TQB: Teacher Quality Bulletin

A workaround for counterproductive pension systems

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Teacher No school district wants to lose their most effective teachers. But pension systems, which are under the purview of state legislatures, are one roadblock to retention. These pension systems often incentivize teachers to make early retirements - and districts are powerless to change that.

Dongwoo Kim and his colleagues at the University of Missouri experiment with a novel retention tool aimed at teachers nearing retirement age.

They developed two models - one addressing STEM teachers in Missouri and the other addressing teachers found to be highly effective in another unnamed state. Each model estimates the effects of giving these teachers bonuses at particular ages, beginning with teachers in their mid-50s, around the time when they might begin to retire to maximize their pension benefits.

Not all that surprisingly, the bonuses did the trick, with larger bonuses having bigger effects. Furthermore, the effects compounded over time, meaning that experienced teachers would come to factor the expectation of bonuses into their retirement decisions and stay longer.

How expensive is this approach? They found that the net cost to get a STEM teacher to stay an additional year in Missouri schools is $32,000 (including the cost of the bonus, plus the additional cost of the experienced teacher's salary compared to an inexperienced new hire). That's not cheap, but for districts with specific shortages, the cost may be worth it.