Thursday, November 18, 2010

Teacher Retirement, the Big Picture

A newly published journal issue offers analyses of how reform of teacher retirement benefit systems could affect not only school finance, but also teacher quality.

University of Arkansas professor Robert Costrell co-edited the special issue of the journal Education Finance and Policy that focuses on teacher retirement benefit systems. Education Finance and Policy is the official journal of the Association for Education Finance and Policy, formerly the American Education Finance Association...

Previous research by Costrell and Podgursky shows that teacher pension plans provide strong incentives to follow a specific career path that may be well-suited to some teachers but not others. Benefits are typically structured to “pull” teachers to work until their early or mid-50s and then “push” them into retirement. Some teachers in their 40s may find themselves better suited to a career change but hang on for their pension, while some in their 50s may still have good years to offer but retire prematurely, Costrell and Podgursky wrote.

In their contribution to this special issue, Costrell and Podgursky show that the distribution of pension benefits is highly unequal: approximately half of an entering cohort's pension wealth is often redistributed from those who leave prior to their 50s to those who retire in their 50s, as compared to the uniform distribution under cash-balance plans. In addition, current systems impose large penalties – worth hundreds of thousands of dollars – on teacher mobility between states.

A number of states are trying to deal with large unfunded liabilities that threaten to absorb large shares of K-12 education budgets. Because this crisis may force policymakers to consider reforms for fiscal reasons, the authors suggest now is the opportune time to examine consequences of these systems on school staffing and educator quality.

Not exactly a page-turner, but so few of the truly important reads are.

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