The School Administrator Payoff from Teacher Pensions

Cory Koedel, Shawn Ni, and Michael Podgursky
Publication Date: 
Fall 2013

Defined benefit plans provide retirees with a guaranteed lifetime benefit, the annual value of which is typically based on number of years of service and average salary during the final years of their careers. A largely overlooked factor is that education administrators, the “stewards” of pension systems, are enrolled in the same plans as teachers. This is typically not the case in large private-sector firms, where senior managers have their own retirement benefit plans. As this paper documents, the rule structure in educator pension plans, combined with the career-cycle timing of teachers’ promotions into administrative positions, results in senior management in K–12 education enjoying the largest net benefits from these plans. With such high personal stakes, there is no reason to expect K–12 administrators or the organizations that represent their interests to support pension reform efforts. Yet it is these administrators who are expected to be the professional voice for the school districts that are bearing the heavy cost of employee pension benefits.