The loudest rallying cries from Colorado teachers protesting for more education dollars were about dwindling paychecks that are steadily losing ground to the state’s rising cost of living.
Teachers usually say a persistent funding shortage, which has cost public schools $6.6 billion since 2009, led them to walk off the job and close down schools last week. But among the biggest reasons for lagging pay is one of the least understood: The rising cost of state pensions.
Colorado isn’t the only state where an underfunded retirement system has played a role in a teacher uprising sweeping the US In Kentucky, educators in at least 20 school districts walked out of their classrooms after the GOP-led Legislature in March passed a measure reducing retirement benefits for future teachers.
Elsewhere, pay and other benefits, such as health care, have been at the forefront of teachers’ demands, including in Arizona, where a historic statewide strike has closed down schools for three days. But that doesn’t mean rising pension costs are not a factor behind the scenes.
Public pension systems nationwide are facing record levels of debt, totaling $1.4 trillion, according to a recent Pew Charitable Trusts study. That puts downward pressure on wages and benefit checks as governments struggle to close the funding gap. It suggests the recent outcry over teacher pay could spread in the coming years, whether pension costs are widely acknowledged as a driving factor or not.
“I think what you see happening in the state and local and municipal sector is it has now become very, very clear how expensive defined benefit plans are. I think we’re headed for a big crisis across the country,” said Olivia Mitchell, executive director of the Pension Research Council at the University of Pennsylvania. “Pensions are now becoming the tail that wags the government dog, if you will.”
In Colorado, school district payments to the public pension fund have roughly doubled since 2006, from around 10 percent of payroll to 20 percent. That has squeezed personnel budgets when the state also was cutting funding during the economic downturn.
In that time, average teacher salaries have grown 21 percent, from $44,439 to $53,768, according to salary data from the National Education Association. But inflation in the greater Denver area has outpaced it, according to the Bureau of Labor Statistics, leaving teachers with an 8 percentage point drop in buying power.
Since the recession, Colorado school districts have shed staff, frozen pay and cut programming to make ends meet. Some have even shifted to four-day weeks.
Published in Daily Times, May 2nd 2018.
