Robert M. Costrell
Insurance costs for teachers are 26 percent higher than they are for private-sector professionals
Is it enough to adjust existing plans?
Even in economically tough times, costs are higher than ever.
Teachers who change jobs or move pay a high price
The peculiar incentives of teacher pensions
Employer pension costs represent a significant drain on resources that might otherwise have been available for classroom expenditures.
While private sector pension costs have been relatively stable at around 10.5 percent of salaries, the teacher pension costs have climbed from 11.9 percent of salaries in March 2004 to 17.0 percent today.
Fundamental reform—based on tying benefits to contributions—is needed to fix these broken systems.
Podcast: Robert Costrell and Michael Podgursky talk with Education Next about ways to eliminate the peculiar incentives built into current teacher pension systems.
In a recent Education Next article 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. In a letter to the editor written in response to our article, Beth Almeida of the National Institute on Retirement Security takes us to task for describing this phenomenon as “redistribution,” noting that such a practice is illegal. Since we don’t want to get pension and teacher union officials in trouble, we have a modest proposal.
For more than a decade, debate over reform of public pensions has been in a rut. On one side, some reformers have favored scrapping traditional teacher pension plans in favor of the IRA-type plans received by most private-sector professionals. On the other side, teacher unions, retiree groups, and defined-benefit pension plan professionals fight hard to protect existing plans. Each side has legitimate points.
Video: Robert Costrell talks with Education Next about the ways that teacher pension plans punish short-term and mobile teachers and reward teachers who spend their entire career teaching in one state.