California’s Pension Crisis Hits Disadvantaged Students the Hardest
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California’s Pension Crisis Hits Disadvantaged Students the Hardest

Leaders must make pension reforms work and address school districts’ long-term liabilities.

As California prepares to spend $68 billion — $2.2 billion more than it spent last school year — to educate more than 6 million students in the 2018-2019 school year, funding intended for students, especially the neediest students, will continue to be diverted to pay for long-term debts.

According to estimates from the state Department of Finance and the Legislative Analyst’s Office, California schools may have to use half of the new state education funding that they’re supposed to get over the next three years to cover their growing pension obligations, which now stand at $107 billion.

While California has directed more than $20 billion in new funding to California schools since 2013, this money isn’t necessarily reaching the schools and classrooms where the most-disadvantaged students enroll. A 2017 Education-Trust West report noted the districts with the highest concentrations of lower-income students were getting more funding than wealthier school districts but that individual, high-poverty schools within those higher-funded districts were not seeing the extra money. The report found districts were using the extra funding — intended for disadvantaged students — to instead reduce district-wide budget holes on things like health care and pensions.

California’s largest school district, Los Angeles Unified School District, is a prime example. A recent Reason Foundation study showed that in next four years the combination of pension costs, health and welfare costs, and special education costs are projected to take up 57.5 percent of unrestricted general fund revenue (LAUSD’s main operational funding) before the district spends a single dollar to run a regular school program.

Similarly, a recent Stanford study, which projected LAUSD pension costs through 2030, found LAUSD’s general fund expenditures for pension costs have risen from 6 percent in 2002–2003 to 9 percent in 2015–2016. The Stanford study argues these rising pension costs are crowding out spending for other priorities, especially on needy students. The study projects that “pension expenditures in 2029-30 appear likely to crowd out an additional $335 million in nonpension spending” that could go to classrooms.

In addition, a June 2018 report by the University of California, Berkeley finds that LAUSD fails to equitably fund high-poverty schools, slowing the district’s efforts to close achievement gaps and help disadvantaged students. The news release for the study noted that “spending per pupil in Los Angeles has climbed by two-fifths since the Great Recession. But dollars are often spread evenly among low-income and middle-class schools, countering Sacramento’s priority to narrow racial and economic disparities in pupil achievement.”

Diverting state revenue that is intended for California’s highest-need students has ongoing negative consequences for these students. In fact, a new lawsuit charges the state with denying hundreds of thousands of students an equal education opportunity because they failed to teach students how to read and write. As the Ella T. v State of California lawsuit notes at La Salle Elementary, where Ella T. is a second grader, the proficiency rate in reading was 4 percent in 2016-17, about 1 child per class.

These kinds of failures have real, long-term consequences. For example, data on students who passed the course requirements known as A-G for admission to the University of California and the California State University systems show that only 41.5 percent of disadvantaged students qualified for admission to UC or CSU in 2017, while 39.6 percent of African Americans, 42.4 percent of Hispanic, 54.8 percent of white and 76.3 percent of Asian students qualified.

These students are first denied basic literacy in elementary school and then denied access to the economic benefits of a college education. If the state legislature’s intent is to increase equity and positive education outcomes for California’s most disadvantaged students, leaders must make pension reforms work and address school districts’ long-term liabilities. If they don’t, taxpayers’ extra investments intended for California’s high-poverty and at-risk students will continue to be misappropriated and futile.

This column originally ran in The Orange County Register.

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