Pennsylvania’s Exploding Teachers’ Pension Crisis

If, as the article says, the figures are from 2012, before ObamaCare and changes in Medicare kicked in, I can guarantee you that the figures are far worse than those portrayed by the article. The Kentucky Retired Teachers newsletter reported last year that they would begin this year $31 million upside-down just due to those changes.

The Kentucky Employee's Health Plan will lose "grandfathering" status under the PPACA effective January 2014 at a cost of about $15 million to the KEHP. Also the KEHP will be charged a $64 per person per year "transitional reinsurance fee" under the PPACA to assist in funding the uninsured and underinsured as part of health care reform. This expected cost is about $16 million for 2014, so the KEHP is starting out $31 million in the hole for calendar year 2014. ...

Summary by Jane Gilbert in the Kentucky Retired Teachers Newletter July/Aug 2013

I wouldn't be at all surprised if the Pennsylvania retirement system was subjected to similar costs.
KTRS has been severely underfunded for years and has cut benefits several times already. Kentucky suffers from similar problems with corruption as well. The investments managers for most of the state agencies are hired for reasons other than their proven track record of making money in investments. They are somebody's son-in-law, brother, or frat brother.

originally posted by: onequestion
a reply to: Hoosierdaddy71

Dont our teachers deserve it though?

Unlike politicians..

And we cant blame them for the system they work in and under.

I wouldn't want to do the job thats for sure. I have no problems with them being paid well.
But it's just like any other job. I know when I was in high school, I had some good teachers and some terrible ones.
Don't take a job you know you will be under paid in and then complain your not being paid enough.

I also live in PA.I dated a teacher a couple years ago and she said that all the new teachers starting don't have the pension plan only the older teachers around her age and up 39 back in 2009.Is that true?

If it is like here, the young teachers get crap and the ones that have been there a while get bigger raises and high salaries compared to the new guys. Just because someone has been a teacher for twenty years does not mean they need to get over double of a newbie and their pension when they retire is higher than the new person's salary too.

It got out of hand. They need to fix this problem. There is no way the schools can afford to pay new teachers more because of the agreements they made that give too much benefits and wages to the older ones. It is not like a teacher gets better at their job after ten years, they don't deserve bigger increases after that.

Full time newguy....32 grand per year and some goes back for insurance. Fifteen years gets you sixty grand with larger cost of living raises. Twenty years and 55 and you can retire with insurance and a nice pension. Making more than the new guy gets.

originally posted by: butcherguy
a reply to: [pst=18362715]onequestion[/post]

I am a PA resident.
I have several relatives that are retired public school teachers.
I know one school administrator that retired ten years ago. He gets $145, 000 a year every year until he dies.
That isn't too bad.

How much does the current school administrator get?

Is there another still alive and collecting before the one you know retired?

Usually they take in for ten in fees but payout an addition of 25 retirees. You can't maintain a system like that. this is why most College tuitions have doubled to cover the retirees.

This is actually typical in a lot of public sector service job.

For example I am a police officer and have been with the same agency for about 10 years.

I have two degress and multiple salary incentive courses.

I make $40k a year. After taxes, social security, retirement contributions, insurance etc I take home $26,700ish.

Our defined benefit retirement is on the verge of being eliminated. The city wanted to do so last year. I was actually the only officer who voted for it out of 200 sworn employees. It is simply not sustainable. We cannot opt out of it and I would rather be able to invest my money how I see fit.

It is even worse for new hire officers. They start off at $35k before taxes and have to contribute a little more to retirement and insurance then those who have senority. And people wonder why the quality of officer is lacking these days. This job is not worth doing for $2200 a month (what I take home), let alone the $1800 or so the new guys are receiving.

a reply to: TorqueyThePig

I do construction and making 30-40k a year feels like minimum wage.

Prices on everything keep going up, how are we suppose to sustain.

a reply to: onequestion

I just don't understand the myth of the low paid teacher. The average starting salary is $36k a year. And that is the minimum entry level. You don't get to deduct union fees and then claim you only make $30k a year, that's phony math. Also you don't need a master's degree to teach elementary/high school. If you have one and do that's fine but it's not the system's fault.

www.nea.org...

originally posted by: ChesterJohn

originally posted by: butcherguy
a reply to: [pst=18362715]onequestion[/post]

I am a PA resident.
I have several relatives that are retired public school teachers.
I know one school administrator that retired ten years ago. He gets $145, 000 a year every year until he dies.
That isn't too bad.

