Who Is In Charge

PERA had good year in 2010

The Public Employees’ Retirement Association had a good investing year in 2010 but still is feeling the hangover of the market drop in 2008.

Greg Smith, Meredith Williams, Maryann Motza
Meredith Williams, PERA executive director (center) makes a point during a hearing on July 11, 2011. At left is general counsel Greg Smith, with board vice chair Maryann Motza at right.

The pension system’s annual comprehensive financial report, released along with an annual outside audit on Monday, showed that the market value of PERA’s portfolio rose 14 percent in 2010 to a net asset value of $38.7 billion. The actuarial value, a different calculation used for forecasting, is about $39.2 billion.

“We had a pretty good year,” said Meredith Williams, PERA executive director.

PERA’s annual financial report is submitted about this time every year to the Legislative Audit Committee and is of high interest to the system’s 476,235 active, inactive and retired members, well over half of whom are in education. The system also covers state and judicial branch workers and some local government employees. (Figures for 2010 also include addition of assets from the former Denver Public Schools retirement system, which was merged into PERA at the beginning of the year.)

The system had assets with a market value of $41.1 billion in 2007, which plunged to $29.3 billion in 2008, the year the bottom dropped out of the economy.

The 2008 market drop had a huge impact. PERA’s three-year rate of return is -.3 percent, and the five-year rate of return is 4.7 percent. Over the last 25 years, the return has been 9 percent.

Unaudited numbers for the first six months of 2011 put market value at $40.2 billion, an increase of about 5 percent.

The continued hangover from 2008 also has affected the funded status of PERA’s five divisions.

The school division was 69.2 percent funded in 2009, dropping to 64.8 percent last year. The DPS division was 88.3 percent funded two years ago and 88.9 percent funded in 2010. The state, local government and judicial divisions all dropped.

“This has been a very, very difficult decade for the pension system,” Williams said.

The 2010 legislature passed a sweeping reform plan that reduced cost-of-living increases for retirees and made other benefit and eligibility changes that will make pensions less rich for new employees going forward. A lawsuit challenging that law recently was thrown out.

The law was intended to make the pension system 100 percent funded in 30 years, and officials told the committee Thursday they still believe that will happen.

“We’ll be close to 100 percent funded in 30 years,” said Thomas Cavanaugh of the actuarial firm Cavanaugh Macdonald Consulting, which advises PERA.

The PERA “rescue” plan approved last year includes the assumption that PERA assets will grow an average of 8 percent a year over the next 30 years, an assumption that some legislators question.

Republican Rep. Jim Kerr of Lakewood and Sen. Scott Renfroe of Greeley both raised that issue Monday, but the discussion was brief and low key.

Cavanaugh said that even if returns average 6.5 percent in the next 30 years, the system will remain solvent but will take longer to reach 100 percent funding.

“Even at 6.5 percent the fund is sustainable,” he said.

Chart of PERA assets
Chart of PERA assets over time. Source: Cavanaugh Macdonald Consulting. (Click to enlarge.)
Many observers trace PERA’s troubles to the late 1990s, when the legislature sweetened benefits but reduced contributions to the system. That’s “when we gave away the store … that’s the root cause of this,” Williams said.

In the middle of the last decade the legislature did increase contributions on a staggered schedule that continues for the next few years. But that has created financial pressures outside the pension system. School district contributions, for instance, are scheduled to top out at 20 percent of payroll, a cost that’s creating additional pressures on district budgets at the same time that state aid has been cut and local property tax revenues are shrinking.

The 2011 legislature saw several attempts to tinker with PERA, including Republican bills to change the makeup of the pension system’s board, convert the whole system to a 401(k)-type program and to allow school boards to shift more of the contribution burden to teachers. All failed, but PERA is expected to be an issue again in 2012.

Who's In Charge

Who’s in charge of rethinking Manual High School’s ‘offensive’ mascot?

PHOTO: Scott Elliott/Chalkbeat
Manual High School is one of three Indianapolis schools managed by Charter Schools USA.

As other schools in Indiana and across the nation have renounced controversial team names and mascots in recent years, Emmerich Manual High School in Indianapolis has held onto the Redskins.

One of the reasons why the school hasn’t given it up, officials said during a state board of education meeting this week, is because it’s unclear whose responsibility it would be to change the disparaging name.

Is it the obligation of the district, Indianapolis Public Schools, which owns the building and granted the nickname more than 100 years ago?

Is it the duty of the charter operator, Charter Schools USA, which currently runs the school?

Or is it the responsibility of the state, which took Manual out of the district’s hands in 2011, assuming control after years of failing grades?

“I don’t care who’s responsible for it,” said Indiana State Board of Education member Gordon Hendry, as he acknowledged the uncertainty. “I think it’s high time that that mascot be retired.”

The mascot debate resurfaced Wednesday as state officials considered the future of Manual and Howe high schools, which are approaching the end of their state takeover. Charter School USA’s contracts to run the schools, in addition to Emma Donnan Middle School, are slated to expire in 2020, so the schools could return to IPS, become charter schools, or close.

Manual is only one of two Indiana schools still holding onto the Redskins name, a slur against Native Americans. In recent years, Goshen High School and North Side High School in Fort Wayne have changed their mascots in painful processes in which some people pushed back against getting rid of a name that they felt was integral to the identity of their communities.

Knox Community High School in northern Indiana also still bears the Redskins name and logo.

