School superintendents and administrators have no incentive to reform teachers’ pensions, write a trio of University of Missouri economists. Administrators “reap the largest benefits” from the pension system, write Cory Koedel, Shawn Ni and Michael Podgursky in Education Next.
. . . the pension system transfers wealth from lower-income professionals to higher-income professionals. Beginning teachers are subsidizing a handsome payoff to better-paid administrators, who are the appointed guardians of the public interest in the education system.
Virtually all public school teachers and administrators benefit from generous defined-benefit retirement plans. A Missouri teacher with 30 years of experience earns 75 percent of her final average salary. The median retirement age is 56. Superintendents and other administrators get more for their pension contribution than senior teachers.
There’s no evidence these pension plans improve the quality of the teaching workforce, the economists write.
It seems likely that schools could do a better job of recruiting young teachers by putting money in upfront salaries rather than in end-of-career pension benefits.
Given the powerful incentives that are in place, there is no reason to expect school administrators or their organizations to support reforms that would provide a more modern and mobile retirement system for young educators, like those found in nearly all other professional employment settings.
When it comes to pensions, “labor and management are on the same side of the bargaining table,” they conclude.