Mill Valley’s School District has placed Measure E on November’s ballot. It’s a parcel tax continuing the district’s existing tax to maintain Mill Valley’s universally acknowledged excellent public schools.
Two-thirds voter approval is required for passage.
The most controversial aspect of Measure E is a 5 percent annually compounded increase in the tax.
This isn’t peanuts.
The tax will rise from $980 per parcel of residential or commercial real estate in 2018, when the “renewed” tax goes into effect, to top out at $1,674 in the 2028-29 fiscal year, when the levy sunsets.
Given America’s present low 1.2 percent inflation rate, this kicker far exceeds any cost-of-living adjustment.
To learn the logic behind such a substantial annual increase I met with Emily Uhlhorn, chairwoman of Renew for Mill Valley Schools. What she told me has implications for every Marin school district.
Much of the funds generated by the 5 percent annual increase are needed to satisfy requirements of Assembly Bill 1469, now-adopted state legislation designed to close the gigantic $79.7 billion funding gap facing the California State Teachers Retirement System — or CalSTRS.
Unsustainable promises negotiated all over California by aggressive public employee unions and compliant elected officials put taxpayers and school trustees behind the eight-ball.
It’s hard to criticize the intent behind AB 1469. The idea is that 30 years from now in 2046, CalSTRS’ unfunded liability will finally be satisfied.
Under this law, pension contributions deducted from classroom teachers and front-office educators will slightly increase from 8 percent of salary before the law was enacted to 10.25 percent in 2020.
Simultaneously, every school district in the state is required to more than double their payments to the teachers’ pension fund.
Mill Valley is typical. At present the district contributes 8.25 percent of each of its employee’s salaries to CalSTRS. That will zoom to 19.1 percent in 2020. On top of this pension payment escalator, school districts — like all Americans — face employee and retiree health care costs rising 6.5 percent a year. Compare that to America’s current 1.1 percent inflation rate and it’s clear where much of the 5 percent inflator’s proceeds are going.
At least Mill Valley’s schools are ahead of the game. Its current parcel tax doesn’t expire until 2018.
The district has already established a trust fund to assist in paying down its pension deficit, squirreled away prudent reserves and devotes only a relatively modest 7.96 percent of its total budget to front office management.
Woe be it to other school districts that have put off reckoning with AB 1469’s implications and have not saved for the fast-approaching rainy day.
Without AB 1469, CalSTRS would be insolvent well before 2046. Even the pension plan’s bankruptcy wouldn’t take average Californians off the hook.
CalSTRS contends it only manages assets; it’s the districts that have the liability.” Taxpayers ultimately will pay the piper.
In a nutshell, that’s why Mill Valley voters face a ballot measure with a 5 percent compounded annual increase.
Of course, voters could simply reject Measure E and similar measures that will soon be popping up all over Marin.
That doesn’t mean that contractually obligated pension payments won’t be made.
In that event of a “no” vote, school trustees from around the Golden State will have little choice but to cut back across the board — including in the classrooms — to come up with the billions needed to pay off unrealistic pension promises made to educators.
Just as pension reformers have long warned, the day of reckoning is finally upon us.
Columnist Dick Spotswood of Mill Valley writes about local politics on Wednesdays and Sundays in the IJ. Email him at spotswood@comcast.net.
