Local legislators not swayed by governor's sweeping proposals Local legislators not swayed by governor's sweeping proposals (January 12, 2005)

** Battles likely over restructuring pension plans and teacher pay.

By David Boyce

Almanac Staff Writer

Last week in his state-of-the-state speech, Republican Gov. Arnold Schwarzenegger -- who opposes new taxes despite a projected $8 billion 2005-06 budget deficit -- outlined a dramatic plan to restructure state government.

Two proposals are virtually certain to spark fierce battles in a state Legislature controlled by union-friendly Democrats. One is the proposed replacement of teachers' seniority-based compensation with a merit-pay system.

The other aims to replace the guaranteed-benefit pension plans for public employees and teachers with private-sector-type investment accounts in which benefits depend on investment performance in the stock market.

The January 5 speech was a prelude to the release early this week of the governor's proposed budget.

If negotiations with the Legislature break down, the popular governor is already threatening to use his formidable star power to go to the voters with ballot initiatives.

"It's kind of hard to compromise with someone who says, 'No additional revenues, end of story,'" said state Sen. Joe Simitian, D-Palo Alto, in an interview. "It's an opening position. ... The governor's method of operating has been to come on strong and strike a deal."

Assemblyman Ira Ruskin, D-Redwood City, told the Almanac that he shares the governor's goals, but not necessarily his methods. "He is intending to make some very dramatic cuts," Mr. Ruskin said. "The difficulty will be in working those out in detail. That's going to be a very challenging process."
Pension problems

In retirement, California's public employees -- including those in local government, public safety and teaching -- can count on steady incomes and health benefits for the rest of their lives. Their pension plans are paid for from investment profits, from state and local-government budgets, and from employee contributions.

The plans enjoyed high investment returns until the dot-com boom ended. Now employers face mounting costs, in part because of large increases in benefits for public safety employees. For state employees alone, the cost to taxpayers this year is $2.6 billion and may rise to $3.5 billion by 2009, said Assemblyman Keith Richman, R-Granada Hills, who is sponsoring a constitutional amendment similar to the governor's proposal.

That proposal would drop the current guaranteed-benefit plan for all public employees and teachers hired after 2006 and instead offer them 401(k)-style investment accounts. Public employees would pay half the total contributions; school districts would face increased contributions, but would be allowed to pass costs on to teachers.

Not so fast, said Mr. Ruskin, noting that pensions compensate public sector employees for missed money-making opportunities in the private sector. "We need to look at this carefully," he said. "Having a decent pension has been a part of public sector work and we just can't start dismantling an entire system."

Mr. Simitian acknowledges the governor's funding worries. "Clearly there are challenges and we're going to need to take a look at the issue," he said. "But I'm skeptical that the approach the governor laid out is the silver bullet."

The know-how for extracting a steady income from investments is not common knowledge, said Angela Howard, Portola Valley's town administrator. "For people who are successful at investing, that's wonderful," she said. "What happens if you don't make a lot of money?"
Teachers at fault?

In his speech, the governor proposed $50 billion in K-14 education spending for 2005-06 -- a $2.9 billion increase over last year -- then proceeded to denounce the current education system as a human, institutional and educational disaster.

Citing various sources, including the departments of education and finance, the governor said that 30 percent of students are not graduating high school, hundreds of schools are failing, and a majority of students are not reading at grade level.

"So, where do we start?" he asked. "We start with the teachers. ... We must financially reward good teachers and expel those who are not. The more we reward excellent teachers, the more our teachers will be excellent. The more we tolerate ineffective teachers, the more our teachers will be ineffective."

"His comments were out of line," said Mike Radoye, a teacher for 30 years and the president of the Sequoia Union High School District teachers union. "In any organization, you're going to find employees that range from the most competent to the least competent." Considering the education required to become a teacher, their competence levels are probably higher than average, he added.

"To make (teachers) the issue is really trying to deflect the discussion from what is the really serious problem with education in California," he added. "The really serious problem is that education is vastly under-funded."

A study released January 3 by the nonprofit Rand Corporation did find California lacking:

** Per-student funding is $600 below the national average, and the amount of personal income spent on public education trails the national average by 1.2 percentage points.

** Teachers' salaries place 32nd nationally and are the lowest among the five largest states.

** Forty-six percent of school districts require fully certified teachers compared with 82 percent nationwide.

** Student performance is 48th on nationally standardized tests, and lowest when controlling for student background.

Under-funding is the major problem, not teachers, said Mr. Ruskin. "That argument is a distraction. Teachers have been laboring under very trying circumstances for a very long time," he said, noting that he's heard of teachers using their own money to pay for classroom materials.

Mr. Ruskin said that until the economy improves sufficiently to increase school funding, he would focus on giving schools more control over their current spending.

Mr. Simitian agreed that education spending is the real issue and that the governor avoided that discussion, and instead "drew a line in the sand" with his no-new-taxes stand.

"I don't think those of us who are public-education advocates should roll over and play dead," he added. "The state-of-the-state speech is a rhetorical device."

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