The cost of fringe benefits and pensions: one quarter of your kid's education

If you live in New York City, a quarter of the money ostensibly spent on your child's education goes to fringe benefits and pension costs, according to the New York Post:

Why have costs continued to skyrocket while performance lags?

A major cause is pensions. New York City doled out $4,822 for each child in its public schools on fringe and retiree benefits for teachers and other education employees in 2008-09 (the latest available) ? a whopping 27% of the total spent per kid.

That's more than twice the $1,493 cost of health care and pensions per kid in the 1999-2000 school year, and double the 13.4% of $11,121 in per-pupil spending back then, data by the Independent Budget Office show. ?Unlike the increases in salaries and staffing, this isn't something that was planned or desired,? said Charles Brecher, research director for the Citizens Budget Commission. ?It's proven to be very difficult to manage and control.?

New York's retirement system for teachers mandates 8% returns and taps taxpayers whenever the market fails to deliver. This puts kids on the hook for market risk instead of workers; if the retirement plan's investments don't perform well, more resources get sliced out of classroom budgets. Teachers, meanwhile, pay only 3% of their salaries for that risk-free 8% return.

Practically every other profession is able to attract high-quality workers without Ponzi-scheme retirement benefits, yet traditionalists decry any attempt to reform teacher pensions on the basis that it will turn young people off to education. It's time to fix a system in which everyone except teachers pays dearly for their guaranteed investment returns.

?Chris Tessone

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