The Sacramento Bee
written by Phillip Reese and Laurel Rosenhall
Sunday June 26, 2011
Thousands of newly retired school administrators will earn more during retirement than most Californians will make during their working careers.
The number of educators receiving $100,000-plus annual pensions jumped 650 percent from 2005 to 2011, going from 700 to 5,400, according to a Bee review of data from the California State Teachers' Retirement System.
Though they make up just 2 percent of CalSTRS pensions, six-figure payouts are a focus of pension reform discussions under way at the Capitol. Six-figure retirees eat 7 percent of CalSTRS benefits and can ultimately get millions more than they put into the system.
Booming administrator salaries are largely behind the trend. Public school superintendents, on average, earned $168,000 in base pay last year, roughly 56 percent more than they did 10 years ago, according to data from the California Department of Education.
"Top-level management … start their careers at a higher wage level, see larger percentage increases than their classroom colleagues, and they still manage to work long careers," said CalSTRS spokesman Ricardo Duran.
A series of benefit enhancements a decade ago also explain the rise. Experienced teachers and administrators can now make a pension equal to 2.4 percent of their highest pay for each year of service, up from a flat 2 percent. Largely as a result, more than a third of the state's six-figure pensioners earn more each year in retirement than they ever did on the job.
The number of six-figure pensions will likely continue to rise as more highly paid baby boomers reach the end of their careers.
CalSTRS is the nation's second-largest public pension system, trailing only its cousin, the California Public Employees' Retirement System, which, as reported by The Bee earlier this month, also has seen a surge in $100,000 pensions. CalSTRS serves teachers and administrators in the state's community colleges and school districts.
Like other public pension systems, CalSTRS has financial problems. The value of its assets isn't enough to cover what it has promised in benefits. System officials estimate CalSTRS will be unable to fund benefits in about 30 years unless the Legislature implements higher contribution rates for school districts, employees or the state.
Investment losses, broad pay raises and benefit boosts, not six-figure pensions, are the primary cause of CalSTRS' troubles. Most CalSTRS retirees are teachers, and the average annual benefit for those who retired last year is $49,000.
Big pensions are a drag, though, and they will hamper the system if they continue to grow exponentially. Already, six-figure CalSTRS retirees get $645 million in annual benefits – almost as much as the combined pay of Sacramento County's 11,000 teachers.
"The system says (six-figure pensions) are a tiny percentage of all pensions," said pension reform advocate Jack Dean, who runs the PensionTsunami.com blog. "They are, but they keep growing. I look at it as the tip of the iceberg, and every day it seems to grow."
The $100,000 club
Several of the best-known former superintendents from the Sacramento region earn close to $200,000 a year in pensions, including:
• Sacramento City Unified superintendent Mary Carrillo Mejia, who will earn about $195,000 in pension benefits this year.
• San Juan Unified Superintendent General Davie, who will earn about $181,000.
• Sacramento County Office of Education Superintendent David Meaney, who will earn about $192,000.
Meaney retired in 2004 with 42 years of service, including two years he received free as a retirement incentive. His annual salary increased about 90 percent to $188,302 during his last 10 years on the job, CalSTRS records show.
Asked about his pension, Meaney noted that CalSTRS members generally don't get Social Security benefits. Meaney paid into Social Security when he moonlighted teaching college classes, but he was not able to draw much because of his participation in CalSTRS.
"So people are taking a hit. That is a downside of retiring under STRS in California," he said. The maximum Social Security benefit for a worker retiring at Meaney's age is about $21,000 annually, or about one-ninth of his annual retirement benefits.
In contrast to booming supervisor salaries, average teacher pay – about $68,000 last year – grew only slightly faster than average pay for all California workers during the last decade, state data show. In the Sacramento region, teachers constitute less than 20 percent of educators earning six-figure pensions.
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