Can Georgia schools afford rising teacher benefits?

The Teacher Retirement System’s board recently voted to increase the “employer,” or government, contribution rate to the fund by almost 25 percent starting July 1 of next year. That rate — a percentage of employee payroll — will have more than doubled since 2012. (AJC File)

I was chatting with my AJC colleagues in the office today about possible candidates for the chief turnaround officer created by the new law on state intervention in failing schools. I wondered about Hall County Schools Superintendent Will Schofield, who is liked and respected by Gov. Nathan Deal.

In the midst of that discussion, my editor sent me a link to a fascinating story in the Gainesville Times in which Schofield predicts school districts will not be able to maintain the level of benefits now accorded employees. Schofield says the rising tab facing his district and others is “on an unsustainable path.”

Georgia and other states are shifting more of the cost of school staff benefits to local school districts. According to a Georgia Budget & Policy Institute analysis of Deal’s new  budget:

School districts employ bus drivers, custodians, administrative staff and other workers who are not certified to teach. For many years, districts and the state shared the cost of providing these workers health insurance through the State Health Benefit Plan. Georgia began reducing its contribution in 2009 and eliminated it entirely in 2012. Plan administrators increased the monthly amount districts must pay for employees from $218.20 to $846.20 in the 2017 fiscal year, adding over $400 million to districts’ health care costs. The monthly bill for each non-certified worker is set to climb to $946 in the 2018 fiscal year, an increase to districts’ total cost of almost $30 million.

The budget calls for $166 million less than the state’s school funding formula calculates school systems should receive. School districts will need to pay nearly $30 million more for health insurance for bus drivers and other non-teaching staff, and that’s on top of steep price hikes in previous years. Districts will also shoulder a portion of rising retirement costs and offset shrinking state funding for student transportation.

The Times reports: (Try to read the full story as it is informative.)

Hall County’s proposed 2018 fiscal year budget includes nearly $6.5 million in new costs for employee benefits to go along with more than $4 million for a 2.5 percent pay increase for all employees. “That’s a one-year increase, and that’s just an awful lot of money,” he said. “That’s a mill and a half of local taxes. That’s $6 million that would have been going to something like reading teachers or additional software licenses or additional books for libraries.”

Schofield said more than $11 million of the $13 million in increased spending in the proposed 2018 fiscal year budget is related to salary and benefit increases for employees. The county budget plan includes both budget cuts and taking up to $6 million from the district’s fund balance to cover the increases. He added that the burden on local school districts is likely to continue to increase, potentially leading to more future cuts.

Public employees have more of their health plan premiums covered than their private industry counterparts.

In 2014, the average total annual cost per employee in the U.S. for group health plan premiums was $9,504, of which the average employer cost was $6,276 and the average employee contribution was $3,228, according to survey data from the 2014 United Benefit Advisors (UBA) Health Plan Survey of nearly 10,000 U.S. employers.

Government (public administration) health insurance plans had the highest average total premium cost per employee at $11,329 per year—17.5 percent higher than the average group health plan. Despite this, public employees’ share of their premiums was the lowest among all workers at $2,040—45 percent less than average, the survey found.

In a report on monthly costs to employee compensation, the Bureau of Labor Statistics looked at data for December and found:

Employer costs for employee compensation averaged $34.90 per hour worked in December 2016, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $23.87 per hour worked and accounted for 68.4 percent of these costs, while benefits averaged $11.03 and accounted for the remaining 31.6 percent. Total employer compensation costs for private industry workers averaged $32.76 per hour worked in December 2016. Total employer compensation costs for state and local government workers averaged $47.85 per hour worked in December 2016. {The report notes: “Professional and administrative support occupations (including teachers) account for two-thirds of the state and local government workforce, compared with one-half of private industry.”}

North Carolina is among the states now debating abandoning state teacher pensions for 401(k) plans for new hires in an effort to decrease costs. Georgia lawmakers attempted similar changes with little success.

State Sen. Hunter Hill, R-Atlanta, has proposed keeping the pension system in place for current employees but offering a hybrid retirement plan for incoming teachers — part traditional pension and part 401(k).

As the AJC reported, the political challenges to such a change are daunting:

Any talk of altering the current pension system for teachers causes a political stir at the state Capitol. Teachers and retirees say that changing the system so that new teachers get a 401(k) rather than a pension, or letting the system put money into riskier investments, are terrible ideas. They say the pension plan is a key tool in recruiting and retaining educators.

