Under funded state pensions

[Nords]

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Originally Posted by Zarathu Education is funny. In the military all you have to do is kill people who don't want to be killed. Lest anyone start freaking out, I'm joking.

Sore spot.

The only members of the Navy who get less respect than school teachers... are the military instructors. Training commands were considered dead-end terminal-career jobs, and only one or two in a hundred would break out of them to greater glories.

I had junior shipmates leave the service for Troops to Teachers and get a pay raise. Another shipmate of mine was forced out at 17 years (with a reduced pension, considered perfectly legal back in 1993) who now earns more as a high-school math department head.

Good thing the Navy kept raising the sea pay and nuclear bonus pay.

[MasterBlaster]

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Originally Posted by Leonidas But please, don't waste any further time on correcting me if I was again imprecise in my words. I feel that if I am to improve the brevity of my writing I will have to devote some time to the effort, so I'm going to have to add to my "ignore poster" list so I'm not distracted. Unfortunately, you didn't make the cut.

I posted the obvious to your diatribe - don't be so sensitive.

And I'll post what I want when I want. And I don't need your approval or anything else.

get over it.

[HsiaoChu]

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Originally Posted by Nords Sore spot. The only members of the Navy who get less respect than school teachers... are the military instructors. Training commands were considered dead-end terminal-career jobs, and only one or two in a hundred would break out of them to greater glories. I had junior shipmates leave the service for Troops to Teachers and get a pay raise. Another shipmate of mine was forced out at 17 years (with a reduced pension, considered perfectly legal back in 1993) who now earns more as a high-school math department head. Good thing the Navy kept raising the sea pay and nuclear bonus pay.

And that's just plain disgusting. Training Commands should be revered!

[ERD50]

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The only members of the Navy who get less respect than school teachers... are the military instructors.

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Originally Posted by Zarathu And that's just plain disgusting. Training Commands should be revered!

Z, I thought respect was something you 'earned' not something you 'got'.

-ERD50

[HsiaoChu]

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Originally Posted by ERD50 Z, I thought respect was something you 'earned' not something you 'got'. -ERD50

IMO, what is "earning respect" to one person is not necessarily "earning respect" to another. There is no universal standard for "earning respect", IMO. Its all in the eye of the beholder.

There were teachers I respected, and there have been school administrators I respected, and those I didn't. Other people respected people that I found to be utterly devoid of respect. I had a former Marine drill instructor turned physed teacher who I had no respect for at all, due to his actions.

Z

[harley]

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Originally Posted by Zarathu And like Leonidas says, the public sector job is usually less than the private one in pay. Although in some areas, with unions involved, this has changed. But in private sector jobs in education, where there are no unions, my wife as a teacher literally makes a bit less than 1/3 of what I make, and for her 30 years of working with kindergarten kids has this tiny little ss pension that wouldn't even pay for her food for one month, let alone her health care or lodging.

This may have been true back in the day, but it isn't that way now. http://www.cato.org/pubs/tbb/tbb-59.pdf

Since public sector jobs are largely paying more than their equivalent private sector positions (base pay, not even counting pensions and benefits) it may be time to bring those benefits in line with what the private sector is getting. Especially since most of the job growth we're seeing these days is in the public sector. Continuing with generous benefits and higher pay isn't going to be doing my tax bill any good.

I'm just sayin'.

[Texas Proud]

Leo...

As someone else pointed out.. there are many jobs that are government that do not require a lot of skill, but get better than normal pay and benefits.

I went to get my license renewed... that is a job I would not want to do... but you can not say someone filling out forms, taking a picture is a high skill job. But their pay is higher than what a private firm would pay... with less benefits.

There are many accountants, purchasers, mechanics, janitors, etc. etc. etc. which have the same job skills in the private sector. Some of them are paid less than what you could get in the private sector, but many are lower skilled jobs with higher pay.


And again... I do not want to take away anything that was promised to date... what I want to do is change what is being promised in the future...

As an example... if you earned 2.2X years up until today... then we pay you that... but maybe we only pay 1.5X or even 1X going forward. You have the choice of keeping your job or going to find another. That is what happens in the private sector.


Also, I don't see who posted it... but it is NOT the same with government and private industry when it comes to negotiations... Government has NO incentive to make a profit.. The ones who make the decisions have NO incentive to make a good deal in the long run... they only have to balance their budget TODAY....

