Short term waste, long term pain
New York City is closing down its ineffective and poorly designed merit pay system in light of a RAND report published yesterday. Mayor Bloomberg and Joel Klein made a terrible deal to get the pilot program into the city's contract with the teacher unions, giving teachers an option to retire at 55 years of age with 25 years of service instead of age 62. Gotham Schools points out that these pension costs will likely leave a much more lasting mark on NYC than the short-term program they enabled.
There's a basic lesson in financial management here for district leaders: match the time period of your liabilities to the assets or services they pay for. Don't put yourself on the hook for decades of payments in exchange for a five-year pilot.
? Chris Tessone
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About the Editor
Bernard Lee Schwartz Policy Fellow
Chris Tessone was a Bernard Lee Schwartz Policy Fellow and the Director of Finance of the Thomas B. Fordham Institute. He has strong interests in governance and education finance, especially teacher compensation and school facilities finance.
May 16, 2013