Teacherpensions.org and Bellwether Education Partners have just released a new state-by-state report on teacher pensions, and whether they serve teachers well. It can only be described as damning. How else can you describe a report that gives all but nine states an “F” grade, and only three (Utah, Oregon and Tennessee) reach the exalted heights of a “C?”
Buried near the bottom of this pile of shame lies Colorado PERA, ranked eighth from the bottom. Let’s call that an F-minus, shall we?
The report grades teacher pension plans using six criteria:
- The percentage of teacher salaries going toward retirement (4.2 percent for PERA)
- The percentage of teacher salaries going toward pension debt (80.9 percent for PERA)
- The percentage of teachers who qualify for employer-provided retirement benefits (36 percent for PERA))
- The percentage of teachers who will break even from their retirement plan (21 percent for PERA)
- The percentage of teachers covered by Social Security (0 percent for PERA).
The study looked at state teacher pensions through the lens of two basic questions: 1. Are all teachers earning sufficient retirement benefits? And 2. Can teachers take their retirement benefits with them no matter where life takes them?
Here’s the conclusion reached by authors Chad Aldeman and Kirsten Schmitz:
In today’s world, workers are likely to have multiple jobs over the course of their lives, and they need to be able to build enough savings at each stage along the way in order to afford a secure retirement. Many workers change fields or cross state lines to pursue job opportunities or make other personal decisions that affect their ability to save. Teachers are no exception, and states should build retirement plans accordingly. Teachers should be able to take their savings with them no matter why they elect to leave the classroom, whether for personal reasons, as a career change, or to continue teaching in a different state.
Today’s teacher retirement plans are not suited to this reality. Rather than improving plans to coverall teachers, state lawmakers have reacted to budgetary pressures by tilting their retirement plans even more heavily in favor of the small group of teachers who remain for 25 or 30 years.
Late next week PERA will release it’s Comprehensive Annual Financial Report. Returns are likely to be better than 2015’s dismal 1.5 percent: the markets have been good. Undoubtedly we’ll hear some crowing about that, and a lot of self-congratulation about what a great job PERA does.
It’s unlikely anyone will mention this report, or any of the data therein. And that’s a pity.