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Wasn't sure if the correct forum for this was politics, business/finance, education or great debates. I settled on this forum because it appears in a Political section of the Washington Post.
Maryland is apparently considering shifting the cost of teacher pensions from the state to the counties, It is currently one of the top states for underfunding teachers' pensions so their solution is to push it off on their counties.
"Maryland pays nearly the entire cost of every teacher retirement plan in the state, although counties negotiate the teacher salaries that ultimately dictate the amount the state will have to pay in retirement costs. The counties make Social Security payments. In recent years, as Maryland has significantly increased funding for education and many counties have gained national attention for the quality of their classrooms, teacher pay has increased, and in turn, the state's long-term teacher pension costs have soared."
Is this shifting of teacher pension costs from the state to the counties done in any other state? The article mentions teacher's union opposition but what would be the impact on individual residents of a state that did this? Would your taxes rise, fall or stay the same if the pension cost was shifted to counties? Would it depend on the county? If there is a change, what taxes would be impacted (income, sales or property tax)? Would it change the quality of education?
I don't have enough information to have an opinion. I just want to know what other people have to say about it and whether Maryland's proposed shift is unique or commonplace in other parts of the country.
Whomever pays the teachers is responsible for completely funding the retirement plan. Whatever this costs should be paid. Shifting to 401k's is just a way of avoiding responsibility for a contract. The stock market is too risky a place to put your pension.
Agreed, too many people have lost their pensions on 401K's. Just fund a pension appropriately and this wouldn't be a problem.
Personally I think the whole education system should be nationalized. If kids are going to have to compete in a national/global economy, why are they taught standards that are decided locally? Doesn't make sense. When I was a teacher, we'd get new kids all the time who are behind or ahead depending on where they came from and the difference in standards between states. Not to mention the difference in teacher salaries between states.
I'm all for high standards. But we expect to get too much bang for our buck out of an underfunded education system that has to deal with the results of an even greater number of social problems every year.
Whomever pays the teachers is responsible for completely funding the retirement plan. Whatever this costs should be paid. Shifting to 401k's is just a way of avoiding responsibility for a contract. The stock market is too risky a place to put your pension.
The problem with this is that the people who pay the teachers are the taxpayers and the taxpayers have no say in the process.
Those contracts that you speak of are obscenely generous and they are bankrupting the cities and towns.
If the teacher retirement formula and investment rules were established at the state level, I guess the state should be responsible for the pension funding and payments. If they are established at the local level, that appears to be an appropriate place to have this responsibility.
The point in the article about teacher salary being negotiated locally would seem to be kind of irrelevant, if the pension formula is established at the state level.
Screw every union that jacked up pensions to unsustainable levels. Let the teachers unions go petition the PBGC Pension Benefit Guaranty Corporation (PBGC) along with the auto workers.
Hmm, lots of different issues going on here. The State of Illinois state workers' pension fund is underfunded to the tune of $80 billion I heard just this morning. We have 'local' pension districts where school districts (ie., the Chicago Public School System) must pay a portion towards the pension benefits, 13 of which are supplemented by state funds. We just passed a law this morning to raise the retirement age at which full pensions can be rec'd from 55 to 67 (isn't 65-67 the normal age of retirement anyways?). And the state also gave a pass to the Chicago Public School system on funding their teachers' pension for the next 3 years.
I also agree with Mr. Joshua. The taxpayers are the ones who pay the teacher salaries in their districts, yet they have no say in the pension contracts that very much affect them and are bankrupting the states. This should be local (funding for pensions), but only if the pension contracts are allowed to be voted on by the taxpayers they will directly effect. If the state wants control, then they should pony up the cash.
Everyone wants their cake and eat it too, but there just isn't enough cake to go around. So what do we do? Steal our kids' cake. Shameful.
Quote:
Eden Martin, president of the Civic Committee of the Commercial Club of Chicago said "The only way to achieve significant cost reductions now is to reform retirement benefits for current state employees prospectively and new hires moving forward." Democratic lawmakers and unions contend Illinois' Constitution prohibits diminishing pensions for existing government workers and teachers.
And therein lies the root of the problem... democrats and unions.
MD teachers are members of the State Retirement System. For the last several years the state of MD was picking up the County portions (MD school systems are County based) of pension contributions. The proposal is to shift that responsibility back to the County governments. The state contribution came about when the teachers pension fund, which was separate, was rolled into the State Retirement System in the mid 1980s. Teachers contribute between 6 and 8% to it (my pension contribution is higher than my SS deduction).
It is a defined benefit system, the new hire pension plans have that as an option along with defined benefit models.
In reality the newState Retirement System pension plan is pays much less than the old system did prior to the change in 1984 or so. Some teachers are still enrolled in the old system but very few now.
The problem with this is that the people who pay the teachers are the taxpayers and the taxpayers have no say in the process.
Those contracts that you speak of are obscenely generous and they are bankrupting the cities and towns.
Agreed. Public employers (aka the taxpayers) should insist that government employees get the same treatment as the people that pay their salaries. 401Ks, contributed to by the individual, with a proportional match by the employer, is fair to everyone. And with even minimal management a 401K will usually provide a higher return than a pension fund, plus not place a permanent obligation on the taxpayer.
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