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Trends in the News

Pension Costs

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Atlanta Journal-Constitution, 2/13/17

Big state subsidy for pensions spurs concern for Georgia lawmakers

The $223 million slated for the retirement system, which ended fiscal 2016 on June 30 with fewer assets than it had two years earlier, is enough to have given all teachers 4 percent or 5 percent pay raises, rather than the 2 percent Gov. Nathan Deal and lawmakers are offering. And it’s more than enough to return the state to the education funding levels lawmakers long ago promised public schools.

U.S. News & World Report, 3/18/16

Why big-city school districts are going broke

While the financial woes are a result of a confluence of circumstances, analysts say one culprit stands above the rest. “Pensions are one of the most untold stories of why this is happening,” says Chad Aldeman, an associate partner at Bellwether Education Partners, an education policy organization in Washington. “These are big dollar amounts at play that people haven’t conceptualized.” According to the Federal Reserve, employee pensions across state and local governments are underfunded to the tune of $1.7 trillion.

Bellwether Education Partners, 2/8/16

Study: How Illinois shortchanges its teachers’ retirement

What policymakers and others have failed to ask is how well the current pension system is serving its workers, particularly teachers. While many assume that the current problems lie solely in the state’s failure to properly manage its finances, few consider the design of the current plan and the impact it has on teachers. This report concludes that by adopting an alternative retirement plan for teachers, the state could improve its financial situation and provide better benefits for teachers.

Education Next, 12/15/15

School pension costs continue to rise

As of September 2015 pension costs were $1,085 per pupil. The reasons for the dramatic rise in pension costs for school employees vary from state to state, but the main cause is payments to amortize the enormous unfunded liabilities that have come to exist as states and districts have deferred payments on benefits they have promised to their teachers and other employees.

Bellwether Education Partners, 5/1/20

Report: How pension debt eats away at teacher salaries

So overall expenditures are up, but teacher salaries are actually down slightly over the same period. Today, the average public school teacher earns $56,689 annually, a couple hundred dollars less than the average teacher salary 20 years ago (in constant dollars). Why is this happening? This puzzle can be explained by three trends eating into teachers’ take- home pay: rising healthcare costs, declining student/teacher ratios, and rising retirement costs.