They say you should not publish late on a Friday if it’s not bad news, but it was a busy week, so here are a few quick things.
This new place-based initiative Janice Jackson is leading looks fantastic. But what does it mean when an accomplished school system executive who wants to send more kids to college decides the leverage point to do it is outside the system? Discuss!
The teacher pension debate can be pretty tendentious. Most reformers don’t want to take retirement away from people and most pension experts acknowledge publicly or privately that the vesting rules and other provisions are untenable for a modern labor market. 5, 7, or even 10 years in almost a third of states to even get any pension at all is not acceptable. Most teacher pensions are not gold plated. I don’t want to start throwing a lot of technical terms around, especially late in the day, but there is a lot of what the experts refer to as bullshit.
Anyway, that’s why I was glad to get a chance to talk about the broader issues in this article about the recent pension rankings that Bellwether put out. One of the things you’ll notice about our rankings is that the top performing states take different structural approaches. That hasn’t stopped some advocates from saying the report is all about 401(k)s but you can look at the results and see that’s not an honest take. Ideology obscures pragmatism in this conversation too much, and the conversation matters to people’s lives. Yes, states have to service their debt responsibly and legacy pension costs crowding out school spending is a real issue in some places. But the core issue is one of design, not finance:
Rotherham argued that education policymakers should not focus exclusively on plan type in debates over how to improve their systems. Defined benefit packages — often caricatured as “gold-plated” vestiges of the mid-20th century, when many employees could expect to retire early with enviable financial security — are not necessarily financially irresponsible for states, he said, and alternative systems can sometimes fail the test of adequacy for the retirees who depend on them.
“This debate has often become very reductionist, and it’s become a debate over what should be the form of the plan — is it defined benefit or defined contribution? — rather than which elements would make it good or bad,” Rotherham said. “And that’s what we need to be talking about because for the plan participants, it’s those elements that affect their lives, not these ideological debates between 401(k)s and pensions.”
Whatever specific structure a state commits to, he said, leaders can no longer condition their retirement benefits on career-long tenures within a given system; any expectation that employees will stay in place for decades is “not a match for our labor market,” Rotherham added.
“If you know you’re going to teach in one place for 30 years, the pension plan works for you, and you should do that. The problem is that people decide they don’t like teaching. They get sick, they have to move, they fall in love with someone whose job requires relocation, they need to be a caregiver. Life happens, people make plans that don’t work out, so these structures have to have some flexibility.