Baltimore?s trusted Abell Foundation recently released a report debunking the myth that Maryland?s teacher pension plan hurt efforts to recruit and retain good educators. Finally, some closure for this issue?
The Maryland State Teacher?s Association had advocated for a pension hike so as to better recruit and retain teachers. It complained that Maryland teachers received the worst retirement benefits in the nation. Yet the study found “There is no evidence that variation in defined benefit plans affects teachers? turnover. Ironically, teachers have one of the most attractive defined benefit pension systems, yet teacher turnover remains very high, primarily due to high rates of turnover among young teachers.”
It also found that when combined with Social Security ? something teachers in many other states will not receive ? Maryland?s pension system prior to the increases enacted this spring compared favorably to other states. That finding alone eliminates any reason for the state teacher union to complain.
We wish this study, done in cooperation with the Maryland Public Policy Institute, had been completed prior to April, when Gov. Robert Ehrlich signed a bill into law that raised retiree benefits for teachers. It would have injected some common sense into what became a very emotional debate. Those who retire after 30 years will now receive 54 percent of their total salary each year, up from 42 percent. It will cost Marylanders $120 million this year and about $1.67 billion over 25 years ? a quarter of what the union requested.
At the time, The Examiner noted multiple factors contribute to teacher recruitment and retention. And that the best way to pay for teacher retirement is to move to a defined contribution plan ? the kind the vast majority of private-sector employees use. With a defined contribution plan, teachers would be able to take their retirement plans with them to a new job ? in or out of the state?s public school system. With nearly 11 percent turnover each year, thousands of Maryland?s teachers would benefit from a switch.
Besides, taxpayers must not be asked to pay for a retirement plan richer in formula than anything they will ever receive. Only 21 percent of private-sector employees receive defined benefit pensions, compared with 90 percent of state and local government employees, those who were once said to work in public “service” jobs. With the state facing an estimated $20 billion bill just for government retirees? health care, we the people can ill afford another hike in benefits for those in our employ.
The Abell Foundation report shows the union?s lobbying for what it was ? a scam to raise teacher benefits disguised as a way to better educate Maryland?s children.
Legislators would better serve the state?s students by enacting reforms proven to help them — including widening school choice options for parents. And since working conditions and pay have been proven to affect teacher performance, why not reward those who excel with merit pay or give signing bonuses to those qualified to fill math and science positions ? the hardest to recruit.
Debating the best way to improve student performance should be a top priority for legislators when they return next month. They can eliminate hiking pensions from the mix, thanks to the Abell Foundation study.
To read the report “Is it time to rethink pensions in Maryland?” go to www.abell.org and click on the November 2006 newsletter section.
