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.”
In Illinois, the teachers pension system is the worst shape because of pension spiking. Many teach for 25 years and then become an administrator for 5 years at double the salary. On a money purchase formula they would retire at lets say 50K instead of 100K. Illinois stopped the worst of it about 10 years ago, but the damage was done.
I have no problem with these pensions being tossed altogether; anyone who thinks the municipalities that employed the parasites are going to (or will even be able to) foot the bill is delusional.
Here in NJ we have a situation where current taxpayers are squeezed to pay for “services” rendered decades ago, while little is left for current services; the result is flight from the toxic IOUs these municipalities have incurred, and they degenerate into cesspools of illegals and welfare populations (neither of whom pay taxes in any way, shape, or form).
NJ, NY, and CA are screwed because there is a huge disincentive to come and make money there (either as an employer or employee).
Death panels should help in solving this problem..
As students have not been educated to even the most minimally acceptable levels for generations, and as teachers knew they were not educating their students, teachers have:
1. Improperly enriched themselves.
2. Committed a massive fraud upon the taxpayers.
3. Knowingly advanced students who had not mastered the course material taught by said teachers.
4. Participated in education curriculum which favored socialism ofer American Constitution bounded government.
Consequent to the actions of said teachers:
1. Generations of students were not educated.
2. Said students were then unable to find gainful employment due to their inadequate knowledge/skills.
3. Teachers have, by their dereliction of their duties as educators, a liability due to the degraded students they claimed to educate, but in fact did not so educate.
Conclusion:
1. Teacher pension benefits may be legally rescinded because such benefits were fraudulently obtained.
2. A case can be made that assets of teachers may also be forfeit because they were obtained by fraud.
Recommended Actions:
1. Reduce or eliminate teacher pensions.
2. A national discussion should be held to ascertain what should be done to address the issue of teacher assets improperly/illegally acquired.
What I think is if the teachers (like Eastern) have bargained for unaffordable pension benefits that bankrupt the state, county or town they should have their pensions cut to the maximum covered by the PBGC? They should be treated the same.
Maybe, but I suspect the death panels will first target those without assets to seize.
I have a friend who has been receiving $80,000 a year pension since she retired from teaching special ed. That is Tier One, supposedly, and the current retirees are not getting that much.
Imagine the municipalities that have to pay those pensions while at the same time paying the new special ed teachers...
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