Why can neither side just follow a sane general strategy of setting taxes and choosing the best benefits to fit under the revenue generated?
Parents are just as culpable as they want a great education for their kids but don’t really want to pay for it, coupled with proposition 13 many schools in california are a mess.
If you get rid of pensions and try to pay the teachers the same amount as you pay them now, there will be a teacher shortage forcing the government to pay more. They will have to raise taxes to cover it but at least all sides will know the true costs.
I don’t think the pension system in my state is too out of whack. It’s only 2% every year worked of your final salary up to 60% (80%?).
But didn’t the private sector basically contribute the value of the pension to the 401K using some type of present value calculation?
There is one other fix - make immigration easier. But in the current climate, a politician could never suggest that.
The only way to switch is to put more money aside than you 'need' so you have a pool of money to pay for each teachers pension on the day they retire. At that point you can then swap new teachers to 401k's without added costs.
But at that point you understand pensions when fully funded actually cost less than 401k's, assuming similar investments. Because 401k's end up with some dead people having large surplus's and pensions don't.
a) 401(k) and 503(b) plans are expensed and accounted for in the present. You may have the best actuaries in the world but if your current pension-expecting workers beat the odds you're in a world of hurt, even without over-promising and under-funding pension benefits. (No less than Warren Buffett himself famously warned of this problem back in the 1970s, and if there's one thing Buffett knows it's risk assessment and insurance.)
b) 401(k)s are only more expensive than pensions assuming everyone retires at the same age and gets the same benefit on retirement between the two investments. However, as is common, pension retirement age can be as low as age 50. Paying out those pension benefits for those extra 10-15 years (vs. retiring at age 60-65 for 401(k)) probably adds up to paying more for pensions than 401(k)s, especially given that some employees can apparently goose their pension eggs by working overtime in the last few years of employment.
B) This just comes down to discounting the pension properly or limiting retirement age to 65.
In the real world doing pensions correctly has not worked out. My point is simply they have an innate mathematical advantage not that it's directly applicable.
While obviously that court decision is unique to California, the broad idea of statewide funding equalization is not a policy that exists only in California, and, in fact, the vast majority of states have most school funding driven by state-set formulas.
School districts are local so bad schools / poor areas will just suck more, good ones might do ok. Nobody will fill the gap where education is needed but there is no money....
It’s so bad in some places that the more affluent parts of a district are trying to break off and form thier own district so they won’t have to fund the poorer parts.
What’s really bad is that California in particular pays the federal government more in taxes than they receive. The new federal tax laws made it even worse.
It’s not fair and I live in a state that sees net inflows of federal tax money.
Why be reasonable when you can get benefits for yourself and have someone else down the road pay for them?
I wonder when this will break though. California has had it comparatively easy with a surging economy (at least in the Bay area), but the next recession will likely send all the pensions even further into the red.
The only reason someone down the road has to pay for them is because the state/municipality reneged on its half of the bargain to actually fund the pension at the time, counting on future earnings to skate by. The teachers unions accepted lower pay raises or frozen wages in exchange for a good pension. Don't blame them for the malfeasance of the counterparty.
The oldest baby boomers were still fairly early in their working life when the gains from the economy stopped broadly reaching the working class.
The generation who benefitted the most from the long post-WWII economic boom with wide distribution of gains were the Boomers’ parents.
They were just the right age for reaping all the benefits from rising land and real estate prices, despite the real wage flat-lining at the end of 1970s
Not to mention that advancement and career progression were far more expedient in their day, allowing them to reap benefits earlier in their life than millenials today, who might still be working entry level jobs by their 30s.
> The generation who benefitted the most from the long post-WWII economic boom with wide distribution of gains were the Boomers’ parents.
And guess who inherited that wealth, since that generation is mostly dead now?
By that standard, Millennials are the eventual beneficiaries, too.
What is the easy fix, given political will, for social security?
Considering how easily we fund a war here, a tax cut there, Social Security could be made self-sustaining again fairly easily. We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). We could adjust the retirement age (say, indexed for lifespan changes to provide some midpoint/average number of 'working years'). That's all without even changing the tax rate, which of course is always another option.
Ultimately, just by basic logic alone, there's no reason we can't fund X amount of benefits with Y amount of receipts by setting the numbers properly -- UNLESS AND UNTIL we have a massive greying crisis like Japan has.
https://www.quora.com/Has-the-U-S-Congress-really-borrowed-t...
https://www.snopes.com/fact-check/social-security-fun-facts/
https://www.cbsnews.com/news/lets-debunk-this-social-securit...
https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/17fr...
Note that Social Security already has “bend points” in the benefit formula, so one or more additional bend points doesn't change the basic design.
I don't disagree with removing the wage ceiling, but if you word it like that you're pretty much guaranteed to fail, because the equal and opposite to that is "Cut the payroll tax so I don't have to fund the bozos that decided to party all through school instead of working their tail off like I did."
Why is this just a progressive thing?
"Some districts are predicting deficits and many districts are bracing for what’s to come by cutting programs, reducing staff or drawing down their reserves—even though per-pupil funding is at its highest level in three decades and voters recently extended a tax hike on the rich to help pay for schools."
Maybe CA should work on it's illegal immigration problem, which is probably a big drain on the schools. Funny to read about all the economic woes in CA despite it's supposed great economy. In reality it's a dump.