Ignorance bites California in the wallet

[one...two...tree 2,762]

A new poll shows that the people want control of the state budget, but most don't know where the money comes from or where it goes.

By Cathleen Decker

Last week brought a blizzard of polling on how Californians feel about their government and the economy. In two words: dislike and despair. The fine print suggested we should save a little distaste for ourselves.

A survey by the Public Policy Institute of California found that, overwhelmingly, Californians want themselves -- not the governor or the Legislature -- to be in charge of big budget matters.

It also found that, even more overwhelmingly, Californians haven't a clue where the state gets its money or how it spends it -- basic essentials for people who want to run the show. This is, of course, after years of headlines and hand-wringing about California's fiscal crisis, budget cutbacks, IOUs and the potential for one of the world's biggest economies to go belly up.

Those who favored the comics pages in decades past may recall the words of the possum philosopher Pogo: "We have met the enemy, and he is us."

It's not quite as bad as it sounds, according to the institute's pollster, Mark Baldassare. It's not as though Californians are an egomaniacal bunch grabbing all the power for themselves while ignoring the state's fiscal basics. At least that first part is wrong, he said. Californians might be happy to turn over power to the governor and the Legislature if they had any confidence that either could handle things. But they don't.

"I don't think it speaks to how much they know, but how little they trust . . . the people in Sacramento to make the decisions," he said.

So, egotistic? No. Clueless? Well, yes.

Baldassare asked Californians where the state gets the biggest chunk of its money. Thirty percent said sales taxes, 28% said personal income taxes, 18% said corporation taxes and 17% said car fees. So more than seven in 10 got it wrong. Last year, 55% of state revenues came from income taxes, 31% from sales taxes, 10% from corporation taxes and a mere 2% from car fees.

As to how the state spends its money, almost half of Californians -- 49% -- said prisons took the most. Twenty-four percent cited health and human services, 16% said kindergarten through high school and 5% said higher education. Again, wildly wrong. The lion's share of state money, 41%, goes to kindergarten-through-12th-grade education, 30% goes to health and human services, 13% to higher education and 10% to prisons.

There was a clear ideological bent to beliefs about spending. Democrats were far more likely than Republicans to believe that prisons took the most money. Republicans were more likely than Democrats to see health and welfare services as most costly.

None of this surprises budget veterans. Jean Ross, executive director of the California Budget Project, recounted a running bet when she and others attend focus groups of Californians about the budget. How long will it take before someone asks: Schools don't have enough money? What about the lottery?

"It's never more than 13 minutes," Ross said. "That's because it was sold to voters as 'billions of dollars for your school.' It wasn't sold to voters as '1% of the money for your child's school.' "

Indeed, the lottery has paid more than $20 billion to education since 1985. That, however, is less than half the education budget for this year alone.

It's not just rank-and-file Californians who don't understand the budget. Politicians, too, are often in the dark, Ross said.

"People don't understand, with good reason, how it all fits together," she added. "I've been doing this professionally for decades, and it's hard to understand how it all fits together."

One reason for that is the organization of civic finance, a bowl of spaghetti even in good times. Revenues and spending flow between the state and counties and special funds, unseen and misunderstood by most Californians. Ever-changing configurations are meant to stave off fiscal problems that never go away, despite the effort.

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[Sofiyya 1,687]

They get their money from Obama's stash. Everybody knows that!

_Ojd13kZlCA

[luckytxn 2,265]

I am surprised not one of them thought that the state printed its own money.

[I AM NOT THAT GUY 5,715]

A new poll shows that the people want control of the state budget, but most don't know where the money comes from or where it goes.

It comes from Mexicans. I never met a Mexican that wasn't flush with cash.

[Peikko 1,575]

Who is surprised that the 'citizens' do not understand how state government runs? Mind you, it is too bloody complicated. The flow of money should be open and transparent and the OP author said

"People don't understand, with good reason, how it all fits together," she added. "I've been doing this professionally for decades, and it's hard to understand how it all fits together."

That can't be a good thing.

[one...two...tree 2,762]

Who is surprised that the 'citizens' do not understand how state government runs? Mind you, it is too bloody complicated. The flow of money should be open and transparent and the OP author said That can't be a good thing.

I agree. The state is too friggin big. It's time to break California up into smaller states.

[Peikko 1,575]

I agree. The state is too friggin big. It's time to break California up into smaller states.

Really? I don't think that's the problem...I think there are several things that could be done to fix it but not breaking the state up and creating more beuaracracy

[scandal 951]

Indeed, the lottery has paid more than $20 billion to education since 1985. That, however, is less than half the education budget for this year alone.

Solution: Schools should be buying more lotto tickets, pronto!

CA revenues and Sacramento have been messed up for years. Unions (particularly prison guards and teachers) have a stranglehold on the budgeting process there.

[one...two...tree 2,762]

Solution: Schools should be buying more lotto tickets, pronto!

CA revenues and Sacramento have been messed up for years. Unions (particularly prison guards and teachers) have a stranglehold on the budgeting process there.

Don't blame the unions.

[I AM NOT THAT GUY 5,715]

Solution: Schools should be buying more lotto tickets, pronto!

