Report: Teacher Pension Debt Is Swamping States
The National Council on Teacher Quality has a new report out looking at teacher pension funds, which the advocacy group contends amount to a massive, underfunded liability for states.
Teacher pension debt now stands at nearly a half-trillion dollars, up about $1 billion from two years ago. (You can read my take on NCTQ’s 2012 report here.)
Among the takeaways from this year’s report:
- The debt load amounts to $10,000 for every K-12 student in the nation’s public schools.
- Only eights states – Delaware, Idaho, North Carolina, Oregon, South Dakota, Tennessee, Washington and Wisconsin – and the District of Columbia have what NCTQ considers “well-funded teacher pension systems,” but “some of these may not be as well-funded as they appear,” according to the organization.
- Taxpayers contribute to state teacher pension systems, but most of those dollars are not being invested in the future retirement of current employees: ”An average of 70 cents of every dollar contributed to state teacher pension systems is paying off the ever-increasing pension debt.”
In a statement, NCTQ Vice President Sandi Jacobs said: “Too often the debate around pension reform pits teachers against taxpayers or school districts or other public sector employees. But pension reform is not a zero-sum game. There are ways to change the systems and to also give teachers what they deserve. Everyone loses – teachers most of all – when the pension crisis is ignored.”
Chad Aldeman, a policy analyst for Bellwether Education Partners participated in a session about compensation at EWA’s National Seminar last April. From the write-up of the session:
These teachers walk away from money being accrued during their short career because most states have a vesting requirement of five or more years, Aldeman said. And when 41 percent of teachers leave before their fifth year that’s five years worth of retirement money they’ll never get access to.
This situation is unfortunate for the teachers’ wealth, but why should the rest of the population care? According to Aldeman, if teachers are systematically missing out on retirement savings that will affect the state and burden it later.
In an op-ed for The Washington Post, Aldeman and Bellwether Partners co-founder Andrew Rotherham discussed their own research into these issues and outlined inherent inequities in how most states structure their teacher pension plans:
… We used pension-plan assumptions for all 50 states and the District of Columbia to estimate that, in the median state, more than half of all teachers won’t qualify for even a minimal pension. Fewer than one in five teachers will work a full career and reach the pension plan’s “normal retirement age.” Most will leave their public service with little retirement savings.
This story doesn’t fit with the popular perception of teacher pensions as more generous than private-sector retirement benefits. That’s because the real story of teacher pensions today involves a small number of relatively big winners and a much larger group of losers.
For more on these issues, take a look at some recent Educated Reporter posts: