Myers reports on state laws affecting the pensions of Chicago Public School teachers. He discusses the politics behind unions involved in the decision making process and their important role in determining a balanced budget. According to Myers, the Caucus of Rank and File Educators (CORE) is a recent contender "whose members say the Pension Board needs better...
The Burden of Teachers' Pensions
While many would agree that the public school systems are in need of a serious overhaul, there is considerable disagreement over how to achieve it. One factor that has consistently been promoted as deserving attention is teacher compensation. Many argue that teachers' salaries are too low, and if increased would incentivize current teachers to work harder as well as attract more quality people into the profession.
The claim that teachers get paid too little is by itself contentious. Even so, our nation's public school teachers are outfitted with quite generous pension plans, which significantly increase the value of their overall compensation. Most are set up with defined-benefit contribution plans, which generally take into account both the number of years the teacher has been employed and his salary over the years, and which promise him a specific amount of money regardless of whether the fund is able to pay it or not.
Unfortunately, many states are now facing, in some cases such as California and Virginia severe, shortfalls in teacher pension plans funding. Proposals of how to reform the system include moving toward defined-contribution plans, which entail a certain percentage of the salary to be set aside for retirement each year by the employer and the employee. These plans--a 401k is one example--are the norm in the private sector, but teachers unions eschew them arguing they are less secure. Crucially though, reform ideas will be significantly hampered by the fact that many states have enacted constitutional provisions to protect public pensions in such a way as to prevent any changes resulting in a benefit reduction for public school teacher retirees.
This section looks at the current state of public school teacher pensions, and the arguments of key players on both sides--those who support the current or an even more generous pension system, and those in favor of reform. The interests of legislators, teachers and their unions clearly dominate the debate, but the burden of teachers pensions will ultimately rest on taxpayers.