NCPA - National Center for Policy Analysis


June 22, 2010

A taxpayer-funded state pension system encourages career teachers and administrators to retire in their 50s, tap the fund and return to work, says the Columbus Dispatch. 

If the educators don't retire at that relatively young age after 30 years of service, they are likely to receive far less income in both their working careers and retirement.  And much is at stake -- for both educators and taxpayers. 

For example: 

  • A superintendent earning $100,000 when he retires at age 52 will receive about $64,000 in the first year he taps his pension.
  • If he is rehired to his same job, as happens regularly, and he receives regular 3 percent raises and other benefits afforded most superintendents, he could retire at age 65 with a pension package totaling $1.6 million. 

While that's good for the public servant, the practice is contributing to a drain on the State Teachers Retirement System (STRS), which also has suffered from Wall Street investment losses and significant increases in health care costs, says the Dispatch. 

The STRS fund now faces $40 billion in unfunded liabilities and is in need of a taxpayer bailout: 

  • STRS officials and some legislators say the retirement formula also needs a tune-up to discourage retirement at a young age.
  • Superintendents who retire after 30 years of service, rather than after 35 years, each cost STRS about $465,000 in expenses and contributions; it's less for teachers. 

An analysis by Ohio's eight largest newspapers of a system that encourages educators to "double dip" by retiring and immediately returning to work found: 

  • One in four public school leaders in Ohio's 614 districts collect both pensions and paychecks, and one in two superintendents of educational service centers are doing the same.
  • When superintendents retire after 30 years, it halts their contributions into the pension fund and pulls out millions of dollars at a time when the fund's long-term viability is at risk.
  • About 32,000 state and local employees collected more than $1 billion in pension payouts last year on top of their government paychecks; three-fourths of those dollars went to State Teachers Retirement System members. 

No one can stop educators from retiring at a young age, and superintendents say they would be fools not to take advantage of a pension system that permits them to retire and return to work. 

Source: Dennis J. Willard, "Pension rules allow educators to double dip," Columbus Dispatch, June 20, 2010.


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