A Clear Conflict of Interest
We have previously posted blogs about the enormous unfunded teacher pension liabilities that loom over school boards (and governments), but so far it's kind of like the weather - everybody complains about it but nobody does anything about it.
Education Next has an interesting explanation of why nothing is being done about unfunded teacher pension liabilities. Unfortunately, the fall issue isn't online yet, so all I can do is quote a few relevant sections of the article, which is entitled "the School Administrator Payoff from Teacher Pensions". It is important to understand that most teacher pensions are "defined benefit" pensions, which "provide retirees with a guaranteed lifetime benefit, the annual value of which is typically based on number of years of service and average salary during the final years of their careers.... DB plans remain the norm in the public education sector....This is a clear area where the public and private sectors are on opposite trajectories."
"There are a variety of reasons DB pension plans have persisted in public education. The most obvious factor is strong teacher support. Unquestionably, teachers unions have vigorously advocated for generous DB retirement benefit plans.
"A largely overlooked factor is that educational administrators, the 'stewards' of the system, are enrolled in the same plans as teachers. This is typically not the case in large private-sector firms, where senior managers have their own retirement benefit plans....The rule structure in educator pension plans, combined with the career-cycle timing of teachers' promotions into administrative positions, results in senior management in K-12 education enjoying the largest net benefits from these plans....
"In the area of teacher pension reform, it is important to recognize that school administrators reap the largest net benefits from the current system, which has rising costs and clear inefficiencies. Given the powerful incentives that are in place, there is no reason to expect school administrators or their organizations to support reforms that would provide a more modern and mobile retirement system for your educators, like those found in nearly all other professional employment settings. On the issue of pensions, labor and management are on the same side of the bargaining table."




Share this article