School Finance

A Crash Course in Teacher Pensions

A Crash Course in Teacher Pensions

Dara Zeehandelaar, author of The Big Squeeze: Retirement Costs and School District Budgets, explains teachers pensions and the difference between defined benefits and defined contribution plans that states offer teachers.

There’s no shortage of bad news in education these days, nor any dearth of stasis, but at least education reform is a lively, forward-looking enterprise that gets positive juices flowing in many people and that is leading to promising changes across many parts of the K–12 system. We are focused on making things better—via stronger standards (Common Core), greater parental choice (vouchers, charters, and more), more effective teachers (upgrading preparation programs, devising new evaluation regimens) and lots else.

The big squeeze

When it comes to pension reform in the education realm, however, it’s hard to stay positive. Here, we’re saddled with a bona fide fiscal calamity (up to a trillion dollars in unfunded liabilities by some counts) and no consensus about how to rectify the situation. No matter how one slices and dices this problem, somebody ends up paying in ways they won’t like and perhaps shouldn’t have to bear. All we can say is that some options are less bad than others.

Today’s new Fordham study examines how three cities (and their states) are apportioning the misery—or failing to do so. This analysis pulls no cheery rabbits out of a dark hat, but it definitely illustrates the nature and scale of the pension-funding problem and describes a couple of painful yet, in their ways, promising solutions (or partial solutions) to it. As you will...

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After a judge ruled last year that Los Angeles was in violation of the Stull Act—a forty-year-old state law signed by Governor Ronald Reagan requiring that principal and teacher evaluations include student-achievement measures, and spurred on by Los Angeles’s ongoing attempt at obtaining a district-level NCLB waiver, Los Angeles Superintendent John Deasy announced that, as of next year, the district will “fully implement the evaluation changes” tested in an ongoing pilot program.

After three years of failed negotiations and angst galore, New York City has a teacher-evaluation plan. Teachers’ evaluation ratings will be comprised of student-test scores (20 to 25 percent), school-established measures (15 to 20 percent), and in-class or video-recorded observations (55 to 60 percent). But don’t break out the celebratory flan just yet! Some are balking at plans to assess subjects like art, gym, and foreign languages, and at least one mayoral candidate has already come out against the plan.

On Tuesday, D.C. councilmember David Catania announced seven proposals that could reform the District’s public education system dramatically—including a five-year facility plan and a process for handing over surplus buildings to charters. For her part, Chancellor Kaya Henderson expressed interest in some pieces (e.g., more money to low-performing high schools) but resisted the more dramatic ones (e.g., a set metric that would mandate closure for consistently underperforming schools)....

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Teachers and other employees of the School District of Philadelphia receive their retirement benefits from the Pennsylvania state retirement plan for schools, which includes both a defined-benefit pension plan and a modest retiree health benefit. The cost of the former is expected to rise quite substantially and, as this technical analysis will show, presents a daunting burden for the district in the near future.

What will the burden of retirement benefits actually be in the future? What impact will it have on the School District of Philadelphia’s budget? How much effect could this have on the classroom?

In Paying the Pension Price in Philadelphia, authors Robert Costrell and Larry Maloney analyze and project the future retirement obligations in Philadelphia and illumine the nature and scale of the pension-funding problem.

 

 

When it comes to pension reform in the education realm, it’s hard to stay positive. Here, we’re saddled with a bona fide fiscal calamity (up to a trillion dollars in unfunded liabilities by some counts), and no consensus about how to rectify the situation. No matter how one slices and dices this problem, somebody ends up paying in ways they won’t like and perhaps shouldn’t have to bear. All we can say is that some options are less bad than others.

In The Big Squeeze: Retirement Costs and School-District Budgets, we analyze and project how big an impact the pension and retiree health care obligations will have on the budgets of three school districts: Milwaukee Public Schools, Cleveland Metropolitan School District, and the School District of Philadelphia.

The Big Squeeze: Retirement Costs and School-District Budgets is a summary report by Dara Zeehandelaar and Amber M. Winkler, based on three technical analyses conducted by Robert Costrell and Larry Maloney to be released by the end of Summer 2013.

Illinois Governor Pat Quinn signed legislation last week that places a one-year moratorium on new virtual charter schools outside Chicago and directs a state commission to study the effects and costs of virtual charters. These actions were clearly responses to suburban districts’ angst over the growing presence of K12 Inc. Relatedly, we’re sure that local bookstores favor blocking Amazon.com so that we might “better evaluate and understand” its impact. Is that next up?

Now in its fifth year, Menlo Park Academy in Cleveland—Ohio’s only charter school exclusively serving gifted children—is a haven for over 300 students, drawing K–8 youngsters from forty school districts in and beyond the Cleveland metro area. It's also the subject of a profile by award-winning journalist Ellen Belcher. To read more, visit the Ohio Gadfly Daily.

