Teacher pension systems around the country are falling into crisis due to poor investment returns, unfunded increases in benefits, and poor governance and management. The PIE Network just made thirteen great policy briefs available on how to advance education reform in the "new normal" of fiscal crisis in America's schools, and among them is a paper I wrote on the teacher retirement crisis.
I commend the full paper to your attention, but here are the key takeaways:
- Traditional pension systems are bad for many teachers and aren't structured to attract the best young workers.
- Retiree health care, which is free for many retired teachers, is a major contributor to cost growth in retirement benefits.
- The time for reform is now. There are lots of good examples of pension reform in the public and private sector that school districts and states can draw on. Fordham has an upcoming publication profiling several such cases.
My colleague Raegen Miller at the Center for American Progress also released a paper on this subject recently that is well worth reading.
Pensions can be a very technical subject, but they're also soaking up growing chunks of school funding. It's an issue that deserves greater attention from the wider education policy community.
? Chris Tessone
Last night, in his speech before Congress, the President called for another round of stimulus spending, including $25 billion for school modernization and $35 billion for what the Administration calls "teacher rehiring," i.e., calling teachers back from layoffs pending for budget reasons. I'm skeptical that this will actually wind up helping schools much, however.
On the teacher front, we know from the Center on Education Policy's recent survey and other data that school districts mostly used their EduJobs money to protect fringe benefits and administrative staff while laying off teachers in the arts and other non-core subjects. [Update: CEP disputes my interpretation of the survey: see the comments below.] There is no reason to expect anything but business as usual from another round of subsidies. When the new money goes away, districts will still not have adjusted to the new normal, to their students' detriment. More subsidies just protect the status quo at great expense to taxpayers.
Funds for school modernization are nice as far as that goes. The emphasis on rural schools means the dollars are more likely to go to a high-need area. But having a nice building is not likely to jump start any child's education, and project labor requirements in many locales may blunt the job creation impact of the program as well. I'd rate this warm and fuzzy but ultimately marginal as an education policy, and questionable as a job creation band-aid.
? Chris Tessone
I shake my head every time I see stories like this: To Cut Costs, 120+ Districts Shift to 4-Day Weeks.
"It got down to monetary reasons more than anything else," Superintendent Larry Johnke said. The $50,000 savings will preserve a vocational education program that otherwise would have been scrapped.
The tradeoff here is not between a fifth day of school and voc-ed. That program was likely just the easiest to cut without running up against the union, school board, or some other stakeholder.
This feels so obvious I shouldn't have to write it, but the basic job of schools is schooling. What ancillary program, benefit, or perk could possibly be so important that it's worth cutting 20% of the core function of schools to preserve? And if you can't afford five days of school a week in your current configuration, reconfigure. Don't cut 20% of the main service taxpayers pay you to provide.
? Chris Tessone
What our Education Reform Idol contestants accomplished this year on collective bargaining and benefits reform
Which of the five states competing to be America's next Education Reform Idol did the most to collective bargaining and benefits during the 2011 legislative session? Consider our analysis below, and attend our event Thursday morning (8:30-10:00AM) to see key players in all five states defend their records in front of a panel of ed-reform celebrity judges?Jeanne Allen, Richard Lee Colvin, and Bruno Manno. And click here to cast your vote for Education Reform Idol.
This year, Florida required public employees to start contributing to their retirement plans. Workers are only asked to kick in 3 percent, but it's a start. (This was enough to spur a lawsuit nonetheless.) The state also increased the retirement age and applied other technical fixes to reduce its liabilities. Overall, the plan is expected to save the state nearly a billion dollars. Collective bargaining was not on the table in 2011, and likely won't be anytime soon. The right to bargain is?enshrined in the Sunshine State's constitution. (That being said, Florida's constitution also frames the state as right-to-work. For teachers, this means that they cannot be required to pay union dues?or strike.)
Illinois saw no action on pension costs or collective bargaining this year. Not a surprise for a Democrat-dominated legislature. The Land of Lincoln?did enact pension reform last year, but the state still faces huge unfunded liabilities. Last year's
- Stretching the School Dollar
- Common Core Watch
- Ohio Gadfly Daily
- Board's Eye View
- Choice Words
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.