Is $2,300 per month too lavish for teachers’ retirement?

Teachers and other public-education employees receive inadequate pay, but can at least count on a secure retirement benefit. Governor Schwarzenegger, in line with a wave of conservative attacks on retirement security across the country, in 2005 proposed to “reform” California public employee defined-benefit pension plans and replace them with defined-contribution programs. He was forced to abandon this plan when public-employee unions showed his proposal would eliminate the pensions of widows and orphans of firefighters and police killed in the line of duty. He regrouped and formed a commission to study the public employee pension issue and make recommendations.

A key ally of Schwarzenegger in 2005, former Assemblyman Keith Richman, filed a new ballot initiative in June 2007 that would keep defined-benefit plans but reduce benefits and raise the age to qualify. The rhetoric supporting Richman’s initiative continues the message of 2005: The pension funds are an unfair burden to taxpayers, and public employees receive “overly generous” retirement benefits compared to private sector workers. But when it comes to teachers, this case falls apart.

Teachers’ retirement funds are exemplary programs

PERS, STRS and UCRS are model public-pension programs. They are very well run, have relatively good returns on their investments, have a minimum of overhead costs, and provide for a reasonable level of security in retirement. They are efficient and serve the public and public employees well. Teachers and school staff should not have to worry about making ends meet after decades of public service.

Teachers need dependable retirement income

Teachers in California do not pay into or draw Social Security unless they also have worked outside of teaching. If they draw Social Security from other employment, it is reduced from what they would have normally received by a federal “offset.”

Modest cost to taxpayers

Some with ideological agendas and bias against public employees claim that the public pensions are excessive. In fact, STRS and PERS benefits are quite modest. The average STRS monthly benefit is less than $2,300 per month, and the average for PERS in $1,752. No one is getting rich on these pensions. Richman’s proposed initiative would reduce the pension formula and would raise the age to qualify for full benefits–a double hit on new public employees. It would be a slap in the face of all public employees.

Ideologically motivated attack

PERS and STRS have been leaders in the shareholder effort to expose and correct corporate bad behavior and increase accountability. They have helped to curb lavish CEO compensation and improve accounting procedures. As the first and third largest public pension funds in the country, their shareholder clout has been effective. The efforts by PERS and STRS to hold corporations accountable may explain some of the enthusiasm on the part of the backers of Richman’s initiative.

Fair retirement for all, not a race to the bottom

Until recently, decent–not lavish–pensions were the norm in both private- and public-sector employment. Seeking to maximize profit, often at the expense of the welfare of their employees, many corporations have sought to eliminate, or have eliminated, worker retirement benefits, especially defined benefit pensions. They have claimed that the remaining pensions, such as those provided by STRS and PERS, are “overly generous.” These attacks on the retirement of working Americans, if successful, will cause much suffering. All workers deserve to retire with a reasonable level of security–and not just those that benefit from lavish CEO buyouts and golden parachutes.