financial merger

Proposal would shift teacher pension fund to new management

UFT President Michael Mulgrew joined Mayor Bloomberg and other union leaders to announce new pension reforms

Management of the teachers’ retirement fund is being merged with other public pensions systems under a proposal unveiled today by city officials and union leaders.

In an effort to chip away at the rising costs of the city’s $120 billion pension fund, Mayor Bloomberg and Comptroller John Liu announced a proposal to overhaul city unions’ scattered pension systems. Until now, each of the five different funds – for teachers, police, fire, school employees and other public sector — had been managed by a handful of trustees under the comptroller’s office.

Under the proposal, the pools of money from each union will be kept separate but the same professional investors will manage all of the funds. Those investors will not be part of the comptroller’s office and will not change when a new comptroller is elected, as they have in the past.

Bloomberg, Liu, and union leaders said today that the fund’s underperformance had resulted in part from its management structure.

But the proposal does not address other issues underlying the city’s growing pension costs, which have soared in the last 10 years. Last year, the city contributed $8.4 billion in payouts to retired city workers, up from just $1.2 billion a decade ago, when the pension funds do not generate enough earnings to match promised returns.

With over 200,000 members, the teachers’ $42 billion retirement fund, called the Teacher Retirement System (TRS), is also one of the city’s largest and costliest. As we reported last year, the fund took a hit from the 2008 financial crisis, which was compounded by a series of pension perks that were approved in the years before it:

The sweeteners reduced the retirement contributions for teachers and principals, putting more of the burden to pay for pensions onto the city. They also allowed per diem salary — money teachers make for taking on extra tasks like running after-school clubs and sports — to be counted in the overall final salary number. And, in 2008, a provision allowed teachers to retire early without being dinged in their pension earnings.

Together, the rising salaries and pension sweeteners have created a perfect storm: increasing costs just as the plan’s performance has plummeted in the down market. Although the TRS has not performed significantly worse than the market according to the new report, the annual rate of return it assumes — 8 percent — is high by most private standards. (To be fair, most public pension plans also use a number around 8 percent. Similar private sector plans assume a rate of around 4 percent.)

United Federation of Teachers President Michael Mulgrew downplayed concerns about specifics in the UFT’s pension plan today and lauded the reforms, saying the agreement shows that unions could collaborative with the city.

“Today what you see here is an announcement about the labor leaders of this city getting together with elected officials to say we can do things better on behalf of our city,” Mulgrew said at a press conference today where he was joined by leaders from each of the unions affected by the proposal.

But fiscal watchdogs said the proposal would not create lasting improvements in the city’s pension situation.

“This is a drop in the bucket and doesn’t begin to address the real problems the city has on its hands,” said Steven Malanga, a senior fellow at the conservative Manhattan Institute who studies urban economics. “The only way to solve this problem is to reduce the benefits of workers, which are extravagant.”

Mayor Bloomberg said he would travel to Albany to lobby the reforms with state legislators, who ultimately have to approve the proposed changes.

a 'meaningful' education?

How a Colorado court case could change how public schools everywhere serve students with special needs

Dougco headquarters in Castle Rock (John Leyba/The Denver Post).

The U.S. Supreme Court on Wednesday grappled with the question of what kind of education public schools must provide students with disabilities, hearing arguments in a case that originated with a complaint against a suburban Denver school district and that could have profound implications nationwide.

The case involves a student diagnosed with autism and attention deficit/hyperactive disorder. His parents pulled him out of his Douglas County elementary school, saying he wasn’t making enough progress and the district’s response was lacking.

They enrolled the boy in a private school for children with autism and asked the district to reimburse them for the tuition, arguing their son was due a “free appropriate public education” as required by the 1975 Individuals with Disabilities Education Act.

The law spells out the requirements states must meet to receive federal money to educate special-needs students. The district declined, saying it had met the standard of the law.

The family eventually filed a lawsuit against the district. Lower courts all sided with the district, reasoning that it had provided the child “some” educational benefit — the standard cited in the federal statute at issue.

Lower courts across the nation have varied in their definition of the proper standard. The high court arguments Wednesday centered on whether “some” benefit was good enough, or whether special-needs students deserve a more “meaningful” benefit.

Jeffrey Fisher, an attorney for the boy’s family, told the justices that as a general rule, individualized education plans for special education students should include “a level of educational services designed to allow the child to progress from grade to grade in the general curriculum.”

Throughout the arguments, the justices expressed frustration with what Justice Samuel Alito described as “a blizzard of words” that the law and courts have used to define what’s appropriate for special needs students.

