Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: In Pension Plan, Lower-Paid Teachers Subsidize the Better-Off

Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: In Pension Plan, Lower-Paid Teachers Subsidize the Better-Off

Article excerpt

Teachers love their pensions. A generous monthly check at the end of one's career helps make the important, and sometimes underappreciated, profession worthwhile.

I wonder if teachers in Missouri's lower-paying rural districts realize, though, that their pension contributions help subsidize the retirements of their better-paid counterparts in districts like Rockwood and Clayton.

That's the finding of new research by James Shuls, assistant professor of educational leadership at the University of Missouri-St. Louis. The inequities occur because the Missouri Public School Retirement System bases pensions on a teacher's last three years of salary, and because some districts grant much steeper raises over the course of a career.

The subsidy effect isn't just the result of differences in pay, Shuls notes, and it isn't unique to teachers.

"Any pension system that's designed in this way is going to have a similar problem when you have people on different earning trajectories," he said.

"The poorer school district gives much smaller raises over time," Shuls explained. "They have a relatively flat salary schedule."

Well-funded districts are more generous with their experienced teachers. A suburban teacher's pay can easily double over a 30-year career, while a typical rural teacher sees much smaller raises.

All teachers contribute 14.5 percent of pay to the pension fund each year, and school districts kick in a similar amount. Because the pension is based on those crucial last three years rather than a careerlong average the teacher who got bigger raises realizes a much greater return on those contributions.

The effect is easiest to see when teachers become administrators and make six-figure salaries. When a former Wentzville superintendent became acting head of the better-paying Rockwood district in 2013, the Post-Dispatch reported that the one-year job would raise his annual pension by $20,000. …

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