Retirement savings system reinforces inequalities in Connecticut schools
Two Connecticut governors have attempted – and failed – to shift some of the massive cost of teacher pensions to municipalities, arguing that it’s inherently unfair for the state to foot the full bill.
Education equity advocates hope to resuscitate that debate this year – with a big twist.
Rather than trying to bolster state coffers, the Connecticut chapter of Education Reform Now (ERN) wants the state to bill wealthier school districts and use at least some of those resources to help students. poorest communities.
“Connecticut schools and students cannot compete with the rest of the country if there aren’t enough quality teachers in all districts,” said Amy Dowell, ERN state director. , whose chapter published a new analysis of Connecticut’s system for funding teachers’ pensions this week.
âIf you have a very crowded classroom, it’s taxing. If you don’t have an assistant in your class, it’s taxing, âshe said. âThis is how teachers burn themselves out. â¦ Who could blame them?
But does the high cost of teacher pensions have an effect on the funding Connecticut provides to local districts to run their schools? The short answer is: Yes, quite a bit.
AT over $ 2.1 billion, the education cost-sharing grant is not only the most important government program to support the operation of local schools, but it naturally accounts for 10% of the overall general fund.
Connecticut’s second largest education expense – about 7% of the General Fund or $ 1.44 billion this fiscal year – is the required annual contribution to the teachers’ pension fund. This large contribution to the pension system consumes resources that would normally be spent on running schools or other basic programs in the state budget.
For most states, this pension expense is much less. Connecticut is one of seven states that prevent cities from contributing to teachers’ retirement expenses, according to the ERN.
And the huge contribution to the Connecticut pension plan was not caused by the benefits promised to current teachers. Only about $ 2 out of $ 10 put into the fund goes to it. The rest covers the fiscal sins of past generations. Connecticut has over $ 18 billion in the unfunded bonds of his pension fund for municipal teachers. This reflects the contributions the state failed to make – and the potential interest and investment income it lost – for more than seven decades until the late 2000s.
But that’s only half the problem, according to the ERN analysis.
Current pension subsidies favor predominantly white wealthy cities
The other is that the pension system disproportionately benefits wealthy communities, reinforcing educational inequalities along socio-economic and racial lines.
Teachers’ pensions are calculated, in large part, on the basis of salaries and years of service. Teachers who earn more throughout their careers will be entitled to much higher pensions.
But while the state pays pensions, cities pay wages. And Connecticut – which has some of the country’s most extreme income inequalities – also relies heavily on municipal property taxes to fund its local schools.
This means wealthy suburban districts can spend much more on education, pay much higher salaries for teachers, and recruit and retain the best staff.
And because the state covers all of the city’s pension costs, it reinforces this unbalanced system.
For example, the state paid, on average, $ 2,700 per student in 2020 to cover pension contributions owed by the 25 top performing school districts in the state, and only $ 1,870 per student to cover the 25 the lowest, according to the analysis. The statewide average was $ 2,312 per student.
White students make up 51.5% of Connecticut’s student body, but pension payments the state made on behalf of their districts made up 68% of all dues.
Likewise, students of color make up 48.3% of the student body, but payments the state made on their behalf only made up 30% of the total.
A tough political fight ahead?
Governor Ned Lamont and his predecessor, Dannel P. Malloy, both cited these inequalities when they presented their proposals for cost-sharing pension contributions in 2019 and 2017, respectively.
But they were more focused on solving a different problem.
Malloy and Lamont primarily wanted additional funds from municipalities to pay off the state’s pension debt, not to help poor school districts.
Malloy’s initial plan in 2017 would have required cities to cover a third of the annual teachers’ pension contribution, over $ 400 million.
Lamont asked two years later for a much more modest $ 50 million per year.
But the legislature rejected both proposals because municipalities argued it would worsen Connecticut’s already extreme reliance on property taxes.
