Summer heats up over school pension reform

See all posts

Summer heats up over school pension reform

Teachers' required contributions to pension plans (many of which are alarmingly underfunded) are rising as states struggle to reign in spending in the face of budget woes. Just last week, Florida Governor Rick Scott signed a bill requiring teachers and other local government employees to contribute 3 percent of their salaries to their pensions. For a teacher earning $45,000 a year this amounts to about $50 a paycheck. Up until now, Florida was one of only a handful of states where employers fully funded teacher pensions. A savings of $2 billion is anticipated in the first year alone. 

Legislation signed by New Jersey Governor Chris Christie this week requires teachers to pay an additional 1 percent to their pension, effective immediately, bringing their total contribution to 6.5 percent. Another 1 percent contribution will be phased in over the next seven years.  

The backlash: The Florida Education Association has already filed a lawsuit against the legislation; the case is likely to reach the Florida Supreme Court. And thousands of New Jersey teachers took to the streets of Trenton to protest the legislation. 

Defined-benefit pensions are all but a thing of the past in the private sector, and in the public sector, market fluctuations, funding shortfalls, an increasing number of retirees and more frequent job switches have encouraged rethinking of public employees' pension plans. Nonetheless, as our 2009 State Teacher Policy Yearbook found, 30 states offer only a defined benefit plan. Stay tuned for an update to the information below in our 2011 State Teacher Policy Yearbook, coming out in January.