However, the incentive structures
of teacher pension systems are not widely understood, even though they can have powerful effects on the composition of our teaching force and on public finance.
Our work offers the first detailed analysis of the distribution of net pension benefits among teachers of varying ages of separation and the corresponding costs that
teacher pension systems impose on mobile teachers.
In this podcast, they talk about the findings of their most recent study, which examines the way that
teacher pension systems concentrate benefits on those teachers who spend their entire careers in a single state, and punish teachers who are more mobile.
Unlike all other school districts in Illinois, which receive full teacher pension funding from the state, CPS is required to fund its
own teacher pension system while its taxpayers also pay into the pension funds of other districts.
In this article, we analyze the incentives embedded in
teacher pension systems by examining the pattern of pension wealth accumulation over a teacher's career.
This paper uses a policy change in California to show that the extreme rewards and penalties built into existing defined
benefit teacher pension systems do affect teacher retirement behavior.
States should give each teacher the right to choose an alternative contract that contains terms and benefits consistent with those in the private sector (e.g., an at - will contract with standard health - care benefits, 401k, etc.), and sits outside of the
existing teacher pension system.
As the Kauffman report notes, Missouri's separate pension systems are «a microcosm of larger national issues
concerning teacher pension systems — particularly the ability of teachers to move between systems.»
Many teacher pension systems have large unfunded liabilities (e.g., California $ 19.6 billion, Missouri $ 5.2 b, Ohio $ 19.4 b, Oklahoma $ 7.7 b, New Jersey $ 10.0 b, all in 2006).
Some public entities, including a
few teacher pension systems (Ohio's is one), have also started to offer DC or CB - type options in their plans.
And unlike a system like Social Security, which awards lower - paid workers with proportionately higher retirement benefits,
teacher pension systems lack these kinds of protections.
Because pension contributions are made as a percentage of salary,
teacher pension systems mirror and amplify any inequities in the way teachers are distributed among schools.
And unlike a system like Social Security, which awards lower - paid workers with proportionately higher retirement benefits,
teacher pension systems include no such protections.
Given the large and growing costs associated with
maintaining teacher pension systems, and the lack of evidence regarding their efficacy, experimentation by traditional and charter schools with alternative retirement benefit structures would be useful.
For past analysis and recommendations of Arkansas's
teacher pension system see the last comprehensive Arkansas State Teacher Policy Yearbook.
California Gov. Jerry Brown, meanwhile, is devoting just $ 72 million out of his budget to begin digging the state's
teacher pension system out of a hole that actually requires $ 4.5 billion every year.
Teacher pension systems target retirements within a narrow range of the career cycle by penalizing individuals who separate too soon or remain employed too long.
Over the past few months I have analyzed 10 years» of Illinois salary data precisely to determine the degree to which Illinois» and Chicago's
teacher pension system contribute to school funding inequity.
As Governor Malloy sits on top of one of the largest unfunded state and
teacher pension systems in the country, an unfunded liability that will cost Connecticut taxpayers more than $ 20 billion to resolve over the next two decades, leave it to back room politics of the Malloy administration to wheel and deal a way for Steven Adamowski to boost his pension at taxpayer expense.
Podcast: Robert Costrell and Michael Podgursky talk with Education Next about ways to eliminate the peculiar incentives built into
current teacher pension systems.
This is a major source of loss for many young teachers, since
most teacher pension systems have a vesting period of five years or longer and the vast majority of early - career teacher turnover occurs in the first five years on the job.
Major issues in the 2015 legislative session included heroin abuse, telecom deregulation, and the solvency of the state
teacher pension system.
Chicago schools will get as much as $ 450 million under the legislation, including a one - time $ 221 million payment toward
the teacher pension system, plus the green light from the state to allow the Chicago Board of Education to hike local property taxes.
We compare existing defined benefit (DB)
teacher pension systems to fiscally equivalent systems that treat all teachers equally and find that the former often redistribute about half the pension wealth of an entering cohort of teachers to those who separate in their mid-50s from those who leave the system earlier.
In fact, the numbers behind Chicago's
teacher pension system are staggeringly, mind - blowingly awful.
Given that administrators are the largest net beneficiaries of the current
teacher pension system, it should come as no surprise that they are not at the barricades clamoring for change.
Given that
these teacher pension systems back - load benefits, it is not surprising that when enhancements have occurred they have been back - loaded as well.
In a recent Education Next article, «Golden Handcuffs,» we talked about winners and losers in
teacher pension systems, and about the huge costs these systems impose on mobile teachers due to the back - loading of benefits.
Common - sense reforms to
teacher pension systems, such as those discussed in Education Next by Robert Costrell and Michael Podgursky (see «Peaks, Cliffs, and Valleys,» features, Winter 2008), would have a similar effect of making the returns to teaching more front - loaded.
Robert Costrell and Michael Podgursky talk with Education Next about ways to eliminate the peculiar incentives built into current
teacher pension systems.
Louisiana's
teacher pension system is one of the worst retirement systems in the country.