Category Archives: Teacher Pensions

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.

 

Pay Gaps in Education are Bad. Pensions Make Them Worse.

Education, as a field, isn’t supposed to have pay gaps. In the vast majority of school districts, salaries are determined by uniform salary schedules based on educators’ years of experience and educational attainment. This policy should, at least in theory, guard against gender- or race-based salary inequities.

Sadly, pay gaps persist. In a new report, we studied Illinois’ educator data and found that women, regardless of experience level, earn markedly lower salaries than their male peers. As shown in the graph below, gender-based salary gaps begin in educators’ first year and increase until an educator reaches her 30th year of service.

As we show in the paper, these gaps also persist into retirement. For example, a teacher first becomes eligible for a pension after working for ten years in Illinois. At that point in their career, women’s average salary is $8,000 less than their male colleagues. This salary gap translates in a $2,100 disparity in annual pension benefits. And that pension inequity continues to grow each year. After working 30 years, a common retirement age, male educators get an average pension that is $8,000 more valuable than the average pension women receive. That is $8,000 less per year. After 10 years in retirement, men will have amassed an additional $80,000 in retirement benefits.

In short, salary schedules fail to sufficiently guard the education field against large and persistent gaps in salary and retirement benefits.

To learn more about gender-and race-based inequities in salaries and pensions, read the full report, here.

3 Reasons Why Teacher Pensions Are Critical to School Funding Equity

Money spent on public teacher pensions is often left out of analyses of school finance equity. Rather than a being seen as an issue affecting students’ education, pensions are often viewed as a budgetary dilemma for state legislators. Yet, both of these approaches overlook the effect pension spending can have on increasing the funding gap between schools based on students’ race.

Last week I released a new report, “Illinois’ Teacher Pension Plans Deepen School Funding Inequities,” that shows just how much pension spending in Illinois affects the state’s finance equity. The results are startling and reveal that teacher pensions are yet another example of how states and districts underinvest in the education of low-income students, and the educations of black and Hispanic students.

Here are three key reasons why teacher pensions should be thought of as a key part of the push to ensure educational equity:

  1. Class-based gaps grow by more than 200 percent after accounting for pension spending. Teacher salaries comprise the lion’s share (roughly 80 percent) of school expenditures. And, unfortunately, the most experienced and highest paid teachers are unevenly distributed across schools. In Illinois the salary gap between the schools serving the highest and lowest concentrations of low-income students is on average around $550 per pupil. After factoring in pensions, however, the disparity jumps to over $1,200 per student.
  2. Race-based gaps increase by more than 250 percent after accounting for pension spending. In Illinois, the average teacher salary-based gap is $375 between schools serving predominantly white students and those serving predominantly nonwhite students. But after accounting for money spent on teacher pensions, the inequity increases to nearly $950 per pupil.
  3. States are investing more money in their pensions (because they’re in significant debt), and that will widen the gaps even further. From an educational equity point of view, the Illinois pension system is the problem. Since pensions are paid as a percentage of teachers’ salaries, which are unevenly distributed across the state, funneling more money into the system may help to decrease unfunded liabilities, but it also will result in even larger funding disparities.

Illinois is widely considered to operate one of, if not the most, inequitable school finance systems in the country. Yet, many prior analyses underestimated the problem because they have not always included money spent on teacher pensions. This problem is not unique to Illinois. On the contrary, pensions will increase funding disparities in any state with an uneven distribution of teachers. The effect will likely be greater and more closely resemble Illinois in states, such as Missouri and New York, where large urban cities operate separate pension funds.

There are a couple of steps states can take to mitigate the increase in education funding disparities due to pension spending. Those states with more than one retirement system should consider folding the district plans into the state fund. The state has greater resources and almost always contributes to the pension fund at a higher rate. This would ensure that schools in the district — which disproportionately serve low-income students and students of color — receive pension payments at the same rate as other schools.

As it stands now, low-income students and students of color receive far less than their fair share in school funding. To change that, states must address the structure of their teacher pension systems as well as their school funding formulas. Teacher pensions are a key feature in the broader education equity debate.

Where Are All The Female Superintendents?

From Randi Weingarten to Betsy DeVos, to Michelle Rhee and Kaya Henderson, some of the biggest names in education policy on both sides of the aisle are women. The majority of teachers (76 percent), too, identify as female. But new survey results from the American Association of School Administrators (AASA) show that about 77 percent of school superintendents identify as male. So while women make up the majority of the teacher workforce, they are vastly underrepresented in higher-paying leadership roles.

Today is International Women’s Day, and while these survey results show progress from previous years, there’s significant room to grow in closing the school leadership gender gap. This disparity reinforces gender wage gaps, and, as we’ve covered previously, this inequity of earnings follows female teachers into retirement.

It’s important to note that, while we can dig into these findings broadly, the AASA survey’s 15 percent response rate suggests it may not be fully representative. Additionally, while the federal government collects representative stats on teachers and principals, it does not do so on school district superintendents. Still, state-based work, like this October Houston Chronicle piece as well as a November Education Week article delve into these trends further, with similar findings.

Here are three takeaways on the state of female superintendents we can glean from the AASA’s 2016 survey: Continue reading