The elephant in the Marin taxpayers’ living room — burgeoning teacher pension costs at local public schools — is the subject of a new report by a Stanford-based policy group.
The 20-page report, “The Canary in the Gold Mine: The Implications of Marin’s Rising Pension Costs and Tax Revolt for Increasing Education Funding,” identifies higher pension costs as the reason why school parcel taxes are becoming an increasingly tougher sell. In Marin, that trend, the report says, first surfaced in 2016, when a parcel tax in upscale Kentfield School District failed, and one in similarly affluent Mill Valley School District passed by only 23 votes.
“Due to a growing concern that dollars are not reaching schools, but instead being used to fund pensions, parcel taxes have faced increasing opposition in Marin County,” states one of four major findings in the report, written by Hannah Melnicoe, Cory Koedel and Arun Ramanathan for the Policy Analysis for California Education, based at Stanford’s Graduate School of Education. “Marin may be a harbinger of political dynamics around pension costs and education funding for the rest of the state.”
Marin advocates and educators don’t disagree. But they say it needs to be made clear that the cause of the problem is not in San Rafael, Novato or Mill Valley, but in Sacramento — specifically, within state Assembly Bill 1469, passed in 2014. AB 1469 more than doubles school district required contributions to the underfunded California State Teachers’ Retirement System, which covers teachers’ pension benefits. These mandated employer contributions ramp from 8.25% in 2014 to 19.1% in 2020 and remain at that elevated level for nearly three decades.
“What is missing from the report is absolute clarity that this (pension contribution escalation) is an unfunded mandate from the state,” Mary Jane Burke, Marin County superintendent of schools, said on Friday. “There’s absolutely nothing we can do to change it. The bottom line is, the state must acknowledge the responsibility and fund the unfunded (pension) liability that they have created and placed upon the schools.”
Burke said most members of the public don’t realize that local school districts, while they have some flexibility to trim teacher health care benefits, have no local control whatsoever on retirement contributions to the state. Gov. Gavin Newsom did make some “small, incremental” appropriations this year to offset the unfunded pension costs, but he needs to do more, she said.
“My expectation is that next year, he will take on and fund employee pensions,” Burke said.
Mill Valley activist Kenneth Broad, who helped finance the report, sees the current situation as so “patently unsustainable” that “our local school and municipal leaders are suffering slow fiscal asphyxiation,” he said in an email.
“The increasing opposition to parcel taxes is just the ‘canary in the gold mine’ – an early warning sign of much larger, systemic issues.” said Broad, a volunteer for the Mill Valley school foundation Kiddo. “Unfortunately, aside from cost-cutting and parcel taxes, virtually all of the levers for reform reside with legislators in Sacramento, who have shown little interest in reform — not wanting to anger the California Teachers Association and other unions.”
Broad says Mill Valley School District, is a “great case study” because it is “representative of Marin in terms of a highly educated and engaged populace and a real focus on fostering school excellence. So the fact the 2016 parcel tax – Measure E – passed by a margin of just 23 votes is emblematic of broader voter tax exhaustion. ”
Broad and Mimi Willard, founder and president of the Marin-based grassroots group Coalition of Sensible Taxpayers, both identify unfunded pension plan payments as the driving force in voter fatigue.
“The choices for voters are getting super-super interesting,” Willard said in regard to the March 2020 ballot, which will likely include parcel tax measures for Novato Unified and Tamalpais Union school districts, a countywide fire tax measure and a SMART train renewal tax. She said taxpayers so far have been trying to take each incremental tax increase in stride, but that acceptance is eroding.
“Now they are getting louder and more upset and concerned,” she said. “They’re at the end of their rope. They can’t afford it anymore.” Willard added she is particularly concerned about senior citizens, who, even though they may be exempt from the parcel taxes, are “losing their support systems” when neighbors move away because they can’t afford the tax costs anymore.
“More and more people are coming to realize that they are hurt by higher parcel taxes even if they personally can afford them,” Willard said in an email. “Seniors who have dependably voted for school parcel taxes from which they are exempt are starting to vote no as they are islanded or isolated in a place where the people they care about and depend upon can’t afford to live.”
The authors of “Canary in the Gold Mine” analyzed 10 years of district budget data for 11 Marin school districts — or those of Marin’s 18 districts that had more than 500 students during the 2017-18 year. Those included: Kentfield, Larkspur-Corte Madera, Marin County Office of Education, Mill Valley, Miller Creek, Novato Unified, Reed Union, Ross, San Rafael, Shoreline Unified and Tamalpais Union school districts. Those account for about 95 percent of total public K-12 enrollment in Marin County, the authors said.
“Our analysis shows that in 2011-12, (teacher) salaries made up 48% of Marin County district budget expenditures,” the authors write. “However, based on districts’ projected budgets, this share is expected to decrease by 3 percentage points by 2020-21, to 45%.
“At the same time, the share of district budgets devoted to benefit costs — of which the main cost items are for health care and pensions — is expected to increase 7 percentage points, from 18% to 25%.”
Broad, a portfolio manager and analyst for San Francisco-based Jackson Square Partners LLC, has his main focus as an activist in “a group called Govern for California, founded by David Crane, which has a mission to elect courageous legislators willing to govern in the common interest,” he said in an email. “Virtually all local efforts at reform are just trimming around the edges – Sacramento legislators hold all the power.”