It was very easy to kick the can down the road... to say... "yes, we will give you 200% of your salary when you retire as long as you do not bust my budget today... " Sure, they were voted in... but that does not mean they are good.. or are looking out for out interests...

Saying they are being 'capitalists' is wrong IMO...

[HsiaoChu]

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Originally Posted by harley Continuing with generous benefits and higher pay isn't going to be doing my tax bill any good. .

Well that's certainly true. But highly skilled jobs, with massive credentials required, are sometimes paid just as well in the private sector and sometimes not. lest you think you don't pay for this, of course you do. The services there simply cost more for better quality.

But generalized labor statistics don't mean a lot. It pretty much depends specifically on what kind of job you are talking about.

If the bottom line is that we keep yours and my taxes down, then there should be very few public services at all, since none of us wants to pay higher taxes.

This means we only have a private police force, that each of us pays for, or we don't get service. And it means that we don't send our kids to school, unless we pay for it specifically. And it means that if we haven't paid for our fire dept, then if our house burns down, they don't come. And it means if someone physically or sexually abuses a child, no one does anything about that unless we pay. And if it snows, then we don't get our road plowed out unless we paid some dude to do it. People who do these jobs, and have specialized skills that you an I don't have, are paid commensurate. Your plumber charges a lot for doing work on your house because he knows what to do and has the equipment to do it.

We don't live in that kind of society. But there are many places in the third world where that kind of place does exist because there is no government.

If you are arguing that government is too big and too much in our lives, I can't disagree, unless they take away the part of government that helps me. And everyone has a different part that helps them that they don't want to get rid of. Getting rid of government is painful.

If you are stating that you want your special services to be at the lowest bidder so your taxes are way down, that's ok too. But then you can't complain that you got substandard services from your police, fire, teachers, child welfare since these people may not be trained or have the experience, or may just hate their low paying job and take it out on the clientelle.

We get what we pay for..... it is what it is.

Just sayin' ........

[HsiaoChu]

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Originally Posted by Texas Proud Leo... And again... I do not want to take away anything that was promised to date... what I want to do is change what is being promised in the future... ...

Someone will need to determine that.....

In a school, do we say that because its more difficult to get a physics or math teacher that that person is worth more and should get more than a kindergarten teacher? Or that because kindergarten teachers teach skills that even though they are just as hard to do for a kindergarten child and the calculus is for a high school junior, that because the skill is harder that the kindergarten teacher should get less money than the physics teacher? Do we do it by how many people in the profession would never take that job in a 100 years? How do we do it?

Surely there are easy ones. A high school physics teacher should more than a food store clerk who just pulls the food across the bar coder.

Just saying that determinations of more skill more ability are not as easy as those who are not in those professions, think it is.

Do we have a new government agency that does this? How much do we pay them?

Talk is easy; walking the talk is hard.

Z

[Spanky]

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In a school, do we say that because its more difficult to get a physics or math teacher that that person is worth more and should get more than a kindergarten teacher?

They do in college. It's all about supply and demand. A professor of law or medicine would command a much higher salary than a professor in pop culture or other liberal art studies.

[Spanky]

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We get what we pay for..... it is what it is.

No necessary. You can pay a lot and get very little in return. If government wastes money, the tax players will not receive any valuable services in return.

[Texas Proud]

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Originally Posted by Zarathu Someone will need to determine that..... In a school, do we say that because its more difficult to get a physics or math teacher that that person is worth more and should get more than a kindergarten teacher? Or that because kindergarten teachers teach skills that even though they are just as hard to do for a kindergarten child and the calculus is for a high school junior, that because the skill is harder that the kindergarten teacher should get less money than the physics teacher? Do we do it by how many people in the profession would never take that job in a 100 years? How do we do it? Surely there are easy ones. A high school physics teacher should more than a food store clerk who just pulls the food across the bar coder. Just saying that determinations of more skill more ability are not as easy as those who are not in those professions, think it is. Do we have a new government agency that does this? How much do we pay them? Talk is easy; walking the talk is hard. Z

I guess you missed what I was trying to say... I know that I have talked about having pay more in line with skill... but the quote you used was about the pension plan... I want to know the true cost of labor right now... the way the pension plan is structured, you do not know the cost until it is to late.. yes, they can estimate the cost... but that is something that can change as it is not 'fixed'.. I also think it is to high.

