San Francisco pension debate puts politics ahead of policy

From the SJ Mercury:

As San Francisco voters head toward a Tuesday decision on dueling pension reform measures, we see what happens when politics obfuscates policy.

Even the most thoughtful residents will have a hard time evaluating the measures and appreciating the magnitude of the problem because politicians, union leaders and the media have, for the most part, mistakenly turned this into partisan warfare rather than examining the sobering numbers and the details of the proposed plans.

As a result, for example, most have overlooked how both plans — Measure C led by Mayor Ed Lee and Measure D spearheaded by Public Defender Jeff Adachi — would place a disproportionate burden on the majority of city workers, who would be essentially subsidizing police and firefighters.

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The Union’s Occupation

Until recently, it’s been tough to pinpoint precisely where Occupy Los Angeles ends and public-employee union activism begins. For weeks, a large contingent of teachers’ union activists has mingled among the several hundred progressive malcontents encamped on the north lawn of Los Angeles City Hall. But the emergence of a new movement—“Occupy LAUSD”—will just about obliterate any distinctions between the two groups. Last week, 500 Los Angeles Unified School District teachers marched about a mile to demonstrate in front of their district’s headquarters. A few dozen hard-core activists joined them, camping out for five days before ending the “occupation” Saturday with a large union pep rally.

Truth is, parents and taxpayers—to say nothing of thousands of hard-working teachers—have plenty to gripe about. L.A. Unified is a picture of dysfunction, bureaucratic bloat, and massive waste. The second-largest school district in the United States, LAUSD has a $7 billion budget and enrolls (“educates” isn’t quite the word) around 600,000 students. The district is home to both the glistening, half-billion-dollar Robert F. Kennedy Community Schools complex, opened last year on the former site of the Ambassador Hotel (where Kennedy was assassinated in 1968), and Locke High School, one of the worst-performing high schools in California. Only 55 percent of LAUSD students graduate from high school after four years. The district is hindered, in large part, by its 350-page contract with United Teachers Los Angeles (UTLA), which enshrines seniority over quality and leaves younger, tatealented teachers most vulnerable to pink slips. Yet as Los Angeles education blogger Anthony Krinsky notes, despite three consecutive years of layoffs, “we have more teachers per student than we had 5 years ago, 10 years ago, 15 years ago, and 20 years ago.” For all of the manpower, student performance remains stagnant.

But the demonstrations at 4th Street and South Beaudry Avenue had little to do with those concerns. For Occupy LAUSD, all of the district’s problems could be solved with more money, more teachers, and less student testing. It’s no coincidence that the Occupy leaders were all top officials with the UTLA, which represents 40,000 LAUSD teachers, or that the marches and rallies preceded preliminary contract negotiations that had been scheduled for this week. What’s more, Occupy LAUSD got backing from the California Teachers Association (CTA), the California Federation of Teachers, and dozens of local teachers’ unions around the state. The CTA is the most powerful lobbying organization in Sacramento; it has spent more than $210 million in the past decade on lobbying, supporting liberal causes and Democratic candidates almost exclusively. The CTA’s state council recently authorized expending $8 million on next year’s elections, a number that’s likely to rise. (To be fair, however, new CTA president Dean Vogel wasn’t lying on Saturday when he counted himself among “the 99 percent.” With an annual salary of just under $290,000, Vogel is in merely the top 4 percent of American earners.)

Unlike the Occupy Wall Street protesters in Lower Manhattan, whose consensus-driven committees have offered an inchoate list of complaints and a hodgepodge of utopian remedies, Occupy LAUSD has issued demands easy to divine. They are precisely the same demands that UTLA has made for months, with derisive references to the rapacious “1 percent” tacked on to align the union’s public-relations campaign with the Occupy zeitgeist. Foremost among the demands is the union’s insistence that district officials use a $55 million budget surplus to rehire up to 1,200 teachers laid off in the past year. One teachers’ union activist—writing for the Socialist Worker, no less—summarized the larger goals of the occupation: “Tax the 1 percent to fully fund our schools; keep our schools public—by the 99 percent, for the 99 percent; and democratic community-based schools, not corporate Wall Street reform.”

District officials reacted to the union-led occupation with frustration and dismay. Superintendent John Deasy, a reliable liberal, professed his bewilderment at the protests in front of his office. “Occupy LAUSD is both misinformed and contrary to the spirit and intent of Occupy Wall Street, Occupy L.A., and the other laudable movements for economic justice that have sprung up around the country and the world over the last month,” Deasy said in a statement. “It is an insult for these protesters to equate a school district that during the past four years has experienced a $2 billion loss of dollars in state and federal funding, with policies and institutions that have systematically hurt the poor and middle class.” Deasy’s befuddlement may have been confounded further by Occupy LAUSD’s response. “It is hard for him to understand what the 99 percent movement is really about because he represents the worst of the 1 percent,” said Jose Lara, a board member of UTLA and chief spokesman for Occupy LAUSD.

