GUEST COMMENTARY: Pension plans derail efforts to improve public schools

Tuesday, June 10, 2014 | 6:00 a.m. CDT

What if instead of busing students from failing school districts to accredited ones, we bused great teachers from accredited schools into the failing districts? That idea has won a fair amount of attention.

Last November, the Cooperating School Districts of Greater St. Louis pitched the idea of providing high-quality teachers as instructional coaches in struggling schools. A similar idea was raised by CEE-Trust, the consulting firm that the Missouri Department of Elementary and Secondary Education hired to address problems in the Kansas City school district.

The CEE-Trust proposal called on accredited school districts “to play a significant role in helping (unaccredited) systems improve.” The St. Louis Post-Dispatch heaped praise on this idea, calling it among the “more promising ideas.”

However, there is one easily overlooked obstacle standing in the way of turning this localized version of a teacher peace corps into a reality in our two biggest cities: the incompatibility of different pension systems.

Pension plans differ

The suburban districts are a part of the Public School Retirement System, as are all other school districts throughout Missouri – with the exception of St. Louis and Kansas City, which have autonomous pension systems. If a teacher moves from PSRS to one of the city plans, he or she will incur a significant loss in pension wealth.

This is not a new problem but a longstanding one. St. Louis and Kansas City have been struggling with this for years. Research by MU economists has demonstrated that the separate pension systems create a barrier to recruiting school leaders into the two urban school districts.

The separate pension systems also limit the pool of teachers who are willing to work in the cities. Jeffrey Kuntze, chief operating officer of the Confluence Charter Schools in St. Louis, says “the separate pension systems make it extremely difficult for us to recruit veteran teachers from the county. We can get them when they retire but not mid-career.”

These pension boundaries are not a problem for Normandy and Riverview Gardens, which are in PSRS, but they would make it practically impossible for high-performing school districts to operate a program, run a school or loan teachers within the St. Louis or Kansas City boundaries. They simply could not move teachers or school leaders across pension boundaries without making them suffer great financial penalties.

Thorny problem

There is no easy way to solve this problem. Some have suggested we move St. Louis and Kansas City into PSRS. This sounds like a good idea but is practically impossible because of Social Security. City teachers pay into it, while PSRS teachers do not.

Schools in St. Louis and Kansas City cannot withdraw from Social Security. In effect, we have a Hotel California problem — urban schools can check out any time they like, but they can never leave Social Security.

The only real solution is to close the current systems to new entrants and place them in a new, statewide system that participates in Social Security.

Before this idea causes mass hysteria, let me stress that this would not affect current employees’ or retirees’ pensions. They would remain secure in their current system. It would, however, remove the artificial pension boundaries and allow us to create a better pension system for teachers and students.

Costly, critics say

Opponents of this idea claim that closing the current defined benefit systems would be financially unsound, as it would lead to considerable “transition costs” that would far outstrip any benefits that we may receive.

This is the very issue tackled in a recent Show-Me Institute policy study by Andrew Biggs, a resident scholar at the American Enterprise Institute. Biggs examines the evidence for “transition costs” and concludes that the concerns are “largely mistaken and should not stand in the way of public employee pension reforms.”

Whether you believe busing teachers into failing schools is a viable solution or just another feel-good proposition, fixing this pension problem should be a top priority. Missouri should not have a system that puts our neediest communities at a disadvantage when it comes to recruiting talented teachers.

James V. Shuls, Ph.D., is the director of education policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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