My proposal was to cut future costs of pensions... that would not affect anybody's current pension... as of today... you have X.. we can not take that from you.. but going forward you will earn Y.. now, you can choose to stay here and do this work or move on and find something else to do..



But to address you comments... there are BIG differences between teachers and the ability of them to teach. There are some classes you can get a highly qualified teacher at a dime a dozen... there are some you are hard pressed to find a warm body that qualifies... much less can even teach the subject... the issue is that they are paid the same... not matter what...

Using your thinking... the guy who changes your oil should be paid the same as the guy who has to rebuild your transmission... they both are important to your car... heck, the guy who changes your oil is more important since trannys don't blow up that much anymore..

Nope, the skill level is not there...

[ERD50]

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Originally Posted by Zarathu Someone will need to determine that..... In a school, do we say that because its more difficult to get a physics or math teacher that that person is worth more and should get more than a kindergarten teacher? Or that because kindergarten teachers teach skills that even though they are just as hard to do for a kindergarten child and the calculus is for a high school junior, that because the skill is harder that the kindergarten teacher should get less money than the physics teacher? Do we do it by how many people in the profession would never take that job in a 100 years? How do we do it? Just saying that determinations of more skill more ability are not as easy as those who are not in those professions, think it is. Do we have a new government agency that does this? How much do we pay them? Talk is easy; walking the talk is hard. Z

Z, first I have agreed with many of the things you just posted (not all), so yes we have some understanding.

But this post shows exactly where people get off on an impossible path about trying to determine what someone or something is 'worth'. That path is fraught with problems. What you are missing is, there is a very good system for this - it is called the free market. There is no "how do we do it", there is no "easy or hard" - it just does it.

In a free market, no one actually tries to determine a value for something - it just happens. All due to supply and demand. And it may have little to nothing to do with how 'hard' the job is, or how much skill it took, or anything. The 'worth' gets set by who will do the job for lowest price offered, or conversely, who can pay the lowest rate, and still hire the qualified people they need. Workers will hold out for the maximum they can get, employers (should be) holding out for the lowest they can offer. The employer has a fiscal responsibility to the shareholders, owners and somewhat to the customers, to do just that.

So no one should have the right to determine if a Kindergarten teacher should be paid more than a Calculus teacher or not. The market decides. If you can get all the qualified Calculus teachers you need for a lower offer than all the qualified Kindergarten teachers you need, then the school has a fiscal responsibility to the taxpayers to do just that.

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Surely there are easy ones. A high school physics teacher should more than a food store clerk who just pulls the food across the bar coder.

Who says? If you are going to make this call, then you have to make it for every other position. No one should be doing that. If it really takes more $ to get clerks than physics teachers, then so be it. At least no one 'decided' (which would mean 'imposed') this on anyone. But of course, in a free market, the physics teacher WILL get paid more, there are fewer of them relative to the demand. It's not hard, it's simple.

I'm losing track of the different threads, but I think it was youbet who mentioned that here in IL the public school cannot offer more money to one type of teacher versus the other. That is true, and it is ridiculous. They should let the free market determine the price. We could be paying the teachers in low demand less, and we could get better qualified teachers for the high demand positions. Win-Win-Win.

IF you don't believe that how hard the job is has anything to do with 'worth', learn to spin 99 plates on sticks. It is very hard, it will require years of training. Now try to get you to pay someone to do it.

-ERD50

[HsiaoChu]

Lotsa good points that I can't disagree with... both from ERD50 and Texas Proud

But.... if you let the free market run Fire, police, education then I suspect that only the rich will have these things. There was a reason why a free and appropriate public education was introduced in the USA. Before that, free market was the process, and only the rich got education.

However, I do have to say that there is enough research on the methods of education now to be assured that if teachers should choose to use the techniques, then a basic level of positive proficiency for everyone can be established. One of these method systems is called LEARNING FOCUS©.

And, I agree that despite being unhappy for future educators, the defined benefit pension at a high level is dead.

