One of the most persistent, and frustrating, myths in education is the myth of the fatcat teacher stealing precious school dollars to sock away in her gold-plated pension fund. This notion got an extra jolt yesterday from Chad Aldeman of Bellwether Education Partners, who made this interesting claim on Twitter:
Bobby Bonilla鈥檚 salary trajectory is similar to how many teachers are paid: Underpaid in early years, large back-end raises, big pensions:
鈥� Chad Aldeman (@ChadAldeman)
You might be asking yourself: who the heck is Bobby Bonilla? Bonilla was a six-time all star professional baseball player, and finished in the top three in MVP voting twice. He was a productive player. Not as productive as his salary might have suggested (Aldeman鈥檚 use of the 鈥淲ins Above Replacement鈥� metric is intended to show that he made more money than he earned), but still pretty productive.
It鈥檚 funny that Aldeman chose Bonilla as his example, though, because Bonilla is also known for something else. See, Bonilla left Pittsburgh for New York, and after bouncing around some, landed back in the Big Apple in 1999. That year Bonilla hit .160 and drove in only 18 runs in 119 at bats, so with a $5.9 million salary looming in 2000 the Mets agreed to restructure his contract. Luckily for Bonilla, he had an agent named Dennis Gilbert who negotiated a sweet deal with the hapless Mets: Gilbert convinced them to defer Bonilla鈥檚 salary and pay him over 25 years instead. With interest. Eight percent interest, to be exact.
As a result, . When the last payment comes in on July 1, 2035, Bonilla will have turned his $5.9 million into $29.8 million. To which I say: well played, sir. Anything that sucks money out of the Mets鈥� payroll is okay with this Braves fan.
This is how deferred compensation is supposed to work: you give up something in the short run for something better in the long run. Unfortunately this is not how things work for teachers, who are not only underpaid during their careers but underpaid after them too. Where are all these teachers picking up 鈥渓arge back-end raises鈥� and settling into retirement with 鈥渂ig pensions鈥�? The reality is that teacher pensions are hardly 鈥渂ig鈥� at an individual level and 鈥渓arge back-end raises鈥� are simply a figment of the public鈥檚 imagination. Have you ever seen a pay scale for teachers? Here鈥檚 . Here鈥檚 . And here鈥檚 . I don鈥檛 know about you, but I鈥檓 not seeing big back-end raises. I鈥檓 seeing very small incremental raises, year over year鈥攑robably not even enough to keep up with inflation. I鈥檓 seeing one scale that ends at twenty steps. That probably means that after your 20th year of teaching not only do you not get a 鈥渓arge back-end raise"鈥攜ou get no raise at all. End of story.
I鈥檓 also seeing a scale that tops out at $57,867. That鈥檚 the top of the scale! And you鈥檇 have to work for 32 years to get to it. Let鈥檚 just put this to bed: you鈥檇 have to draw a much straighter line than the one representing Bonilla鈥檚 salary to actually represent the salary histories of most teachers. 鈥淟arge back-end raises鈥� just don鈥檛 exist in teaching. For a lot of teachers, small ones don鈥檛 either.
So what about those 鈥渂ig鈥� pensions? clears that one up for us. As you can see if you click through, the average benefit for new retirees is hardly what I think anyone would characterize as a 鈥渂ig pension.鈥� Most teachers have traditionally received a portion of their final year鈥檚 salary as an ongoing pension benefit (it鈥檚 called a 鈥渄efined benefit鈥�) after they retire鈥攏ot their full salary, and nowhere near gold-plated levels considering that most are not making high salaries when they retire to begin with.
And there鈥檚 more to the story. As , 鈥減ension averages tend to be skewed by a small number of large winners.鈥� He correctly points out that many teachers never receive any pension benefits whatsoever, usually because they leave teaching before their contributions vest, and even those that do remain rarely teach in the same place long enough to max out their benefits. To jump from 鈥渁 small number of large winners鈥� to the claim that 鈥渕any鈥� teachers enjoy large raises and big pensions seems disingenuous, at best. At worst, it鈥檚 irresponsible.
Of course, this is exactly the jump you would want to make if you were trying to convince policymakers and the public that defined benefit plans are bankrupting America鈥檚 economy and that defined contribution plans would be better. You might even go a step further and blame collective bargaining by those hated teachers unions for making things worse. Rick Hess is definitely on that bandwagon: he by teachers in Chicago for ruining the city鈥檚 finances since teachers there refuse to 鈥減ick up their full nine percent pension obligation.鈥� He suggests that greedy teachers (or at least their unions, who have 鈥渉ave siphoned vast sums out of classrooms and into retirement and health benefits that do nothing for students鈥�) should simply tear up the agreements they made with the city and pay for their own retirements themselves. This would be like the Mets demanding that Bobby Bonilla stop being greedy and give back some of the money they agreed to pay him because they changed their minds. Who needs contracts anyway?
Hess would have us believe that the only solution is to wean all of these self-interested teachers off this wasteful system and deliver them straight to Wall Street, where they can have their retirements managed like everybody else. ?
Is that the only solution? I鈥檓 not so sure. At the end of the day, the real source of trouble in teacher pension plans is not that plans are too generous, or that teachers won鈥檛 contribute enough of their salaries to support them. It鈥檚 that politicians can鈥檛 seem to find the political courage to deal with a ridiculously inadequate education funding problem. Chicago鈥檚 mayor, Rahm Emanuel, says to resolve the city鈥檚 financial crisis by agreeing to higher property taxes and now wants Chicago鈥檚 teachers to do the same. He forgets, of course, that teachers are taxpayers too. They鈥檝e already stepped up. Now we need elected leaders to step up and admit that their responsibility to taxpayers includes a responsibility to ensure that schools are adequately funded and are capable of delivering a high quality education to all kids. In part that means compensating teachers with professional-grade salaries and benefits.
Yes, the pension system is badly broken, but, no, it鈥檚 not because teachers are robbing us blind. You don鈥檛 negotiate your salary or your pension if you鈥檙e a teacher in this country. You accept it. That鈥檚 just the way it is. Blaming teachers for the pension mess is no better than blaming 鈥溾�� for the failure of government to provide an adequate safety net for poor Americans. This is scapegoating, pure and simple, and it鈥檚 designed to take your eye off the ball.
If we kept our eyes on the ball we鈥檇 know that we can have it one way or another but not both ways. We can entice people to consider teaching and pay them low salaries with the promise of secure benefits, or we can promise them higher salaries with less generous benefits. If we choose the first route we鈥檒l be choosing stability in the teacher workforce; if we choose the latter, we鈥檒l be encouraging people to teach for a short time and then move on to something else. Either way, let鈥檚 start with accurate assumptions so we can at least have an honest conversation about our options.