In many states, the pension systems for K-12 educators create perverse incentives, fail to boost retention rates, and are unfair to younger teachers, according to a widely circulated study published last week in a center-right education policy journal. The study, which called for reforms to the system and a shift in priorities in how retirement benefits are accumulated, drew a withering public response from one of the nation’s most influential teachers’ unions.
The report, published in the moderately conservative publication Education Next, is by Chad Aldeman and Kelly Robson, both of the nominally nonpartisan and nonprofit Bellwether Education Partners. (The left-wing group Media Matters has said that Bellwether is part of a “right-wing corporate education reform echo-chamber”).
Retirement funds, or pension funds, for public school teachers often represent enormous multi-billion dollar pools of money controlled by state laws. The details of how pension systems are arranged are often the result of long, high-stakes negotiations between policy-makers and union representatives.
Bellwether’s analysis suggested that in most states, pension benefits are back-loaded and disproportionately benefit veteran educators that have been on the job for decades. In many cases pensions don’t even vest until a teacher has been in a system for ten years, long after most have moved on in the high-turnover profession. (Because state and local governments provide pensions to the public-school teachers, the educators are not protected by a 1970’s federal law that regulates pensions in the private sector and would prohibit such long vesting periods.)
“In the median state, less than half of all teachers are expected to work long enough to vest in their retirement plan—meaning that despite big spending and promises, less than half of all public-school teachers, on average, will ever receive retirement benefits for their years on the job,” states the report.
Furthermore, the Bellwether report argues that in many states, the pension system is structured in a way that incentivizes veteran educators to retire early, or risk being put at a financial disadvantage. Similarly, ineffectual or “burnt out” teachers that are only a few years away from receiving the full benefits of their pension may be encouraged to stay on for longer than they otherwise would. Though the report does not clearly lay out how such a mechanism would work, the researchers seem to be arguing for reforms that would make the system flexible enough to reward strong veteran educators who stay in a system longer without punishing teachers who choose to leave when they recognize they might be past their prime.
“Current teacher pension plans are neither improving the workforce nor providing teachers with adequate retirement savings. Schools are investing billions of dollars in teacher pensions, but they’re getting little return in the way of retention incentives. Meanwhile, teachers are accepting lower base salaries today in exchange for the promise of future retirement benefits, a promise that only a fraction of teachers will ever realize. That disconnect means current teacher pension plans are not working well for teachers, schools, or students.”
The report concludes with a series of recommendations, including tweaking the system in many states to allow teachers to vest earlier in their pensions and spreading the accumulation of benefits out more evenly through their careers. The researchers also argued that states should drop the idea that pensions can be used to retain teachers, and instead consider giving teachers more control over their retirement savings.
The president of the country’s second largest teachers’ union, Randi Weingarten of the American Federation of Teachers, issued a scathing rebuke on Monday to what she called “a fallacious report.” In addition to arguing that the proposed changes would push teachers out the door earlier, Weingarten suggested that the Bellwether authors’ real purpose was to dismantle the pension system as part of a larger right-wing effort to delegitimize the public education system.
“By pauperizing teachers, the retirement burden will shift increasingly to taxpayers. And the billions that public pension funds invest in the real economy will be stripped away,” reads the response.
Weingarten also explicitly accuses Bellwether of being in cahoots with the school choice lobby and other center-right think tanks like the Fordham Institute. She suggested that Bellwether and others have a pecuniary interest in the reforms they are pushing:
“These groups want to undermine confidence in the pension system and place teachers’ retirements at the whim of the market. But why? Probably because their friends on Wall Street stand to reap billions in management fees by converting guaranteed benefits into 401(k)-type accounts.”
Aldeman, the Bellwether principal and co-author of the report, then issued a rejoinder to the union leader’s response. In a post titled “AFT Still Working at Cross-Purposes with Teachers’ Interests” the researcher annotated Weingarten’s statement to issue a point-by-point rebuttal.
Among the highlights, Aldeman accuses the union of selectively protecting its senior members to the detriment of younger newer teachers. Aldeman also rejected the insinuation that his research is motivated by corrupt Wall Street or school-choice ties, and instead accused the extant system of being overly friendly to Wall Street.
While technical in parts, the back and forth between Aldeman and Weingarten reflects the battle lines being drawn in many parts of the country (and outside of education circles) over how retirement benefits should be managed as a graying baby boomer generation gets replaced by a smaller corps of more-mobile millennials. In many cases, the mathematical reality suggests that pension systems need to be restructured, but the past week’s debate reflects the political difficulty of finding a solution that satisfies all parties involved and creates proper incentives in the workforce.