Retiring California teachers will earn more than working teachers in 24 states

More than 900,000 current and former public school teachers are covered by the California State Teachers’ Retirement System (CalSTRS). The pension system has $210 billion in net assets. It will need all of it and more, since it holds only 63.7 percent of the funds necessary to pay all those teachers what they are owed. Legislation over the past few years has increased contributions to CalSTRS in order to address this shortfall.

It is difficult for the average person to grasp expenditures of hundreds of billions of dollars. So let’s look at how much money is disbursed to the average retired teacher.

CalSTRS reports that the average monthly benefit it paid was $3,831. That comes to $45,972 a year. That is hardly a fortune, though it is much superior to what Social Security would pay a similarly situated individual. California teachers do not contribute to Social Security while working at public schools and receive no Social Security benefits for that time served when they retire.

But that amount is a little misleading. California teachers are vested in the pension system after five years. Almost one-third of those receiving benefits from CalSTRS taught for fewer than 20 years. Eight percent taught for fewer than 10 years. Their payout is lower and thus reduces the average.

The $3,831 average also includes payments to surviving spouses and partners of covered teachers. A teacher can choose a reduced pension payment that also covers a spouse or partner for the rest of his/her life. This also affects the overall average.

Fortunately, CalSTRS computed the average benefit paid to the 12,247 California teachers who retired in 2017. Demographically, they better match what we picture when we speak of retirees. Their average age was 63.3, with 24.6 years in the pension system. Their average annual final salary was $90,324.

CalSTRS paid that average retiree $53,700 this school year. That is higher than the 2017-18 average salary for working teachers in 24 states, according to National Education Association estimates.

As with all comparisons, it is easy to debate this from both sides. Some will say the CalSTRS pension payouts are too high. Others can counter that it illustrates how poorly paid teachers are in those 24 states. What is the right mixture of salaries and pensions when spending limited funds? How does the demographic composition of the teacher workforce affect their desire for better salaries over better pensions, or vice versa?

These are complex and intertwined questions. Let’s hope our politicians and school administrators consider all the angles when they make funding and staffing decisions.

This article originally appeared in LA School Report.