In Maryland, teacher pension spending increases inequities between high and low poverty school districts. The problem is only getting worse as the state's pension debt costs continues to grow. In 2018, Maryland spent approximately twice as much per pupil on teacher pension debt than it received in federal Title I funding. The state’s pension spending blunts the effect of federal education spending designed to provide greater support to high-poverty school districts. If Maryland were to improve the financial health of its teacher pension system, students attending high-poverty districts would receive greater per pupil funding overall even if the state didn’t increase the equity of its own school funding system.
Since state teacher pension systems are based on teachers' experience level, high turnover districts spend less on teachers' total contribution than low-turnover districts. Also, districts with high teacher attrition disproportionately serve low-income communities. As such, teacher pensions can exacerbate inequities in school funding.
Inequities in teacher salaries across districts are exacerbated by teacher pensions. While it is true that teachers with higher salaries pay more into the pension fund, the additional pension wealth they receive far outweighs the greater contributions they made to the fund during their tenure.
In a new report we modeled the wealth accumulation for teachers in West Virginia's pension fund, before and after its reform, as well as the intervening DC plan. We found that all of the plans were poorly constructed from the outset and fail to provide a significant retirement benefit to a majority of West Virginia’s educators