Gov. Robert Ehrlich this week signed into law a bill that increases pensions for teachers.
Maryland public school students and their parents can hardly wait to see how much the quality of their experience will go up this fall or even five falls from now as a result of this wasteful expenditure.
Not.
Here?s how it works:
Teachers who began working in Maryland in 1998 or later and retire after 30 years will now receive 54 percent of their total salary each year after leaving their jobs, up from 42 percent. This could work out to half pay at 52 or 53, right?
Lots of you have that kind of pension, right?
Not.
The bill for “we the people” will be $120 million this year and an estimated $1.67 billion over 25 years.
The Maryland State Teachers Association had been pushing for a $480 million-a-year increase that would have pushed pensions to 60 percent of annual salaries. It said it would help to recruit and keep good teachers. Fortunately or unfortunately, the union got a quarter loaf.
Who could be against hiring or keeping good teachers? No one. But who truly thinks that our brightest young people, considering job opportunities, think first or second or even third about what their pension take is going to be 40 years later?
A number of studies, including one from 2001 by Richard Ingersoll of the University of Pennsylvania, show that many factors contribute to teacher turnover, not least the work environment.
Sounds a lot like where many of the rest of us work in the private sector.
Supporters say the law is necessary to push Maryland teacher pensions closer to the national average of about 57 percent of annual salary, as if teachers really look at moving to another state to get a slightly higher pension benefit.
A defined-contribution plan makes much more sense ? of course.
With a 401(k), workers can take their retirement accounts with them like everyone else lucky enough to have any pension benefit when they switch jobs. With about 7,000 of the 64,261 Maryland instructors leaving the school system each year, many current teachers would benefit from a portable plan. Some businesses match employee 401(k) contributions based on the success or profitability of the unit of business in which those employees work.
Expanding a defined-benefit plan like the one in place for Maryland teachers defies common sense. Businesses around the country are slashing defined benefit pension programs left and right to respond to the rigorous demands of global and local competition.
Supporters of higher pensions say teachers deserve it because they make less than private-sector workers.
But that argument doesn?t work here.
At an average salary of $52,331, Maryland?s teachers make $11,000 more per year than the average private-sector worker in the state. They can save on their own ? like the rest of us. And their employer (the rest of us) could match a percentage of their contribution.
If we are going to spend more money on teacher compensation and work conditions, let?s spend it on starting pay or, better still, signing bonuses for great teaching prospects or students not interested in teaching right now who are so smart we want them to be interested. If we can?t get merit increases past the public union contracts that hamstring our schools, let?s try harder to reward successful teachers for success in the classroom as reflected by the success of their students. And let?s spend money, of course, on making teachers and their students safer in our schools.
But we won?t get to spend our money that way without a change in the law.
The legislature and governor have decided to raise teacher pensions instead.