For people like Lara, the “1 percent” consists of people such as Microsoft’s Bill Gates and Los Angeles real-estate mogul Eli Broad, both of whom support charter schools and contribute heavily to education-reform efforts. References to “keeping schools public” and rejecting “corporate Wall Street reform” are code for long-standing union opposition to school choice and suspicion of private philanthropy. Gates and Broad come up again and again in union talking points. “We reject the premise that the 1 percent billionaires—Bill Gates and Eli Broad—should be allowed to seize our public schools by buying seats on school boards that dismantle our schools, lay off thousands of teachers, and then award dozens of public schools to private charters, while denying teachers collective bargaining rights,” reads an October 22 UTLA press release outlining the themes of Saturday’s rally.

Beyond union rabble-rousing ahead of what’s sure to be a contentious contract negotiation, Occupy LAUSD highlights a stark and widening disagreement about what American public education should be. With their billion-dollar endowments, Gates and Broad are powerful players among an ideologically diverse coalition of reformers that includes conservative Republicans, Milton Friedman libertarians, and urban Democrats. But Gates and Broad are hardly the prime movers or the last word in education reform—a point that UTLA and its left-wing union allies refuse to concede. In general, reformers hold that public education should teach students how to be autonomous, knowledgeable, and self-governing citizens. The how and the wherematter less than the what. So reformers advocate empowering parents with a range of options, whether they’re charters or “virtual schools” or opportunity scholarships aimed primarily (but not exclusively) at lower-income families. Traditional public schools should compete with alternative models. Excellent teachers should be rewarded with higher pay. Bad teachers should be eased out of the system.

When Deasy took office this summer, he laid out a handful of proposed contract changes, including more school-site flexibility with hiring (thus curtailing the “dance of the lemons”), overhauling tenure rules, and experimenting with merit pay. Occupy LAUSD opposes every one of those ideas. For the occupiers, public education means tax-funded schools operated by union-organized administrators and teachers with little testing and accountability and no choice. Seen in that light, Occupy LAUSD is less radical than reactionary.

(Ben Boychuk is an associate editor of City Journal, where this article first appeared.)

Why You Should Care about Pension Reform

The current pension reform debate – with proposals from the governor and now from a team of Republicans via ballot initiative – is drawing considerable media attention.

It’s hard to understand why.

The debate has almost nothing to do with the broader public.

The pension changes being talked about won’t change all that much or save much money for other public programs. And the plans being offered don’t respond to the real problem in matters of retirement savings.

The problem? That the number of Americans participating in retirement plans is on the decline.

You read that right. I just finished reading a chilling new report from Michael Calabrese of the New America Foundation (full disclosure: I’m a New America fellow). His conclusion:  “the majority of American adults do not participate in any retirement saving plan—whether pension or 401(k) or Individual Retirement Account (IRA). Participation in employer-sponsored plans peaked in the late 1970s and appears to be at its lowest level in more than 30 years.”

In that context, any debate about public pensions that doesn’t talk about the lack of retirement savings is missing the point. The question ought to be how do we increase retirement security for the broad majority of Americans – by getting them to save and participate in retirement plans. Because that’s the real unfunded obligation – those who don’t have retirement savings will have to rely more on Social Security or other forms of public assistance.

So if you want meaningful pension reform (meaningful enough for the public to care), a proposal must focus on ways to reshape public employee pensions not merely to save money but to provide some sort of basis for greater retirement savings by people who don’t work for the government.

And the California reforms on the table don’t meet either test. Both Brown’s plan and the initiatives filed this week would set up two-tiered pension systems – different for current and new employees. The savings in such systems are likely illusory because two-tiered pension systems are unstable (they end up becoming one tier again in good times) and because savings from new employees are likely to be minimal (especially in an era when there aren’t many new employees).

And yes, both Brown’s plan and the initiatives demand more in contributions from current employees. That’s good – but it’s not enough. If current employees are going to be asked to take hits – and they should be asked, and pressured to do so – they should be asked to move into defined benefit programs that are so safe and sustainable that other Californians and their employers outside the public sector could participate in them.

That kind of program would require not only more in contributions from employees (and from employers) but also much more conservative assumptions about investment returns.

That would mean less in pensions for public workers – but much, much more in retirement, and in retirement security for the rest of us.

For now, however, the pension reform debate remains one of those Sacramento conversations that has almost nothing to do with the lives of Californians.

(Joe Mathews is a Journalist and Irvine senior fellow at the New America Foundation, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010). This article was first published in Fox & Hounds.)

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