U-T San Diego: "Taxpayers betrayed by bureaucrats"
Californians by the millions appear to have finally figured out that public employee union power has translated into extremely generous - and ultimately unsustainable - benefits for government workers. But an Associated Press investigation published in U-T San Diego this week points to another key part of the government compensation problem that isn't widely understood: High-level government administrators often stand to personally gain the most from policies billed as being about rank-and-file workers.
The AP story detailed how a 2000 law that was approved by the state Legislature as a way to attract and retain teachers at a time when there was a teacher shortage ended up turning into a vehicle for huge payouts to retiring school executives. The law allowed retiring educators to get a lump-sum payment in return for having their regular monthly pension checks reduced.
But from 2002 to 2010, AP found that about 180 retiring educators making $100,000 or more in annual pensions took home lump-sum payments averaging $147,000. These educators were typically high-ranking executives who joined the education establishment in pushing for the lump-sum option.
Unfortunately, there are parallels to this throughout California. In 1999, after the Legislature gave current state employees a 50 percent retroactive increase in the formula to calculate their pensions, many local governments followed suit, accepting the astounding California Public Employees' Retirement System claim that this giveaway would have little long-term cost.
Instead of questioning CalPERS' preposterous free-lunch theory, city managers and county administrators up and down California sought much more generous pension formulas for their workforces. It is not cynical to note that they did so in full knowledge that they would disproportionately benefit from the giveaway, given that they were usually the highest-paid members of their workforce.
Take, for example, El Cajon. A 2008 San Diego County Taxpayers Association report noted that thanks to benefit "enhancements" approved by the city earlier in the decade, retiring employees who worked 30 years - not just those in public safety - could get a pension equal to 97.2 percent of their final pay. You will be unsurprised to learn that the San Diego County public employee with the highest CalPERS pension is former El Cajon City Manager Bill Garrett, who retired in 2004 and now has a $278,000 annual pension.
The reform measure approved by the Legislature last week will curb some of these pension abuses, but many of the changes won't start helping California taxpayers for decades. In the meantime, these taxpayers will continue to be besieged. But the culprits won't just be union-allied elected officials or union-influenced state agencies, such as the Public Employment Relations Board, which seek to undermine local government pension reforms.
The list also includes all the city managers, county administrators and special-district executives who were supposed to protect taxpayers by offering smart management guided by sound financial principles. Instead, they joined CalPERS in pretending there was no downside to giving public employees huge retroactive pension increases - and are now the biggest beneficiaries of this policy fiasco.
The Press-Enterprise: "Sparing cities"
California has no conceivable public interest in keeping communities from becoming new cities or joining existing cities. So Gov. Jerry Brown should sign legislation that will fix a budgetary mistake from last year, and restore funding for newly incorporated cities and some annexations.
The Legislature last week approved AB 1098, a late-breaking bill that proposes to restore $14 million in funding to help newly incorporated cities and $4 million to aid cities that annex populated areas. The bill passed with bipartisan support, and now awaits the governor's signature. Nearly identical legislation stalled in the Senate in May, so legislators last week stripped an existing bill of its contents and put in the provisions to aid local funding.
That approach, known as "gut and amend," is hardly an ideal way to craft policy, but waiting another year to restore the money would have been irresponsible. As part of the budget package last year, legislators diverted $153 million in local vehicle license fee revenue — the "car tax" — from cities' general funds in order to pay for a grant program for law enforcement. But that change also wiped out funds intended to help startup cities, and made the annexation of already inhabited territory financially infeasible.
So Jurupa Valley, for example, lost more than 40 percent of its $14.4 million general fund all at once. Eastvale saw a third of its $8.9 million general fund vanish, while Menifee and Wildomar both lost about one-fifth of their general fund budgets. The four newest California cities — all in Riverside County — had to slash spending on basic public services, including law enforcement and street repair, to cope with a financial disaster created by the state. Another Inland city, Fontana, lost about $760,000 intended to finance services for newly annexed parts of the city.
No rational state policy would fiscally undermine the formation of new cities or the annexation of already populated areas. Nor does California benefit by making fledgling cities fiscally untenable. The idea that a state with steady population growth can forgo any new cities — or that unincorporated communities should not have the chance to set up their own local government — is foolishness.
Counties worry that AB 1098 would deprive them of funding for state services legislators shifted to county control last year. But legislators will have to revisit financing for the realignment of services anyway, because the process is complex and many questions remain unanswered. And surely legislators can find a more comprehensive fiscal approach than an either-or choice between funding county programs or nascent cities.
The governor has a precedent for signing this bill. Legislators made a similar error with local funding as part of a complicated budget deal in 2004, and corrected that mistake with new legislation in 2006.
The fact that legislators made such a blunder again in 2011 does not inspire confidence in state government, but leaving the status quo in place would only compound the error. Brown can at least remedy last year's budgetary gaffe; all it would take is his signature on AB 1098.
