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ERIC Number: EJ833453
Record Type: Journal
Publication Date: 2009
Pages: 6
Abstractor: ERIC
Reference Count: 0
ISSN: ISSN-1539-9664
Teacher Retirement Benefits
Costrell, Robert; Podgursky, Michael
Education Next, v9 n2 p58-63 Spr 2009
The ongoing global financial crisis is forcing many employers, from General Motors to local general stores, to take a hard look at the costs of the compensation packages they offer employees. For public school systems, this will entail a consideration of fringe benefit costs, which in recent years have become an increasingly important component of teacher compensation. During the 2005-2006 school year, the most recent year for which U.S. Department of Education data are available, the nation's public schools spent $187 billion in salaries and $59 billion in benefits for instructional personnel. Total benefits added about 32 percent to salaries, up from 25 percent in 1999-2000. The increase reflects the well-known rise in health insurance costs, but it also appears to include growing costs of retirement benefits, which have received much less attention. Conventional wisdom holds that teacher pensions (along with other public pensions) are more costly than private retirement benefits, for reasons dating to an earlier era of low teacher salaries over lifelong careers. In spite of dissent from this view by some researchers, in this case the authors find that conventional wisdom is right: the cost of retirement benefits for teachers is higher than for private-sector professionals. To track changes in retirement costs and compare employer contributions to retirement for public school teachers with those for private-sector professionals, the authors draw on recent data from a major employer survey conducted by the U.S. Department of Labor. These data show that the rate of employer contributions to retirement benefits for public school teachers in 2008 is substantially higher than for private professionals: 14.6 percent of earnings for teachers vs. 10.4 percent for private professionals. Moreover, the gap has widened over the four years the data have been available. Between March 2004 and September 2008, the difference more than doubled, rising from 1.9 to 4.2 percentage points. (Contains 2 figures.)
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Publication Type: Journal Articles; Reports - Research
Education Level: Elementary Education; Elementary Secondary Education; High Schools; Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A