A new report from the National Council on Teacher Quality estimates that America now has $325 billion in unfunded pension liabilities for teachers alone. Drastic action is needed to curb costs. The Wall Street Journal reports:
The report argues the crisis was created by bad policies and by lawmakers’ failure to fully fund promises to teachers. It recommends fixes including increasing the age at which teachers can begin to collect full benefits, and moving more teachers to 401(k)-style retirement accounts. Teachers in most states now have plans that guarantee a specific income after retirement. . . .The report, based on state data, calculates that teacher pension systems on average are funded at about 73% this year, compared with 82% in 2009. Shortfalls have grown in all but seven states during that time. Illinois tops the list with unfunded pensions of $43.5 billion. The report doesn’t include liabilities of individual school districts that fund their own pensions, such as Chicago, which has a $6.8 billion shortfall in its pension system.
Under the current pension system, teachers are tied to the profession for their entire career. As a result, teachers who have lost their edge and energy now soldier glumly on to get the pension, leading to widespread burnout. This is far from an ideal system for students, teachers, or taxpayers.Perhaps a system in which many young people teach for a few years and only a minority stay in the classroom would work better. The best teachers, teachers who have demonstrated a consistent ability to train and supervise the young, would stay for the long haul, while those who have lost the passion or ability could move on to something else. Switching to 401k-style portable pension, as the report suggests, would carry less political risk than the current system and allow teachers to get out of the profession without sacrificing years of pension benefits.We have to start thinking outside the blue box.