Teacher Pension Reform

It's the widening gap spooking statehouses across the country—the more than $1 trillion difference between what states have promised for public employee pensions and what they have actually set aside, according to the Pew Center on the States. In most states, these unfunded obligations exceed thousands of dollars for each resident.

Confronting this fiscal nightmare is the right thing for states to do. Action on pensions is urgently needed because this financial crisis is also an education crisis: the design of many state pension systems can actually prevent states from recruiting, retaining, and adequately compensating the high-quality teachers and principals that are critical to their educational and economic success.

It's the widening gap spooking statehouses across the country—the more than $1 trillion difference between what states have promised for public employee pensions and what they have actually set aside, according to the Pew Center on the States. In most states, these unfunded obligations exceed thousands of dollars for each resident.

Confronting this fiscal nightmare is the right thing for states to do. Action on pensions is urgently needed because this financial crisis is also an education crisis: the design of many state pension systems can actually prevent states from recruiting, retaining, and adequately compensating the high-quality teachers and principals that are critical to their educational and economic success.

Most pension systems are far from equitable: they highly reward some teachers, penalize others, and push some good teachers into premature retirement. They also allow teachers with similar years of experience to receive vastly different benefits. On top of these structural inequities, unchecked pension obligations threaten to siphon money that might otherwise go to higher wages for teachers, better professional development, and extended learning opportunities for students.

Education Sector's work on pensions highlights the complexities and challenges of current pension systems and key areas for reform.