The Impact of Oregon’s Pension Legacy Costs on New Teacher Turnover and Quality

Kevin E. Cahill, Andrew Dyke, and Michael D. Giandrea
Publication Date: 
August 2016

Pension legacy costs can restrict the amount of resources available for current public education and make it more difficult to attract and retain high quality teachers. Oregon provides a useful case study in pension legacy costs because many school districts in the state are now reallocating General Fund expenditures to cover sizeable past pension promises. This paper first describes how Oregon’s past pension promises, as compared with nearby Washington’s, affect the level of resources available to compensate new teachers. It then assess potential impacts by examining how new teacher turnover differs in districts along the Oregon-Washington border and within Oregon across school districts. The authors find early-career quit rates in school districts on the Oregon side of the Oregon-Washington border have exceeded those on the Washington side in recent years, and overall teacher experience on the Oregon side has fallen below that on the Washington side. Further, using district-level variation within Oregon, early-career quit propensities are positively associated with the percentage of General Fund revenues allocated to PERS expenditures. These findings are consistent with the hypothesis that Oregon’s pension legacy costs negatively affect current teacher quality and retention.