And now, from Nevada, a riddle about poor school-funding policy: What do you get when you add the third-largest fraction of English-language learner (ELL) students in the nation (a full fifth of Nevada’s 2010–11 student population) to a school-funding formula that doesn’t allot districts any extra state cash to educate said youngsters? Answer: Only 29 percent of the state’s ELL students in the graduating class of 2010–11 made it across the stage with their cohort. Brian Sandoval, the Republican governor of Nevada, has proposed $50 million over two years to go towards ELL programs; the state’s Senate majority leader has countered with $140 million. While money alone won’t solve Nevada’s achievement woes, extra...

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Joshua Dunn
The Lobato school-finance case
The Colorado Supreme Court made a wise decision in the long-running Lobato school-finance case.
Photo by SalFalko

A wave of good sense swept through the Colorado Supreme Court earlier this week, which finally made a decision in the long-running Lobato school-finance case. Back in 2009, the court split 4–3 ruling that school funding was a justiciable issue, which paved the way for a bizarre 2011 trial-court decision holding that the state was underfunding education by billions of dollars each year—an opinion that ignored those inconvenient parts of the Colorado Constitution that limit the ability of the legislature to raise taxes. Complying with the trial-court ruling would have required the legislature to violate the constitution. But what are constitutional limits when we have strained claims of underfunding based on dubious costing-out studies?

In Tuesday’s 4–2 decision, the court wisely declined the plaintiffs’ invitation to launch a constitutional crisis. Holding that the state’s school-finance system was rationally related to the constitution’s requirement to provide “a thorough and uniform” system of public schools, the majority rejected the trial court’s decision in its entirety.

Even though the plaintiffs lost, it's unclear what the litigation’s long-term political effects will be. Three weeks ago, Colorado’s legislature passed a school-finance bill that will increase funding and—allegedly—accountability. Promoted...

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Education’s Fiscal Cliff, Real or Perceived?In our 2005 report, Charter School Funding: Inequity’s Next Frontier, we wrote, “U.S. charter schools are being starved of needed funds in almost every community and state.” We backed that statement with funding data from seventeen states and twenty-seven districts. A 2010 report, tracking 2006–07 data, agreed. In the years since, some jurisdictions have moved to provide more equal funding levels to district and charter schools, yet large disparities remain. This paper—which will be published in the Journal of School Choice in September—examines the extent of those inequalities. Larry Maloney and colleagues tallied local, state, federal, and non-public revenue from 2007 to 2011 in Denver, Newark, Los Angeles, Washington, D.C., and Milwaukee. The upshot: On average in 2011, charters received $4,000 less per pupil, per year, across all five studied locales, with gaps ranging from $2,700 in Denver to nearly $13,000 in D.C.—though jurisdictions with the largest spending gaps (Newark and D.C., specifically) actually narrowed the gap between district and charter funding during the study period while those that started out closer to equal funding widened the gap. The authors also noted that charter schools—which receive a higher percentage of their operating budget from nonpublic revenue, such as foundation grants—were hit harder by the economic recession than their district counterparts: While states seemed to find funds (sometimes federal bailout dollars)...

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When Ohio Governor John Kasich released his “Achievement Everywhere” school funding plan in late February it was widely criticized for “stealing from the poor and giving to the rich.” Opponents of the governor’s plan noted “rich” suburban districts would see more state funding than poorer rural and urban districts. People wondered why the Cleveland Metropolitan School District, with a long history of poverty, would see no increase in state funding while Cleveland suburban districts like Euclid City would see a 21 percent increase in funding.

It didn’t seem to make sense, despite the arguments of the governor’s staff that Ohio’s demographics had changed considerably over the last decade (consider Cleveland had lost 30,000 students), and poverty was far more widely dispersed than most people thought. In response to the cries that the governor’s plan was unfair to rural and urban districts while a money grab for suburban districts the House rewrote the Kasich school funding plan to fund both rural and urban schools at higher amounts. This, it was argued, would be a fairer funding formula than what the Governor proposed and spreadsheets of the House plan did indeed show more rural and urban district benefiting from their plan than the governor's.

It is yet to be seen what the Senate is going to do per school funding, but one hopes that Senators are reading the new book from the Brookings Institution that reports “the suburban poverty rate in America has climbed by 64 percent over the...

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GadflyOur Gadfly readers won’t be surprised that in India, where a quarter or more public school teachers are absent at any given time, the demand for quality education among the poor has created a thriving market of private schools. Some think tanks, such as the Economist-profiled Centre for Civil Society, and provincial governments are running voucher experiments—with encouraging results. But as the Economist points out, the Indian government, which has proven to be innovative in some areas like health care, remains mulish in its opposition to private schools, designing rules apparently aimed at their eradication. For the sake of their nation’s children, we urge them to reevaluate.

A new NCTQ study finds that during the Great Recession, forty of the fifty largest school districts froze or cut teacher pay at least once between 2007 and 2012. Still and all, teacher pay did rise, if only slightly, over that five year period. The trends were “on par with almost all of the comparable professions” they assessed. Fascinatingly, Chicago clocked in with the highest pay raises (6.5 percent).

Christine Quinn, a front-runner for mayor of the Big Apple, has proposed addressing inequities in that city’s excellent but far too small gifted-and-talented program by creating 8,700 new spots over nine years. Additionally, she suggested allowing students from disadvantaged backgrounds to seek admission by way of teacher recommendations, rather than...

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