Chief Justice John Roberts said regardless of the term used, “the whole package has got to be helpful enough to allow the student to keep up with his peers.”

Neal Katyal, an attorney for the school district, argued that providing children “some benefit” is a reasonable standard.

“That’s the way court after court has interpreted it,” he said. “It’s worked well. This court shouldn’t renege on that.”

Ron Hager, senior staff attorney for special education at the National Disability Rights Network, attended the oral arguments Wednesday and said he was optimistic the lower court’s ruling would be overturned.

He said if the Supreme Court does overturn the federal Tenth Circuit Court’s ruling and requires a higher standard, it won’t necessarily come with major financial costs for school districts. Instead, he said, it will nudge them to be proactive and provide teacher training and intervention services early on instead of waiting until problems — and the expenses associated with them — snowball later.

Marijo Rymer, executive director of the Arc of Colorado, which advocates on behalf of people with intellectual and developmental disabilities, said she was heartened to see the case advance to the Supreme Court. Establishing a clearer standard on what constitutes a fair and appropriate education for students with disabilities is a civil rights issue, she said.

“It’s critical that federal law, which is what this is based on, be reinforced and supported, and the court is in the position to deliver that message to the nation’s schools and the taxpayers that fund them,” Rymer said.

Both Hager and Rymer acknowledged that even if the Supreme Court establishes a new, higher standard, it could be open to interpretation. Still, they said it would send a strong message to school districts about their responsibilities to students with disabilities.

Summer remix

Ten stories you may have missed this summer (and should read now as the new school year kicks in)

PHOTO: Caroline Bauman
Gabrielle Colburn, 7, adds her artistic flair to a mural in downtown Memphis in conjunction with the XQ Super Schools bus tour in June.

Labor Day used to signal the end of summer break and the return to school. That’s no longer the case in Tennessee, but the long holiday is a good time to catch up on all that happened over the summer. Here are 10 stories to get you up to speed on K-12 education in Tennessee and its largest school district.

TNReady is back — with a new test maker.

Last school year ended on a cliffhanger, with the State Department of Education canceling its end-of-year tests for grades 3-8 in the spring and firing testmaker Measurement Inc. after a series of missteps. In July, Commissioner Candice McQueen announced that Minnesota-based Questar will pick up where Measurement Inc. left off. She also outlined the state’s game plan for standardized tests in the coming year.

But fallout over the state’s failed TNReady test in 2015-16 will be felt for years.

The one-year void in standardized test scores has hit Tennessee at the heart of its accountability system, leaving the state digging for other ways to assess whether all of its students are improving.

Speaking of accountability, Tennessee also is updating that plan under a new federal education law.

The state Department of Education has been working with educators, policymakers and community members on new ways to evaluate schools in answer to the federal Every Student Succeeds Act, or ESSA, which requires states to judge schools by non-academic measures as well as test scores.

Meanwhile, issues of race and policing have educators talking about how to foster conversations about social justice in school.

In the wake of police-related killings that rocked the nation, five Memphis teachers talked about how they tackle difficult conversations about race all year long.

School closures made headlines again in Memphis — with more closings likely.

Closing schools has become an annual event as Tennessee’s largest district loses students and funding, and this year was no exception. The shuttering of Carver and Northside high schools brought the total number of district-run school closures to at least 21 since 2012. And more are likely. This month, Shelby County Schools is scheduled to release a facilities analysis that should set the stage for future closures. Superintendent Dorsey Hopson has said the district needs to shed as many as two dozen schools — and 27,000 seats — over the next four years. A Chalkbeat analysis identifies 25 schools at risk.

Exacerbating the challenges of shifting enrollment, families in Foote Homes scrambled to register their children for school as Memphis’ last public housing project prepared to close this month amid a delay in delivering housing vouchers to move elsewhere.

The new school year has officially begun, with the budget approved not a moment too soon for Shelby County Schools.

District leaders that began the budget season facing an $86 million shortfall eventually convinced county commissioners to significantly increase local funding, while also pulling some money from the school system’s reserve funds. The result is a $959 million budget that gives most of the district’s teachers a 3 percent raise and restores funding for positions deemed critical for continued academic progress.

The district also unveiled its first annual report on its growing sector of charter schools.

With charter schools now firmly entrenched in Memphis’ educational landscape, a Shelby County Schools analysis shows a mixed bag of performance, while calling on traditional and charter schools to learn from each other and promising better ways to track quality.