Tags: teachers | pensions | states | report | teacher quality

Teachers' Pension Plans Sinking Fast, Report Says

By    |   Wednesday, 28 Jan 2015 09:15 AM

Teacher pension plans across the country are sinking in debt and will be unsustainable unless drastic changes are made, a report from the nonpartisan National Council on Teacher Quality finds.

"Do the math and it is clear that most state pension systems serving teachers are in peril and getting more unstable all the time," the report states. "In 2014, teacher pension systems had a half trillion dollars in unfunded liabilities — a debt load that climbed more than $100 billion in just the last two years.

"States need look no further than the role pension debt played in bankruptcies in municipalities as varied as Detroit; San Bernardino, California; and Central Falls, Rhode Island, for a wakeup call."

Just eight states — Delaware, Idaho, North Carolina, Oregon, South Dakota, Tennessee, Washington and Wisconsin plus the District of Columbia — have well-funded pension plans, according to CBS News.

Illinois has unfunded liabilities of $55 billion, which equates to $27,000 of debt for every student currently in its system, The Daily Caller reports, while the Alaska student debt is  more than $25,000 per student. The national average is $10,400 of debt per student.

Only South Dakota’s pension system is perfectly funded, according to the Daily Caller, citing the report.

The overall grade awarded by the National Council on Teacher Quality to states was a "C-."

Alaska was the only state to receive an "A" for its pension practices, followed by South Dakota with a "B+." Mississippi scored last, with an "F" for its long vesting periods and poorly funded system, according to CBS News.

Alaska, according to the Daily Caller, scrapped its pension system and launched a portable plan that can be properly funded year to year.

The report points out that pension contribution rates have gone up in more than half of states, with 36 states requiring "excessive teacher contributions."

The National Council on Teacher Quality suggests ways to fix the pension system, such as not using unrealistic rates of return on the funds. They also recommend making the plans portable. Currently, only Alaska has adopted a mandatory plan that allows for portability. Florida, Michigan, Ohio, South Carolina and Utah offer the option of a portable plan.

Plans must also start paying down the growing debt and teachers should be able to vest in their retirement system no later than the third year of employment, they suggest.

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Teacher pension plans across the country are sinking in debt and will be unsustainable unless drastic changes are made, a report from the nonpartisan National Council on Teacher Quality finds.
teachers, pensions, states, report, teacher quality
393
2015-15-28
Wednesday, 28 Jan 2015 09:15 AM
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