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North County legislators comment on governor’s proposed K-12 budget

REGION — North County legislators at least tacitly commended recovered levels of funding for public schools in Gov. Gavin Newsom’s recent state budget proposal but mostly sidestepped questions about structurally underfunded teacher pensions.

Four state lawmakers shared their thoughts, outlined below, about the governor’s proposal. The Coast News also asked 60 school board trustees, who govern North County’s 12 school districts, to comment; only one, Carlsbad Unified School District Trustee Claudine Jones, did so.

State Sen. Pat Bates (R-Laguna Niguel) and Assemblywoman Tasha Boerner-Horvath (D-Encinitas) represent Encinitas, Carlsbad, Oceanside, Vista and Camp Pendleton. State Sen. Brian Jones (R-Santee) and Assemblywoman Marie Waldron (R-Escondido) represent San Marcos and Escondido.

Each January the governor recommends a budget for the next fiscal year, based on estimated revenues, which the legislature then tweaks and adopts in the summer.

Along with health and human services, one of the largest proportions of state funds — 27% in Newsom’s 2021-22 proposal released Jan. 8 — goes to public schools and community colleges.

Rebounding school funding

Newsom’s proposal this year entails “the highest level of funding for K-14 schools ever” — about $86 billion, or $15 billion more than last year.

The bump owes mainly to a faster-than-anticipated recovery of the COVID-thrashed economy, and along with it the statutory proportion of state revenues allocated to education.

Newsom would pay down $9 billion of nearly $13 billion of last year’s cost-saving deferrals, leaving $4 billion in IOUs to school districts. As a result, districts “will experience only a few weeks of delay in receiving apportionment in 2021-22 (as opposed to ten-months of delay in 2020-21),” according to the budget document.

California teachers' pensions
Graphic by Dan Brendel (Source: CalSTRS FY 2019-20 Comprehensive Annual Finance Report)

The governor would designate $4.6 billion in one-time General Fund monies under Proposition 98 — a 1988 voter initiative guaranteeing minimum school funding — to address “learning loss due to the pandemic,” according to the budget document.

“These funds will be eligible for targeted strategies” focusing on “on students from low-income families, English language learners, youth in foster care, and homeless youth, including an extended school year or summer school.”

Newsom also proposes adding a 3.84% upward cost-of-living adjustment to the Local Control Funding Formula, or LCFF, the mechanism through which school districts receive most of their operating funds. Last year’s budget didn’t include a cost-of-living adjustment.

Pre-pandemic, the cost to maintain district programming grew about 4% annually, according to a 2020 report from School Services of California, a consultancy and advocacy group.

“Many parents will welcome the governor’s proposed funding for reopening our schools,” Bates said. “Distance learning can never replicate the benefits of in-person instruction. … Local school input is essential in determining targeted strategies.”

“The governor’s draft budget is an important first step, including the proposed $4.6 billion to help students bounce back from learning loss and the $400 million for school-based mental health services,” Boerner-Horvath said.

“While the LCFF is not perfect in itself, it does allow for some local control as opposed to a top-down state-mandated approach,” Sen. Brian Jones said. “My constituents will benefit best from a local determination of how to use [other one-time] resources.”

“The most important thing … is getting kids safely back into classrooms,” Waldron said. “The state paying back the billions of dollars it ‘borrowed’ [deferred] from schools last year would go a long way toward ensuring student and teacher safety as COVID lingers. In general, I’d like to see more local control over how money is spent.”

“We’re grateful the governor’s budget proposal emphasizes education,” Trustee Claudine Jones said. At the same time, she cited Suzanne Kitchens of the California School Boards Association, who last week told EdSource, a nonprofit: “No one should consider this an increase; otherwise, it is a bit like docking someone’s pay, restoring the wages you withheld and then calling it a raise.”

Ongoing pension challenges

Newsom’s proposal also includes nearly $1.2 billion to reduce school districts’ required contributions to CalSTRS and CalPERS, which are retirement systems that oversee pensions for teachers, administrators and other state employees. That amount is “redirected” from General Fund monies that would’ve paid down long-term unfunded pension liabilities, according to the budget document.

The state, school districts and employees all pay into the pension systems, and the systems’ invested assets also produce some yield. But this activity hasn’t kept pace with obligations.

For teacher and administrator pensions, CalSTR’s unfunded liability weighed in at $106 billion in 2019, representing a funding ratio of 66%, down from 71% a decade ago, according to a recent financial report.

“Rising pension costs have been a significant factor affecting district budgets over the past several years,” according to the Legislative Analyst’s Office. “Required district contributions to [CalSTRS and CalPERS] have grown from $3.5 billion in 2013‑14 to $8.4 billion in 2019‑20. … In 2021‑22, district costs are likely to increase by at least $200 million.

“For 2022‑23, the underlying contribution rates currently are projected to grow more than 2 percent of pay for CalSTRS and nearly 4 percent of pay for CalPERS. Depending on district decisions about salaries and staffing, the associated cost increase is likely to range from $1.3 billion to $1.7 billion. A cost increase of this magnitude exceeds the additional funding districts are likely to receive from the statutory [cost-of-living adjustment] that year.”

When asked about alleviating pension pressures, North County’s legislators’ said:

“Without additional reforms, state programs will see larger portions of their budgets siphoned off to pay for pension and retiree health costs,” Sen. Jones said.

“I don’t support taking away pensions that have already been earned, as promises made should be promises kept,” Sen. Bates said. “There are no easy fixes and it will take gubernatorial leadership and cooperation from the legislature’s majority party to make additional pension reforms.”

However, neither Sen. Jones nor Sen. Bates elaborated on reforms they’d favor.

Others, such as education analysts Chad Aldeman and Max Marchitello, have advocated switching from the current defined benefit system to a 401(k)-style defined contribution arrangement for new employees.

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