Current public employee pension systems don’t provide the right incentives to attract and retain younger teachers and need serious reform, a trio of advocates argued Thursday.
“It’s not working,” said Andrew Rotherham of Bellwether Education Partners. And school district pension costs are “crowding out programs,” said Sandi Jacobs of the National Council on Teacher Quality.
They joined Amanda Kocon of The New Teacher Project to speak at an event Thursday evening sponsored by the Colorado Pension Project, an advocacy effort that seeks to focus attention on what it sees as problems with teacher pensions. Chalkbeat Colorado sat down with the three earlier in the day.
Colorado’s PERA system serves not only teachers but also state employees and many higher education and local government workers. Despite a comprehensive 2010 law designed to shore up PERA by changing eligibility requirements for new employees, the pension system has remained a partisan issue.
Republican efforts to make further changes have been stopped by legislative Democrats, who want the effects of the 2010 law to play out undisturbed. The 2014 legislative session did authorize a series of new PERA studies (see story). While PERA continues to have a significant unfunded liability, its investment returns have been healthy in recent years (see story).
The group sees two key problems in the way pension systems currently are structured.
First, in most states it can take five years or more for teachers to “vest,” or become fully eligible, for pensions, meaning teachers can lose money if they leave the system before that. Colorado’s Public Employees’ Retirement Association has a five-year vesting time. Teachers who leave before that can recoup the money they put in, but money contributed by their employers stays with the system.
Some 64 percent of Colorado teachers leave within five years, according to the Pension Project.
Second, systems like PERA are structured so that the size of future benefits doesn’t begin to grow substantially until well into a teacher’s second decade of service.
Rotherham said only about 13 percent of Colorado teachers reach their full pensions.
Pension-reform advocates argue that vesting and benefit-growth methods should be changed so that teachers can receive full value from what they put into the system, earn benefits on a faster timeline and be able to carry it with them when they move on.
The three suggested a system under which current benefits for members nearing retirement would be protected, teachers in their middle years would be incentivized to sign up for different retirement products and new teachers would be under a new system.
“You simply have to find a way to honor benefits” for longer-term members of pension systems, Rotherham stressed.
The group agreed that it would take many years for pension systems to change under that scenario and for most teachers to receive what they see as better benefits. Rotherham also noted to political challenges of persuading elected officials to change pension systems.
They also acknowledged it’s hard to predict whether changing pension systems actually would incentivize more people to enter and stay in teaching.
Rotherham said research shows younger teachers are relatively indifferent to pensions as an incentive. “You’re not going to get people up in arms about pensions,” added Kocon.
The Colorado Pension Project supports many of the steps advocated by Jacobs, Kocon and Rotherham. The project is supported by the Anschutz, Donnell-Kay, Laura and John Arnold and Telluride foundations, and its membership include several organizations active in Denver education reform work.