Leaders of the Connecticut Conference of Municipalities and the Connecticut Small Town Council said this week that any new billing proposals would likely face further criticism.
Betsy Gara, executive director of COST, noted that binding state arbitration laws actually govern the contracts that set the salaries of local teachers – and by extension the levels of pension benefits – in most cases. And while state aid to towns and villages has increased over the past year, it was nowhere near enough to reverse decades of minimal or no growth that has not kept pace with the economy. inflation.
Adding teacher retirement costs now “would overload property taxes in many of our small towns,” Gara said.
Joe DeLong, executive director of the CCM, noted that state aid to education and government combined is still falling by around $ 1 billion below full funding levels promised by law.
And while DeLong said the CCM fully supports any debate on ending educational inequalities in Connecticut, it must also include a more candid discussion of the benefits paid to teachers and the depth of the problem facing the state.
âOur public education services shouldn’t be much different, depending on a child’s zip code,â DeLong said. “As long as they are, we are letting our children down.”
But while lawmakers have cut pension levels for state employees twice in the past decade through concession deals with unions, no proposal to cut teacher pensions has been discussed at length. discussed by lawmakers.
According to the Legislative Assembly’s Non-Partisan Office of Tax Analysis, the average pension of a teacher take full retirement in 2021 was $ 58,371. Most teachers in Connecticut do not contribute to the Social Security system and do not receive this benefit.
Dowell said Education Reform Now’s proposal does not approve of cutting teacher pensions.
Spokesmen for the state’s two major teacher unions, the Connecticut Education Association and AFT-Connecticut, declined to comment on Wednesday.
Lamont Budget Office spokesman Chris McClure responded to the ERN report by noting that Connecticut has made huge strides in recent years to stabilize the teachers’ pension fund, including an additional payment $ 900 million this fall.
And while eliminating billions of dollars in pension debt will take decades, “Governor Lamont is committed to finding real solutions for Connecticut taxpayers, especially local property tax relief,” McClure added. . “… But to solve our long-standing problems, we must always be attentive to the short and long term impacts and the solutions must be meaningful to all concerned.” “
Dowell acknowledged that the concept of charging any community for teacher pensions is politically delicate, but she was optimistic the latest debate would be different.
The ERN intentionally focused on the concept of fairness rather than the method of achieving it. In other words, the analysis does not recommend which wealthy communities should pay, and which low-income communities could receive further aid, or by how much.
The analysis suggests that the state could use some of the proceeds from teachers’ retirement bills sent to wealthy cities to bolster existing education grants to needy districts or create a new source of funding to help them recruit teachers.
The report’s findings “have a real impact on children,” Dowell said, adding that advocates hope progress can be made over time.
“The pension policy is sometimes a policy of compromise”, added Anthony Randazzo, executive director of the Equable Institute, the Queens-based political group that prepared the analysis for ERN. âThe status quo, however, is clearly unfair. â¦ There is no reason why the distribution of retiring allowances per student should align with school performance.
Coronavirus pandemic could open door to debate on education reform
Some key lawmakers said this week that the Education Reform Now report asked the right questions at the right time.
âI think it’s worth exploring,â said Representative Bobby Gibson, D-Bloomfield, co-chair of the General Assembly’s Black and Puerto Rican caucus, noting that long-standing inequalities in many areas, including including education, are starting to attract more and more attention to the Capitol.
The pandemic has exposed inequalities in education, healthcare, economic opportunities and other areas like never before, said Representative Toni Walker, D-New Haven, longtime co-chair of the Credit Committee of the legislature.
Students have been separated from normal school routines for much of the past two years. Districts with large numbers of experienced teachers fared much better than poorer and understaffed districts, Walker said.
“I think it’s a good concept,” New Haven lawmaker said of the ERN report. âWhat he’s trying to do is, as much as possible, equalize the education delivery system. We can no longer speak with lip service and say ‘we believe in a fair education and then do nothing’.