Civic Report 61 | UNDERFUNDED TEACHER PENSION PLANS: It’s Worse Than You Think

One more report warning of the problem with state sponsored pensions.  This seems to be another debt bomb that everyone is consiously ignoring.  Tick – Tock, Tick – Tock!

Please, read the whole thing.

 

Civic Report 61 | UNDERFUNDED TEACHER PENSION PLANS: It’s Worse Than You Think

Josh Barro, Walter B. Wriston Fellow, Manhattan Institute for Policy Research
Stuart Buck, Distinguished Doctoral Fellow, Department of Education Reform, University of Arkansas

This report was co-sponsored by the Foundation for Educational Choice

SUMMARY
Teacher pension funding gaps are three times greater than what states report, states a new Manhattan Institute/Foundation for Educational Choice study. Authors Josh Barro and Stuart Buck reveal the major disparity between what states report and the true value of unfunded liabilities for teacher pensions. These liabilities for all 50 states now total almost $1 trillion—an unfunded burden that states must pay over time at taxpayer expense.

To all the other fiscal travails facing this country’s states and largest cities, now add their pension obligations, which are far greater than they may realize or are willing to admit. This paper focuses on the crisis in funding teachers’ pensions, because education is often the largest program area in state budgets, making it an obvious target for cuts.

Although it is generally acknowledged that education is the foundation of every modern society’s future prosperity, schools unfortunately will have to compete with retirees for scarce dollars. This competition is uneven, because retirees have a legal claim on promised pension benefits that supersedes schools’ budgetary needs. Consequently, Americans can look forward to higher taxes and cuts in services, resulting in fewer teachers, bigger classes, and facilities that are allowed to deteriorate. In several states, these developments have already arrived.

The crux of the problem is the gap between assets and liabilities affecting the fifty-nine pension funds that cover most public school teachers in America. Some of these are general state-employee pension funds, while others cover only teachers.