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Society for Quality Education

A Clear Conflict of Interest

September 23, 2013 by .(JavaScript must be enabled to view this email address) at 07:16 AM

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."

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When the boards of ed begin complaining that they have no $$ for pensions, our current liberal government will bail them out with our tax dollars, since they’ve been in bed with the public sector unions for years now.  It won’t be fair, since the vast majority of tax payers in the private sector don’t have pensions anywhere near what the public sector has, and some taxpayers have no pensions, but the Liberals are only concerned about buying votes with our money.  Social justice just doesn’t matter to them nor to the NDP who would do exactly the same thing.

Posted by Bev on 09/23 at 02:16 PM

I agree Bev.I remember seeing Frank Stronach on The Agenda last year(not that I am a fan but he is smart) saying exactly that,the unions rig all the elections and the applicants for premier no sooner get to office that they let their platforms go because they start campaigning for their next 4 years day one.

I doubt there is much we can do about it,I am starting to see in my old age that corruption is everywhere,non profits are just as bad as for profits and the rumour is that charities are as well at the administration level.

I guess blogging helps:)

Posted by Jo-Anne Gross on 09/24 at 06:48 AM

Blogging does help.  ‘Armed with knowledge’ as they say…

Posted by bev on 09/24 at 06:33 PM

I have been on a e-mail campaign to our political representatives now for at least 3 years - to no avail. You hit the nail on the head. Who in private industry would sign these contracts in which generous payments are doled out for 25, 30, 35 years. How can anyone who runs a business guarantee such payments for so long. It is not just the teachers, it’s rampant throughout our civil service. These contracts are signed by civil service managers who also get the benefit. I’d sign it too!!! Our own North Bay CAO retired just last year on a $126,000 per annum DB pension complete with indexing and full benefits. He signed the contract agreements for our city workers. Get it? I do, but our mayor and council does not.

ONTC has severance pay and indexed pension liabilities that make it impossible for government to divest this white elephant. If a worker is terminated after 3 or 4 years employment, he is entitled to 14 years severance pay. What private industry manager would agree to such extortion? Management at ONTC, an Ontario Crown Corporation, did. Guarantees their job and pension for a long time doesn’t it?

Posted by Jim Chaput on 09/25 at 03:19 PM

I believe we are in a vicious cycle with overly generous, out of control pensions for public sector employees supported by the Liberal and NDP parties who are supported / elected by the powerful unions who represent the public sector employees.  The unions are able to provide this support under a veil of secrecy by taking advantage of obvious gaps in our political donation rules.  The current situation in Manitoba which has the unions donating hundreds of thousands to support NDP MP Pat Martin in his defence of a defamation lawsuit is a perfect example.  Nobody can tell me that Martin will not come out of this process without the feeling that he owes the unions and the public sector that they represent some form of payback. 

In addition to “right to work” legislation that has helped a number of US States start to turn things around, we also need legislation that provides transparency in terms of the funds collected by unions and how these funds are spent.

Posted by Scott on 09/26 at 06:14 AM

It slays me that Stephen Harper is lying to the world about our debt load (he cites only the federal debt and ignores the added burden of provincial debts) in an effort to promote to the world that Canada is a great place to do business. With our over compensated, bloated and dysfunctional civil service, Canada is a terrible place to do business and international corporations know it. They vote with their feet by moving their operations elsewhere.

Mr. Flaherty keeps on exhorting that Canadian private industry has to increase their productivity in order to compete in the global economy. How can we when we have to deal with our civil self-service that increasingly gets paid more to do less. For a logical thinker like myself, it’s mind boggling – I’m getting a headache just thinking about it.

Posted by Jim Chaput on 09/26 at 06:41 AM

In order to prevent any violent strikes (Mexico teachers 2 months ago)  I would negotiate with all civil services including teachers a move towards defined contribution plans and away from defined benefit plans in future contracts. With the country’s demographic makeup fewer teachers will be contributing for more retired teachers the math doesn’t work. Taxes payers will end up paying for the shortfall. The private sector had to go to defined contribution plans were the performance of the plan determines the retirement nest egg Wow a novel idea performance and contribution and time determine my own pension funded by my own rrsp account. The civil service should be in the same boat as the rest of us.

Posted by Jerry on 09/26 at 07:50 AM

We all wish to avoid violent strikes but the unions initiate violent strikes to increase their compensation packages. That’s how they got to the level at where they’re at. If concessions are to be implemented, unions will initiate confrontation, violent or not. Look at what happened with the Ontario teachers last year when McGuinty tried to reduce the amount of sick days. Unfortunately, any concessions was given back to teachers by Kathleen Wynne which only gives the unions more resolve.
I’m afraid confrontation is unavoidable but necessary. We are in for some rough days ahead or we can keep on going on the path we are on. Roll over, give them they want, create even more social inequality and stay on road to debt serfdom.

Posted by Jim Chaput on 09/26 at 09:50 AM

POBOD

The way to “even out’ public and private is not to lower public but to raise private pensions. Also raise CPP to a much higher level by demanding all workers put in 15% like teachers and employers match it.

The Supreme Court has been crystal clear on union political donations. If you want to ban them no problem but you MUST ban corporate donations at the same time. Corporate donations to Liberals and PC are much higher.

Either both biz and labour are in or both are out SCC has spoken. I am happy to ban both and put $100 ceiling on personal donations. It would kill the biz parties.

Posted by Malkin Dare on 09/26 at 09:58 AM

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