School districts’ unfunded pension and benefit costs are rapidly increasing at a rate that will become unsustainable. While districts paid approximately $500 per pupil in 2013 for employee pension costs, they will pay $1600 per pupil in 2020. We’ve dubbed this “The Big Squeeze” because it is strangling public education funding, forcing districts to reduce both teacher salaries and crucial services for high-need students.

California must maintain its commitments to retirees, invest in and support teachers, and provide its diverse student population a high-quality education. How does it do all of this in an era of inadequate revenues, massive unfunded pension liabilities, and other soaring costs? The new report, “The Big Squeeze: How Unfunded Pension Costs Threaten Educational Equity” explores these questions.

The “Big Squeeze” finds that California’s unfunded pension costs are exacerbating inequity in public schools by forcing school districts to decrease services to the neediest students – those who are low-income, English learners, or otherwise marginalized. To cover growing unfunded pension costs, school districts are making harmful cuts and compromises. For example:

• 35 percent of districts have raised class sizes and 45 percent plan to do so in the next five years.
• 33 percent have cut enrichment programs and 37 percent plan to in the next five years.
• 19 percent have reduced counseling and mental health supports and 22 percent plan to in the next five years.
• Nine percent have reduced access to technology and personalized learning tools and 16 percent plan to in the next five years.

In order to make their growing pension contributions , districts are tapping into funding sources intended to serve low-income students and English learners – including the Local Control Funding Formula (LCFF), which is supposed to provide extra resources to high-need students. More than one in five districts said they are using supplemental and concentration grant funding from LCFF – which is supposed to be used to increase and improve services for English learners, foster youth and low-income students – and putting it toward their pension payments.

The rising cost of pensions is also forcing districts to make cuts and compromises that negatively impact teachers. As California’s education budget increases, teachers should expect to receive more, not less. And yet, The Big Squeeze finds that districts are spending five percentage points less on teacher salaries as more of their budgets have gone towards shoring up the solvency of the pension system. In addition:

• 88 percent of districts say that increased pension and benefits costs impact their ability to provide higher salaries for teachers.
• 45 percent say these costs impact their ability to recruit and retain teachers.

The report not only sounds the alarm about the equity crisis facing California public schools; it offers solutions for school districts and state policymakers.

For more information about our methods, review the report’s technical appendix.

Read EdSource’s reporting about pension costs.

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