The Pension Pac-Man: How Pension Debt Eats Away at Teacher Salaries

Reads and Resources

In this report, released by Bellwether Education Partners, the author examines how rising retirement costs have reduced teachers’ salaries over the last 20 years, even though spending on teacher compensation has remained virtually unchanged during the same period of time. The report highlights three major factors for the decline in teacher salaries:
  • An increase in healthcare costs for teachers;
  • A steady decline in student/teacher ratios even though instructional costs have not significantly increased;
  • And, of particular importance, rising retirement costs.
According to the report, teachers’ retirement costs have jumped to an all-time high, both as a percentage of their salaries and in actual dollars, but these costs have not translated into increased benefits. One reason for this trend is that 70% of the contributions teachers make to their pensions today actually go toward paying down unfunded liabilities from previous budget cycles. The analysis presents the percentage of teachers’ salaries that go toward pension debt by state and the salary boost an average teacher in each state could receive if pension debt costs are eliminated. The report concludes by urging policymakers to consider alternative retirement systems to address the decline in teachers’ salaries.
Read it here.