IN PA, I suspect we will see a small defined benefit pension at about half of the current one, with some kind of 401K type for the rest. Employees will have some involvement as to where their contributions go. I had no choice in giving about 9.5% of my take home pay into the fund for about 33 years. We will also see some kind of amortization of the current debt into a sustained and required % every year for the next 40 years by both districts and the state. As it is now, the fund is not fully funded but its not touchable by anyone in the government, and its well managed normally. While it lost a lot of money in 2008, it made 13% in 2009, when interest rates continued at abysmal levels. So given even average times, the PA fund can make decent money.

Z

[clifp]

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Originally Posted by Zarathu But.... if you let the free market run Fire, police, education then I suspect that only the rich will have these things. There was a reason why a free and appropriate public education was introduced in the USA. Before that, free market was the process, and only the rich got education. And, I agree that despite being unhappy for future educators, the defined benefit pension at a high level is dead. IN PA, I suspect we will see a small defined benefit pension at about half of the current one, with some kind of 401K type for the rest. Employees will have some involvement as to where their contributions go. I had no choice in giving about 9.5% of my take home pay into the fund for about 33 years. We will also see some kind of amortization of the current debt into a sustained and required % every year for the next 40 years by both districts and the state. As it is now, the fund is not fully funded but its not touchable by anyone in the government, and its well managed normally. While it lost a lot of money in 2008, it made 13% in 2009, when interest rates continued at abysmal levels. So given even average times, the PA fund can make decent money. Z

You make good points also. Both individual and society as whole benefits from well educated children, professional police and fire departments. This is true even one personally doesn't have kids, never has a fire, and never needs cops.

The free market doesn't do a great job at delivering these services, and they are legitimate and important function of government. Certainly in the case of police, and teachers their are private sector equivalents (security, private investigators, private schools, corporate trainers) that can be used to help establish what is the fair market value of the service. There are psychic benefits to jobs like being a teacher, cop, or firefighter that are hard for the private sector to match. Saving lives putting a high-level drug dealer in jail, and teaching a kid to read are I imagine all pretty gratifying. Public sectors jobs have higher job security also. Of course there are downsides to being a public employee also.

I think the area where there is a huge discrepancy between private and state/local government is in the pension plans. I think they are too generous in two respects first they not only allow but encourage people to retire in their mid 50s by basically capping out the maximum pension for someone working 30 years in the system.The benefit reductions for early retirement are much less than a comparable plan like social security. Second and just as importantly the benefits aren't tied to the economic situation of the community and/or the country.

You said you had no choice but to contribute 9.5% to your pension. I guess in theory I could have chosen not to max out my 401K contribution at 12.5%, and when possible max out my IRA. However, I didn't realistically have a choice not make a large 401K contribution unless I was content to live on Social Security at age 66. I know that most of the folks on the board who've retired early from the private sector did the same.

It is worth looking at the private sector expected retirement is from making this contribution. If I put 12.5% into a 401K with a 4% employer match how much will I have by early retirement or normal retirement. If we project that you get a real 2% increase in wages. The follow table shows how many times your final salary you will have accumulated with combined 16.5% contribution for various (real) interest rates and length of time.

Times initial salary

Years 4% 5% 6%

30 6.7 8.0 13.0

40 10.0 12.7 16.2

To put this chart in real number. If guy starts out making 50K today from college with 2% real increase he'll end up making 110K by the end of his career and if averages a 5% real return on his contribution, he will have accumulated about 1.4 million in today's dollars.

If we apply the 4% SWR rule a private sector employee would only be able to retire on 25-50% of his income depending. The person contributing for 40 years is probably fine because Social Security would supplement their income and they have shorter withdraw period.

However, I think the take away from this chart is that even very diligent savers who max out their 401Ks and work for 40 years are hard pressed to have the same financial security as public employees who work for 30 years.

[ziggy29]

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Originally Posted by Zarathu IN PA, I suspect we will see a small defined benefit pension at about half of the current one, with some kind of 401K type for the rest.

In other words, more like the FERS model the feds have adopted, one which I have repeatedly praised as a model, sustainable retirement system that relies on all three "legs" of the retirement stool of SS, personal savings and pension.

[ERD50]

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Originally Posted by Zarathu Lotsa good points that I can't disagree with... both from ERD50 and Texas Proud But.... if you let the free market run Fire, police, education then I suspect that only the rich will have these things. There was a reason why a free and appropriate public education was introduced in the USA. Before that, free market was the process, and only the rich got education.

