Teacher's Pensions: Overblown and Underfunded
Consider some of the most important solutions for reforming the lackluster American public education system. Thinking of vouchers? Charter schools? Think again, says William McGurn, formerly a Chief Speechwriter to President George W. Bush, now a Vice President at News Corporation. His Wall Street Journal piece reveals instead the pressing need for a revamp of teacher’s pensions.
Unlike a majority of private sector workers, teacher’s unions have yet to switch to a pension system based on 401(k)s and employee contribution. Their status quo of defined benefit plans, financed by taxpayers, is both a brutal drain on state economies as well as an assurance of continued mediocrity within the ranks, McGurn notes. The assumption that deluxe retirement packages keep good teachers has resulted not only in gross overspending, but also a culture where unenthused educators feel compelled to stay in the system, lest they lose the golden prize far at the end. Rather than insuring good teachers for the kids, this pension plan keeps the tired, bored, or just plain bad ones hanging around.
The studies, the statistics, and the specialists agree: cut the costs, cut the rot, cut the pensions. That is to say, teachers must start contributing toward their own retirement funds. If the pension plans are kept unchanged, the financial burden on taxpayers will only grow worse. And it’s pretty bad as it is. According to Andrew G. Biggs of the American Enterprise Institute for Public Policy Research, public-employee pension plans are underfunded by over $3 trillion nationwide. A report from the Manhattan Institute for Policy Research claims that $933 billion of this shortfall arises from underfunding of public school teachers’ pensions alone. These numbers truly hit home when the debt is shown as passed down to individual families:
Even with such stark numbers, rousing support for pension reform is no easy task. Avoiding it at the behest of the teachers’ unions, state legislatures have massaged their liabilities, taken out additional loans, and issued shaky bonds. They’re not doing themselves, much less their constituents, any favors.