Pension legislation a mistake for lame-duck session

Rick Joseph

The proposed legislation before the Michigan Senate, SB 102, aims to enter all new public school employees into a defined contribution system, or 401(k).

While the intent of this proposal may be to address the $26.7 billion shortfall in the Michigan Public School Employee Retirement System, the plan would actually result in an additional $13.6 billion expense over 30 years, plus an additional $4.5 billion in short-term costs. All educators hired after 2010 are already enrolled in a hybrid pension that is fully funded.

There is a need for fiscal responsibility and the elimination of unfunded liabilities, but this legislation must be carefully considered and certainly not pushed through during a lame-duck session of the state legislature.

“It’s noteworthy that defined benefit plans still serve certain industries and companies well, especially those with particular talent and retention needs,” said Kevin Wagner, senior retirement consultant at Towers Watson. “Eliminating defined-benefit pension plans and switching to 401(k)-style defined-contribution plans will not save money because dollar-for-dollar defined-benefit pension plans are much more efficient.”

Effective schools and school districts require stability. A relatively well-funded district like Birmingham prides itself on its stability, but the proposed legislation would destabilize even places like Birmingham by making teaching a less desirable career option. If Birmingham ceases to be an attractive place to work, who would want to be a teacher anywhere?

The volatility and relative financial risk involved in a required complete 401(k) plan makes teaching even less of a career choice worth consideration. The greater stability of a hybrid pension offsets the relatively low salaries that teachers make.

Education is a relationships-based field. If a company has a churn of employees, that may or may not affect its productivity and growth. If a school has a constant turnover of teachers, it is impossible to build relationships with students. Research proves that student learning suffers.

Furthermore, creative career advancement, teacher leadership opportunities, and participation in a defined benefit plan need not be mutually exclusive. We must continue to promote ways that teachers can stay in one district and remain nurtured, stimulated, and professionally challenged throughout their career, such as encouraging teachers to achieve National Board Certification.

Too many schools and school districts throughout Michigan have a significant rate of teacher turnover. Coupled with the fact that half of all new teachers in high-needs areas leave the profession within five years, anything that further destabilizes public education through disincentivizing teaching is misguided education policy. No one wants his or her child to endure the comings and goings of multiple new teachers every year, or worse, in the same school year.

Instead, our legislature should consider ways to support the desirability of public education so that it becomes a stable, sustainable career choice for entry-level professionals. Special attention must be paid to supporting schools in high-needs areas where educators’ jobs are more challenging as they consistently must do more with fewer resources.

Attempts to recruit and retain talented teachers are a critical component of real, long-term education reform that is systemic and enduring. A secure retirement plan that offers at least a hybrid defined benefit to educators is a part of the need to promote stability in our public education systems.

Rick Joseph, 2016 Michigan Teacher of the Year, is a teacher at Covington School in the Birmingham Public School district.