“The term Redskins can be absolutely offensive,” said Jon Hage, president and CEO of Charter Schools USA. “We’ve had no power or authority to do anything about that.”

He suggested that the state board needs to start the process, and that the community should have input on the decision.

An Indianapolis Public Schools official told Chalkbeat the district didn’t have clear answers yet on its role in addressing the issue.

Even if the state board initiates conversations, however, member Steve Yager emphasized that he does not want the state to make the decision on the mascot.

“We don’t have to weigh in on that,” Yager said. “I feel like that’s a local decision.”


Tennesseans reflect on Candice McQueen’s legacy leading the state’s schools

PHOTO: Caroline Bauman
Education Commissioner Candice McQueen speaks with Arlington High School students during a school visit Tuesday that kicked off a statewide tour focused on student voices.

As Candice McQueen prepares to leave her role as Tennessee education commissioner in January, education leaders, advocates, and parents are weighing in on her impact on the state’s schools.

McQueen 44, will become the CEO of National Institute for Excellence in Teaching in mid-January after about four years under the outgoing Gov. Bill Haslam administration.

Her tenure has been highlighted by overhauling the state’s requirements for student learning, increasing transparency about how Tennessee students are doing, and launching a major initiative to improve reading skills in a state that struggles with literacy. But much of the good work has been overshadowed by repeated technical failures in Tennessee’s switch to a computerized standardized test — even forcing McQueen to cancel testing for most students in her second year at the helm. The assessment program continued to struggle this spring, marred by days of technical glitches.

Here are reactions from education leaders and thinkers across the state:

Gini Pupo-Walker, senior director of education policy and programs at Conexión Américas:

“It was her commitment to transparency, equity, and strong accountability that helped create a nationally recognized framework that places students at its center. Commissioner McQueen’s commitment to inclusion and engagement meant that our partners across the state had the opportunity to weigh in, share their experiences, and to ask hard questions and conduct real conversations with policymakers. Tennessee continues to lead the nation in innovation and improvement in K-12 education, and that is due in no small part to Commissioner McQueen’s leadership.”

Shawn Joseph, superintendent of Metro Nashville Public Schools, who in August co-penned a letter declaring “no confidence” in state testing:

“Since joining MNPS just over two years ago, I’ve had the pleasure of working closely with Commissioner McQueen and her team. She has been a strong advocate for Tennessee’s children, and I especially want to thank her for her support of the work that is taking place in Nashville. We send her our very best wishes — and our hearty congratulations for accepting her new role.”

JC Bowman, executive director of Professional Educators of Tennessee:

“Commissioner Candice McQueen is one of the most visible members of the Haslam Administration. She took over the department during a dark period in public education, and she made a significant difference within the department, particularly in the infrastructure. Those changes are not readily noticeable, as they include systems, processes and human capital. There are some exceptional people within the Department of Education working to make public education a success in our state. It is unfortunate that online testing continues to be a point of contention, but the state is moving in a positive direction. The next Commissioner of Education and the 111th Tennessee General Assembly will need to make adjustments in student assessment as we move forward.   We will always be grateful to Commissioner McQueen for her unwavering support of increasing teacher salaries and commitment to student literacy.”

Sharon Griffin, leader of the state-run Achievement School District:

“I have truly appreciated Dr. McQueen’s leadership and vision for the Department of Education.  From a distance and even closer in recent months, I have clearly seen the integrity and passion she brings to the work of improving student outcomes.  We have absolutely connected around our shared belief in how what’s in the best interest of students should guide our work.”

Jamie Woodson, CEO of SCORE:

“Tennessee students have been served very well by the steady and strong leadership of Commissioner McQueen. Her priorities have been the right ones for our children: improving student achievement, with a specific focus on reading skills; advocating for great teaching and supporting teachers to deliver high-quality instruction; and emphasizing that students and schools with the greatest needs must receive targeted focus and support in order to improve.”

Sarah Carpenter, executive director of parent advocacy group Memphis Lift:

“Memphis parents want decision makers to be accessible, and we appreciate that Commissioner McQueen made a point to build relationships and hear concerns from the entire community. Hopefully, the next education commissioner will bring parents to the table for conversations about our kids’ education.”

Mendell Grinter, leader of Memphis student advocacy group Campaign for School Equity:

“In our collaborative work and position in the educational landscape, we have witnessed firsthand how Commissioner McQueen has served as a tireless advocate for students and families in Tennessee. Over the past two years her leadership has inspired school leaders, and teachers alike to recognize the sense of urgency for improving school equity and academic outcomes for more students.”

Andy Spears, author of Tennessee Education Report and vocal critic of state test, TNReady:

“After what can charitably be called a rocky tenure at the helm of the Tennessee Department of Education, Candice McQueen has miraculously landed another high-level job. This time, she’ll take over as CEO of the National Institute for Excellence in Teaching, an organization apparently not at all concerned about the track record of new hires or accountability.”

Beth Brown, president of Tennessee Education Association:

“As candidates for the state’s next commissioner of education are considered, it is my hope that serious consideration is given to an individual’s experience in our own Tennessee public schools… Students and educators are struggling with two major issues that must be tackled by the next commissioner: high-stakes standardized tests and a lack of proper funding for all schools. Our schools need a leader who understands that the current test-and-punish system is not helping our students succeed. Governor Bill Haslam has made significant increases in state funding for public education, but there is still much work to be done to ensure every child has the resources needed for a well-rounded public education.”