Monday, June 03, 2013
"New California Taxes Pay for Pensions, Not Schools"
It appears the voters may have been "tricked" on this...
On the Bloomberg.com website, David Crane reports on where California is spending the revenue from their recently increased taxes:
"Most Californians would be surprised to learn that 100 percent of education’s share of the tax increase proposed by Governor Jerry Brown will go to pensions instead of classrooms. But that would be no surprise to longtime observers of the California State Teachers’ Retirement System, which administers teacher pensions. “Here’s why: After retirement, teachers are unconditionally guaranteed lifetime pensions by their school districts. Everything works out fine if Calstrs, as the retirement system is known, earns the investment returns it forecasts and from which upfront contributions are derived. “But if they fall short, school districts must make up the difference. Because of compounding, the failure to earn forecasted earnings translates into huge deficiencies down the road. “Unfortunately, 'down the road' is where school districts are now."
