State Teacher Retirements Need Major Change

Up front I want to say I have 25 years of service logged in the state university retirement program. But I made a conscious decision almost 20 years ago to self-manage my retirement funds. So you won’t see my name listed in the local newspaper when it posts the six-figure retiree salaries from the state’s education system.

And I think my strategy should become the only option for incoming teachers and school administrators.

The current picture is very disturbing. The state’s teacher retirement system is asking for an extra $400-million dollars from the legislature for next year. It already is the biggest hog at the trough, costing taxpayers $4.8 billion dollars a year. That’s over a quarter of the state budget, which is crazy.

The incoming governor will try to cover the hole with higher taxes. That doesn’t solve anything. In fact, it will make things worse over time.

So here’s my proposal.

You can’t mess with the current retirees----they get the deal they were offered when they started their careers. But you must shift to my plan---one where new hires are funneled into personal retirement accounts that get politicians out of the business of managing retirement savings. Every legislature has used retirement accounts as a piggy bank-----well, now piggy is overdrawn---by about $130-billion dollars. That’s the unfunded state pension liability.

Don’t mess with the retirees. Give new hires a way to build their retirement like most people in private industry do----with their own money. 

It’s fair. It’s up front. And I have to tell you. It works.