Missouri Charter Schools and Teacher Pension Plans: How Well Do existing Pension Plans Serve Charter and Urban Teachers?

Cory Koedel, Shawn Ni, Michael Podgursky, P. Brett Xian
Publication Date: 
February 2014

The authors of this report examine teacher pension plans in Missouri, focusing on Kansas City and Saint Louis. Compiling statistical data from the districts’ pension plans, the authors find that the districts’ pension systems reward only a small percentage of teachers who remain in the same district for an extended period, while severely penalizing teachers who move across districts or leave the profession. Retention was particularly low in Kansas City and Saint Louis, where the eight-year retention rates ranged from 10 to 30 percent.

The authors argue that the defined benefit pension structure does not benefit Missouri’s urban schools. Using a trade analogy, the authors argue that the traditional defined-benefits pension plan function like a “trade tariff” on the import and export of teachers. In particular, mobility plays an adverse role in pension wealth due to the lack of reciprocity of retirement plans. Teachers in Kansas City, St. Louis, and Missouri lose retirement employer contributions if they switch or move out of a system, resulting in substantive losses in pension wealth. Rather than penalizing mobility and back-loading benefits, the authors recommend greater plan portability, transparency, and front-loading teacher compensation, in order to widen and improve the applicant pool of teachers for schools to recruit.