John Palmer, a Cobb County educator and spokesman for the activist group TRAGIC, has made it clear that teachers and retirees would fight any changes to the pension system. He said lawmakers approved measures similar to those promoted by Hill and Martin a decade ago for the state employee’s retirement system.

“The argument back then was that the state would offer higher wages to offset the loss of a defined retirement benefit,” Palmer said. “Those higher wages have never materialized, and state agencies are finding it nearly impossible to recruit and retain state employees. “Teachers are used to broken state promises, and we will not be able to recruit and retain quality teachers by trading one of the most stable retirement systems in the country for the empty promise of a higher salary.”

 

Reader Comments 0

71 comments
HKim
HKim

I tried to search online for what health benefits legislators receive from the state, but was unsuccessful. Any ideas?

JK1951
JK1951

The question is are teachers overcompensated for their work not how much do you want to pay. I don't see where teachers are overpaid but it's a fact that we have raised spending per student drastically over the years with no or little improvement in the end product. If you want to pay less then maybe you should cut spending somewhere else.

Milo
Milo

Gravy train is grinding to a halt. 

Starik
Starik

More pay and benefits are justifiable and desirable only for quality teachers. Raise the standards.

Falcaints
Falcaints

Let us not forget that the cut in state funding for education coincides with the Republican takeover of the the state govt.

Astropig
Astropig

@Falcaints 

Not true.State funding tanked when the economy tanked.

Which has nothing whatsoever to do with the teachers pension funds anyway. Once collected from a teachers contribution (deduction),pension money,by law, can never be used for any reason other than the holders benefit.The state can't get it back,appropriate it or play games with it,like the feds do with Social Security.(Congress has been spending the SS "trust funds" like drunken sailors since 1969).


I would say "nice try",but I doubt you put much effort into your comment.

 

Falcaints
Falcaints

@Astropig @Falcaints sorry, but Sonny started the cuts before the crash and they have  continued to shift the responsibility every since. As to your last statement, yawn.

Lee_CPA2
Lee_CPA2

I would wager that the amount of money a typical school system spends to educate the children of illegal aliens is much more than the rising cost of benefits to teachers.

Blynne Roberts
Blynne Roberts

Can Georgia not afford to provide higher Teacher benefits? With the serious Teacher shortage??? Is this a rhetorical question?

Jeri Henson Dies
Jeri Henson Dies

Can Georgia afford to shortchange their own children while shortchanging teachers?

weazel
weazel

I know, it is 'throw', not through.

weazel
weazel

" I have attended many official meetings in which the speaker was from the TRS. All of those facts that I learned in those meetings are filed in my home."

"THOSE FACTS"?

You have no clue.

Don't worry thou. If you work for Fed, State, Local or school system just throw another couple of mil taxes on my property tax assessment ( I am retired and my pension was turned over to the PBGC). I am 73 years old.

Astopig doesn't have a "beef". Just trying to point out the 'real facts' of life to you.

Wait till you retire and those behind you decide they don't 'get enought' and you get 'too much".

They will through you 'under the proverbial bus' faster than you can cash your retirement check.

Check out Bloomberg for 'facts' on retirements in America.

Astropig
Astropig

@weazel 

"Astopig doesn't have a "beef". Just trying to point out the 'real facts' of life to you."

I say let these younger folks that are reading this learn their lesson the hard way.They can follow the rantings of someone who couldn't get any better job than 4th grade teacher or they can educate themselves on what is really going on with public pension plans across 'Murica.I'm just trying to be a sober voice here.(MES take note)

Public pension plans are blowing up all over the country.Just guessing here,but, because they are localized,there is no national awareness of what is happening.When it happens to strangers in another state,it's "lamentable",but when it happens to you,it's a tragedy.I follow this stuff and I can tell you,there is a storm brewing.

 

MaryElizabethSings
MaryElizabethSings

@Astropig @weazel


I don't "take note" of anything you write, Astropig.  Not worth my time to read it.


And, just to correct your faulty facts:  I was a teacher of "Advanced Reading" a college preparatory course for 11th and 12th graders for half of my teaching career.


And for most of the other half of my teaching career, I was an Instructional Lead Teacher, functioning directly under the principal to implement his continuous progress model school for students in grades 1 - 7 by working with teachers throughout the school and parents throughout the community.

Astropig
Astropig

@MaryElizabethSings @Astropig @weazel


"I don't "take note" of anything you write, Astropig.  Not worth my time to read it.


And, just to correct your faulty facts: "


You.Can't.Make.This.Stuff.Up.


If you don't "take note" of anything I write,why are you so obsessed with trying to argue it? Why do you come here and embarrass yourself and shame your profession by looking like a drunk,silly fool all the time?


