Posted on 01/28/2015 5:49:29 PM PST by Tolerance Sucks Rocks
Teacher pensions are a huge and growing crisis waiting to explode without major reforms, warns a new report released Tuesday by an educational think tank.
“Do the math on teacher pensions and it just doesn’t add up,” argues the National Council on Teacher Quality in its report, Doing the Math on Teacher Pensions. Total unfunded teacher pension liabilities in 2014 were a whopping $499 billion dollars, the group found. That amount is surging rapidly; in 2012, the total was just $394 billion, meaning that pension debt is growing by over $50 billion a year.
Some states are in a particularly huge hole. Illinois, for instance, has unfunded liabilities of $55 billion — a debt of over $27,000 for every student currently in its school system. In Alaska, per-student debt is over $25,000. Nationwide, the average burden is about $10,400 per student, and only one state, South Dakota, has a perfectly funded pension system with zero unfunded liabilities. Since 2008, the number of states with well-funded pension systems (over 90 percent of obligations met) has dropped from 14 to only nine.
Without reform, state governments are sinking towards an abyss. Out of every dollar spent on pensions, 70 cents are paying off pension debt for current retirees rather than preparing for the retirement of current teachers. Eventually, either pension plans are going to go broke or the states themselves will.
While that’s awful for taxpayers, NCTQ makes the case that it’s bad for teachers as well, because the unsustainability of their promised pension plans denies new teachers the security a pension is supposed to provide. That loss of security, they argue, drives top talent away from teaching and will lead to lower-quality teachers, and by extension, lower-quality schools.
According to NCTQ, the biggest culprit for the rising crisis is states’ reliance on defined benefit pension plans, which stipulate exactly how much teachers will receive upon retirement, rather than defined contribution plans, which requires that a certain amount of money be put into the pension fund every single year.
The group argues that DB plans encourage states to put off paying for the retirement of current teachers, pushing expenses into the future for later governments to deal with. While DC plans don’t explicitly guarantee certain benefits, their required annual contributions towards employee’s retirements make them substantially more sustainable, and less likely to grow into bloated monsters of unfunded liabilities that put governments on the brink of bankruptcy.
In addition to sounding the alarm, NCTQ also graded states based on how well they are reforming to meet the coming pension maelstrom. A handful were graded well, especially Alaska, which earned an A grade for tossing out its entire pension system and rebooting it as a DC plan that can be properly funded year to year. Most, however, were faulted for relying on Band-Aids rather than the big fixes that are needed. Over 20 states received D grades, however, and one, Mississippi, earned an F.
“For the most part, policy changes have focused on achieving cost savings, often amounting to relatively minor savings to the system at great expense to teachers.”
Teacher, teacher, can ya teach me???
PING!
The sweet part is if they had taught- or, maybe, been allowed to teach- their students then there might have been money to pay their pensions!
Depends on the state. Currently the Teachers Retirement System in Texas is what social security was supposed to be. There actually IS a giant pot of money earning interest, not an IOU to be paid by taxpayers at a future date. The problem is every two years the teachers have to send a hoard of lobbyists to the statehouse to make sure their retirement fund doesn't get merged into the states general fund.
It is an interesting mindset. Teachers are generally a lefty bunch. They, or at least their organizations, are economically literate enough to know they don't want to depend on a state IOU but the general ideology forces them to have the state control that money rather than distribute it into privately owned defined contribution retirement plans.
They should change over to the pay matching, 5 year vested 401(d)s that the southern states have.
I guess its more aggravating regarding teachers because they already work very short years, with lots of days off, and top health/sickleave/sabbatical/etc...
we won't even talk about the free breast augementation and nose jobs for the lovely teachers in Buffalo NY...
my idea?...stop offering pensions immediately and offer only to set up 401ks with a modest contribution from the govt....whatever you do with your 401k as far as investment is totally up to the worker, and sometimes that would mean a much greater pay out in the end......
for current teachers, such as the ones in NYS where they pay no state income tax, establish a small pension fee OR at least tax these pensions...with that money going into the a 401k fund for future retirees...
Too late. In case the author hasn't noticed all the teachers in state-financed schools are ed majors. Top talent majored in the sciences, engineering, the arts (not art history or art criticism, actually doing an art) or the humanities (at a top school), not education.
