Bailout for teachers' pensions to cost California school districts

Thursday, May 22, 2014

California's public school districts could face difficult cutbacks if state officials move forward with a plan to bail out the retirement fund for teachers, officials and educators say, but even those painful steps may fall short of curing the pension deficit if investments don't meet expectations.

Under a proposal released last week by Gov. Jerry Brown, more money will flow into the California State Teachers' Retirement System to begin closing an estimated $74-billion shortfall. But addressing that problem creates a different one: School systems would have to quickly pare back spending for next year, and they would face steeper diversions of dollars in later years.

"It has a lot of school districts reeling in terms of how to grapple with this unanticipated expense in the coming school year, throwing a major wrench into everything," said Kevin Gordon, president of Capitol Advisors Group, a Sacramento company that lobbies on behalf of school districts.

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