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Smart List: 60 People Shaping the Future of K-12 Education
I read the Time article and the paper with Aldeman over the summer. While sensible and timely, I think your basic premise continues to be hamstrung by a hyper-focus on large urbans and the notion that education can be revolutionized by the infusion of young, mobile elite teachers. Portable pensions make a lot of sense if your goal is to bounce TFA graduates from Princeton to San Antonio to Sacramento. I can make a credible argument, though, that the idea of a mobile elite teacher is not valued in numerous communities across the country. Teachers in places like Johnstown, Centralia, and Pendelton value community and are less likely to track the latest happenings in EdWeek or to follow Rhee or some other reformer on their upward tract to the next job. These values are matched by the communities and this is why these teachers are hired in the first place.
Unfunded pension liablities are a potential problem and we should not keep our heads in the sand. Unfunded liabilities should not yet be another route, though, for ideas with a genesis in urban-focused reform to get wedged into the national conversation. There will still be plenty of 30 year veteran teachers across this country who got their state school license and spent their careers in one community. They still deserve a traditional defined benefit pension.
Great article. My dad received the benefit of this, as he taught for 30 years and was able to bulk up his paycheck during his last few years by teaching extra classes. Now he receives a great pension.
While this is great for him, it’s not so great for the state. The obvious solution is to switch to some type of plan where teachers receive money into their retirement accounts after every year that they teach, not receive benefits indefinitely after they retire.
Lou,
Your entire argument is based on an ideal that no longer exists, not the reality within the current job market. As policymakers, it’s our job to respond to the wishes and desires of the electorate and provide the conditions that enable them to be successful. In this case, the electorate wishes to have more than one job their entire life (I believe the average person has 10 jobs before they are 40 now). Now, I’m not advocating for or against defined benefit/contribution plans or the rationality of holding an absurd amount of jobs. However, since this isn’t just a TFA thing (it’s an economy-wide structure), states need to create the right conditions for those interested in pursuing a teaching career the right incentives to move forward. Otherwise, we create perverse incentives to keep people who may want to leave and construct roadblocks to those that may wish to enter. In addition, as the article states, there are enormous disparities between the winners/losers in this scheme.
Almost all professional people (doctors, lawyers, professors, CPAs, teachers etc.) stay in their same occupations for their entire careers but they might move from place to place. For example, even though I was a teacher for 42 years, I had about nine different positions in different states and school districts. What would really help teachers would be a portable pension plan that they could take from state to state.
Linda,
Thank you for supporting the entire premise of Andy’s article, which was the idea of portable retirement accounts for teachers (just like the professionals you always tout). Now, if you think you can get multiple states and their corresponding districts to cooperate on defined benefit plans, by all means lay out the strategy, I would love to hear it.
I don’t know why the federal employees Retirement program can’t be the model for teachers. Having worked in the private sector, as a federal employee, and as a teacher Texas I think the federal program is by far the best and most sustainable
First, federal employees are in social security which makes total sense. That so many state and municipal employees are not is frankly ridiculous. Why these states want 100% of the burden escapes me when a sound alternative public pension program is available to take up some of the slack
Second, federal emloyees have a great 401k type program in the thrift savings program that has an employer match and lower fees than any private mutual fund
Third, federal employees have a modest defined benefit pension to fill in the third leg of their retirement
So they have 3 basically solid programs that are all independent of each other and only one of them is market based so no one really gets destroyed by the stock market. Also the social security and thrift savings plan are completely portable to any state or career. And the defined benefit plan is a simple formula based on years worked that isn’t back loaded like many teachers pensions
Would make a lot of sense for states to move towards something similar at least for new employees
So what should a young teacher do? In ohio we have the option to use a 401k type plan instead of the pension? Should younger teachers start opting out of the pension system?
The Teacher Retirement System is the problem. Just like all of the corrupt companies that have received bailouts and/or unscrupulously taken advantage of their employees’ retirements, the CEO’s and Administrators of the Teacher Retirement System are the “few really big winners”. The long-term teachers receiving what they have paid in is hardly making them rich, but the same cannot be said of the salaries and who-knows-what-else that these administrators are receiving. The legislators must be receiving their share of the pie, as well, because the system has been allowed to operate the way that it has for years and years, unchallenged and independently. The digs that house these retirement systems are often far too nice, as well. Where is that money coming from? Someone should look into it. A few good teachers would like to know why someone else is benefitting from their money, rather than them, and being allowed to operate, basically, without accountability- because that’s the way it is.
Excellent analysis. I’ve been criticized for arguing that changes need to come to Colorado’s PERA system, but I’m more worried about reality than about “promises that were made” to teachers offering better retirement in exchange for lower pay. And, those promises were made. And, any changes shouldn’t affect anyone in the system or ten years out.