How much does the current school administrator get?

Is there another still alive and collecting before the one you know retired?

Usually they take in for ten in fees but payout an addition of 25 retirees. You can't maintain a system like that. this is why most College tuitions have doubled to cover the retirees.

Current superintendent's salary is $142,000 until 2018, when it will probably be renegotiated.
The one that I was originally speaking of went on to become a professor at a local college as soon as he retired from the school district.
One other has retired from that position between him and the current superintendent. She is getting around $140,000 per year in retirement.

Wife retired in Michigan and has full insurance and $3600 a month after 22 years service. For some reason they figured she needed disability too so thats another $1200 a month with no loss of anything else. She didn't apply for disability they pretty much made her take it. Strangd but nice

a reply to: onequestion

Unless pay goes up or prices come down we will eventually be defeated by inflation.

In the mean time try to pay off any debt that one may have. That will at least slow the process.

originally posted by: ketsuko
As for public workers' pension funds being insolvent, this is the major elephant in the room. No matter what state you are in or what kind of public worker you are, this is the coming crisis. The pols and unions made promises that never materialized. The pension funds have all been based on annual percentage rates of return that are pie in the sky at best. So now, even with good management, those funds are all overdrawn because the promises were bad and the workers never paid in enough to keep them solvent or were allowed any autonomy in managing their funds.

As someone who served for over 10yrs. on the Board of Trustees of a multi-employer, multi-trusts, employee benefit plans with over 500 million in assets, I can tell you that this "elephant" has been standing in the middle of the room for quite some time.

I remember going to an educational conference back in 1995 or thereabouts, with over 15,000 trustees in attendance, representing employee benefit trusts funds from almost every walk of life here in America. From teachers, to firefighters, to longshoremen and everything in between.

To make a long story short, even as a new trustee I couldn't believe, or should I say I was astounded, by the fact that many if not most of the funds represented at the conference used what I believed to be, exaggerated expectations of future earnings to actuarially calculate the solvency of their plans into the future. While the funds I represented used a "benchmark' of 6%, many of the funds there had benchmarks in excess of 10% and some even as high as 12%.

I'm not sure how those trustees got convinced that their earnings expectations would hold up in the future, or who did the convincing, but any trustee worthy of the title should due his homework, or as they say in the business, his "due diligence," to educate himself as to what reasonable long term earning expectations should be.

The one thing I am sure of is that both the management and the labor trustees of these funds had to be in agreement, otherwise their benchmarks wouldn't be where they were.

The funds I served for were managed by a Board of Trustees made up of 16 individual representatives, with 8 coming from employers or management and 8 coming from the employees or labor.

All payments made into the funds for employee benefits were made on a quarterly basis, with penalties and interest for late payments. No Promises of Future Funding! When it came to making required payments to the Trust Funds, we had what was basically a "cash on the barrell-head" policy.

Also during my tenure on the Board, we phased out our defined benefit plan and started a new defined contribution plan to replace it for future workers.

This was done primarily due to the fact that defined benefit plans include something called "Withdrawal Liability" for employers looking to withdraw their affiliation and for that reason, it was getting harder and harder to get new employers to agree to the terms of our multi-employer agreements that included defined benefit plans. Seeing the writing on the wall, we made the change before it became our Achilles heel.

While we were considered to be "conservative" funds when compared to many others, we're still fully funded to this day and actuarially solvent for some 30yrs. into the future, which should outlive any remaining beneficiaries of the discontinued defined benefit plan.

I'm not saying that the financial meltdown didn't hurt, because it did. Especially those with substantial assets in our new defined contribution plans. What it didn't do was to cripple us or require us to be in need of some kind of a bailout.

What I am saying is that a well managed plan can survive these kinds of things, but it takes honesty, due diligence and sometimes some hard choices by those managing the trusts.

a reply to: Flatfish

100% truth right there.

During the 2008 "financial crisis" i think my department's retirement committe were expecting a 10 to 12% return. Obviously it was much less.

So now they continue to make us contribute more to cover for the losses. That coupled with no pay raises for years has chipped away at our take home pay.

It will only get worse.