Is it enough to adjust existing plans?
Even in economically tough times, costs are higher than ever.
Teachers who change jobs or move pay a high price
The peculiar incentives of teacher pensions
A 1962 RAND Corporation study on teacher pay described teacher salary schedules in the following way:
There is more to compensation than a teacher’s salary
Public Education as a Business: Real Costs and Accountability by Myron Lieberman & Charlene K. Haar
WASHINGTON—As American schools reopen, a 15-year effort to “professionalize” the job of teacher is running up against a strong counterforce—the urgent need to fill classroom vacancies. — Christian Science Monitor, August 26, 2002 The headlines in those early years of No Child Left Behind (NCLB) were consistently alarming. “As Standards Rise, Too Few Teachers,” was [...]
School reformers need to understand that on the issue of pension reform, labor and management are likely to be on the same side of the bargaining table.
While private sector pension costs have been relatively stable at around 10.5 percent of salaries, the teacher pension costs have climbed from 11.9 percent of salaries in March 2004 to 17.0 percent today.
Fundamental reform—based on tying benefits to contributions—is needed to fix these broken systems.
Podcast: Robert Costrell and Michael Podgursky talk with Education Next about ways to eliminate the peculiar incentives built into current teacher pension systems.
In a recent Education Next article we talked about winners and losers in teacher pension systems, and about the huge costs these systems impose on mobile teachers due to the back-loading of benefits. In a letter to the editor written in response to our article, Beth Almeida of the National Institute on Retirement Security takes us to task for describing this phenomenon as “redistribution,” noting that such a practice is illegal. Since we don’t want to get pension and teacher union officials in trouble, we have a modest proposal.
For more than a decade, debate over reform of public pensions has been in a rut. On one side, some reformers have favored scrapping traditional teacher pension plans in favor of the IRA-type plans received by most private-sector professionals. On the other side, teacher unions, retiree groups, and defined-benefit pension plan professionals fight hard to protect existing plans. Each side has legitimate points.
A recent “Policy Memorandum” from the Economic Policy Institute by EPI researcher Monique Morrissey is sharply critical of our article “Peaks, Cliffs, and Valleys.” Morrissey has a number of critiques of our articles, but the main one, as the title suggests, is that our metaphors are inappropriate, and there is nothing at all “peculiar” about the structure of retirement incentives in teacher pensions.
In the Spring 2009 issue of Education Next, Robert Costrell and I presented data on the growing gap between employer pension costs for public school teachers and employer pension costs for private sector managers and professionals. This gap continues to widen.
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