That's not a matter at issue in the unsustainable (non-)funding of defined benefit pension plans.
This isn’t rocket science. Any local, county or state legislature can cancel a teacher’s contract. Not a thing teachers can do about that.
But it is not right that those already receiving pensions, or those very close to claiming it, are not given what they were promised in their employment contracts.
And no, I don't have any pension plan, public or private, on the line.
Set the cut off date now, and end the unsustainable “pensions” for recent and future hires.
That would magically also cut the funny numbers games people play with on the topic, while not harming current and near future recipients of the grandfathered pension plans.
I agree that we need to greatly alter the way government employees are compensated for their work going forward.
Ask former Eastern Airlines employees about their pensions. Why should government employee pensions be guaranteed for the full amount and employees of private firms that go bankrupt get theirs drastically reduced? Are politicians promises more believable than corporations?
Throw in cops, fire personnel, city utilities workers, mayors, city councils, county/city controllers, administrators, water and power employees, and on and on and on.
And on and on.
We are being economically gang banged by these folks, many of which are now unionized....
BTW, all of these government lottery style benefits and gold plated tax paid pensions will eventually choke us all off.
Public servants?
Riiiiight.
You could offer teachers a 401K contribution of $20,000 a year on top of their salary and the unions will still shoot it down.
Two reasons :
1> The union leaders can’t control pension money. They’d never have an opportunity to get their filthy hands on it. Their #1 source of “side income” would be lost. Pension funds are *the* reason why these scummy parasites LOVE being in charge of a union. The dues are nothing compared to the fees associated with managing a pension fund.
2> The teachers are trained to believe that the only path to retirement is through the union (via the taxpayers of course). I’ve discussed this MANY times with teachers ... each and every one turned into a screaming lunatic upon hearing about pension alternatives.
Taxpayers, in the long run, would be better off if we’d give teachers a crazy annual 401K contribution on top of their salary ... the salary is a one time charge that’s easy to budget.
The open-ended number of years a pension is drawn is impossible to budget/project. If the retirement money could be a fixed, annual cost, I think you’d see things shape up quickly.
Are they not supposed to pay into the government mandated pension insurance plan for corporations who offer pensions?
Perhaps the government is defaulting on those plans, or did not enforce the requirement that all those companies who offered those plans, pay their insurance premiums.
You tell me.
Sorry ... 1> Can’t control 401K money ... :-)
The good news is everybody feels good about themselves and their gender identity, anyway.
altern....If I remember correctly Eastern’s demise was caused by the Mechanic’s union refusing to negotiate thus forcing the airline to fold.
One thing we can do is to start supporting Republicans that actually try to enact pension reform. Gov. Tom Corbett of PA tried to tackle the govt pension problem and the unions poured money into the campaign against him and advertised hard against him for two years. We threw him under the bus because he wasn’t pure enough of a conservative for us and let him get defeated when he ran for re-election. We now have Democrat Wolf for governor of PA who is totally owned by unions. The problem just got exponentially worse.
Here in NJ the costs of teachers (present and future salaries and benefits) are driving out businesses and workers; the state is being left with illegals and gibsmedats.
We just lost the Mercedes HQ to Atlanta; on top of the losses in the financial sector over the years, this is going to hurt. There was a slew of public employee parasites being paid by these employers that will now see their costs pushed onto individual taxpayers.
“I’ve discussed this MANY times with teachers ... each and every one turned into a screaming lunatic upon hearing about pension alternatives.”
The hysteria in those conversations should convince the most stalwart defenders of public school teachers that they are in fact enemies of American taxpayers. Here in NJ they are an incestuous lot, marrying within their own ranks or some other public sector employees (cops refer to them as “holster-sniffers”); they are so far removed from the everyday drudgery of the taxpayers required to support them that they have lost public support (one of Governor Christie’s major accomplishments here - exposing them for the upper middle class parasites they are).
The debate ended in NJ when the Asbury Park Press released the salaries of every public school teacher in NJ years ago; you could look up their salaries and see that people crying poverty were being paid $85K annually for 180 days of work, 6.5 hours per day...and without getting results on top of that.
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