But, I put in only six years in Illinois, and the estimated payout I can draw from them at the age of 62 is ridiculous. The fact that they would pay me a nice retirement based on six years of work is a ridiculous example of problems inherent in the system. That said, a basic 401K is not a viable option for people who make lower than average wages for experience and education and can’t draw from Social Security. The 401K adjustment could only go forward if teachers upfront salaries were significantly increased.
Although you have pegged the looming pension issue, you actually made it look better (much better) than it is.
“Although three states (New York, Florida, and Washington) are currently enjoying funding surpluses for their teacher pensions, the rest have unfunded liabilities,”
Rest assured that NY, FL and Wash. are all underfunded as well. You need to look at the investment assumptions for the pensions. Most are at 8% or so. With bond yields much lower (we are in the waning days of a 30 year bull market in bonds) there is no hope of getting close to those return targets, and they know it. They are just afriad to talk about it.
Also, you have to look at retiree health benefits. I can’t speak for other states, but in NY, those are 100% unfunded… yes, you read that correctly… 100% unfunded. It is pay as you go. Taxpayers are set up to take on a world of hurt, and you managed to substantially understate the problem.
I had to supply my email to make this post. Contact me if you need any clarification.
I can only speak for the good state of NJ when I say that Teacher Pensions are just the tip of the iceberg.
Average Teachers Pension is roughly 55k per year. Average Police and Fire Pension is about 65k per year. The Pensions of elected officials and political appointees is over 100k per year. (And in many cases, elected officials and political appointees will collect MORE THEN ONE pension!)
Also it bears mentioning that Gov. Whitman raided the State Pension Fund (when it was at a surplus) to help fund a tax cut for mainly the states wealthiest 1%.
If teachers pensions are so evil, then teachers should be given the choice to opt out. But what many people do not know is teachers (in NJ) have no choice. They MUST be enrolled in the pension system. And why not when the state basically uses it as another form of revenue. Also, did you know it is AGAINST THE LAW for a teacher to not be in the State Pension System, but it is not against the law for the State to NOT contribute their portion. Imagine a company telling their workers they will match their 401K benefits and then not paying it. I think some would consider that bad faith at least, while many would consider it fraud.
The state (and in some cases local) Gov’t are the boss of all state employees. The state Gov’t thru collective bargaining agreed to the salaries and benefits of each state worker. Now that the good times are over, they are crying that what they agreed to is bankrupting the state.
Change is needed… no doubt. But focusing on just teachers pensions will not get it done. Loopholes need to be closed. Sacrifice SHARED! Teachers alone did not create this problem, and alone, they will not solve it.
The editorial in Time failed to mention the deliberate underfunding of pensions by politicians. This is, in large part, why there is a problem today.
The result is that now, teachers and other public employees are being scapegoated by politicians and are blamed for being greedy.
Instead of the public complaining that public employee pensions are too high, maybe they should ask why their own pensions are so low.
I do not doubt that excesses occur in many states relative to pension benefits. However, in the State of Oklahoma such excesses are not evident. One would like to believe that authors who publish such revelations relative to pension excesses would at least be professional enough to clearly identify the fact that not all states fall into this category. So much for fair and honest reporting.
Politicians borrow against my pension, lose a ton of money and I need to sit down for reform. Did your reporting find how ONE term politicians always get there pension? Their pensions never effect my taxes.
Keep Slantin’
My dad taught for 40 years, he receives $3,200 / month pension but cannot enjoy it because he has Alzheimers and Dimentia. His pension pays for his nursing home while he lives (survives) in an oblivious bliss. What I want to say is that my dad, before these diseases over came him, expresed to his children that he would “never enter formal education” if he had to do it over again – Now ponder that ..
Has anyone noticed how “the girls” are no longer going into education? Well, I know of only one young man who plans to enter high school teaching and no girls (zero). When I asked a high school counselor about this, she said that there is only one girl at her school (no boys) who expressed an interest in K-12 education.
It is this fact, more than any other, that will determine the salaries, benefits and working conditions of teachers in the coming years.
I’m sorry for Tim’s dad because you can be certain the poor man worked for every penny of that pension.
Tim:
Sorry about your Dad.
But if I look around my own extended family I bet over half my elderly relatives would express similar sentiments and none of them were teachers. I’m sure my uncle wishes he hadn’t spent his entire adult life tied to a dairy farm that none of his kids want to take over (and for good reason). Another uncle who was in construction his entire life has little to show for it. A third uncle went from WW-II to working the rest of his life in small town bank that eventually folded.
By contrast, all my relatives who spent careers in teaching are living relatively rewarding lives and doing what they want in retirement. None are wealthy but all are living frugal but prosperous lives in retirement. Neither their bodies nor their minds have been beaten down by a life of hard physical labor or mental tedium.
Linda, I don’t know who you are talking to but I still run into lots of kids who are interested in teaching. But then I also run into a lot of kids who have phenomenally unrealistic ideas about future careers. For example, I’m sure there aren’t nearly as many positions out there in fashion design and fashion marketing as there are girls at my school who think it is a viable career.