Wednesday, May 3, 2017

Benefits are taking a big bite out of school budgets in a number of states that have made lavish pension and retiree health care promises to workers.

...Oregon benefit costs consume nearly 30% of school budgets, leaving education districts and local governments bracing for a 44% jump in pension bills alone in the next two years — amounting to $885 million in new spending. A study concluded that the additional burden could lead to significant staffing cuts in Oregon, costing as many as 10% of all public employees their jobs.

A recent study estimated that pension contributions from California school districts will have to increase from $3 billion in 2014 to $9.45 billion in 2021. "It's scaring districts right now. A lot are questioning whether they can stay afloat," an official with the California School Boards Association recently said.

As the bills come due, public officials will discover that the actual costs are even higher than reflected in these alarming data. The reason: Many state and local governments have been contributing less than they should to fund their benefits — and they can't keep doing it.

A 2016 study by Pew, for instance, found that only 15 states were putting enough money annually into their pension systems to meet future obligations. In total, Pew found that states paid 75% of what they needed to add to pensions in 2014 — leaving $28 billion in contributions unpaid.