Teacher Union Pension Flim-flam
The public employee pension problem isn’t new, but a teacher union leader’s defense of it has sunk to new depths.
According to the Federal Reserve, public employee pensions in aggregate nationally are in serious trouble. Currently totaling $5.8 trillion, they are underfunded by $1.7 trillion. While all these pensions are draining public resources, Don Boyd, director of fiscal studies at the Nelson A. Rockefeller Institute of Government, charges that the teachers’ plans are a disproportionate part of the problem. And in a recent US News & World Report piece, “America’s Bankrupt Schools,” Lauren Camera sounds alarm bells, explaining that “Pension plans could be the culprit behind broke big-city school districts,” and goes on to detail the bleak fiscal situation that now burdens Philadelphia, Baltimore and Chicago.
Teachers’ pensions are funded to some extent by teachers themselves but the bulk of the payment is supplied by the school district (the taxpayer) and the local and state government (the taxpayer). It’s a “defined benefit” set-up whereby the teacher, upon retiring, receives a fixed monthly amount for life…no matter how much he or she has actually contributed to the plan.
While it is true that local and state governments are responsible for the looming disaster, the influential teachers unions have much to say about these policies and are leading the charge to maintain the unsustainable status quo. Randi Weingarten, president of the American Federation of Teachers, which represents many educators in the most fiscally challenged cities, claims, “People become schoolteachers knowing full well they will not command riches like in the private sector, but when they retire they can take comfort in knowing they have a pension to support them…The real culprit of the school systems’ trouble has been state governments’ support for expanding charter schools, voucher plans and other school choice policies,” which she argues have eaten into the budget for traditional public schools. She adds, “There is a common thread in how the Philadelphia crisis started, what happened in Michigan, and what’s happening in Illinois, where there is abandonment by these Republican governors or legislatures of urban city school districts.”
Where to begin?! In one fell swoop, she plays the “poor teacher” card, blames legislators who try to help kids to escape their failing public schools (which her union rules over) and Republicans. Of course, she omits the fact that every city and some states that are underwater are run by Democrats. As for her first claim, the myth of the underpaid teacher has no basis. Perhaps the most respected study to date, conducted by researchers Jason Richwine and Andrew Biggs (in which they account for all variables – including the fact that teachers work on average for 180 days, while private industry workers toil for 240-250 days) found that workers “who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent, while teachers who change to non-teaching jobs see their wages decrease by approximately 3 percent.” And that doesn’t include the very generous “Cadillac” healthcare plans that most teachers have and don’t pay for. So it would seem that teachers do quite well compared to other workers, even before their pensions are accounted for.
Weingarten’s comments about school choice are especially egregious. As explained by the Friedman Foundation’s Martin Lueken, “First, the states Weingarten cites are experiencing the worst pension crises, Pennsylvania, Michigan, and Illinois, do not even have strongly funded private school choice programs. Michigan has none, and fewer than 3 percent of the state’s students in Pennsylvania and likely fewer in Illinois are currently using any private school choice program.” He rightfully points out that schools of choice do not siphon public funds. “The truth is that school choice programs can improve the fiscal health of public school districts. Between 1990 and 2011, there were 10 private school choice programs in operation. Those programs saved a total of $1.7 billion. Another fiscal analysis on the Milwaukee Parental Choice Program demonstrated net savings of $37 million in FY 2009 from the program.”
Unmentioned in Weingarten’s misguided explanation was a prior classic. She is on record saying that, “Every dollar paid out in pension benefits puts $2.37 back into the economy.” Here the union leader blithely ignores that the same economic activity would be generated by taxpayer money if it were not diverted to pensions in the first place.
Another outrage that has been rarely acknowledged in the pension discussion is what is euphemistically called release time or, in some circles, “ghost teachers.” It’s a practice that allows public employees to conduct union business during working hours without loss of pay. These activities include negotiating contracts, lobbying, processing grievances, and attending union meetings and even out-of-town conferences. It has cost the state and federal governments billions to date, not including the pension time the “ghosts” rack up doing work for their union. Thankfully, reports about abuses in Michigan, Connecticut, Philadelphia and elsewhere have been brought to light over the past year.
Via legislation or initiative – whatever it takes – public sector employers must be made to set up 401(k) or “defined contribution” retirement plans as exist in the private sector. In this arrangement, the employer, employee or both make contributions on a regular basis, but there is no additional taxpayer involvement. However, until 401(k) plans are implemented – and the unions will fight tooth and nail to keep that from happening – so much of the money that should be spent on education, especially in our most blighted cities, will go into the pockets of not only retired teachers but to various other public employees…ghost and otherwise. And all the while the teachers unions claim that everything they do is for the children. In this case (and in so many others), they are doing it to the children, not to mention the ever-more-beleaguered taxpayers.
Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.