Mathews: The great California school squeeze

Call it the great California school squeeze.

The state is caught in a school funding paradox: Even though our schools have never had higher per-pupil spending, school districts face financial peril.

Why? Because of The Squeeze, a torture machine with three ratchets.

First, escalating obligations for retirement benefits grow so fast (more than 100 percent this decade in many districts) that they gobble up the rising funding, leaving little for today's students and teachers.

Second, with birth rates low and immigration stagnant, the number of students is flat or declining in many districts. Since school funding is granted on a per-student basis, fewer students can mean less funding, even at the higher rates.

Third, the state has adopted new spending formulas and measures that push schools to tackle difficult social challenges, including poverty and inequality.

The Squeeze, in essence, requires schools to produce millions more educated California adults out of a smaller student population, even as retirees grab a larger share of available funds.

That might be impossible, but it's also essential if California is to reverse its education decline.

In 1970, according to a Chapman University report, Californians were better educated than the average American; the state had a higher percentage of adults with college degrees — and a lower proportion of adults with less than a high school education — than the nation as a whole. By 2012, California had the second highest percentage of adults with less than a high school education in the country (and had fallen in the percentage of adults with college degrees).

Reversing such trends requires massive new investment. But under The Squeeze, school districts are freezing budgets, laying off teachers, limiting instructional hours (my youngest son just started half-day kindergarten) and, in districts from Oakland to Pasadena, moving to close schools.

Where could new money come from? Not today's kids and teachers, who already are hit hard by The Squeeze. Even if it were legal to claw back pensions from retired teachers, it wouldn't be fair, since teacher pensions are modest, averaging just over $50,000, and teachers aren't eligible for Social Security. (Under the Penis Rule of Pensions, most scandalously large pension payouts — like the $1.27 million secured by L.A.'s new police chief — come in male-dominated professions, like police and fire.)

Unfortunately, there is no way to get the money from those most at fault: previous state and local politicians who made retirement promises without properly funding or disclosing them. Much of The Squeeze on California schools today comes from ramping up school districts' contributions to the state pension funds in order to make up for years of underfunding.

What's most scary about The Squeeze is that it's likely to get worse. It has hit hard even as the stock market has risen and the economy has expanded; a recession and stock market decline would make The Squeeze so bad that school districts could be forced into massive cuts and even bankruptcy.

If you're surprised to be reading all of this, that is by design. School districts often hide the growing size of their retiree obligations deep in budget documents; many districts ask local voters for additional taxes, which delay the reckoning but don't fix the problem. Diminished local media don't have resources to cover it. And powerful teachers' unions have misled the public by refusing to acknowledge the problem of retiree costs and trying to shift the blame for The Squeeze to their favorite boogeyman, charter schools, which are public schools independent of the system.

You also aren't hearing about it during campaign season. The endless state media celebration of Gov. Jerry Brown's supposed successes in turning the state around has obscured the crisis. Political candidates have offered few ideas for tackling The Squeeze, because, well, there are few ideas for tackling The Squeeze.

But that doesn't mean there aren't any.

Addressing The Squeeze starts with clearer disclosure: making plainly public the ways in which retiree costs are crowding out money that should go to today's kids and teachers and the impact of declines in enrollment. Retired teachers must have their pensions protected, albeit with a haircut: cost-of-living adjustments should stop. And it's unfair for retired teachers to receive costly health benefits; they should rely on the same public programs — Obamacare, Medicaid and Medicare — that the rest of us do.

The savings from such changes won't be nearly enough to escape The Squeeze, but they should make it possible to do more for today's teachers; school districts from San Francisco to Fresno are now devoting less than half of their revenues to compensation for today's teachers, David Crane of Govern for California has shown.

But breaking the grip of The Squeeze will require more from California taxpayers and policymakers — and not just small tax increases at the local level.

Two big dysfunctional state systems hurt today's kids. One is a complex tax system, built around Proposition 13, that protects older homeowners. The other is a complex education funding system, built around Proposition 98, that ties education spending to the budget and economy, rather than to students' needs. Proposition 98 has effectively acted as a cap on education spending since it was adopted 30 years ago.

Both systems need replacing. The Proposition 98 funding formula should die, and education funding should be tied to educational needs. Doing that will require tens of billions of new dollars each year, which in turn will require a massive tax reform that makes our systems for income, sales and property tax more rational.

Of course, even that might not be enough for schools, now that the state's leading Democrats want new tax dollars to provide a single-payer universal health care system. That's a worthy goal. But California first needs to rescue kids from The Squeeze that's crushing our single-payer education system.

Joe Mathews writes the Connecting California column for Zocálo Public Square.

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