California was once the State that everyone looked up to. With the best weather and natural resources, we were full of hope and innovation. We had the best public schools, a world class system of higher education, the best freeways, infrastructure to provide fresh water to our growing population, which also doubled as a source of clean energy through hydro-electric power, a business-friendly environment where entire industries grew in entertainment, aerospace, and technology, making our economy virtually recession-proof.

Then in 1978, then-governor Jerry Brown signed an executive order that imposed union-shop collective bargaining on public agencies in California, and the rise of public sector union power began.

Today, public sector unions are the most powerful political force in our State. They control a majority of our State Legislature and might control a supermajority in November if a few swing districts fall their way.  No politician, Democrat, Republican or Independent, acts without considering how it will affect the union agenda.

These government unions press 100% for a progressive agenda, and they consistently agitate for increased spending. In two areas, the quality of our public education system, and the financial health of our cities and counties, the consequences of government union power have been catastrophic.

Public Schools

The teachers’ unions, usually a local affiliate of the California Teachers Association, control most of our school boards, leading to control of our public schools. It is more than a coincidence that our public schools rank near the bottom in every category in the fifty United States.

As lobbyists for staff and teachers, who are paid to run our public schools, public sector unions fight to maintain the status quo. They protect incompetent teachers, they permit excellent teachers to be dismissed in layoffs, they actively oppose charter schools, they fight poor parents who try to employ Parent Trigger Laws, and they conduct an active campaign 24/7 against any form of school choice.

The financial power of teachers unions:

  • There are over 266,255 public school teachers in California.
  • Each pays at least $1,000 in union dues annually.
  • The CTA acknowledges spending up to 40% of those dues explicitly on politics. That is $106 million per year.
  • If the lawyers in Friedrichs are right—that all public union spending is political—the actual total is $266 million per year.
  • Unions for non-teacher staff also are active. There are 215,000 school staff employees who are members of the CSEA (California State Employees Association), who each pay approximately $500 annually in dues. If all of those dues are spent on politics, that adds $107 million more for political spending annually.
  • The total spent by public education unions alone is estimated to be $373 million per year – just in California.

Pensions

Police and firefighter unions do the most damage at the local level. They have attained unsustainable pensions, known as “3%@50”, meaning that a member of that bargaining unit is eligible at age 50 for a pension equivalent to 3% of his highest salary times their number of years of service. While the age of eligibility has been raised for new public safety employees entering the workforce, the vast majority of active police and firefighters still retain these “3%@50” benefits. So at age 50, a 20-year veteran can retire with a pension equivalent to 60% of their highest year’s salary, which can be manipulated through spiking, and a 30-year veteran is eligible for 90% of his or her highest salary.

These pension requirements are held under the “California Rule” to be irreversible. In other words, once they have been adopted, democracy is incapable of turning off the spigot. With the spigot running constantly, communities go bankrupt. First, they cut other services. Then they increase taxes. Then they refuse to pay bondholders, so no one will invest again.

Current unfunded liabilities in California:

At CalPERS: $93.5 billion (ref. page 120, “Funding Progress,” CalPERS 6-30-2015 financial report).

At CalSTRS: $72.7 billion (ref. page 118, “Funding Progress,” CalSTRS 6-30-2015 financial report).

Local Unfunded Liabilities add considerably to this total, since CalPERS, with assets of $301 billion, and CalSTRS, with assets of $158 billion, only constitute 62% of California’s $752 billion in state and local pension fund assets. If all of these systems in aggregate were 75% funded, which is probably a best case estimate given the poor stock market performance since the official numbers were released, the total unfunded pension liabilities for California’s state and local government workers would be $256 billion.

And $256 billion in unfunded liabilities, a staggering amount, still understates the problem for two reasons: First, these pension funds may not succeed in securing a 7.5% average annual return in the coming decades. If not, then they will not earn enough interest to prevent their funding ratios from getting even worse. Also, this doesn’t take into account “OPEB,” or “other post employment benefits,” primarily health insurance. The unfunded OPEB liability just for Los Angeles County is officially recognized at over $30 billion.

A realistic estimate of the total unfunded liabilities for retirement obligations to state and local workers in California is easily in excess of $500 billion. These benefits, which are financially unsustainable and far more generous than the taxpayer funded benefits available to ordinary private sector workers, were forced upon local and state elected officials through the unchecked p0wer of government unions.