The Los Angeles Times: "California should restore the Healthy Families program"
One of Gov. Jerry Brown's budget-cutting moves this year was to end the Healthy Families insurance program for low-income children and cover them instead through Medi-Cal, the state's version of Medicaid. Now, at the very end of the legislative session, a bipartisan group of lawmakers is pushing to restore the program and boost its funding. Although we're skeptical of 11th hour bills, we agree that Healthy Families should be reinstated.
Healthy Families is California's version of the State Children's Health Insurance Program, which Congress created in 1997 to provide coverage for low-income children whose parents weren't poor enough to qualify for Medicaid. While Medicaid typically extends only to families earning no more than the federal poverty line, Healthy Families' cutoff is two-and-a-half times that amount, or about $58,000 a year for a family of four. California has the most children in the program by far — more than 1.7 million as of 2010, almost twice as many as the state with the second highest number, Texas.
The Brown administration argues that moving Healthy Families kids into Medi-Cal will save the state up to $72 million a year, largely because the state pays doctors significantly less in Medi-Cal than in Healthy Families. Medi-Cal also provides better coverage for some kinds of treatment, such as mental health care, with lower premiums. But those advantages are illusory — the state's low rates have driven so many doctors and hospitals out of Medi-Cal that it's becoming increasingly difficult for patients to obtain treatment, particularly in rural areas.
The shift may also cost the state more than it saves. The federal government covered two-thirds of the cost of Healthy Families, but pays for only half of Medi-Cal. In addition, Healthy Families was financed in part by a tax on Medi-Cal managed-care plans. That tax — which was expected to bring in about $180 million this year and significantly more in future years — expired at the end of June, and Republicans have refused to provide the votes needed to renew it unless Healthy Families is restored.
The biggest problem with folding Healthy Families into Medi-Cal is that it forces hundreds of thousands of children to change insurers and doctors just before the federal healthcare reform law provides new ways for their parents to receive coverage. Most of those parents will be obtaining coverage from private insurers through a subsidized insurance exchange, not from Medi-Cal. As a result, children and their parents would be getting their healthcare from different programs, in many cases with separate networks of doctors and hospitals. That makes little sense. Lawmakers should preserve Healthy Families along with the tax on managed-care plans at least until the major changes wrought by the federal law are in place.
San Jose Mercury News: "Take loophole out, then pass pension bill"
Gov. Jerry Brown made an honest effort to control public employee pension costs. Against a complex legal and political backdrop, he fought with legislative leaders for meaningful change. Unfortunately, the final package on which lawmakers will vote Friday falls far short.
Traditional defined benefit pensions are worth maintaining, but benefit levels must be reasonable and the accounting must be straightforward. The pending plan partially addresses the former and does nothing about the latter. To make matters worse, it contains a huge loophole that will invite more pension spiking.
Legislators should pass the bill if — and only if — they close that loophole. With that change, it will at least be a marginal improvement.
Most of the proposed changes only affect new employees. They include reductions in benefit formulas and caps to block exorbitant pensions for high earners. But real change to restore financial stability requires alterations for current workers.
Toward that goal, the governor fought for the most significant reform in the legislation: A requirement that public employees share equally with employers the going-forward cost of their pensions. If implemented, this would be a breakthrough. Currently, governments often pay far more and sometimes all of the cost of pensions. That's unfair to taxpayers and leaves employees no incentive to consider cost savings.
The proposal to split costs fifty-fifty would address that. However, the bill requires it only for future employees and current state employees. For current local workers covered by state insurance plans, it would be subject to collective bargaining. We know how well that's worked.
As for accounting, we continue to see pension systems, usually dominated by union representatives and elected officials beholden to them, cooking the books by making overly optimistic investment forecasts and deferring losses, pushing debt onto future generations. Taxpayers today face a pension debt of, conservatively, $257 billion, an average of $20,700 per household. Yet the proposal would, at best, only make a small dent in this.
Finally, the proposal does nothing to address vested rights — the premise that once an employee is promised certain levels of benefits, that guarantee applies to all future years of work. It's a concept foreign to the private sector, and fixing it will probably require a public vote. This package should have included a ballot measure for a future election. Instead, it's silent.
As to issues the plan does address, nobody knows if it will deliver as promised. Legislators first saw it just Tuesday and won't be able to intelligently analyze it before the vote, let alone have expert analysis or even any real public review.
It's a disappointing bill and an ugly process. But if lawmakers close the one glaring loophole they created, it's worth passing as a down payment on pension reform.
Contra Costa Times: "Flawed pension reform bill result of flawed process"
Did we all get suckered last week by the governor's office and the state Legislature on pension "reform"?
Within a 72-hour period, Gov. Jerry Brown released sketchy details, the 60-page bill was posted on the Internet, a committee hearing was held and the Legislature approved it.
We scrambled to decipher the highly technical and complex language. The Legislature and governor's office put out summaries that were incomplete and misleading. Outside experts had no opportunity for input.
It was an outrageous charade. A missing word here, an added clause there — it didn't take much to change the meaning and effect. The stakes were high — billions of dollars.