OK, but it really does not have to be an all-or-nothing thing, and I don't think it should be.

It is in the public interest to have everyone protected by the police, and by the firefighters, and to have everyone educated. So that requires some public support. I'm good with that.

But that doesn't mean we can't also use the free market principles to achieve the goals where appropriate. Let's stick with Firefighters for a minute. Once the public has funded a Fire Department, shouldn't we buy fire trucks, two-way radios, office supplies and other support equipment on the open market, and let the manufacturers compete with each other to provide the best products at the best price?

Shouldn't we hire the firefighters on the open market, and get the best qualified people at the best price we can? Wouldn't anything else be a misappropriation of the funds entrusted to the government by the taxpayers?

That is what I want from teachers also. I want the best we can get for the money. If that means we need to pay some teachers in some areas more, fine. If it means we can get qualified teachers in other fields for less, that is fine also. And it will better serve the needs of the kids, which is what we are supposed to be doing in the first place.

-ERD50

[Spanky]

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The free market doesn't do a great job at delivering these services, and they are legitimate and important function of government. Certainly in the case of police, and teachers their are private sector equivalents (security, private investigators, private schools, corporate trainers) that can be used to help establish what is the fair market value of the service.

Teachers of private schools make in most cases much less than their public school counterparts. The academic performance of private schools in general is higher than that of public schools.

[HsiaoChu]

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Originally Posted by Spanky The academic performance of private schools in general is higher than that of public schools.

That's a statement that cannot be verified since in PA, private schools are not required to take the devilishly difficult state tests, and at the same time, private schools are not required to take anyone who enters. You will not have private schools who pride themselves on high scholarship taking in kids who are at the lower end of the socio-economic group, or at the below the average IQ ranges. A private school that was forced to take in the same population of children that the public school gets and must address would not be able to do any better than some public schools. However, the one elementary school where I work is a national blue ribbon school and is #13 and #20 in reading and math in the entire state of 5000 elementary schools. No private school can even hope to match that.

[HsiaoChu]

Part of the problem here is that people without pensions speak in generalities as if all pension systems for the public sector are the same.

They vary very widely in what they require, how they are administered, how they are managed.

In PA, there are huge issues, but they aren't anywhere like those of Illinois or California, where the system was raided by state government or where the management of it was poor. There are places where you can retire at 55 with 100%, and other places where you have to wait until you are 62 and don't get more than 40%.

In PA, the fund has more than 46 billion bucks in it, and with current teacher contributions has enough money for anyone who is within 10 years of current retirement and anyone currently retired. If it continues to gain at 8%(this past year it gained at 13%) if won't have really bad issues, no matter what.

IN PA, teachers must work 35 years to get their full pension or they have to be 60 years old. There is a 2-3% per year penalty for going earlier than that, and something like a 5% per year penalty for retiring with less than 25 years in. Most teachers who want to retire earlier than 30 or 35 years could suffer as much a 30% off their income up to 25 years. But at 24 years in they would suddenly have double that reduction.

Some places have all their health care covered. PA teachers do not have any health care covered. They do have a state plan, but its usually more than the employer. My employer will keep me on, but at the rate that the employer must now pay for me to the insurance company.

You have mentioned that a person out of college starting at 50K a year..... I know of no teacher out of college starting at $50K a year, and many start at $35K or below. Sure there are some places where this happens but these are generalities designed to scare the populace. Additionally in PA, all teachers must pick up an additional 24 credits to maintain their certificate after 5 years, at often a price of $1500 a credit hour, which means that starting at their $39K they have to over five years come up with an additional $36,000 to pay for their continuing education just to keep their certificates, while they are having a full 9.5% of their take home pay channeled into the retirement fund. Some schools help with this, but few pay more than $400 per credit hour, and the teacher must come up with the money up front, while they are still paying on their college loans too.

What I am illustrating is that the issues for teachers in their system, in PA, are different than other places, and that the whole picture is rarely shared. I AM NOT SAYING THIS TO MAKE TEACHERS BETTER OR WORSE OFF OR BETTER OFF OR ANYTHING THAN OTHER WORKERS. I'm only sharing that generalities about education systems and retirement pensions and pay for work, are just that. And people who work in a business environment really don't have a clue to what the education work day is like with real children, and of course VICE VERSA.

Z