California Teachers' unfunded pension increases to $73.7 billion (Exeter: home, bankrupt)

[lvoc]

Originally Posted by SportyandMisty

That's not going to happen in the real world. So what do we do?

Modify prop 13 to increase property taxes by about $500 on average. That would pay it all off in less than 20 years.

Any equivalent set that gives about $500 per tax paying head in new revenue. I doubt it would make CA number 1 in taxes though perhaps number 2.

[TVC15]

Prop 30 was a scam to fund this pension that many were duped into thinking it was for classrooms.

Teachers pensions = "classroom expenses"

Track Prop. 30 : Home

As we predicted, pensions eating up Prop. 30 education funds | CalWatchDog

[Ultrarunner]

Originally Posted by lvoc

Modify prop 13 to increase property taxes by about $500 on average. That would pay it all off in less than 20 years.

Any equivalent set that gives about $500 per tax paying head in new revenue. I doubt it would make CA number 1 in taxes though perhaps number 2.

Prop 13 doesn't need to by modified.

All that is needed is 2/3 voter approval.

Heck, it's only 55% for school infrastructure.

[SportyandMisty]

Originally Posted by TVC15

Prop 30 was a scam to fund this pension that many were duped into thinking it was for classrooms...

True, but it didn't fix the pension hole. What do we do?

[ExeterMedia]

Originally Posted by SportyandMisty

That's not going to happen in the real world.

If we're talking about the real world, things will just go on
as they are until there is a total collapse. That's how it is,
and how it has been, for all big government mismanagement
all the way from Rome, to the Byzantines, to the British Empire.

Human nature is greedy, and other than sex and self-preservation,
greed is the hardest natural human motivator to ignore. The entire
Western World is driven by the natural inclination to want more
than one needs.

You let me know when you find a solution to that, and you'll
have the answer to your thread.

[SportyandMisty]

Originally Posted by TheFlats

This is a reactionary way of looking at it...a significant portion of the liability will be paid through increased contributions from the educators and their employers (the schools, which I understand are publicly funded). Taxpayers will certainly pay through transfers from the general fund but you can't just take the whole liability and divide it by # of taxpayers...

Hmmm. You have a point. Perhaps a better way to look at it is through dividing the liability by the number of properties for which their owner pays property taxes..

I don't have a good estimate for that. Here's what I do have:

* In 2012, the number of housing units in California was 13,700,000 (rounded) (source: US Census)
* Of that, about 4,236,000 (rounded) are units in multi-unit buildings, which means
* Of the 13.7 million housing units, about 9,472,000 (rounded) are single family homes.

Regarding the 4.236 million units in multi-unit buildings, I have no idea how many are condominiums (for which each unit owner pays property taxes) and how many of those are in apartment buildings rented by the unit for which there is a single property tax bill owed for the entire property.

I don't know how many commercial properties for which property taxes are owed, either. Nor do I know the number of vacant parcels.

But, let's make an assumption or two just to see where it ends up.

Let's say the number of commercial properties for which property taxes are paid is, say, 10% of the number of households. That puts it at about 1,370,000 properties.

Let's just say the denominator is calculated as follows:
# of single family homes + # of condo units + # of other multi-family units + # of commercial properties

Let's just say that adds up to about 15.1 million entities (rounding). but let's say I'm off, so let's increase it to 16 Million

SOoo...

$73.7 BILLION divided by 16 Million is about $4,600 per entity -- to pay off the accrued debt. But of course, differing assumptions (or actual data) can change this a lot.

Originally Posted by TheFlats

... If we take away the retirement benefits and do not increase salaries we have just made being a Californian educator a less desirable job, attracting less qualified people. Is that the direction we want to go as a state?

You're right, of course. To paraphrase a popular financial help guru with a radio show (adding my own twist), "The Defined Benefit Pension has taken the place of the BMW as the New Status Symbol."

But, if we offer a 401K-style (with employer match) instead of a defined benefit pension, that isn't taking away a retirement benefit -- just offering one that is more affordable.

[SportyandMisty]

Originally Posted by lvoc

Modify prop 13 to increase property taxes by about $500 on average. That would pay it all off in less than 20 years.

Any equivalent set that gives about $500 per tax paying head in new revenue. I doubt it would make CA number 1 in taxes though perhaps number 2.

Perhaps a one-time assessment of the full extra amount (depending on assumptions, maybe $4600), payable over 4 or 5 years would work. The key is to show it as a separate line item - the point being, when it is paid off, it is not extended just because it is a source of revenue that people have become used to paying.

This takes care of the teachers' unfunded pensions -- a real issue -- and then all that's left is to figure out what we do going forward.

[ExeterMedia]

lol, yes. Let's keep taxing homeowners for unfunded teacher pension liability. That's the ticket.

[Tulemutt]

Originally Posted by SportyandMisty

$73.7 BILLION divided by 16 Million is about $4,600 per entity -- to pay off the accrued debt. But of course, differing assumptions (or actual data) can change this a lot.

You do realize though that modern economic systems are not designed to ever pay off debt. It would literally destroy the economy as we have come to allow it to be.

[lvoc]

Originally Posted by SportyandMisty

Perhaps a one-time assessment of the full extra amount (depending on assumptions, maybe $4600), payable over 4 or 5 years would work. The key is to show it as a separate line item - the point being, when it is paid off, it is not extended just because it is a source of revenue that people have become used to paying.

This takes care of the teachers' unfunded pensions -- a real issue -- and then all that's left is to figure out what we do going forward.

You are trying too hard. There is actually no real need to pay off the debt in any particular time frame. If there is sufficient income to cover the cost of the interest you can leave it like it is forever.

But if you can increment the incoming revenue a small bit you can begin reducing the principle.

I would think it is wise to stabilize such debt perhaps as a percentage of gdp and then reduce it or increase it as we determine how we want things to run.

What we really need to avoid is the open ended commitment. That is what killed the auto industry and any number of other things. Maybe what we need is truth in accounting. We need to make politicians or business executives stand up and admit what they committed to...not launch a time bomb that gets us 20 years down the road. NPV? Sure but how does one explain NPV to the unwashed?

It appears to be a very intractable problem. We basically reward people for screwing up long term.