Feeling the Pinch: Navigating Financial Pressures in Pursuit of Educational Quality and Equity

Rising Costs in Four Domains

Pensions

**Melnicoe, H., Hahnel, C., Koedel, C., & Ramanathan, A. (2019). The big squeeze: How unfunded pension costs threaten educational equity. Oakland, CA: Pivot Learning. Available at https://www.pivotlearning.org/wp-content/uploads/2019/04/big-squeeze-report-april-2019.pdf

With the passage of the Local Control Funding Formula (LCFF) in 2013, the state increased funding by providing billions of dollars statewide in supplemental and concentration grants. Then in 2014, Governor Brown signed Assembly Bill 1469 mandating that district payments into the California State Teachers' Retirement System (CalSTRS) pension system increase over a seven-year period from 8.3% of teacher salaries to 19.1% of teacher salaries. Brown also signed legislation increasing district contributions to the California Public Employees’ Retirement System (CalPERS) pension fund. These financial obligations are straining district budgets; the authors of The Big Squeeze set out to understand how California’s increasing pension obligations are impacting educational equity. The study drew on three data sources: (1) school district budgets, (2) school board member surveys, and (3) interviews and focus groups with school district leaders, key policymakers, and budget experts in Sacramento and throughout California. Results of the analysis show that school districts’ pension and other benefit obligations are rapidly increasing. To absorb those increasing financial obligations, districts are spending proportionally less money on salaries for teachers and other certificated staff and cutting services for students, including some of the most vulnerable student populations targeted by LCFF.

Koedel, C. (2018). Pensions and California public schools. Available at https://gettingdowntofacts.com/ sites/default/files/2018-09/GDTFII_Brief_Pensions.pdf

This study provides background information about how CalSTRS and other pension plans work and explains why the total CalSTRS contribution rate for school districts will nearly double from 8.3% of a district’s payroll in 2013-14 to 19.1% by 2020-21 . The study discusses options for reform, both within the current CalSTRS structure and under alternative structures, though the author points out that all options going forward will involve tradeoffs. Koedel states that the problem of rising pension costs is not a temporary aberration and will not be easily fixed. He argues that the only way out of the current crisis is to do exactly what California is doing—require larger contributions to cover current worker benefits and pay down previously accrued pension liabilities.

Special Education

Warren, P., & Hill, L. (2018). Revisiting finance and governance issues in special education. Available at https://gettingdowntofacts.com/sites/default/files/2018-09/GDTFII_Brief_SpecialEducation.pdf

In a review of special education challenges in California, this brief describes issues of finance and governance that districts are facing. Among these are the rising costs for special education programs and the common district response of using general education funds to close the gap. Funding is further stretched because special education funds are allocated according to average daily attendance and not the number of students with disabilities enrolled. Therefore, per-pupil spending differs among Special Education Local Planning Areas (SELPA). Additionally, there is great variation among SELPAs in how they classify and serve students. The authors recommend allocating more Proposition 98 funding to special education and addressing governance challenges created by flaws in the design and operation of the SELPA system.

Health Care

Ed100. (2018) Lesson 3.7 benefits: The benefits of teaching [Web log]. Author. Available at https://ed100.org/lessons/benefits

Non-salary benefits, which include health insurance, are a valued part of teacher compensation, and are negotiated locally between districts and unions. However, in the face of escalating health care costs, districts struggle to sustain these benefits. According to the California Legislative Analyst Office, districts today are spending about twice as much on retiree health benefits as they did in the early 2000s. This added financial pressure comes at a time when districts are facing rising pension costs and other spending obligations. If districts over-commit on teacher benefits, they risk fiscal insolvency and an inability to meet their obligations to provide students with a quality education. 

Chang, A. (2018). Teacher pay is falling. Their health insurance costs are rising. [Web log]. Vox. Available at https://www.vox.com/2018/3/16/17119366/teacher-health-insurance-cost-rising-data

This article suggests that one factor frequently unaddressed in the dialogue around teacher pay is that increases in health insurance premiums combined with stagnant or declining salaries has the same effect as a pay cut. Vox asked teachers across the country to share their experiences about teacher salary; one-third of the hundreds of teachers who responded mentioned health insurance costs as a factor in why their take-home pay stagnated or dropped. Teachers across the nation are on average contributing nearly $1500 more per year toward premiums than they were ten years ago. And now that districts are paying more into pensions, those increasing costs are eating into teachers’ take-home pay while not providing better benefits for teachers.

Facilities

Vincenta, J. M., & Jain, L. S. (2015). Going it alone: Can California’s K–12 school districts adequately and equitably fund school facilities? Berkeley, CA: Center for Cities+Schools. (Executive Summary). Available at http://citiesandschools.berkeley.edu/uploads/Vincent__Jain_2015_Going_it_Alone_final.pdf

This study examines California’s trend of underfunding school facilities and provides policy recommendations that advocate for change. Researchers found that between 2008 and 2012, more than half of California districts did not meet industry standards for facilities spending, including renewals and maintenance. The study’s findings pointed to deep inequities, including the ability of districts with higher property values to raise more money for facilities than districts with lower property values. Moreover, districts serving low income students spent less on capital outlay and more on maintenance per student than districts serving higher income students, which ultimately translates to less money available for educational programs. The authors’ policy recommendations include dedicating a stable state fund toward K–12 facilities, distributing the monies in the fund equitably, and developing standards and a database for facilities conditions to ensure accountability.

**This document is considered a priority pre-reading.