Yet, while the pension bill was sold as reform, it wasn't. It fiddled on the margins, a small down payment on a huge debt. The state has a pension shortfall of, conservatively, $257 billion. That averages $20,700 per California household.
The California Public Employees' Retirement System, the largest pension plan in the nation, has about $117 billion of the debt. Yet, by CalPERS' quickie analysis, released last week, the present value of the savings from the bill was, at best, $15 billion.
In other words, assuming all the savings were plowed back into paying down the debt (they won't be), the bill would at best reduce the shortfall by 13 percent.
We have no idea of the savings for other public pension systems in the state. There were no analyses released. The teachers retirement system put out an estimate with no backup information.
This was fly-by-the-seat-of-the-pants legislating. Lawmakers had no idea what they were approving. Brown, Senate leader Darrell Steinberg and Assembly Speaker John Perez simply said "trust us." Like lemmings oblivious to the consequences, legislators went along.
When this newspaper pointed out that a missing word created a loophole that provided new opportunities for pension spiking, the Legislature corrected it. But lawmakers and staff members viewed it as an annoyance rather than a symptom of a dysfunctional process.
Shortly before the vote, we noted that in many cases employees would not be required to equally share in the cost of the pensions, contrary to the claims of the administration. Nobody flinched.
It was full speed ahead. Details were insignificant. Everyone just wanted to claim the mantle of pension reformer. It was an abrogation of responsibility.
We're already hearing about other serious problems with the bill. If we find more — and we expect we will — we'll let you know.
We may never know whether they resulted from political manipulation or technical incompetence. We have our suspicions. Either way, this is what happens when a few people develop legislation in secret and lawmakers ram it through without meaningful public review.
Brown and legislators must explain how they justify this behavior. And Democratic members of the Assembly and Senate need to stop privately complaining about their leaders while publicly enabling them.
If they're not part of the solution, they're part of the problem.
Santa Cruz Sentinel: "Wrong timing for teacher evaluation bill"
Summer still has another three weeks or so on the calendar, but for most parents and kids in Santa Cruz County, it's already over.
Many K-12 students started classes Aug. 29 — with Pajaro Valley Unified School District welcoming kids nine days earlier. Cabrillo College's fall semester started Monday.
For all the excitement a new school year brings, 2012-13 also brings a heavy curriculum of anxiety. That's because the annual school funding crisis remains unresolved, amid new concerns about the quality of education in California.
While Nov. 6's general election, may seem far off, the next 68 days will keep school administrators busy sketching out alternative scenarios as they await a decision on whether Gov. Jerry Brown's tax increases will be approved. If the taxes are rejected, Brown says public schools and community colleges will face $5.5 billion in midyear cuts, which comes out to about $450 per student in Santa Cruz County.
Amid the uncertainty, the state Legislature is considering a bill that would revamp teacher evaluations. Assembly Bill 5 has already gotten through the Senate Education Committee and if enacted will force every district in the state to negotiate with unions over annual reviews. The bill also proposes to add "excellent" to the existing levels of "satisfactory" and "unsatisfactory" and to allow negotiations on how much weight will be given to state standardized test scores as an indication of teacher effectiveness.
The overhaul of the evaluation process comes months after a Los Angeles judge ruled the state's biggest school district was violating state law by not using student test scores in teacher evaluation. The judge noted that 99.3 percent of the teachers in the Los Angeles Unified School District received the top evaluation rating.
The bill is supported by public employee unions and state schools Superintendent Tom Torlakson, who said it would make reviews more comprehensive, frequent and rigorous, and improve the quality of education.
But opponents, including the state PTA, organizations representing districts and administrators, and a number of education reform groups, say the bill would add to the financial burdens faced by already-strapped school districts, since only 20 percent of districts, mainly the lowest performing ones, would be reimbursed by the state for the additional costs.
But what opponents mostly object to is that the districts would be forced to bargain for how they evaluate their teachers. Negotiating with the powerful unions representing teachers, they say, could weaken districts' ability to get rid of ineffective teachers and could also hurt the state's chances to qualify for federal funds while staying this side of penalties aimed at underperforming schools.
The bill, which is sponsored by Democratic Assemblyman Felipe Fuentes of Sylmar, comes at a time when top Democrats in the state are counting on public employee unions such as the California Teachers Association to provide financial backing for Brown's tax proposal, Proposition 30.
The vast majority of teachers — especially in Santa Cruz County, with a higher level of parent participation and educational levels — are committed and highly competent. A good teacher, as every parent and school administrator knows, can make a huge difference in a child or young person's life and contributions.
All the more reason then to upgrade the evaluation system to ensure good teachers are recognized and bad ones weeded out.
We have no problem with collective bargaining — especially since teacher buy-in on any changes in the evaluation process is essential.
We do have a problem, however, with this bill, mainly because of timing. The current legislative session ends after today, which means AB 5 is getting pushed through too quickly, in a swirl of political wheeling and dealing.
A far better course, and one that would allow opponents' arguments to be fully considered, would be to bring it back after the election.