Pension crisis hits school districts

Local school districts are staring into a half-empty glass trying to find money for rising state-mandated pension contributions.
Six weeks ago the California Public Employees Retirement System (CalPERS) lowered its discount rate — the assumed rate of return — from 7.5 percent to 7 percent. Beginning in fiscal year 2018-19, both Scotts Valley Unified School District and San Lorenzo Valley Unified School District will see pension contributions increase by up to 3 percent.
 “This kind of slight shift can have a huge impact,” said Tanya Krause, superintendent of Scotts Valley schools. “Something’s going to give.”
Before the recent CalPERS action, the employer contribution rate topped out at 20.4 percent. By fiscal year 2023-2024 the highest rate will be 28.2 percent.
The increase affects 56 classified workers in the Scotts Valley district and 121 employees in the San Lorenzo Valley district.
This year, San Lorenzo Valley schools contributed $600,000 (2.3 percent of the annual budget.)  In 2024, the calPERS price tag will be $1.2 million, or 5 percent of the district’s annual budget, according to Laurie Bruton, school superintendent.
Krause said Scotts Valley has not budgeted out that far, but in 2017-2018, the district will contribute an extra $47,157 in pensions, slightly less than 1 percent of the budget.
“This is just for classified employees,” Bruton said. “Certified teachers and administrators are all part of the State Teachers Retirement System (STRS). “They also have prospective increases.”
(CalSTRS) provides retirement, disability and survivor benefits for 140 instructors and administrators in Scotts Valley and 157 teachers and administrators in San Lorenzo Valley. CalSTRS, with a $188 billion portfolio, is the largest teachers’ retirement fund in the United States, and 13th largest public pension fund in the world.
With Gov. Jerry Brown budgeting for a recession, and federal funds hard to come by, school districts have almost no wiggle room.
“We don’t have a plan to raise the money,” Bruton said. “The only way we can pay the shortfall is to either reduce services to kids or cut personnel.”
Additionally, Krause complains that the federal directive Disabilities Education Act (IDEA) that requires schools to serve the educational needs of eligible students with disabilities is inadequately subsidized. “It’s an unfunded mandate,” she said.
One idea being explored by Krause is partnering with the City of Scotts Valley (also affected by the CalPERS recalculation) developing a parcel tax for the two.. This effort would need to be approved by 66 2/3 percent of the voters in a special election. “It’s the only avenue we have,” said Rudolph Ramirez, Scotts Valley chief business official. “We’re going to have some tough times ahead.”
But Bruton doesn’t see a parcel tax as a viable option in the San Lorenzo Valley, where there are no cities, just water and fire districts. “I don’t know how popular it would be to have a parcel tax to pay for salaries,” she said, adding that she hopes to get increased state and local funding to offset the shortfall.
“The state is saying, ‘We’re getting out of the pension business,’ ” Krause said. “It makes it difficult.”