 *   *   *

Bob Loewen is the chairman of the California Policy Center.

25 Responses to How Government Unions Are Destroying California

  1. Tough Love says:

    Excellent summary of the problem…..

    The impossibility of the “math” will bring an end to Pubic Sector pensions/benefits as they now exit.

    It is just a shame how much damage will be done as we traverse the path to that end.

  2. Fact Checker says:

    I did not get past the second paragraph because when I saw an obvious partisan attempt to blame Jerry Brown for the existence of public sector union power in California I recognized a theme of deception. The deception? It was not Democrat Jerry Brown who began the rise of public sector union power in California as this writing misrepresents,it was Republican Governor Ronald Reagan when he signed the Myers-Milias-Brown Act into law in 1968. THAT is when the rise of public sector union power began in California, not 10 years later when Brown signed that executive order.

    • Moving Back to America says:

      That may be true but the numbers don’t lie and the Democrats hold almost all the cards now. After living here almost all my life I am leaving California because I remember the state as was described in the writer’s first paragraph. It is no longer a place to thrive in small business. House is up for sale and I’m outta here!

    • maroon says:

      The unions praise Brown for his signature on the collective bargaining executive order. What Reagan signed did not give power to the unions. BTW..wasn’t Grey Davis (D) who gave us the huge increase in public union costs? The unions and Davis claimed it wouldn’t cost the taxpayers a penny… remember?

  3. SkippingDog says:

    If the author can’t even get the basics correct about when and who signed the Meyers-Milias-Brown bill into public law, there’s nothing to suggest his other claims are any more valid.

    • Tough Love says:

      Skippy,

      Hardly a “mistake” worthy of simply shrugging-off everything else stated ….. as you (a retire CA Public Sector worker sucking away at the Taxpayers’ teat) would like us to believe.

  4. Mark Flannery says:

    I agree with most of the article, but FactChecker and Skipping Dog are also correct. Ronald Reagan was the first governor to sign collective bargaining legislation for public employees in California, when he signed the Meyers-Milias-Brown Act (MMBA) in 1968, giving collective bargaining rights to city and county employees.
    Brown followed by signing the Educational Employment Relations Act of 1976 for school and community college employees, the State Employer-Employee Relations Act of 1978 (now called the Dills Act) for state employees, and the Higher Education Employer-Employee Relations Act of 1979, for higher education employees.
    Source: California PERB Blog at http://caperb.blogspot.com/…/little-history-on-labor-moveme….

  5. maroon says:

    So who cares who signed a law… who is going to fix it? I don’t see Brown doing a thing.. he wants the unions to keep giving cash to Dems. The whole system is corrupt.

    • SeeSaw says:

      Who cares? Not you, of course! You don’t care, because you got it wrong! The whole system is corrupt all right–we have less than ten billionaires guiding everything in the country! But that’s ok. Just stay gullible–go on sipping your kool-aid.

      • Tough Love says:

        SeeSaw,

        So are you saying that the misdeeds of America’s Billionaires justifies the HUGE and ongoing financial rape of PRIVATE Sector Taxpayers by PUBLIC Sector workers via pensions that are ROUTINELY 3 to 5 times greater in value at retirement than those of comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service ?

        Really ?

        Really ?

        • SeeSaw says:

          Billionaires control the political system in this country. Stop comparing apples and oranges, when it comes to the sectors, and you will be able to stop hyper-ventilating. My pension is quite modest–thank you. I wish it were the size you try to make others believe it is.

          • Tough Love says:

            Seesaw,

            You conveniently ignored answering my earlier question …. why, no reasonable answer?

            And it is at EVERY (yes EVERY) income level ….. Public Sector pensions are ROUTINELY 3 to 5 times greater in value at retirement than those of comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service.

            NONE of them are necessary, fair to taxpayers, affordable, or justifiable, even for Public Sector workers with the lowest incomes.

        • SeeSaw says:

          I cannot give a response to what is a lie. My pension is certainly not three to five times greater in value when compared to a private sector worker in the same category. Again, it is apples and oranges and I am not in the habit of comparing what is not comparable or true. I don’t spent my time pouring over the figures on other peoples’ pensions, public and private! I live a responsible life with the funding I have available–it was earned honestly–period. I suggest you do the same, and your conscience will be clear and you don’t have to worry about what someone else has.

