Younger Californians and their Families Should Care about Public Pension Reform

As public pension costs rise, the State pays less and students pay more for higher education.

2040_matters_6The LA Times recently ran a front page story on “California’s Pension Crisis.”  It is the latest in a long line of articles, reports, and op-eds designed to educate voters and spur much needed public pension reform.  Today, California spends billions every year on public pensions as State workers take advantage of a system that allows many of them to “retire” in their 50s with annual pension benefits representing more than half their highest salary.  Unsurprisingly, the cost of these generous benefits for public employees is rising much faster than tax revenue, even with California’s steep income and sales taxes.

As a result, and as the LA Times article explains, pension costs have changed California’s budget priorities and will continue to “crowd-out” other forms of spending.  Today, California’s pension costs now exceed what the State spends on environmental protection, fighting wildfires, and drought response, combined.  Although many Californians undoubtedly care deeply about these expenditures, we believe younger Californians and their families would be even more interested in examining the relationship between rising public pension costs and decreasing public investments in younger Californians, as evidenced by the rising cost of higher education in our State.

As the charts below make quite clear, as California spends more on pensions, it has less general fund revenue for the University of California and Cal State University systems.  Indeed, while pension costs have nearly doubled since 2008, General Funding for higher education has languished – just now approaching its 2008 level after years of decline.  To compensate for lower General Funding levels, both university systems have been forced to collect more revenue from tuition and fees.  Indeed, the revenue collected by both systems from tuition and fees has doubled since 2008 – mirroring the rise in the State’s pension costs during that time.

Pension Costs Squeeze UC Funding

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Pension Costs and UC Tuition and Fees Rise Together

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Pension Costs Squeeze Cal State Funding 

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Pension Costs and CSU Tuition and Fees Rise Together

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There are literally dozens of reasons that California desperately needs public pension reform, but none of them has captivated the public and galvanized reform.  Just this year, a promising potential ballot initiative on pension reform fizzled for lack of support and didn’t reach the November ballot.  Like Cher in Moonstruck, the LA Times has slapped Californians in the face and told us to “snap out of it.”  Will the millions of Californians who are tired of rising higher education costs be energized by the LA Times’ sustained focus on the pension crisis and put pressure on politicians in Sacramento to rein-in pension costs, free-up funding for higher education, and lower tuition and fees?  Will a new group of activists form to address this issue?  “Parents for Public Pension Reform” has nice alliteration and sounds kind of catchy.  Who’s in?

Editors Notes:

1)      If you like this Post, please like our Facebook Page and subscribe to the Blog (it’s free).

2)      The charts were prepared using data pulled from the U.S. Census Annual Survey of Public Pensions and the annual education budget reports prepared by the California Legislative Analysts Office.

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