Category Archives: Teacher Pensions

To Address Their Teacher Pension Problems, States Need to Better Understand West Virginia’s History of Reform

Despite its relatively small size, the state of West Virginia has had a significant influence on national politics. Take for example West Virginia’s educators, whose two-week strike in 2018 sparked similar protests across the country.

Yet, stagnant salaries are not the only financial problem facing teachers and states: there is a growing teacher pension crisis.

Here again, West Virginia is at the center of the debate. The state reformed its pension plan in the early 1990s, but by 2005, reverted back to the statewide pension system. The West Virginia experiment is now frequently cited as a cautionary tale when other states attempt to refashion their teacher retirement systems. Critics argue that pension reform simply doesn’t work.

However, that reading of West Virginia’s pension reform is incomplete and based on commonly held myths about pensions and alternative retirement plans. Continue reading

Media: “West Virginia shows states how not to reform teacher pensions” in GOVERNING magazine

I have an opinion piece out today in GOVERNING magazine. Despite the insistence that West Virginia’s pension experience proves reform can’t work, a closer analysis actually reveals how the state’s missteps can be instructive for other states looking to address their own teacher pension problems:

…the limited success of the state’s DC plan wasn’t the result of an innate shortcoming of DC plans in general. Rather, the state’s design choices undermined the ability of the plan to provide a sufficient benefit to most teachers. Indeed, both plans were designed in such a way that at least 40 percent of teachers never qualified for any retirement benefits from the state at all.

Read the full op-ed here. And check out our new report on teacher pension reform in West Virginia here.

Media: “Kamala Harris’s Flawed Proposal to Help Teachers Could Make Problem Worse” in The Hill

Last month, Senator Kamala Harris (D-CA) introduced a plan for a federal-state partnership to boost teacher salaries. In a new op-ed for The Hill, I write that Harris’ proposal relies on flawed data on teacher pay and ignores the real factors holding teacher salaries back — namely, the rapidly rising costs of teacher benefits like pensions and health care:

Of course, teachers can’t use their health care or pension plans to pay their mortgage or buy groceries, but total compensation is still the only apples-to-apples way to analyze across sectors — especially because deferred compensation through pensions is such a fundamental aspect of teacher compensation today.

Failing to accurately account for pensions and health care obscures the extent to which these costs are crowding out resources for teacher pay. To give one example from Sen. Harris’s home state, in Los Angeles, where teachers recently went on strike, spending on teacher salaries increased 24 percent over the past decade, whereas health care and pensions increased 138 percent. Overall compensation is rising even if teachers don’t see it in their paychecks or the supports they receive in their classrooms.

While Harris’ proposal is well-meaning, it would not address the root causes for why teacher salaries have been flat for so long. Without more meaningful attempts to control benefit costs, teachers are likely to see a growing disconnect between their take-home pay and their total compensation package.

New Report: Benefit Spending Consumes Growing Share of Education Budgets

The recent teacher strikes in Arizona, Colorado, and West Virginia highlight a common problem: education spending is stagnant or in some cases decreasing. If teachers working multiple jobs to make ends meet isn’t bad enough, here’s worse news: skyrocketing benefit costs, such as healthcare and pensions, are consuming an increasing share of K-12 education budgets.

In a new report, “Benefits Take Larger Bite out of District K-12 Budgets,” I analyzed district education and benefit spending from 2005 to 2014. The results are troubling. Over that ten-year span, benefit spending increased more than 22 percent nationally. K-12 spending, on the other hand, grew less than 2 percent. As a result, more than $11 billion fewer dollars made it to classrooms in 2014 compared with 2005, after adjusting for inflation.

The problem of rising benefit costs varies significantly by state. As shown in the graph below, in the vast majority of states, benefit spending grew far faster than education budgets overall. In North Carolina, for example, benefits grew 48 percent while the state’s education spending only increased 2 percent. The problem persists even in states like Michigan that cut both K-12 and benefit spending, because they weren’t cut at the same rate. The Wolverine State cut education spending by 19 percent, but benefits were cut by only 2 percent. As a result, benefits eat up an even greater share of Michigan’s education budget than they did previously.

via “Benefits Take Larger Bite out of District K-12 Budgets”

Barring a dramatic change, the problem of ballooning benefit spending will only get worse. Due to many states’ histories of underfunding their pension systems while simultaneously increasing the generosity of the plan, costs will continue to rise. Legislators will need to find politically viable solutions that both meet existing obligations and mitigate rising costs going forward.

Read my full report here.

Confused About Teacher Walkouts and Pensions? We’ve Got You.

Still from our pension explainer video

Teacher pay and benefits have made headlines over the past few weeks, with walkouts and strikes by teachers in Kentucky, Oklahoma, and West Virginia. A New York Times piece from earlier this week quotes a teacher who likens the movement to a wildfire. Indeed, with so much unfolding so quickly, it can be hard to keep up.

A few publications have provided context for what’s happening: EdWeek, the Washington Post, and Fortune have tackled the broad topic of teacher compensation with varying levels of detail. And my colleague Chad Aldeman weighed in on teacher pensions for an NPR panel on Tuesday, which you can listen to here.

But education issues are heavily state and local; the variances across state lines make high-level discussion of educator benefits especially difficult to tackle in traditional explainer pieces. Teacher retirement benefits, in particular, can be especially complex. Those looking to learn more about the intersection of teacher salaries, teacher pensions, and school budgets may be interested in our additional resources:

  • Our simple, 3-minute video explains how teacher pension plans work and how they affect millions of public school teachers.
  • Kentucky teachers (and those in 14 other states) aren’t covered by Social Security. More on that in our explainer video here.
  • Want to know what teacher retirement looks like in your state? There’s an interactive map for that.
  • Knowing your state’s “average teacher pension” can provide context for larger teacher compensation conversations – this chart captures that, but be sure to account for the listed caveats.

We’re always open for additional questions at teacherpensions@bellwethereducation.org.

A version of this post also appears at our sister site, TeacherPensions.org.