Retirement Benefits Represent Big and Growing Cost for Schools

NCPAIt’s for the kids, right? Wrong. And there’s no question that public school administrators and teachers could care less about the future of education funding. They want theirs, period. From the NCAP:

The costs of retiree benefits for educators, including “legacy” costs from unfunded benefits for previous retirees, consume a large and growing share of public spending on K-12 education, say Cory Koedel, an assistant professor of economics, Shawn Ni and Michael Podgursky, professors of economics, at the University of Missouri, Columbia.

  • Between 2004 and 2012, data on fringe benefits from the Bureau of Labor Statistics show that pension costs for public educators rose from 11.9 percent to 16.7 percent of salaries.
  • In contrast, pension costs for professionals in private firms were relatively flat, at about 10 percent of salaries, over the same period.

These gaps are likely to continue to widen as states and school districts attempt to pay down large unfunded liabilities in educators’ defined benefit (DB) pension plans.

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