PENSIONS: A TOOL FOR A STRONG

WORKFORCE:
Three R’s: Recruit, Retain, and Retire
Public sector is better at retaining workers (BLS)*
Creates an environment of careers, not jobs: Helpful, given unique public jobs
Good for Schools, Too
Experienced educators improve outcomes, provide stable communities
Retention helps mitigate damage from teacher shortage
61.8% of public school teachers have >10 years experience, only 9.9% have
less than 3 years on the job**
* https://www.bls.gov/news.release/tenure.t05.htm ** https://nces.ed.gov/programs/digest/d17/tables/dt17_209.20.asp
 MEDIA AND LEGISLATIVE LENS ARE
TOO NARROW
What’s Missing?
Community Impacts:
• Less stable schools and public workforces
• Talent flight (retirement spikes, job changes)
• Dwindling teacher pipeline

Other Financial Impacts:

• Turnover Costs
• Salary Impacts
• Cost of closing a plan (sometimes captured)
 Collapsing Teacher Pipeline Foreshadows
-11%
Growing Teacher Shortage Crisis
UTAH
TEXAS
-2%
NORTH CAROLINA
WASHINGTON
6%
11% Nationwide, the average
FLORIDA
HAWAII
12%
17% number of students pursuing
VERMONT 17%
NEW HAMPSHIRE 18% degrees in education has
GEORGIA 20%
MINNESOTA 22% fallen by 42%
WYOMING 26%
LOUISIANA
VIRGINIA
28% (2009-10 through 2015-16)
28%
MASSACHUSETTS 30%
KANSAS 31%
NEBRASKA 33%
WEST VIRGINIA 34%
MAINE 34%
MISSISSIPPI 34%
NORTH DAKOTA 35%
COLORADO 37%
WISCONSIN 37%
OKLAHOMA 38%
MONTANA 39%
CALIFORNIA 40%
SOUTH CAROLINA 41%
ARIZONA 43%
MISSOURI 43%
IOWA 44%
SOUTH DAKOTA 44%
ALABAMA 44%
NEVADA 45%
ARKANSAS 45%
RHODE ISLAND 45%
KENTUCKY 45%
NEW YORK 47%
DELAWARE 48%
OREGON 49%
MARYLAND 50%
NEW JERSEY 52%
TENNESSEE 53%
INDIANA 55%
IDAHO 55%
OHIO 55%
ALASKA 61%
ILLINOIS 63%
NEW MEXICO 64%
MICHIGAN 64%
PENNSYLVANIA 65%
CONNECTICUT 66%
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
 PENSIONS WORK FOR TEACHERS,
CLASSROOMS AND COMMUNITES
New critique regarding future teachers is wrong
In our actual classrooms: 75% of CalSTRS members will
work 20+ years, 49% will retire with 30 years or more
The 40% who never vest only teach 6% of classrooms
There is an agenda: A billionaire’ foundation is trying to
shift resources to short-timers.
• Same group has spent hundreds of millions on privatization

Nari Rhee: Are California Teachers Better

Off with a Pension or a 401(k)?
STRESS TESTING: A GOOD
PRACTICE, NOW WEAPONIZED
Retirement systems use stochastic models already
Pension opponents now use modeling to create sense of crisis
 Often ignores Reversion to the Mean
• During 5-year periods following a loss of 8% or more (25 instances), the S&P 500 averaged
returns of 12.3%
• During 5-year periods following a 3-year bull market where, returns averaged 4.9%
(16 instances with 22% annual returns over a 3-year period, 1945-1959 was an outlier).

• Thus, range of results are likely too wide.

More importantly, understand the Context!