Dayton Daily News: Proposal to increase contribution to teacher pensions jeered

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Proposal to increase contribution to teacher pensions jeered

A Springboro school board member says ‘our community would be outraged’

Dayton Daily News, January 2, 2010
By Anthony Gottschlich, Staff Writer

After voters rejected four straight levies for new operating money, Springboro school officials cut wherever they could.

They closed an elementary school, laid off 30 workers, set fees of up to $1,900 a family for extracurricular participation and limited busing to students beyond a two-mile radius from school.

One area they couldn’t touch — the district’s employee pension funds for teachers and other staffers. State law forbids it. The funds are expensive, though — Springboro paid $2.8 million into the State Teachers Retirement System in 2008, and a little more than $1 million into the School Employees Retirement System.

Those figures could grow as salaries and wages climb, but they could grow even more if lawmakers go along with a proposal to increase the share school districts must pay to fund STRS.

Teachers currently pay 10 cents into their retirement fund for every dollar they earn, while the school district pays 14 cents. But as state leaders explore ways to keep Ohio’s five pension systems afloat amid faltering investments and a rough economy, STRS has proposed that both teachers and the districts that employ them increase their pension contributions by 5 percentage points — 2.5 more from teachers by 2016 and 2.5 more from the district by 2021. The proposal also calls for raising the retirement age.

Incoming school board member Kelly Kohls, who was elected in November, said raising the employer share won’t fly in Springboro.

“The community already feels we compensate every employee in our school system wonderfully; we’ve been very generous,” Kohls said. “To have the state tell us we have to contribute another 2.5 percent in a couple years, I think our community would be outraged and I think they would have every right to be.”

Kohls noted that most employers in corporate America have eliminated their contribution to employee pension plans. Perhaps it’s time for public employers to follow that example, she said, or at least look for ways to reduce the cost.
‘Glaring differences’ Scott Maney, president of the Springboro Education Association, said the corporate model wouldn’t work for school systems.

“There are glaring differences between corporations and schools,” Maney said.

Maney, citing U.S. Department of Labor statistics, said public school teachers with a master’s degree earn 25 percent to 35 percent less on a per-diem basis than private sector employees with master’s degrees. Public schools also don’t pay into Social Security, he said.

Maney called the current pension system “adequate at best,” but said STRS’s proposal has problems, too. He said he opposes raising the teachers’ contribution, and he thinks raising the retirement age is a mistake, too.

“Increasing the retirement age will increase salary and health care costs for school districts,” he said. “In addition, teaching is a physically and mentally demanding profession. Increasing the retirement age can lead to burnout among teachers and higher rates of disability. This is not a recipe for improving public schools.”
‘Huge problem’ ahead It’s difficult to predict just how much districts might be paying into pension funds in the years ahead. It depends on the number of employees — Springboro’s in the midst of a hiring freeze — and salary and wage increases.

Still, any increases would be borne by the school district, not the state, and the options for paying for it aren’t easy: Cut spending, which could hurt classroom instruction, seek additional funding through a levy campaign, or do a combination of both.

“That’s a huge problem,” said Stan Lucas, treasurer for Dayton Public Schools.

Lucas said Dayton likely will pay less into the system in the years ahead because of a shrinking employee base. But the budget scenario is still daunting, he said, as the district copes with an ailing economy and reduced property tax collections.

Any changes to the pension system would have to be approved by the General Assembly.

“My gut is it will probably be put on the back burner until after the 2010 election,” said David Varda, executive director for the Ohio Association of School Business Officials, a lobbying group that opposes any increases to the employer’s share.

Varda questions the sustainability of the current pension system, saying, “If it’s going to be sustainable, we might have to start looking at different ways to compensate people.”

Contact this reporter at ?(937) 225-7408 or agottschlich?@DaytonDailyNews.com.

From John Curry, January 3, 2010