I read the recent article in the Independent Journal about the Stanford Graduate School of Education-based report titled “The Canary in the Gold Mine,” about the burgeoning pension costs in Marin schools.
The Citizens for Sustainable Pension Plans offers several thoughts as to how we got to this pivotal point in our county’s history. Rejection of new taxes — by normally generous Marin voters — serves well as the “canary” in this analysis.
It’s important to note that union pensions are managed by an equal representation by both labor and management. If one side is not strongly represented, problems arise.
Labor unions represent union members and try to negotiate the highest possible pension benefits for their members. The job of management is to hold the line in negotiations, whether it is in the laws that regulate public pensions or the actual pension benefit levels.
Management is supposed to represent the taxpayers who pay the costs of the pensions and benefits.
Management in the public sector has not done its job. One might think that the laws and interpretations of those laws were written solely by public sector unions. This is a valid assumption since many elected officials, both local and state, receive generous financial support from public unions.
In addition, many management employees also participate in the very pension plans in which they are entrusted to control costs – not only pension benefit levels but the rules that govern public pensions.
Benefit increases such as the 1999 SB 400, coupled with benefit formulas that do not reflect today’s high salary levels, have created pension benefit levels that are far too high.
Marin County Schools Superintendent Mary Jane Burke wants the state to fund the unfunded pension liability that local schools have incurred. Early this year, Gov. Gavin Newsom put $80.7 billion from the California budget towards K-12 and community college education, a new all-time high and $2.9 billion higher than the previous budget. It was touted as a record setting windfall of tax revenues to boost public schools. There was also an additional $3 billion one-time payment from the general fund to the California State Teacher Retirement System to reduce long-term liabilities for employers.
The public pension crisis is not a funding issue. It is a benefits issue. Pension benefits are too high. As long as the benefit side of the equation is not addressed, this issue will not go away.
Keeping pension benefit levels in line and pension costs under control is the job of management.
We are left to wonder if our public officials really understand defined benefit plans. Where was Burke when the Public Employees’ Pension Reform Act, which is watered-down public pension legislation, was enacted in 2013 for the supposed purpose of addressing the high cost of public pensions? The CSPP said, at the time, that PEPRA would provide no immediate relief – that there was need for benefit flexibility for all prospective benefit accruals, not just for new employees. There was no support for this from any of our public officials.
The Pension Protection Act of 2006 made union-defined benefit pension plans viable in the private sector by requiring those plans to make adjustments to contributions and benefits so that they can achieve 100% funded status more quickly. Our public officials need to similarly address these issues in the public sector.
Continuing to throw more and more money at a problem that has not been fixed will not work anymore.
Despite being conflicted negotiators, our elected representatives, including supervisors, council members and high-level county officials, as well as management — including Burke — need to take responsibility and represent those who pay the cost of these pensions and benefits.
Transparent California records reflect that Burke received $373,108.66 in total pay and benefits in 2018. One should rightly expect her to earn this generous compensation by protecting school districts from financial ruin and protecting taxpayers.
Bob Bunnell, who has more than 40 years experience in the administration, consulting and account management of union and non-union defined benefit pension plans, is a founding member of Citizens for Sustainable Pension Plans.
