Education Week - April 25, 2018 - 20
Costly Pension Plans Fanning Flames of Teacher Unrest
plications for K-12 spending.
Teachers' pension debt today
tops out nationally at more than
$516 billion, and states such as Connecticut, Illinois, and Michigan project they won't have enough money
within the next decade to pay teachers what they're owed at retirement.
At the same time, hefty increases
to school spending in some states
end up being used to pay down underfunded pension obligations, putting pressure on the money available for instructional spending,
staff salaries, and other needs.
"The way these pensions are set up
allows mischievous politicians and
different groups to play games and
kick the can down the road," said
Michael Podgursky, a school finance
expert at the University of Missouri,
in Columbia. "But guess who's paying
for this? The kids currently in school
because there's less money for books
and school supplies, and the current
teachers who will get less in their paycheck and less generous pensions."
Close to 10 cents of every dollar
spent on education today goes toward retirement costs, according
to an analysis by Robert Costrell, a
finance expert at University of Arkansas. That's double the amount
spent on retirement costs in 2004.
Addressing that can be financially
complex and politically fraught.
Just last week, for example, more
than 200 Colorado teachers protested
at the state capitol in Denver after
a state senator proposed a bill to,
in part, cut public employee retirement benefits. The state is more than
$32 billion short of the necessary
money to pay its retirement costs.
In New Jersey, former Gov. Chris
Christie was bedeviled by his failed
efforts starting in 2010 to overhaul that state's pension system
by, among other things, kicking
out part-timers and switching new
teachers over to 401(k)-type plans.
Kentucky is perhaps the highestprofile battleground for pensions in
a year when teacher activism is on
the rise nationally.
Kentucky's public employee retirement system, which includes its
teachers, was cited by Standard &
Poor's last year as the nation's worstfunded in the nation. The state is
$14.5 billion short of what it will need
to cover the retirement costs for its
71,000 current teachers and 51,000
retirees over the next 30 years.
The state last year paid $1.5 billion toward pension costs, up from
$624 million in 2008, according to
the state's budget director.
A nd Kentucky teachers are
among the 40 percent of teachers
nationally who are not eligible for
Social Security-heightening the
sense of urgency among educators.
Kentucky's pension spending in
the last decade has grown nearly
five times as fast as revenues, according to an analysis conducted by
a state-appointed firm.
"Kentucky has been operating with
a structurally imbalanced budget
CONTINUED FROM PAGE 1
Teachers from across Kentucky gather inside the state Capitol in Frankfort to rally for increased funding for education. The unrest comes amid teacher protests in
Oklahoma and Arizona over low funding and teacher pay. They were inspired by West Virginia teachers, whose nine-day walkout kicked off a wave of activism.
Teacher-pension debt across the nation has
soared in recent years, with two-thirds of the
money poured into those retirement systems
going to service that debt rather than to
make payouts to retirees.
SOURCE: National Council on
Teacher Quality, Education Counsel
for years now," said Brigitte Blom
Ramsey, the executive director of the
Prichard Committee for Academic Excellence, an advocacy group that has
long pushed for more school funding.
In 2016 when Republicans took
control of the statehouse, Gov. Matt
Bevin, a Republican, promised
to make dramatic changes to the
state's pension system-and did so
in a way that took aim at teachers.
The battle came to a head earlier
this year over a bill that would have
reduced yearly cost-of-living increases
for retired teachers to 0.75 percent
for the next 12 years, down from 1.5
percent. After protests, legislators
revised the proposal to cut the cost-ofliving increases to 1 percent until the
pension system is 90 percent funded.
B ot h ver sion s were w idely
panned by educators. The final
bill made no significant changes to
current teachers or retirees' benefit plans-but it made some other
changes that have drawn fire from
20 | EDUCATION WEEK | April 25, 2018 | www.edweek.org
both teachers and district leaders.
For one thing, teachers who are
hired after the start of 2019 will now
be put into what's known as a "cashbalance" plan, which is a hybrid of a
traditional defined-benefit pension
and the kind of 401(k) retirement
savings plan common in the private
In addition, school districts are
now expected to contribute 2 percent
of teachers' salaries to their pension
plans, on top of the contribution from
the commonwealth. Previously, local
districts did not pay into the pension
fund for teachers-according to the
Teachers' Retirement System of Kentucky, their contributions under the
new cash-balance plan will help pay
down unfunded liabilities.
District Leaders Worried
That last shift concerns district
leaders, who will now have an extra
expense in their budget that will
continue to grow over time.
"It's a slow bleed, really," said
Robb Smith, the superintendent
of Bellevue schools, a 770-student district in the northern tip
of the state. "For a small district
like ours, that will be especially
troublesome. ... It will definitely
cause us to be more conservative
with distributions [of funding] for
District leaders are also worried
about how the changes will affect
new-teacher recruitment. New
teachers have been removed from
the state's "inviolable contract,"
which means policymakers could
make changes to their retirement
benefits down the road.
