Cairo Association of Teachers - Newsletter

CAT Tracks for January 3, 2008 "DEFINED BENEFIT" PENSIONS

Guess I better throw away my "Deadwood" t-shirts after posting this article!

Traditional pensions can curb enthusiastic teaching

By Julia Steiny

Traditional “defined benefit” pensions motivate some teachers to become deadwood. Teachers who have lost their appetite for the work must continue to put in their time, however half-heartedly, to qualify for retirement benefits that are far more valuable than most private-sector employees get.

In general, one of the biggest problems in public education is that the field is rife with badly designed policies that motivate the wrong behavior. Pensions are only one example.

Nationally, politicians face crippling fiscal crises brought on by a weakening economy and in some cases, miserably managed state governments. Policy-makers will be forced to make painful changes anyway, so they might as well realign the incentives while they’re at it. Human motivation is a powerful force of nature that can be harnessed to good purpose or allowed to be counter-productive.

One aspect of the fiscal crisis is that most states have public-employee pension funds that are woefully underfunded. Past politicians and labor-contract negotiators sweetened the pot for teachers — and other public employees — by promising ever larger pension benefits, knowing full well that someone else, off in the future, would have to pay the bill. Those bills are now due. Even if states manage to curb the benefits, they’ll still have to raise taxes significantly to make good on promises made in the past. Rhode Island and West Virginia lead the nation with the largest unfunded pension liability.

And not only are the pensions themselves unsustainably expensive, they can also richly reward poor service.

Consider the once-idealistic teacher who worked hard and well for the first 10 years of her career. An inspired principal, collegial staff and creative curriculum made the job intriguing and enjoyable. Many teachers get frustrated and leave the profession in their first few years without becoming vested in the pension system, but this teacher had reason to stay.

In time, however, she began to dislike the job. Perhaps the kids got harder, or there was bad chemistry with a new principal; maybe poor test scores began to sour the once pleasant climate at the school. Working conditions make a huge difference in a teacher’s experience. A chaotic building environment, animosity among the staff, oversized classes, or useless curriculum can make a teacher’s life miserable.

So in year 12, 13, 15, the teacher begins to burn out. She prepares less thoroughly, beats the kids out the door at the end of the day, and uses her I-phone to clean out e-mail during professional development. The kids can feel her disaffection.

In the private sector, such a worker would get another job or look into another line of work.

Labor-market pundits tell us that most people these days not only change jobs, but even careers several times during their lifetime. “Defined benefit” pensions presume a lifetime of employment in the same field, in the same state. There is no way of getting the full benefit of the pension unless you stay for the full haul.

If a teacher goes into a different line of work, or even moves to a cooler school in a different state, she loses all or most of her investment in her future. Big disincentive.

Maybe she’s a terrific sport, and in spite of her frustration does a creditable job, though without much joy or inspiration. This is good, but not ideal. Worse, of course, are teachers who show up and go through the motions in a way that outright maddens the kids, parents, colleagues and the principal. I’ve seen with my own eyes the teacher who puts his feet on the desk and hollers to the kids, “Do what you’re supposed to do or don’t; I don’t care. I get paid either way.”

That unions protect such deadwood teachers makes parents insane. But the unions argue that if you kick the teacher out of her job, she’ll lose her retirement investment. And she did put in 10 worthwhile years of service. It’s just a bad situation.

A “defined contribution” retirement plan — 401(k) or TIAA-CREF plan — is the perfectly portable pension plan. The employer and employee put in money on a pay-as-you-go basis, so there’s no future sticker shock. The money sits in a bank or mutual fund and is still there when the teacher moves from state to state or, for that matter, from a teaching career to a completely different line of work. The teacher takes the nest egg with him or her.

If teachers want to take a risk and see if they like teaching in an experimental school for a while, there’s no retirement penalty. If they’ve always wondered what Alaska was like and can find a job, they can up and go while adding to their 401(k).

Traditional pensions are a throw-back to another era, specifically to the factory model of schooling that no longer suits our current economy anyway. In the short run, shifting from the old model pension to the new will be neither easy nor cheap. But the shift will save money eventually and root out one set of badly skewed incentives.

And rethinking incentives is something we need to do in every aspect of public education.

Julia Steiny is a former member of the Providence School Board; she now consults and writes for a number of education, government and private enterprises.