Teacher pensions soak up education funds

Nearly one-tenth of education spending, or more than $1,000 per pupil on average, goes to teacher pensions, according to University of Arkansas professor Robert Costrell.

That's twice the amount spent in 2004, when pension costs were about $500 per pupil.

Compared to the private sector, the cost of public school teacher pensions has risen dramatically. In 2004, the employer cost of a public teacher pension was 12 percent of earnings. Today, it is 20 percent. Over the same time frame, pension costs for private sector professionals have mostly held steady, rising only from 10 percent of earnings to 11 percent.

"The reasons for the dramatic rise in pension costs for school employees vary from state to state, but the main cause is payments to amortize the enormous unfunded liabilities that have come to exist as states and districts have deferred payments on benefits they have promised to their teachers and other employees," says the staff at Education Next.

Regardless of the cause, state and local leaders need to find solutions. In many areas, switching to a defined-contribution pension plan could help resolve unfunded liabilities over the long-term.

Jason Russell is a commentary writer for the Washington Examiner.
Read more on WashingtonExaminer.com