TEACHERS: first year salary question

[elflord1973]

Originally Posted by WurliVox

You may well be correct in this assessment, Elflord. The question, of course, is how to phase them out. The current teachers took their jobs with the foreknowledge that they were deferring some compensation in the form of a good pension. So, yes, they'd make less in the present, but in return, they'd get the money later.

So...How to fix the system? Well, if you want to phase them into a 401K type-system, then nobody's paying into the pension system. Is the state simply going to pick up the tab until the last person is out of it? It's hardly fair to kick people out who have been teaching for awhile and who took the job with the agreement that part of their compensation would be that pension.

Perhaps you say, "All new people will be in a 401K type system." But, again, then where does the money come from to fund those who are in the pension system? The state?

State pension systems (unlike social security) are supposed to be funded, meaning that their model doesn't depend on current employees paying future beneficiaries.

It happens that NJ's plan is underfunded, so they would need to close the gap (by increasing contribution amounts, and by increasing state funding).

Unfortunately, it's politically easier to underfund it. I suspect at some level, they are counting on a federal bail out, and therefore they aren't completely committed to saving the system. The federal government has created a climate where it is better to head towards insolvency and hope for a bailout than it is to dig yourself out (which involves making tough choices).

Then there's the problem with the 401k system itself. Are you going to do a system where the employees are the only ones contributing or will it be as with many big businesses, where the employer matches the contribution to some extent? (And, yes, there are plenty of big businesses that still do this. And although some stopped a few years ago, they're also starting to do it again. The most recent example of this would probably be FedEx.) I'm guessing it would be unmatched. After all, why would anyone believe that the state would provide any kind of funds for this when they haven't bothered contributing to the pension plan for so long?

It is a limitation of the system, but it does have the advantage that the money you put in is really yours, something you can't count on with a DB plan. It also forces the state to be more transparent about accounting for their promises up front.

[lkb0714]

Originally Posted by elflord1973

This is a pretty easy problem to solve. The reason it's harder to hire these teachers is because they are on a different supply curve to English teachers. The "pay everyone the same" approach inevitably leads to some being overpaid and some being underpaid.

As for pensions, as I post like a broken record, they need to be phased out and replaced with 401ks. Pensions are the politicians way of doing enron-like accounting.

I 100% agree on the pensions to 401ks.

I am not sure how to make it equitable to pay some teachers more than others but since there have been cases of "bonuses" being paid to teachers signing contracts for teaching in shortage areas there is at least some sort of a precedent.

[WurliVox]

Originally Posted by elflord1973

State pension systems (unlike social security) are supposed to be funded, meaning that their model doesn't depend on current employees paying future beneficiaries.

That would be nice, but since the state hasn't bothered to fund the plan, I'm not sure that the reality matches up to the plan.

It happens that NJ's plan is underfunded, so they would need to close the gap (by increasing contribution amounts, and by increasing state funding).

It should be noted that the teachers actually did increase their contribution a few years ago. I'm not saying that it can't be increased a bit more, just that it should be acknowledged that the teachers have increased their contribution and that the state has yet to meet its obligations.

Unfortunately, it's politically easier to underfund it.

Too true.

On the 401K:

It is a limitation of the system, but it does have the advantage that the money you put in is really yours, something you can't count on with a DB plan. It also forces the state to be more transparent about accounting for their promises up front.

Perhaps...But I still doubt the state would bother to contribute to it.

[WurliVox]

Originally Posted by lkb0714

I 100% agree on the pensions to 401ks.

I am not sure how to make it equitable to pay some teachers more than others but since there have been cases of "bonuses" being paid to teachers signing contracts for teaching in shortage areas there is at least some sort of a precedent.

Well...Salary can be negotiated at the time of hiring. I would think most Boards of Ed would have little reason to negotiate with someone who is looking to get a position for which there are many applicants.

On the other hand, if a BoE thinks they've found a great science/math teacher, then they may want to offer to put him/her further up on the salary guide. They can do that any time they want.