L.A. Times columnist Michael Hiltzik's has a new piece on California teacher pensions, and like his last one, it's extremely unrepresentative of California's actual teaching workforce. His argument mainly breaks down because he's dealing in the theory behind pensions without troubling himself with how pensions actually work in practice.
Let's start where Hiltzik starts, with the anecdote of 61-year-old Lisa Chattler, who has worked in California public schools for 34 years and is beginning to think about retirement. According to Hiltzik, she'll have an annual pension worth about $100,000, payable in monthly installments until death. That pension will increase 2 percent a year every year, regardless of inflation.
Hiltzik portrays $100,000 a year in retirement as sort of modest, especially because Chattler, like other California teachers, did not participate in Social Security.* But it's not meager at all. Using a simple online calculator, it turns out that Chattler's annuity is worth about $2.7 million. That's a lot of money! Now, Chattler has been a hard-working public servant for a very long time, and she deserves a decent retirement. But given the value of her guaranteed retirement payments, she's an odd example for Hiltzik to worry about.
Later in the piece Hiltzik attempts to quantify how many Ms. Chattlers there are in California, and this is where he goes entirely off the rails. He cites Nari Rhee, a researcher at UC Berkeley who formerly worked at a pension advocacy group, saying we shouldn't worry too much about backloaded pension plans because, she estimates, about half of all California teachers stay at least 30 years. This is dead, flat wrong. Nationwide, only 7.3 percent of all public school teachers have taught for at least 30 years. In California, the figure is 7.4 percent.** Rhee's estimate of 50 percent is almost 7 times too high.
Getting this stuff wrong matters a great deal. It's easier to dismiss the concerns that pensions are unfair if you don't think too many people are being hurt by them.
Hiltzik actually provides a good example of this when he cites the case of a 17-year veteran of San Francisco public schools named Patricia Arian. Arian will qualify for a pension worth only about 41 percent of her salary (as compared to Chattler's 90%), and she's worried this won't be enough to live in high-cost San Francisco. Hiltzik isn't too worried about Arian, but I can't help but wonder if his calculus would change if he knew that 72 percent of California teachers** have less experience, and thus lower pensions, than Arian.
Hiltzik doesn't seem to mind that the system is specifically designed this way. In fact, he calls it a "feature, not a bug" that some small minority of educators receive quite generous benefits while everyone else gets much less. I think that's wrong, unfair, and leaves too many teachers with inadequeate benefits. I hope Hiltzik will see the data and reconsider.
*Chattler is actually a speech and language pathologist, but she's enrolled in the same CalSTRS pension plan as California teachers.
**These figures come from NCES' 2011-12 Schools and Staffing Survey (SASS). I suspect Rhee is using CalSTRS' estimates of teacher turnover rates, which we have used in the past to estimate the percentage of teachers who will reach various pension milestones, but there are a few flaws with using those here. One, the turnover rates are merely estimates whereas the SASS figures provide a snapshot from a representative sample. Two, the turnover rate tables are much more accurate for shorter time periods than the longer ones here. And three, Rhee's calculation understates the rate of total turnover because it does not include teachers who leave the profession for early retirement, death, or disability.