"That just guarantees them
a big, fat nothing," said Stephanie Winkler, the president of the
Kentucky Education Association.
"I wouldn't want to go into a job
that has a guarantee of a big, fat
nothing when I dedicated my life to
public service. ... It's kind of a slap
in the face."
Chad Aldeman, a principal at
Bellwether Education Partners,
said his analysis shows the cashbalance plan for new teachers
could be better for educators during the first two decades of their
careers, allowing them to build
wealth more quickly than the existing plan. By contrast, the existing plan is estimated to be more
beneficial for a teacher who stays
in the profession for more than 21
years, because it is backloaded so
veteran teachers earn more in retirement wealth in the latter part
of their careers.
Still, Aldeman said Kentucky
teacher-turnover data suggest less
than half of new teachers will reach
21 years in the profession. And he
said the cash-balance plan will ensure that Kentucky does not accrue
additional unfunded liabilities.
'We've Had Enough'
The specifics aside, the way Kentucky policymakers handled the
pension changes only inflamed tensions around the issue. The final
bill was tacked onto a measure
about sewer system regulations and
passed in a matter of hours, spurring outrage from educators.
KEA's Winkler said "there was no
time in the 11th hour to talk about
the final proposal or even see it."
The day after the pension bill
passed the legislature, droves of
teachers called in sick to protest
at the statehouse, forcing more
than 20 school districts to close.
The following Monday, schools in
all of Kentucky's 120 counties were
Table of Contents for the Digital Edition of Education Week - April 25, 2018
Education Week - April 25, 2018
Facing Hard Facts on College and Career
School Choice Proves Scarce in ESSA Plans
After a Shooting in Her Classroom, Teacher Re-evaluates School Safety
Pension Woes Have Teachers On Front Lines
News in Brief
Discipline Gaps—and Ways to Close Them —Get Scrutiny
Parents Lash Out at District Over Shooting
Arizona Teachers Set to Strike Over School Funding and Pay
Schools With Confederate Ties Slowly Shed Their Names
U.S. Students Surprise on New Exam Of Online Reading
NAEP: Gaps Widen Between High Fliers And Low Scorers
Ed. Dept. Policing ESSA Assessment Rule On Special Education
Federal Special Ed. Chief Aims to Foster Partnership
School Shootings Reverberate On Capitol Hill
Ian Rowe: What NAEP Scores Aren’t Telling Us
In Conversation John Urschel: From the NFL to MIT
Rebecca Kolins Givan & Pamela Whitefield: Teacher Pay Isn’t the Whole Story
Thomas Toch: 35 Years After ‘A Nation at Risk,’ Education Is Still Going in the Wrong Direction
Education Week - April 25, 2018 - Pension Woes Have Teachers On Front Lines
Education Week - April 25, 2018 - 2
Education Week - April 25, 2018 - Contents
Education Week - April 25, 2018 - Report Roundup
Education Week - April 25, 2018 - 5
Education Week - April 25, 2018 - Discipline Gaps—and Ways to Close Them —Get Scrutiny
Education Week - April 25, 2018 - Arizona Teachers Set to Strike Over School Funding and Pay
Education Week - April 25, 2018 - Schools With Confederate Ties Slowly Shed Their Names
Education Week - April 25, 2018 - 9
Education Week - April 25, 2018 - 10
Education Week - April 25, 2018 - 11
Education Week - April 25, 2018 - U.S. Students Surprise on New Exam Of Online Reading
Education Week - April 25, 2018 - NAEP: Gaps Widen Between High Fliers And Low Scorers
Education Week - April 25, 2018 - 14
Education Week - April 25, 2018 - 15
Education Week - April 25, 2018 - 16
Education Week - April 25, 2018 - Federal Special Ed. Chief Aims to Foster Partnership
Education Week - April 25, 2018 - School Shootings Reverberate On Capitol Hill
Education Week - April 25, 2018 - 19
Education Week - April 25, 2018 - 20
Education Week - April 25, 2018 - 21
Education Week - April 25, 2018 - In Conversation John Urschel: From the NFL to MIT
Education Week - April 25, 2018 - Rebecca Kolins Givan & Pamela Whitefield: Teacher Pay Isn’t the Whole Story
Education Week - April 25, 2018 - 24
Education Week - April 25, 2018 - 25
Education Week - April 25, 2018 - 26
Education Week - April 25, 2018 - 27
Education Week - April 25, 2018 - Letters
Education Week - April 25, 2018 - CW1
Education Week - April 25, 2018 - CW2
Education Week - April 25, 2018 - CW3
Education Week - April 25, 2018 - CW4