Bad Philanthropy

Enabling a cancer to grow.

David Crane

Sometimes political philanthropy produces bad outcomes. One example is the latest parcel tax increase for San Francisco Unified School District, the campaign for which was financed by political philanthropists and approved by voters June 5. Using a loophole to lower the threshold for voter approval and sold falsely as a sustainable solution to inadequate teacher salaries, the regressive tax covers up a growing financial cancer, reduces pressure to address that cancer, and burdens SF’s shrinking middle class.

The new tax raises $50 million per year — just enough to cover the amount by which annual pension and other retirement costs grew at SFUSD over the last five years. Retirement costs now consume an amount that could boost teacher salaries 30 percent. Absent reform those costs are headed much higher. Similarly-situated school districts estimate a doubling of retirement costs in five years. Worse, those estimates are optimistically based on inflated investment return assumptions that in all likelihood won’t be met.

Alas, the new tax revenue reduces pressure for retirement cost reform and frees the financial tumor to grow. That means even greater retirement costs down the road.

The first principle of political philanthropy should be to “do no harm.” But what’s done is done, so another principle — “you break it, you own it” — now comes into play. The philanthropists who enabled SFUSD’s tax increase should work to address the real causes behind inadequate teacher pay.

David Crane

Written by

Lecturer at Stanford University and president of Govern For California

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