“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Wednesday, May 18, 2011

More Unbelievable Spending On Teachers' Benefits In California

Allysia Finley wrote an editorial in this past weekend's edition of the Wall Street Journal describing the surreal situation in California. A tax revolt for higher rates.
It's an incredible story:

Thousands of California teachers turned out this week to protest potential budget cuts to education and to urge lawmakers to raise taxes. Such activism may be par for the course in Democratic strongholds like Sacramento or Los Angeles, but in conservative Orange County?

Teachers swarmed me, eager to get their message across. "We need to educate our community about the tax extensions," said Elizabeth Hoffman, a member of the California Faculty Association's Board of Directors. "We need a rational budget process, a stable funding source that we can count on," Linda Manion, president of the Placentia-Linda teachers unions, added, only to be cut off by Fola Odebunmi, president of the United Faculty North Orange County Community College District. "We can't take any more!" she said.

These teachers complain that schools are facing a "state of emergency." Perhaps what schools are actually experiencing is a state of withdrawal.

The stock market run-up stuffed state and local coffers—but lawmakers decided not to save any of the surplus cash for a rainy day. Between 2004 and 2007, the state increased K-12 and community college funding to $56 billion from $47 billion. Even as student enrollment declined, schools added 4,000 teaching, 2,100 administrative and 5,200 student-support jobs. Meanwhile, school districts that experienced a boom in property-tax revenue increased teacher benefits and salaries.

Poor fiscal management has resulted in swollen teacher and administrative ranks "even as student enrollment declined." Either the enhanced teaching conditions must be scaled back, or Californians need to admit that they were conned into fueling a rise in teaching labor with no corresponding increase in value or performance.

As Stephen Moore noted in a recent Wall Street Journal editorial, if this were a private sector, productivity improvements would be sought, rather than productivity reductions. And if productivity weren't improving, spending on the line-item would be curtailed until problems were addressed.

Lawmakers should have known that it never rains in California. It pours. Months after the 2008 stock market crash, the state had to confront a $40 billion deficit. Democrats proposed raising taxes to help bridge the gap, but they couldn't do it alone since the state's constitution requires a supermajority vote for tax increases. A few Republican state legislators compromised and agreed to raise income, sales and vehicle taxes for two years in order to reduce cuts to education.

Those taxes expire this year. Democrats want to extend them for another five years, insisting that allowing them to expire won't just jeopardize the state's schools, but California's economic recovery. "Five years is what's necessary to bridge our economic recovery," says State Senate Majority Leader Darrell Steinberg.

In a bow to democracy, Gov. Jerry Brown has pledged to put the taxes on a special-election ballot, which also needs a two-thirds vote of the legislature. All of the parents and teachers I spoke with supported this idea.

The California Teachers Association—surprise, surprise—has a different proposal. The union is urging Mr. Brown to extend the taxes without a vote of the people. David Sanchez, the union's president, says he's afraid that voters will reject the taxes if they're put on the ballot after they expire in June. "The people are pretty clear that they don't want new taxes," says Mr. Sanchez.

Amazing, isn't it? When the views of voters don't suit these unions and their boss, they simply appeal to the governor to ignore them, skip a vote, and unilaterally extend the taxes.

A recent Public Policy Institute of California poll shows that nearly two-thirds of likely voters oppose increasing sales and income taxes to maintain school funding. At the same time, 76% of parents say their child's public school has been affected by recent budget cuts and 68% believe that the quality of education will suffer if more cuts are made. Education has already been cut by about $20 billion in the past three years. "We're at a breaking point," Suzanne Gastreich, a mother of two from Mission Viejo, tells me.

You can bet that most of those parents don't know what Finley's editorial reveals about where the money went from the last decade's education spending orgy.

But the reality is that despite recent cuts, education spending and the student-teacher ratio are about the same as they were in 2004. The real problem is that more and more tax dollars are being diverted for teacher benefits. The Los Angeles Unified School District is paying 11% more for teacher health benefits than it did two years ago.

To me, that passage explains the rest of the reason for the problem. It's not education spending, per se, it's benefits for teachers which were increased in the lush real estate boom years.

Republicans have offered to help "save schools" by extending the tax increases for 18 months in return for pension reforms and a hard spending cap. But Democrats have refused to negotiate on those points. Union chief Mr. Sanchez tells me that pension reform "isn't going to help anything."

Democrats say that ideally they'd like to make the extensions permanent, but know they can't get the votes to do so. A five-year extension would give them two election cycles to win four more legislative seats and achieve a supermajority. Then they could make the taxes permanent—and raise whichever other taxes they want.

So Democrats have decided to take schools hostage in the budget showdown in order to rally public support for higher taxes. Judging by the crowd and the car horns, their strategy has a chance of working.

Being California, you can't make this stuff up, can you? After having looted higher educational spending for their own larger staffs, salaries and benefits, the union and its teacher members now tell voters that the core educational services, which didn't actually receive the extra funding, will be cut if taxes don't remain high. Because, as the union boss claims, pension reform and inquiry into union members' pay and benefits "isn't going to help anything."

I suspect that what the teachers' unions don't yet understand is that people and businesses can leave states- and their union pension liabilities- for cheaper, saner right-to-work states. And, ultimately, the states that don't fix these teachers' union problems will simply lose the tax base to pay promised benefits, resulting in larger problems than now exist.

As one example of how teachers are beginning to understand the situation, my New Jersey public school teacher friend recently told me he no longer wants to have his pension contribution deducted from his compensation. He correctly reasons that his money is funding currently-retired teachers, while shrinking teacher ranks and pay-and-benefits wrangling will not provide him with the same assurances. So he'd like to keep his money, rather than pay for the retirement of teachers he doesn't even know, and find his own promised benefits missing when he retires.

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