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LA Unified facing initial $35 million cost for teacher pensions

Michael Janofsky | May 28, 2014

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Gov Jerry Brown LAUSD

Gov Jerry Brown

Just when members of the Los Angeles teachers union, UTLA, thought brighter economic times for California would translate to higher salaries after seven years without a contract, the state threw them a curveball.

In recent weeks, Gov. Jerry Brown and the legislature have begun debating over how to pay down teacher pension debt, which has reached $74 billion.

They have devised a formula that calls on the state and school districts — as well as teachers — to increase their contributions.

It’s a double whammy for classroom teachers because teachers will be required to increase their pension contributions, eroding whatever raise the union negotiates with the district, and the additional dollars districts spend on pension debt are dollars that can’t be spent elsewhere.

In LA Unified, the state’s largest school district, the pension funding would cost the district about $35 million in the first year, rising to over $300 million after the seven-year phase in period, according to an LA Unified analysis.

“By far,” said Edgar Zazueta, LA Unified’s chief lobbyist, “the Governor proposes that employers carry the lion share of this additional burden.

The analysis by the district finds that school districts around the state would bear the biggest burden of covering the shortfall, contributing $47 billion, or 63 percent of the total, through increased contributions over 32 years.

Over an initial seven-year period, the employer rate would increase to 19.1 percent of payroll from 8.25 percent, which includes a contribution rate increase of 1.25 percent in 2014-15.

The state share would be $20 billion, or 27 percent of the cost, over 32 years. The state would increase its contribution to 6.3 percent as a percentage of payroll over a 3-year period, from the current 3 percent, starting with a .16 percent increase in pension funding in 2014-15.

The final share, $8 billion, or 10 percent of the cost, would fall to teachers in increased contributions over 32 years. Over a three-year period, certificated employee contributions would increase to 10.25 percent of payroll from 8 percent, starting with a .15 percent increase in 2014-15.

The increase for any teacher depends upon salary, but one making, say, $75,000, would contribute an additional $1,875 over the first three years.


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