Charting a new course to retirement

Guest Blogger / June 22, 2011

Today, Fordham released our latest, "Charting a New Course to Retirement: How Charter Schools Handle Teacher Pensions." Authors Amanda Olberg and Michael Podgursky explain the report's findings here.

In the wake of the economic downturn, American public schools face serious, long-term fiscal challenges. Of them, rising pension costs are a particular concern. Yet school districts have no mechanisms for reining in these costs; almost all districts are tethered by statute to state pension systems (or, sometimes, their own local pension systems). It turns out, though, that some states allow their public charter schools to opt out of those systems. How they handle this opportunity bears scrutiny?and may suggest some lessons for the larger public-education system.

Nationally, teacher compensation comprises 55 percent of current expenditures in K-12 education. (That figure rises to 81 percent when all school staff are included.) A large and growing share of these costs goes to help fund retirement benefits. Between 2004 and 2010, for example, district pension costs (not counting retiree health insurance) increased from 12 percent to over 15 percent of salaries. A recent report from the Pew Center on the States estimated that unfunded public employee pension liabilities in the U.S. grew to $1.26 trillion during the 2009 fiscal year; other studies estimate that the true liability is even higher. Even as states attempt

» Continued

Charting a new course to retirement