California Pensions: Teachers and LA Times Lecture

CALmatters has an interesting review of three different school districts and how each is dealing with the coming pension crisis.

First off, what the article mentions is that the average teacher gets a pension of $55,000. That doesn't seem like an outrageous amount especially when you consider they don't get social security benefits. According to California Department of Education the average salary for a public school teacher in 2015-2016 was $77,179. I'm not sure if this is strictly salary or includes other benefits. Either way, if someone in the private sector was making that much and worked 35 years, they'd get about $29,000 a year in social security benefits (if my calculations are correct). And if that person did some 401k savings that were matched by their employer (let's target 10% of income and that obviously they weren't making $77,000 per year when they started to work), my guess is that using the 4% rule they could pull out $21,000 per year from their 401K. So that comes to $50,000. This is all back of the envelope, but what I'm saying is that teacher pensions aren't out of line with reality.

Of course, that doesn't mean that there isn't a coming pension problem and that adjustments need to be made.



CALmatters highlights 3 school districts and how they're dealing with the coming pension crisis. It is an interesting read if you have the time.

Fremont (in the Bay Area) puts the highest percentage of their budget to salaries compared to other school districts.

Sacramento tried to save money, but were eventually pressured into giving some of it away to teachers.

Los Angeles has an enrollment problem, which will cause declining revenues while pension costs increase.

Meanwhile, the LA Times editorial board has a very non-Liberal argument regarding pension investing.

We are concerned about the increasing pressure to politicize the state’s largest public employee retirement funds, and think teachers ought to be as well. 

Essentially, they're concerned about pressure to divest from various corporations that, for example, financed the Dakota Access Pipeline or manufacture assault rifles. They note that divesting from tobacco companies cost CalPERS $3.68 billion.

I wonder how their readers reacted to that editorial.