Now that PUSD Board President Tom Selinske has been predictably re-elected what is he going to do?
I believe that Sean Baggett's own record contributed to his losing the runoff despite my defending him from a vicious smear campaign in the newspapers. Other than a dying newspaper needed a scandal to sell online hits and to get people to read its claptrap, there was no need however to smear Mr. Baggett. His record should have just been presented on its own, without smearing him and libeling him.
But smearing Baggett has been a successful diversionary tactic from what the PUSD Board President is going to do with the declining fund situation of the State Budget. Forty percent of $89 billion state budget is about $36 billion guaranteed under Prop 98 for K-12 school funding. But what happens if State revenues decline to, say, $75 billion because CalPERS pension obligations start crowding out school funding and take priority over Prop 98?
Prop 98 has three funding formulas for K-12 schools, oversimplified below:
Test one, used only for 1988 to 1989, requires spending on education to make up 39% of the state budget. Test 2, used in years of strong economic growth, requires spending on education to equal the previous years spending plus per capita growth and student enrollment adjustment. Test 3, used in years of weak economic growth guarantees prior years spending plus adjustment for enrollment growth, increases for any changes in per capital general fund revenues, and an increase by 0.5 percent in state general funds.
So if Gov. Brown gets his $5 billion continuation of increased sales taxes and vehicle license fees, but pensions add, say, $10 billion to state expenses, this will start crowding out revenues for Medi-Care, CalWorks, etc. The Prop 98 funding formula guarantees no decrease in revenues, at least on paper. But what if there isn’t enough money to go around for other programs? What if there is a cram down on K-12 funds? K-12 funding has been reduced in other lean budget years by promising to pay back the reductions by a loan. But how would they reimburse K-12 schools if there is no money because pensions are crowding out the budget?
The Cal-PERS and Cal-STRS pension programs are rolling the dice with risky investments in the hope of plugging the unfunded gap in their funds. Cal-PERS reportedly made 12% to 13% return last year. But to give you an idea how risky that is, that is 12 to 13 times the net return on an Inflation Protected Security after adjusting for income taxes and that pension funds are tax exempt. An investment that is 12 to 13 times more risky than a safe rate is going to have the risk of wipeout maybe every 8 years or so. That is what happened in 2008 when Cal-PERS’ risky investments in speculative land developments and real estate resulted in a $56.2 billion loss of principal. Coupled with a $43.4 billion loss in the teachers pension fund, Cal-PERS and CalSTRS lost about $100 billion. The two giant pension funds might be able to again plug that loss, but with highly speculative investments that again may come cascading down on them. Then what?
What is PUSD going to do? Well the State Legislative Analysts Office has recommended cutting out $7.4 billion by eliminating categorical jobs programs and mildly increasing class sizes. This deregulation does not involve having to layoff any core teachers.
Is PUSD President Selinske going to advocate the LAO's recommended budget cuts or ruinously put yet another Parcel Tax on the ballot that would be DOA? The voters who elected him are probably largely those who are voting for their ancillary jobs and consulting contracts with the district. But that doesn’t reflect the larger vote of the home owning and taxpaying public that have given no mandate for raising taxes.
Selinske's election is no referendum for a parcel tax given that only 13,000 voted in total. PUSD can amass that amount of votes merely from parents and employees.
PUSD can survive the coming fiscal shocks by advocating the legislature for a second round of deregulation of "Categorical" programs and modest increases in class sizes. But will Selinske advocate for another round of deregulation of mandated education programs that have nothing to do with core teaching, or will he push for a reckless parcel tax and waste yet another half million dollars on a useless campaign?
California residents will soon be facing a continuation of $5 billion of supposedly temporary increased sales taxes and vehicle license fees, an electricity rate increase to pay for Green Power of $5.7 billion to $9.1 billion beginning in 2012, and no plan from Gov. Brown or the legislature as to how to meet the looming half a trillion dollar pension Tsunami to arrive in 2014 and thereafter.
Selinske "won" but has no platform to responsibly address the situation school districts are now facing. He’s like the proverbial king with no clothes on – only he’s the king without a platform other than to resume the deluded push for parcel taxes. Winning a dirty campaigned election is one thing. But now Selinske is going to have show leadership and responsibility.
In the past Selinske and his Board have just created a media climate of hysteria that the sky was falling, but had to lay off no core teachers. The colluding newspaper media, however, have never informed the public that there were no layoffs. I guess journalistic ethics got in the way.
If PUSD were ever able to push through a parcel tax it would eventually change the complexion of its Board. Homeowners, small businesspersons, and the elderly would push for representation on the Board, unlike today where unions and special interests predominate.
We will have to wait to see what other “Tom-foolery” will emerge from PUSD’s Board or if there is going to be an eventual recall election if Selinske again pushes for a parcel tax.
P.S. FOR THOSE OF YOU FOLLOWING THE POST-ELECTION BANTER, IT IS APPARENT THAT PEF MEMBER LARRY O'BRIEN IS THE LEADING CANDIDATE FOR WHO "PASADENA MOM" AND "ANONYMOUS" IS AT THE SIERRA MADRE TATTLER AND SUB ROSA BLOGS. O'BRIEN IS A PRIVATE INVESTIGATOR AND HEADS THE DIRTY TRICKS DEPARTMENT OF PEF. HAVE A NICE DAY LARRY.
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