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040105 Don't rely on administration to explain rising retirement costs
To the Editor:
Indeed, as you wrote on the "Economics and emotions of teacher retirement," (The Record-Review, March 11), the "the rising costs of the state retirement system is a line item that sometimes needs explaining." I just wouldn't rely on the administration to give a full and accurate story
District superintendent Debra Jackson claims that "we [teachers] pay into the retirement system" similar to Social Security. But her analogy to the Social Security system leaves the impression that as employees, teachers have to match the employer school district contribution.
In fact, however, for teachers hired prior to July 2, 1976, contributions are optional. For those hired after July 2, 1.976, they only have to contribute 3 percent of salary for the first 10 years of service.
The school district (read, taxpayer), on the other hand, is required to make a contribution in accordance with an actuarially determined "employer contribution rate" for each year of teacher service.
The rate is based on the overall performance of the $80 billion fund to meet the pension obligations to 254,515 active teachers and 121,000 retirees (as of 6/30/04). The rate fluctuates, obviously. For some perspective, in 1983-84, the district contributed 22.9 percent of payroll! In 2001-2, 0.36 percent.
These days it's creeping up again. For 2003-4, it's 2.52 percent; for 20045 it doubles to 5.63 percent. When you have a payroll of over $34 million, those are big numbers.
What irks me is the district's feigned indignation and surprise. They've known the big increases have been coming for years, but as the obligation decreased down to 0.36 percent, the savings weren't built into the next budget. Instead, the administrators found new permanent ways to spend this "found" money. The board is either negligent or ignorant of this shell game.
Thus the "p.r. move" to blame the "state" for a sudden "accounting change."
The other glaring omission in your reporting is the "retirement award." It's really unbelievable. Each retiring teacher gets a cash bonus on retirement totaling l percent of the final year's compensation times years served.
A teacher earning, say, $100,000 with 37 years of service gets a check for $37,000. What for? Showing up. This is not mandated by the state. It's an item in the teacher contract that must be eliminated.
Aren't the high salaries, pension, and health benefits compensation enough? This extra "retirement award" is truly unwarranted, excess compensation.