Since you "don't read" my writings, I'm sure that you won't provide an answer.

MaryElizabethSings
MaryElizabethSings

Astropig:

My post was not based on emotion. I see you still think in cliches and caricatures.

I have attended many official meetings in which the speaker was from the TRS. All of those facts that I learned in those meetings are filed in my home.

The bottom line is that teachers pool their teacher retirement funds throughout the the state of Georgia through the TRS. Those massive pooled funds from teachers' paychecks monthly are invested by investment professionals who are employed by the TRS. Those investors have done a fantastic job over the years so that Georgia's TRS is one of the most stable in the nation.

Moreover, about 20 to 25 years ago the GA TRS became a separate and autonomous group not connected financially to the state of Georgia's financial undertakings.

When you speak so forcefully from ignorance you can affect efucational policy adversely, and I am here to inform the public of your educational ignorance.

Astropig
Astropig

@MaryElizabethSings 

Fine. You seem to have everything under control. No problem. Just carry on and I'm sure everything will turn out okay.

AvgGeorgian
AvgGeorgian

@MaryElizabethSings @Astropig

Astro  - Teacher employers pay 16.81% and teachers pay 6% into their retirement accounts(2016-17). That is a 2.6 to 1 match. Good deal now but was a 2 to 1 match in 1980.

Take into consideration that teacher pay rises about 40K over a 30 year career IF you get a masters degree, a specialists, degree, and a doctorate; Also, no raises for 8 of the last 9  years.

So what is your beef?

MaryElizabethSings
MaryElizabethSings

The TRS funds, when issued in retirement to individual teachers, are made up of 80% to 85% from teachers' monies invested over time to expand and 20% to 15% divided between the local employer (school system) and the state of Georgia.

Intteach
Intteach

401ks are not working for the private sector so why would we consider them in the less-paid public sector? The erosion of pensions and stable incomes are undermining the middle class.

Astropig
Astropig

@Intteach 

Huh? 401K's work just fine.Combined with a roth IRA,you can retire early,rich. The best you can hope for with generational-low interest rates in a traditional pension plan is genteel poverty.


Good grief. I'm glad I don't take investment advice from teachers.

BurroughstonBroch
BurroughstonBroch

401ks work well if you are a disciplined saver. You must be an adult and pay yourself first. Not like the plantation-style TRS.

AvgGeorgian
AvgGeorgian

@BurroughstonBroch I'm thinkin' that teachers pay about 6% of their pay every single month into their retirement account. Is that the kind of pay yourself first you are talking about?

MaryElizabethSings
MaryElizabethSings

@AvgGeorgian @BurroughstonBroch


Moreover, these individual teacher retirement funds accrued monthly from each teacher's paycheck are pooled together by all of Georgia's public school teachers and invested by investment professionals hired by the TRS so that those teacher retirement funds, en masse, are doubled and tripled (if not moreso) over time through astute worldwide investment.

MaryElizabethSings
MaryElizabethSings

I received my data about 3 years ago when I attended a GAE- retired meeting in which a professional from the TRS spoke. He informed the group that there will always be higher and lower points depending on the economy. After the financial crash of the nation in 2008, the TRS lost funds but in the years until that meeting, the TRS funds had expanded almost to the point before 2008. One year's analysis does not tell much. One has to chart a financial trend over several years.

MaryElizabethSings
MaryElizabethSings

Correction:  It was an ODE-Retired Meeting in 2014 which I had attended which was presented by Jeffrey Ezell, Executive Director of the Financial Services Division of the TRS.

Phil Dodge
Phil Dodge

Is this ariticle saying we (teachers) are getting too good of a deal. Where the costs are becoming unaffordable is at the local level where costs are being shifted from the state to the local districts and the teachers themselves.

MaryElizabethSings
MaryElizabethSings

BurroughstonBroch, this is your, and Astropig's, REAL beef with Georgia's public school teachers - the fact that they have worked hard and earned excellent retirement benefits.


Moreover, your assumptions and facts about teacher retirement contributions over the years by teachers are wrong.


I understand, from your posts, that your wife did not last but a few years teaching in Georgia'a public schools. Perhaps that fact has something to do with your jealousy and bitterness at public school teachers who have lasted teaching for 30 years or more in Georgia's public schools.

Astropig
Astropig

@MaryElizabethSings 

Incorrect. A deal is a deal and I believe that teachers should get every dime that they have earned,nothing more,and certainly not a penny less.

