 in Santa Ana, $5,000 in San Diego, $3,700 in Riverside and $1,300 in Long Beach. Meanwhile, Irvine boasts a ?taxpayer surplus? of $4,400 per person. …

Click here to read the full article from the Daily Democrat?

Sacramento Tax Increase Proposal Represents Statewide Trend

The Sacramento City Council vote to place a tax increase on the November ballot is representative of what we?ll see around the state in many localities: a call for more taxes to maintain basic services when in reality the money is needed to meet pension obligations.

In one sense the argument that the money is needed to maintain services is correct. Because greater pension costs will eat into the general funds of local governments, services provided by government will be cut because of reduced revenue. The problem is that officials promoting the tax won?t talk about pensions.?

What?s needed is transparency.

In Sacramento, the city council placed a 1-cent sales tax on the ballot to offset a ?-cent tax that is soon to expire. The new tax will be permanent. The tax is projected to raise $100 million, twice what the temporary tax now brings in. The new money is purportedly for specific projects but money is fungible and can be used where the city needs it?and the city needs to deal with rising pension costs.

(UPDATE: The current tax take from the 1/2-cent tax is actually $36 million. The $50 figure came about because of carryover money from previous year. A full penny is about $72 million. Thanks to Dan Walters at CALmatters for the correct information.)

The city budget speaks of the long-term difficulty Sacramento faces dealing with pension obligations.??The pension cost (normal cost and unfunded liability combined) in the General Fund alone is projected to be $134 million in FY2024/25 when the rate change is completely phased in. This reflects an increase of more than $66.9 million over the eight years which is a 99.6% cost increase from FY2017/18 to FY2024/25.?

Sacramento?s General Fund has increased about 25% from the?2009/10 budget?to?now?from $385.9 million to $484.4 million. Even that steady increase cannot match what is needed to keep pace with the expected pension demands.

A tax increase is a way to meet the obligation but you won?t hear much about that when a campaign is mounted for the tax increase. At the council meeting approving the tax there was talk of maintaining basic services and supporting a plan that would confront multiple problems including homelessness, neighborhood investments, and job issues.

This formula is not exclusive to Sacramento. Many local governments must face pension costs that are burdening their General Funds and are turning to taxpayers for relief. By paying more in taxes the taxpayers have less to contribute to their own retirement costs.

The debate over these taxes should be truthful about the pension monster that is devouring local budgets. Once that happens more attention will be focused on how to deal with the problem.

Joel Fox?is editor and Co-Publisher of Fox and Hounds Daily

This article was originally published by Fox and Hounds Daily

The California Legislature passes the pension buck ? again

In truth, Sacramento politicians are very dependable. You can depend on them to raise your taxes, pass meaningless resolutions attacking President Trump and hurt the private sector by eliminating workplace arbitration and enacting even more burdensome regulations. And finally, they are very dependable in avoiding the most important threats to California?s financial solvency, especially dealing with unfunded pension liabilities.

Much has been written about California?s unfunded pension crisis. By 2024, normal contribution payments by cities and counties to CalPERS are estimated to total nearly $3 billion, and the unfunded contribution payments are estimated to total $5.5 billion. That shortfall of nearly $3 billion a year will continue to increase unless reforms are enacted ? soon.

California?s pension crisis exists in large part due to the very nature of defined-benefit plans. Unlike defined-contribution plans, where the taxpayers? obligation to each public employee ends with every pay period, defined-benefit plans depend on a projection of future investment returns. And therein lies the problem. California has been horribly wrong in its application of assumed rates of return, leading to hundreds of billions in unfunded liabilities.

And this shortfall is occurring in good economic times when the state of California is relatively flush. A recession will quickly expose this short-sighted thinking, yet the Legislature continues to believe that local municipalities will continue to pass regressive sales tax increases to bail themselves out. Already, 24 cities have sales tax rates at or over 9.5 percent, and more cities are destined to join them.

To read the entire column, please?click here.