I am not sure what this space will really become, but I felt the need to park some thoughts on education issues away from my Facebook timeline. I'd love for this to become a blog for both those who are in education and those who are outside the biz. Talking pensions right off the bat is probably not the best way to bring 'em in the door.
But we'll do it. Because it's on my mind.
For those of you who aren't teachers - and those of you who are teachers but don't know anything about it - teachers, administrators, and support staff in Massachusetts pay into the Massachusetts Teachers Retirement System (MTRS). Teachers pay anywhere from 9% to 12% of their gross salary into the system. Every year you get a statement in the mail that makes it seem like you're rich (or poor, depending on how you view it) by showing what you've paid in to date. The idea is that when you hit your magic number combination of years served and age, you'll get 80% of the average of your last five years of salary.
Compared to a 401k, I'm told this is pretty good. Compared to Social Security, this is awesome. Pensions are especially awesome because, unlike a 401k, they are insulated from market downturns. If the bottom falls out of the economy again, you're hypothetically OK. Alas, nothing gold can stay, can it? Pensions, like many social safety net programs, are facing issues regarding solvency. While Massachusetts is one of the better state governments when it comes to having our fiscal house in order, we are just like many others in that we have grossly underfunded our public pensions. According to a recent study, the unfunded liability on the MTRS is somewhere in the neighborhood of $22 billion. There will be a reckoning someday on either the taxpayer side, the beneficiary side, or both.
While I offer no fiscal policy solutions to this issue, I've been thinking a lot this week about a recent piece by Teach Plus CEO Celine Coggins regarding how pensions affect millennials in education. You should absolutely give it a read. She is absolutely correct to point out that, with a teaching force that is increasingly younger and more mobile, pension reform is an important issue that is not being discussed by the "new majority" of educators. She does a great job explaining how salaries have not kept up with cost of living, making it more difficult to achieve the middle class dream of our parents, and putting more pressure on the need for a shorter-term compensation solution to bridge that divide. And sadly, as Celine predicts, any future modifications to account for mobility and a
changing work force will probably result in a loss of benefits in some
way.
This has me thinking. If the purpose of a pension for the baby boomer generation was to reward long-term employees for decades of service, why can't that still be the case? I realize that teachers don't last as long in the field today and they are likely to move around much more, but shouldn't that be all the more reason to reinforce the concept of a pension plan? In other words, shouldn't we be looking for more incentives that keep great teachers in the classroom (preferably the same one) for the bulk of their careers, and not catering to the current trend of mobility? Critics will say pensions cause ineffective teachers to overstay their welcome so they can cash in on the retirement, but that's an accountability issue, not a benefits issue.
I think the conversation around pension reform could be a great chance for us to reconsider what it was that kept our fantastic baby boomer educators in the classroom for so long, and what it will take to replicate that with millennials. It will need to be some combination of financial incentives (such as a pension plan that young teachers can actually care about) and non-financial incentives like teacher-leadership opportunities.
Either way, I don't believe that rolling new teachers into 401k-style plans and/or tying yet another aspect of compensation to arbitrary and unreliable performance ratings systems is the best path forward. I'm not opposed to flexibly compensation or rewarding great teaching, I just don't think we have the capacity to do those things correctly at this time.
Celine's post has left me with more questions than answers, but if nothing else, I think I've discovered that I'm old for 29.
I am not a public school teacher, but one place where teacher longevity is being undermined by the current system, as you describe it, is when you "hit your magic number combination of years served and age, you'll get 80% of the average of your last five years of salary." If someone goes into teaching straight out of college, the magic number can be attained when they reach their mid-fifties. If they retire at that age, the pension could pay out on that employee for upwards of 35-40 years. One simple solution is to set the retirement age at 65 or 70. If someone wants to work elsewhere they would still get the pension they earned, but not until they reach an age that is more commensurate with a legitimate retirement age. The current system creates an incentive to quit when you reach the "magic number" and this incentive creates a serious drain on the overall pension fund that tax payers will not be sympathetic to subsidize when the pension liability reaches critical mass.
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