I'm simply stating the facts about the current state of the traditional pension scheme in the country.It is unsustainable because it is based on a flawed economic model.Business realized a long time ago that they could not afford to pay a worker for 30 years of active service and (with ever lengthening life expectancy),another 30 years of not working.Public pension schemes are no different.Only the political environment surrounding them is distinct.I've not even made any mention of inflation,which is simply another way that pensions can end up robbing the thrifty of their life's savings.That's a subject for another day, when you've returned from another stint in rehab.


Your (uninformed) argument is based on emotion.Mine is based on simple math.

MaryElizabethSings
MaryElizabethSings

To Astropig:

My post was not based on emotion. I see you still think in cliches and caricatures.

I have attended many official meetings in which the speaker was from the TRS. All of those facts that I learned in those meetings are filed in my home.

The bottom line is that teachers pool their teacher retirement funds throughout the the state of Georgia through the TRS. Those massive pooled funds from teachers' paychecks monthly are invested by investment professionals who are employed by the TRS. Those investors have done a fantastic job over the years so that Georgia's TRS is one of the most stable in the nation.

Moreover, about 20 to 25 years ago the GA TRS became a separate and autonomous group not connected financially to the state of Georgia's financial undertakings.

When you speak so forcefully from ignorance you can affect efucational policy adversely, and I am here to inform the public of your educational ignorance.

elementary-pal
elementary-pal

@Astropig @MaryElizabethSings A deal is a deal and I believe that teachers should get every dime that they have earned,nothing more,and certainly not a penny less.    I AGREE!  Do you think you could get my back pay for National Certification that was cut????????

Astropig
Astropig

The pension system in Georgia (and every other state) is a loudly ticking time bomb.Years and soon decades of zero interest rates have absolutely destroyed investment return assumptions.Pension funds are pretty much on the brink of insolvency everywhere and there will be some real pain and political dynamite when the problems can no longer be papered over.With stagnant incomes and unemployed snowflakes in the basement,I think that I can comfortably predict that there will be a LOT of political resistance to raising taxes to cash out everyone that has pension promises due over the next few years. 

Get ready for fireworks.

BurroughstonBroch
BurroughstonBroch

Let's assume the TRS provides you with a $36,000/year pension after you retire with 30 years service. You would need $900,000 in a 401k account to provide the same income. Very few folks can accumulate a 401k balance like that by age 55 when most public school teachers are looking for the door. The TRS has been a taxpayer burden for years because the teacher was required to invest a minor amount.

It's time to reform the entire scheme and put some overpaid drones off the State payroll.

Astropig
Astropig

@BurroughstonBroch 

Watch Puerto Rico.The island territory just declared insolvency and might just provide a preview for what other states will experience over the next few years.The teachers retirement scheme there is a typical political insider shell game that has been going on for a long time:

 https://www.nytimes.com/2017/03/08/business/dealbook/puerto-rico-teacher-pensions.html?_r=0

The gist of the problem is that politicians have been putting off dealing with the growing shortfall of funds needed to pay benefits for so long that short of a miracle,PR teachers won't get more than (my estimate) 70 cents on the dollar of promised benefits in retirement.

The game is as follows: Salary increases are in the here-and-now,while pension promises will come due after the current group of politicos are out of office or retired.That means that at some vanishing point in the future,then-current retirees wind up on the short end. 


Conversely, 401K money is yours from the get-go,depending on vesting schedules.They're portable and with the advent of exchange traded and market-index funds,can have almost non-existent fees and expenses.Too bad teachers won't use them to provide for a dignified retirement.

AvgGeorgian
AvgGeorgian

@BurroughstonBroch

You would then assume that a teacher made 60K the last 2 years of her employment and started at about 17K per year in 1987. 

Let's see - if we spread the 900K over 30 years, the teacher would have started at 47K per year and ended at 90K per year with no retirement. money is funny, no?

Starik
Starik

Yet another argument for a universal, Federal health care system.

Astropig
Astropig

@Starik @BurroughstonBroch 

Never,ever work. Millenials and X'ers (young and healthy) will refuse to subsidize Boomers (ever increasing healthcare needs and costs),except at the point of a gun.

Millenials think that everything that's not "free" is not "fair".They're not going to pay the tax burden necessary for very long (if at all).

Another little time bomb in the economy,rigged to explode. 

Starik
Starik

@Astropig @Starik @BurroughstonBroch Millenials and Xers aren't all stupid. Boomers are on Medicare or soon will be. We paid in to Medicare. The youngsters will someday be oldsters. Pay now benefit now, Medicare for everybody as a start.