Many of California’s school districts, transportation authorities, and public employee retirement systems are teetering on the brink of bankruptcy.
California’s next governor must have a clear and defined pathway to address our state’s greatest social and economic challenges. Candidates who speak in circles, insert vague keywords, and blurt out word salads to confuse audiences are inadequate and undeserving of being elected.
School Districts
As of July 2023, there were 13 California school districts were in serious financial trouble, with 10 at risk of not meeting their financial obligations in the next couple of years. Some say that the situation could get worse in 2024-25.
Causes for the impending bankruptcies include:
- Declining enrollment
The 2023-24 school year saw the 7th consecutive decrease in total public K-12 enrollment in California. - End of pandemic relief grants
The end of federal pandemic relief grants has left some districts in a precarious financial situation. - State budget uncertainty
The state’s financial outlook is gloomy, which could lead to more districts facing financial challenges.
Transportation Authorities
32,000 Californians work in some capacity within California’s system of transit authorities — and numerous agencies are lurching towards collapse. Transit authorities have requested an additional $5 billion to cover budget shortfalls.
With decreased ridership, ending federal COVID-19 grants, and increased work-from-home business models, total transit revenues have dropped form $1.8 billion in 2019 to just $390 million in 2021.
California State Retirement Staggering Debt
The California Public Employees Retirement System has a pension debt of nearly half a trillion dollars and is only 72% funded. As California struggles to address its alarming budget deficit, big bills are coming due for retirement past benefits promised city, county and state workers.
Meanwhile state officials like Gavin Newsom are picking and choosing winners by telling the State’s investment authorize which sectors can and cannot be invested in as an attempt at punishing industrial sectors. Firearms, by example, are a profitable but prohibited investment venture.
According to the SF Chronicle cities like San Jose are facing a $4 billion retirement shortfall, and many public employee stand to make more in retirement than their average salaries. Keep in mind that as 1 employee retires, the state pays for their retirement and then must also pay for the replacement employee’s salary. The financial liability growth is exponential because of the past efforts of lawmakers like John Burton and Willie Brown (and so many after them) fully funding every desire of special interest labor organizations to the extent that California has reached a breaking point. Under the California Rule, the State is legally required to fulfill whatever irresponsible retirement promises a municipality gave to its public employees.