Principal Turnover and Pensions

The U.S. Department of Education recently released the results from the 2012-13 principal staffing survey. Like the survey on teachers, principals were tracked as “stayers,” “movers,” and “leavers,” where stayers are principals who remain in the same school, movers are principals who transfer to another school, and leavers are principals who leave the profession either to retire or go elsewhere. The survey also breaks down the data across various groups, such as traditional public schools and charter schools and principal demographics.

•Compared to teachers, a slightly lower percentage of principals stayed in their schools. While 81.4 percent of public school teachers remained in the same school the following year, only 79.5 percent of public school principals stayed put. Principals also had a slightly higher likelihood of completely leaving the profession than teachers, who were slightly more likely to move between schools.

•Most principals have very little experience. Almost three-quarters (73 percent) of principals have less than 5 years at their current school (as of 2011-12), and about half (49 percent) of all principals have less than 5 years at any school.

•Most principals were teachers before becoming a principal. 60 percent of all public school principals had 10 or more years of teaching experience before becoming a principal, and 90 percent had 5 or more years of experience.

•There were some turnover differences between principals at traditional public schools and charter schools, but the discrepancy is not as large as some may think. Principals at public charter schools have slightly lower retention rates (71.2 percent) than principals at traditional public schools (77.8 percent). 11.4 percent of principals at traditional public schools left the profession, compared to 12.2 percent of principals at public charters.

•As with teachers (and many non-education professions) principal turnover was lower during the recent recession. In 2012-13, 77.4 percent of public school principals stayed in their schools; this percentage is a slight decrease from the 79.5 percent reported in the 2008-09 survey.

The new report has several implications for pensions. Public school principals, administrators, and teachers all participate in the same pension plan. Most plans continue to use a traditional defined benefit formula which calculates pension wealth by multiplying an employee’s years of service by final average salary and a multiplier. When a teacher becomes a principal, she does not give up her pension so long as she remains in the same retirement system. But principals have substantially higher salaries than teachers, and these salaries in combination with a full career in a single retirement system (which can include teaching years), result in lucrative pensions. In Missouri, a teacher who stays for a full career accrues $250,000 in pension wealth, while a principal accrues over $360,000 in pension wealth for a full career.

According to the new staffing survey, 60 percent of public school principals had 10 or more years of teaching experience. This is a good thing for a principal’s ability to lead a school, but makes his or her pension much more expensive because years spent teaching count toward pension benefit formulas. As with teachers, traditional defined benefit plans create strong incentives for administrators nearing normal retirement to continue on the job until their pension wealth peaks, and the turnover rates from the principal survey confirm this trend. Pension wealth is even more backloaded for school leaders because their salaries are higher than teachers and pension formulas only take into account ending rather than starting salaries.

As suggested by a recent Fordham report, districts should consider paying principals more to attract strong candidates. Rather than paying principals substantial retirements at the back end, districts can pay more upfront in salary.

-Leslie Kan

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