Show-Me Institute Supports Strong Pensions For All Teachers

The Springfield News-Leader ran an incorrect version of this op-ed on December 13, 2013. Here is James Shuls’ original version:

When my wife and I entered college and both majored in education, the furthest thing from our minds was our pensions. When we accepted teaching positions, she in the Spokane School District and I in the Republic School District, we did not care about pensions. When I entered graduate school and we moved out of state, I lost half of my pension contributions; we started to care.

As public school teachers in southwest Missouri, we were part of the Public School Retirement System (PSRS). Currently, teachers in PSRS contribute 14.5 percent of their salary to the defined benefit pension system. The school district matches that amount. The funds are not very portable. If you leave before vesting at five years, you lose your employer contributions. If you leave prior to retirement age, you lose much of your pension wealth.

This is a problem in Missouri because Kansas City and Saint Louis are on completely different pension systems. As the St. Louis Post-Dispatch reported, “Switching between these retirement systems can be costly for teachers.” For instance, if a teacher works for 15 years in a PSRS district and then 15 years in the St. Louis Public School District, she would have about half as much pension wealth as if she stays in one system for the entire 30 years.

Jonathan Shorman’s recent piece in the Springfield News-Leader reported that the Show-Me Institute requested funds to conduct research on these pension systems, “but has already determined the conclusions it plans to reach.” But that is not the case.

Research shows that there are problems with having three separate pension systems. Mobile teachers lose pension wealth and this hurts teacher recruitment in both Saint Louis and Kansas City. That fact has been well-documented in newspaper accounts and in the academic literature.

Everyone can agree that Missouri teachers should have a secure retirement. But a secure retirement can be achieved while allowing individuals to move without being penalized and to leave the profession without losing half of their contributions.

What we do not know, and hope to find out, is what type of compensation arrangements would help schools improve teacher recruitment efforts and would be appealing to teachers. Fewer than 20 percent of teachers in the two cities will make it to full retirement. This means the current system will penalize the majority of those teachers. Would these teachers rather have higher salaries now and less contributed to their pensions? Would they prefer portability over larger payouts?

We will continue to explore these questions and will continue to seek funding for our research. Those who disagree with us may think there is something nefarious about this, but perhaps they have determined their conclusions about us before fully examining our ideas.

Teacher pensions are worth caring about and they deserve an honest discussion about what is best for all teachers, even the mobile ones.

James V. Shuls, Ph.D., earned his bachelor’s and master’s degrees in elementary education and taught for four years in the Republic School District. Currently, he is an education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy. His wife is currently vested in PSRS.