Teacher Pension Penalty

NEWSPAPER EDITORIAL

September 5, 2008 - Editorial from the Charleston Daily-Mail: Misconduct = loss of pensions (for elected officials and state employees, including teachers.)

To its credit, the state Consolidated Public Retirement Board has acted in cases of public employee misconduct.

Jerome Fruit, 54, of Scarbro, a former Fayette County middle school teacher, had 30 years in the Teachers Retirement System when he pleaded guilty in 2007 to possession with intent to distribute at least 500 grams of cocaine. He was sentenced to five years in prison.

They conclude:

Obviously, a few public officials and public employees either don't know right from wrong or don't care.

The possibility of losing a nice pension would clarify thought processes statewide. That would be helpful.

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tt entry for Fruit.

Unfunded Teacher Pensions

Jan 16, 2008 - Governor Rell is hoping the State Bond Commission will approve the sale of $2 billion worth of bonds to help close a nearly $7 billion liability in Connecticut's teachers' retirement fund.

Revenue from the bond sale will be reinvested, with hopes of earning a higher rate of return. The new law also commits the state to fund the teachers' pension fund at 100 percent of recommended contributions, which the state failed to do from 1992 to 2005.

Previous entry on Connecticut's unfunded teacher pensions.
See Unfunded Pension entries.
Pew Study Finds States Face $2.73 Trillion Bill for Retiree Benefits PDF

Unfunded Pensions

When teacher retirement funds are unfunded to the tune of billions, the response in West Virginia is to seize one teacher retirement fund and merge it with another.

Jan 17, 2008 - After a hearing Jan 8, three of five Justices on the West Virginia Supreme Court of Appeals refused a petition of the West Virginia Consolidated Public Retirement Board for an appeal of Circuit Judge Paul Zakaib's decision that made the consolidation of two teacher retirement funds unconstitutional.

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TT - Unfunded teacher pensions are a major problem, but in West Virginia, it's worse than any other state. Continued here for space considerations.

Unfunded Pensions

The state’s share of the pension bill for teachers alone is expected to soar from $80.2 million this year to a projected $94.8 million next year.

Jan 10, 2008 - In Rhode Island, the Speaker of the House submitted a bill to create a commission to study how to finance state pensions that are currently underfunded by $4.9 Billion.

New age-and-work requirements adopted by lawmakers in 2005 were aimed at stemming the growth in cost.

But longtime state workers and public school teachers can still retire at any age — and newer employees at age 59 — with an almost unheard of benefit in private industry: a defined-benefit pension that pays them up to 75 percent of what they were making in their final years of work, with guaranteed annual cost-of-living increases of up to 3 percent.

The average pension paid a retired state employee was $22,493, and retired public school teacher, $40,151, during the year that ended June 30.

With a $4.9-billion unfunded liability accruing interest at 8.25 percent per year through 2029, Rhode Island struggles every year to come up with enough taxpayer money to pay the annual tab.

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Rhode Island isn't the only state to have large unfunded pensions.

See HERE and HERE and HERE and HERE and HERE and HERE

Pension Fund Shortfalls

Dec 27, 2007 - The Argus reports that pension funds in Vermont are on solid ground - except for the pension fund for Vermont's teachers. Those are funded at about 84.6 percent.

The Pew Center recently released a report called Promises With a Price, Public Sector Retirement Benefits.

There is another obligation the state owes former workers as well - other benefits like retiree health care, dental and life insurance. Over the next three decades that will mean $552 million to the state of Vermont, according to the report.

NEW JERSEY The pension shortfall in New Jersey is $25 BILLION short of the funding needed to cover its pension obligations as of 2006. In addition, the state faces a $58 billion shortfall for retiree health benefits.

Nationally, only 14 states have set aside enough to cover 90 percent or more of their pension costs.

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The stories don't' link to the report, but it is here. (pdf)

Pew press release with links to state fact sheets as an overview. Sample

Because of a new rule by the Governmental Accounting Standards Board, the states are required to identify these costs in their FY 2008 financial reports. The Pew report is a preview of these numbers.

WEST VIRGINIA

UNFUNDED PENSIONS

WEST VIRGINIA Sept 10, 2007 - From AP: The Legislature faces a potential price tag of as much as $215 million if it wants to aid the nearly 20,000 teachers and school workers whose 401(k)-style retirement accounts lack sufficient funds in all but a handful of cases.

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TT - Mind you, West Virginia received $804 million from tobacco securitization. (Selling all future tobacco settlement income to investors for a much smaller one-time lump-sum payment.) The $804 million was supposed to have assured the stability of the teachers pension fund.

See our collection of Unfunded Pension stories.

Unfunded Pensions

TEXAS June 25, 2007 - The Texas Attorney General reports that there are 82 unfunded public pensions with liabilities of $23 Billion.

One of the worst is the Teacher Retirement System of Texas with an unfunded liability of $13.9 Billion.

Unfunded Teacher Pensions

CONNECTICUT News Story dated June 4, 2007 - The state of Connecticut wants to borrow $2 million worth of "pension obligation bonds" to help narrow the $6.9 BILLION dollars of unfunded teacher pension liability.

The investment income would go toward paying off the debt and replenishing the pension fund coffers. But some lawmakers said the state was taking too much of a financial risk. Rep. Shawn Johnston, D-Thompson, said the state would be better off setting aside surplus funds and also making regular payments for the pension fund.

"I think, quite frankly, we are taking a gamble with our teachers' retirement," he said.

The bill, which moves to the Senate, also commits the state to fund the teachers' pension fund at 100 percent of actuarial recommended contributions, something the state failed to do from 1992-2005.

TT - Explanation of the bonds here. If they make money on the investment, they'll spend it. If not, they'll just raise taxes.

Teacher Retirement System

May 15, 2007 - A bill was introduced by state Sen. Harry Coates (R) to "fix" the teachers retirement system.

With a funded level of only 49 percent, it is currently the third-worst funded education pension system in the entire nation.

With the passage of SB 357, which will phase in higher employer contributions through increased state appropriations, we should be able to bring the funded level to about 80 percent by 2026, and to 100 percent within a few years after that. This is critical to ensure the pensions of tens of thousands of Oklahoma educators.

TT - the question is why should taxpayers contribute even more to a retirement system that should be self-funding? The reason why teachers don't pay Social Security taxes is because they opt out to join the generous teacher pension plans. If pension payouts exceed contributions, that, surely, is THEIR problem, not taxpayers. The obvious solution is that they should receive less benefits, commiserate with their contributions and pension fund earnings.

May 7th, 2006 [Date is correct.] news article that signalled the Governor would sign the bill.

SB 357 would increase the contribution requirements of school districts on behalf of its employees, contingent upon the Legislature providing the additional funding. It also would make sure dedicated revenue sources, including personal income tax, sales tax and use tax revenue, are not reduced, regardless of economic downturns or tax cuts.

The bill would cost about $10 million in the upcoming fiscal year and eventually would cost the state $60 million a year. If the funding is put in each year, the bill would put the state on track to fund the teacher retirement system at 80 percent by 2026.

Standard & Poor's recently ranked Oklahoma's pension funds 49th out of 50 states in percentage of unfunded liabilities. Only West Virginia fared worse.

See April 3, 2006 article in the Journal Record by William O. Pitts.

Just in passing

The headline reads, "Qwest, Calif. Teachers Reach Settlement" but it should have read: "California State Teachers' Retirement System Loses $100 million" -- in a bad investment.

Such is our media oversight of the national education industry.