High pension costs lurk behind us teacher push for more pay – fire engineering static electricity how it works

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"I think what you see happening in the state and local and municipal sector is it has now become very, very clear how expensive defined benefit plans are. I think we’re headed for a big crisis across the country," said Olivia Mitchell, executive director of the Pension Research Council at the University of Pennsylvania. "Pensions are now becoming the tail that wags the government dog, if you will."

In Colorado, school district payments to the public pension fund have roughly doubled since 2006, from about 10 percent of payroll to 20 percent. That has squeezed personnel budgets when the state also was cutting funding during the economic downturn.

In that time, average teacher salaries have grown 21 percent, from $44,439 to $53,768, according to salary data from the National Education Association. But inflation in the greater Denver area has outpaced it, according to the Bureau of Labor Statistics, leaving teachers with an 8 percentage point drop in buying power.

Pension costs have played a role in the financial woes at Cheyenne Mountain School District in Colorado Springs, Superintendent Walt Cooper said. Since 2009, the district has shuttered an elementary school and instituted a pay freeze twice. Other years, it could only offer minimal raises that fell short of inflation, he said.

Additional contributions are not padding the benefits of current teachers. The bulk of the money that school districts spend on the Public Employees’ Retirement Association is paying off $32 billion in benefits previously promised to public-sector retirees but never properly funded.

Current teachers indirectly paying for their predecessors’ retirement is not unique to Colorado. A 2016 study by Bellwether Education Partners found that $14 of every $20 that school districts contribute to the pension of each educator nationally are paying off unfunded debts, with just $6 going to the worker’s retirement.

A Colorado teacher making about $70,000 who retired in 2016 after 30 years of service receives about a $56,000 annual pension, according to the pension’s financial reports. But the average pension benefit in 2016 was far less than that — about $37,000 a year for the typical school district retiree who worked until age 58.

Cutting future benefits worries teachers. Public sector workers in Colorado don’t receive Social Security checks, so proposed cuts to cost-of-living raises will leave them more vulnerable to inflation over time. That’s because the Public Employees’ Retirement Association, or PERA, was created before Social Security, so its members do not make contributions to Social Security retirement while working and do not receive those benefits.

"We don’t have another option. So what happens to PERA affects us for the rest of our lives," said Suzanne Etheredge, president of the Pueblo Education Association, whose members recently voted to authorize a strike following three straight years of difficult contract talks.

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