CA revenues and Sacramento have been messed up for years. Unions (particularly prison guards and teachers) have a stranglehold on the budgeting process there.

Could be worse. We could be living in New Jersey.

California's problems are similar to GM's: Too many promises to the Unions they can not keep.

[one...two...tree 2,762]

California's problems are similar to GM's: Too many promises to the Unions they can not keep.

Such as?

[I AM NOT THAT GUY 5,715]

Such as?

Huge pension plans, and generous healthcare.

[one...two...tree 2,762]

Huge pension plans, and generous healthcare.

What's an acceptable pension plan? Healthcare?

[one...two...tree 2,762]

The Facts about California Teacher Retirement

From California Retired Teachers Association

The Governor has withdrawn his proposal to end defined-benefit retirement plans for California teachers due to what he called drafting flaws that could eliminate death and disability benefits for police and firefighters. However, he indicated he may bring the proposal back for the June, 2006 election if he cannot reach a compromise with the Legislature on public pensions.

The California Retired Teachers Association opposes closing the current retirement system to new members. The issue is complex but the facts are clear. Elimination of defined benefit plans could be a costly mistake for California and harmful to public education in the state. Consider:

State costs for teacher pensions have declined over the past six years, not increased.

In 1998 and 2000 surplus investment revenue allowed the California State Teachers' Retirement System (CalSTRS) to increase teachers' pensions for the first time in more 20 years. Before 1998, the state paid 4.3 percent of teacher payroll into the retirement system. In 1998, that amount was reduced to 3.102 percent and further reduced in 2000 to 2.107 percent. Through fiscal year 2004-2005, those reductions have saved the state $2.7 billion in pension contributions.

(Source: CalSTRS; Analysis of Budget Proposal on Contributions to CalSTRS, February 3, 2005)

Closing the current retirement system to new members will increase, not reduce, state costs.

The actuarial valuation of the Teachers' Retirement Fund based on assets as of June 30, 2003, showed that new members will contribute more than they necessary to finance the pensions they will receive at retirement age. However, the overall pension system has a $23.1 billion deficit. The state is legally responsible to pay all benefits currently in place. If the system is closed to new members, the potential costs to the state will be higher.

(Source: CalSTRS Actuarial Valuation; Milliman Consultants and Actuaries, June 22, 2004)

Teacher pensions are not lavish—even with long careers, most teachers do not receive adequate retirement incomes.

Even with substantial improvements in teacher pensions in 1998 and 2000, the benefits provided still fall short of providing financial security in retirement for most career educators. An analysis of income replacement ratios found that a teacher needs to work at least 30 years and receive employer provided health care insurance in retirement in order to be financially secure. Only about 40 percent of teachers work that long and even fewer receive health care coverage.

(Source: CalSTRS: Adequacy of CalSTRS Benefits, November 4, 2004)

Most teachers are subject to penalties that severely reduce and often eliminate any income from Social Security, making their CalSTRS pension much more important for financial security in retirement.

The CalSTRS pension system is not integrated with Social Security.CalSTRS members pay 8 percent of their salary toward their retirement benefit, higher than the 6.2 percent contribution rate for workers covered by Social Security. In the late 1970s and early 1980s two penalties were imposed in Social Security to reduce benefits to public employees. The Windfall Elimination Provision reduces the income a teacher would receive from their own employment covered by Social Security by $3,762 per year. The Government Pension Offset reduces a teacher's spousal and survivor's benefit by two-thirds the amount of their teacher's pension—usually eliminating any such benefit. Because of these losses in income they would have received if they had not been a teacher, CalSTRS retirees are more financially dependent on their teacher's pension.

(Source: Social Security Administration)

California faces major shortages of teachers. Dismantling the current retirement system for new hires will further discourage qualified individuals from pursuing a career in education.

In the last two years, nearly 25,000 public school teachers in California retired. About a third of the state's teachers are now over 50 and will be eligible to retire in the next decade. By 2014, the state will have to replace 100,000 qualified teachers due to retirements alone. Many highly qualified individuals who wish to teach are willing to work long hours for lower pay than they might otherwise receive in the private sector. But the loss of a certain retirement benefit in exchange for an unknown pension and reduced Social Security benefits will certainly discourage many from entering the profession.

(Sources: CalSTRS: Population Information As Of June 30, 2004, published November 23, 2004

The Center for the Future of Teaching and Learning: California's Teaching Force 2004: Key Issues and Trends)

In recent years, Californians have demonstrated their strong support of public education in the state by approving measures to guarantee school funding. Everyone recognizes that a good education starts with a good teacher.

Teachers today are highly trained professionals and need to be treated as such. If we are to apply the "business sense" of the private sector, it's important to note that eighty-three percent of Fortune 100 firms have defined benefit pension plans. These guaranteed pension plans are used to attract and retain the best personnel. That's exactly what we need for California's teachers—and for the success of education in our state.

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[I AM NOT THAT GUY 5,715]

What's an acceptable pension plan? Healthcare?

Time was when government workers received smaller salaries in return for better benefits than they could receive in the private sector. Currently employed government workers are making twice what employees in the private sector receive for similar positions, so that justification no longer applies.

Something has got to give.

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