School Finance

When it comes to public-sector pensions, writes lead author Michael B. Lafferty in this report, “A major public-policy (and public-finance) problem has been defined and measured, debated and deliberated, but not yet solved. Except where it has been.” As recounted in Halting a Runaway Train: Reforming Teacher Pensions for the 21st Century, these exceptions turn out to be revealing—and encouraging. As leaders around the country struggle to overhaul America’s controversial and precarious public-sector pensions, this study draws on examples from diverse fields to provide a primer on successful pension reform. Download to find valuable lessons for policymakers, workers, and taxpayers looking for timely solutions to a dire problem.

Younger teachers in Illinois, whose pensions were slashed last year by the legislature, should start asking whose benefits they're really paying for. The new Tier 2 pension only costs about 5 percent of salary...yet teachers are paying 9.4% of their salaries into the Teacher Retirement System. This takes the usual shell game of wealth transfers from younger and more mobile teachers to retirees to a whole new level: theft.

My hometown newspaper, the Southern Illinoisan, is running a story that explains who benefits the most richly from the old Tier 1 pension: union functionaries who stopped teaching decades before retirement but still receive a state-funded pension:

Then there is Kenneth Drum. TRS pays Drum more than $160,000 a year, despite Drum only working for 12 years as a teacher.

Drum's large pension comes not from his time in the classroom, but rather because of a 20-year career at IFT. Drum has collected more than $2 million from TRS since retiring in 1994, and is one of 21 former NEA, IEA, IFT or IASB employees who has collected more than $1 million from the TRS since retiring.

Comerford said he couldn't speak for individuals as to

...

Teacher pension systems around the country are falling into crisis due to poor investment returns, unfunded increases in benefits, and poor governance and management. The PIE Network just made thirteen great policy briefs available on how to advance education reform in the "new normal" of fiscal crisis in America's schools, and among them is a paper I wrote on the teacher retirement crisis.

I commend the full paper to your attention, but here are the key takeaways:

  • Traditional pension systems are bad for many teachers and aren't structured to attract the best young workers.
  • Retiree health care, which is free for many retired teachers, is a major contributor to cost growth in retirement benefits.
  • The time for reform is now. There are lots of good examples of pension reform in the public and private sector that school districts and states can draw on. Fordham has an upcoming publication profiling several such cases.

My colleague Raegen Miller at the Center for American Progress also released a paper on this subject recently that is well worth reading.

Pensions can be a very technical subject, but they're also soaking up growing chunks of school funding. It's...

Last night, in his speech before Congress, the President called for another round of stimulus spending, including $25 billion for school modernization and $35 billion for what the Administration calls "teacher rehiring," i.e., calling teachers back from layoffs pending for budget reasons. I'm skeptical that this will actually wind up helping schools much, however.

On the teacher front, we know from the Center on Education Policy's recent survey and other data that school districts mostly used their EduJobs money to protect fringe benefits and administrative staff while laying off teachers in the arts and other non-core subjects. [Update: CEP disputes my interpretation of the survey: see the comments below.] There is no reason to expect anything but business as usual from another round of subsidies. When the new money goes away, districts will still not have adjusted to the new normal, to their students' detriment. More subsidies just protect the status quo at great expense to taxpayers.

Funds for school modernization are nice as far as that goes. The emphasis on rural schools means the dollars are more likely to go to a high-need area. But having a nice building is not likely to jump start...

I shake my head every time I see stories like this: To Cut Costs, 120+ Districts Shift to 4-Day Weeks.

"It got down to monetary reasons more than anything else," Superintendent Larry Johnke said. The $50,000 savings will preserve a vocational education program that otherwise would have been scrapped.

The tradeoff here is not between a fifth day of school and voc-ed. That program was likely just the easiest to cut without running up against the union, school board, or some other stakeholder.

This feels so obvious I shouldn't have to write it, but the basic job of schools is schooling. What ancillary program, benefit, or perk could possibly be so important that it's worth cutting 20% of the core function of schools to preserve? And if you can't afford five days of school a week in your current configuration, reconfigure. Don't cut 20% of the main service taxpayers pay you to provide.

? Chris Tessone...

The latest Education Next poll results are packed-full of interesting findings on topics ranging from choice to merit pay, from NCLB to tenure reform. But particularly timely, in this era of fiscal austerity, are new insights about the public's views on school budgets. And guess what: On education, like everything else, Americans don't want to make tough choices. They want to keep taxes low while boosting school spending. Sound familiar?

Let's start with taxes. Question 25a asked: ?Do you think that local taxes to fund public schools around the nation should increase, decrease, or stay about the same?? Sixty-five percent of the public wanted taxes to remain steady or drop. The numbers were a little lower for African Americans, Hispanics, and parents, but not by much. (Half of teachers even expressed this view.) Interestingly, even more people (73 percent of the public) opposed raising local taxes, even if they were to be targeted to local (instead of national) schools.

OK, Americans don't want higher taxes. So they must want school spending to remain flat, right? Wrong. Question 3b queried: ?Do you think that government funding for public schools in your district should increase, decrease, or stay...

The debates surrounding Ohio’s biennial budget and other education-related legislation during the first half of 2011 were intense, and it’s no wonder. The state headed into the year facing a historic deficit, federal stimulus money was vanishing, and school districts were preparing for draconian cuts. Meanwhile, despite decades of reform efforts and increases in school funding, Ohio’s academic performance has remained largely stagnant, with barely one-third of the state’s students scoring proficient or better in either math or reading on the National Assessment of Educational Progress. Achievement gaps continued to yawn between black and white students and between disadvantaged youngsters and their better-off peers.

 Revised considerably by the General Assembly, Governor Kasich’s budget plan (House Bill 153), a 5,000-page document that both funded the Buckeye State through fiscal year 2013 and included dozens of education-policy changes, was signed into law on June 30. The Ohio House and Senate were also engaged during the spring in passing other legislation that impacts schools.

It’s time to take stock. To what extent have Ohio’s leaders met the challenges and opportunities before them in K-12 education? What needs to happen next?...

Pages