Pensions, rising costs to pressure California school budgets -Fitch
SAN FRANCISCO, Sept 23
SAN FRANCISCO, Sept 23 (Reuters) - Bigger payments to California's pension fund for teachers and other rising costs will challenge school district finances despite an increase in education spending by the state, a report released by Fitch Ratings said on Monday.
"Fitch views California school districts' credit quality as confronting considerable pent-up cost pressures after years of service reductions, wage stagnation and substantial pension underfunding," the report said.
"These pressures in some cases could neutralize or overwhelm recent state funding improvements and potential outyear gains," the report added.
It noted some solutions proposed for improving the California State Teachers' Retirement System's funding "could result in substantially increased costs to school districts if implemented."
California school districts also face additional pension spending for workers covered by the California Public Employees' Retirement System, which has raised contribution rates, the ratings agency said in its report.
Spending by the state's school districts is also seen rising due to parents calling for restoring services that were dropped amid cost-cutting measures in recent years.
Additionally, teachers and school employees will demand pay increases. "Some school districts have begun to implement wage hikes for the first time in several years, a trend that Fitch expects will be exacerbated as state funding increases given rising pressure from labor groups," the report said.
Fitch expects ratings for California school districts to stabilize over the near-to-medium term as the state's revenue improves. But the ratings agency projected "significant costs pressures" that could weigh on the ratings over the longer term as temporary tax increases approved by voters last year expire.
- Putin dissolves state news agency, tightens grip on Russia media
- North Korea says Kim's powerful uncle dismissed for 'criminal acts'
- Thai PM calls snap election, protesters want power now |
- Record cold, ice grip U.S.; more snow to blanket East
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'