October 2013

How Charter Schools Handle Teacher Pensions

Forty states currently have public charter schools. In twenty-four of those states, teachers in charter schools must participate in the state plan. But in the other sixteen states, charters have the option of participating in the state’s pension plan for teachers, meaning the law offers access to the state retirement system but does not require membership. How often do charters avail themselves of alternative options? And what do they do instead?

The Big Squeeze: Retirement Costs and School-District Budgets

This report parses the budgets of the Milwaukee, Cleveland, and Philadelphia school districts to estimate just how big an impact their pension and retiree health care obligations will have on their bottom line in coming years.

Pension reform will help cities balance budgets, but will their schools still be able to attract talented teachers?

If we fail to pair public-sector fiscal reforms with efforts to make teaching a more attractive profession, then in the long run pension reform will end up being a lose-lose proposition. And not just for public-sector employees, but for us all.

Pension System Choice for Public School Teachers

A large share of teachers are willing to transfer from a traditional DB plan to a hybrid pension plan, and there is some evidence that more effective teachers are more likely to enroll in the hybrid pension plan. The general popularity of a hybrid plan suggests that states could reduce the financial risk associated with pensions without sacrificing the desirability of pension plans to employees.

Peaks, Cliffs, and Valleys

This paper illustrates powerful “pull-push” incentives in Ohio, Arkansas, Missouri, California, and Massachusetts and shows the patterns of pension wealth accumulation over teachers’ careers, patterns that feature dramatic peaks, cliffs, and valleys that can greatly distort work decisions for no compelling public policy purpose.

"But the Pension Fund Was Just Sitting There"

Teacher pensions pose two challenges. The first challenge is that political incentives invite irresponsible fiscal stewardship, as public officials make outsized commitments to employees. The second is that incentives hinder modernization, as policymakers avoid the politically perilous task of altering plans ill-suited to attracting talent in the contemporary labor market. The alignment of the political stars has helped states and localities to address the first challenge, but there is little evidence of a willingness to tackle the second.

Social Security Coverage of State and Local Government Employees

About one-fourth of state and local government employees are not covered by Social Security for various historical and other reasons.

Golden Handcuffs

Evidence suggests that current pension systems, by concentrating benefits on teachers who spend their entire careers in a single state and penalizing mobile teachers, may exacerbate the challenge of attracting to teaching young workers.

Pension Litigation Summary (April 2013)

This review represents a centralized resource that monitors the lawsuits and court decisions currently challenging public pension reform.

NCTQ's State-Level Reports

Not only are teacher pension systems costly to states, school districts, and taxpayers, but the carefully guarded retirement benefits are being squeezed and distributed unfairly in ways that are also costly to teachers. Since 2008, the National Council on Teacher Quality (NCTQ) has tracked the health of teacher pension systems in the 50 states and the District of Columbia as part of our annual State Teacher Policy Yearbook. In 2012, they expanded their coverage of pensions to provide a more detailed picture of the pension policy landscape, compile state-level data on funding and technical features, and show how states can simultaneously shore up their pensions financially and improve their ability to recruit and retain highly-effective teachers.

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October 2013