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by Jonathan Cetel in Pennlive/Patriot-News
As a former teacher and current education advocate, my comfort zone is talking about the typical issues in education policy: standards, curriculum, governance, and human capital, among others. Until recently, one topic I wasn’t comfortable talking about was pensions.
My eyes would glaze over when I heard words like unfunded liability, vesting and accrual rates. My feeling was we should let the actuaries and fiscal hawks worry about budget woes while the advocates focus on classrooms and kids.
But what I’ve learned is that you can’t be a serious advocate for schools and ignore pensions.
The pension crisis is, in reality, an education crisis — as the title of our latest report suggests: “Pennsylvania Pension Benefits Don’t Add-Up For Teachers And Taxpayers.”
The 260,000 educators who are part of PSERS deserve retirement security and students deserve adequately funded public schools.
It is increasingly clear that neither of these goals can be achieved unless significant changes are made to Pennsylvania’s public pension system.
For instance, our research revealed that the vast majority of teachers would be better off in an alternative retirement plan because they do not remain in the profession or the state long enough to reap the full benefits of Pennsylvania’s public pension system.
Based on actuarial projections released by PSERS, only .52 percent of teachers entering the profession at age 25 are projected to remain in the system until normal retirement age (35 years of service).
Teachers are not even guaranteed an annual annuity upon retirement unless they are vested (aka, 10 years of service), which nearly two-thirds of teachers today will never reach.
Due to the lack of flexibility and portability of PA’s pension system, teachers who leave the profession or move out of the state prior to vesting have essentially given a no-interest loan to PSERS.
Which means, the majority of educators are subsidizing the pensions of a small percentage of their colleagues who remain in the system their entire career.
School districts are not fairing much better under Pennsylvania’s current pension system.
Gov. Tom Wolf and the General Assembly deserve credit for embracing a new school funding formula and continuing to increase education spending. However, more than half of the new education dollars in the past few years bypassed the classroom and went to pensions.
Ultimately, school districts have experienced net losses each year Governor Wolf has been in office because increased revenue from the state has been offset by mandated cost increases, primarily pensions.
As pension costs eat up a greater portion of districts’ budgets, spending in other important areas have been cut. From 2010 to 2015, pension costs increased by 261 percent.
In that same period, funding for career and technical education fell by 3.8 percent, spending on classroom supplies fell by 9.3 percent, and after-school programming fell by 47 percent.
If left unfixed, pension costs will consume an even greater percentage of the state’s education spending.
The Independent Fiscal Office estimates that, by 2020, $1 out of every $5 the state invests in K-12 education will go directly to pensions.
Pension reform is education reform. Pennsylvania has an opportunity to address this crisis through legislation moving through the General Assembly.
And we hope the findings of our report will encourage our fellow education advocates to get engaged on this issue.
Jonathan Cetel is the executive director of the Pennsylvania Campaign for Achievement Now (PennCAN). He writes from Philadelphia. Readers may email him at jonathan.cetel@penncan.org.