Pension Costs Are Draining School Budgets
Student enrollment is falling at public schools across the country, impacting funding streams and threatening financial solvency, as schools continue to be on the hook for considerable fixed costs like loans or debts. Having to pay out teacher pensions (mostly using current revenue to pay retired teachers) is contributing to this growing problem. But even though teacher pension plans are tremendously expensive, they’re still not serving the majority of their members. There are better ways to provide benefits in a more sustainable way.
Nationally, teacher pension costs amount to around $83 billion a year, or about one out of every ten dollars that taxpayers provide for public education. That works out to almost $1,700 per student.
These pension payments are eating up a growing share of the funds that taxpayers think are paying for teaching and learning. This millstone weighs down districts and hampers their ability to be responsive and flexible to falling enrollment levels or other changes in student needs.
States and districts are contributing nearly 20% of each current teacher’s salary toward pension costs. That figure is much, much higher than what a typical private-sector employer pays toward retirement benefits and does not include Social Security contributions.