          • Tough Love says:

            SeeSaw, No, it is absolutely TRUE that Public Sector pensions are ROUTINELY 3 to 5 times greater in value at retirement than those of comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service.

            And there is ZERO justification for it.

  6. Fact Checker says:

    Good work Mark. You got it right.

  7. talltalk says:

    The personalities of the teachers, firefighters and police i have encountered? They ALL have a bully aspect to their personality. ALL of them. They also have an uncaring (no empathy) aspect to their personalities.

    this is not to demonize them. these are the personalities that are running all the beauracracy. the retirements are supposed to be stipends that keep you alive in old age, after you do great stuff for society, in appreciation.

    instead, the retirements have attracted people who only care about themselves. after a full generation of this, what will society be like? not so good?

    so in my view, selfish people have been attracted to and gamed the system, kept caring people out, and they literally do not care what they leave behind.

    they just want their pension.

  8. SeeSaw says:

    Talltalk: The bills don’t stop coming in after retirement. Health issues increase. None of these obligations can be covered with stipends, “just to keep alive”. Since when do retirees not have the privilege of continuing to live and participate in our society? If you want to do away with pensions, be prepared to support the social services system with higher taxes. Regarding personalities–you might try taking a look in the mirror and doing a checklist on yourself. I have found that that whatever I put out to others in the public space comes back to me the same. The key word is, “respect”. Try it–you will see your own esteem level increase.

    • Tough Love says:

      Public Sector workers who desire a reasonably comfortable retirement should be required to SAVE out of their own NET INCOME …. just as virtually all Private Sector workers must do.

      You are NOT “special” and deserving of a better deal ….. on the Private Sector Taxpayers’ dime.

  9. SeeSaw says:

    We all save part of our own net income–I certainly did and I have a 457 which has been ebbing and flowing with the economy just like your 401K, TL. I deserved as all workers do, payment for my services–that’s how I made a living. If a portion of the payment received is/was used for a DB retirement plan, that’s the way it is/was. Whether or not it is a better deal than that offered to workers in the private sector is the problem of that sector. I am certainly aware of those issues–I am the spouse of a private-sector retiree.

    • Tough Love says:

      Quoting SeeSaw ….

      “Whether or not it is a better deal than that offered to workers in the private sector is the problem of that sector.”

      You bet that it’s a “problem” for Private Sector Taxpayers …. because WE (the Private Sector Taxpayers) are being told that WE must pay for all but the 10%-20% of Total Public Sector pension Plan costs that are actually paid-for by the workers’ own contributions (INCLUDING the investment earnings on those contributions).

      Believe me when I say that Taxpayers WON’T be paying for all that you have shoved our way, and the Public Sector workers …. actives, and retires younger than you …… will come to curse your generation of Public Sector workers for YOUR insatiable greed as cutbacks GREATER than would have otherwise had been necessary, negatively impact THEIR retirements.

      • SeeSaw says:

        TL, there is no such thing as private sector taxpayers vs. public sector taxpayers. All taxpayers are from the same population–and that group contains people who work in both sectors. Stop the whining–nothing is more irritating than a constant whiner.

  10. plotter says:

    No one mentions Social Security. I paid into Social Security for 20 years now that I’m retired I receive $159 a month. How do I live on $159/month when you take away the pension I paid into for 32 years?
    Callers said in my last statement my account was $526,000. Are you going to give me that money back? Or put it in a 401k account?

    • Tough Love says:

      Your SS benefits have likely been APPROPRIATELY reduced by the SS “Windfall Elimination” provision …. to PREVENT you from getting an UNJUST “windfall”.

      If Public Sector pensions were calculated using the SAME formula and provisions that SS uses, none of the current financial problems would exist ….. with (when considering the MUCH richer Public Sector “formulas” and the MUCH more generous “provisions” such as very young full/unreduced retirement ages) …. Public Sector pensions ALWAYS multiples (3 to 5+ times) greater in value at retirement than SS benefits.

      So let’s take away your pension and let’s replace it with 100% of what you what have received via SS.

      Got a problem with EQUAL …. but not “better” ? benefits.

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