Cross-Subsidization of Teacher Pension Costs: The Case of California

Autor/inn/en	Costrell, Robert M.; McGee, Josh
Titel	Cross-Subsidization of Teacher Pension Costs: The Case of California
Quelle	In: Education Finance and Policy, 14 (2019) 2, S.327-354 (28 Seiten)Infoseite zur Zeitschrift PDF als Volltext Verfügbarkeit
Sprache	englisch
Dokumenttyp	gedruckt; online; Zeitschriftenaufsatz
ISSN	1557-3060
Schlagwörter	Retirement Benefits; Teacher Characteristics; Costs; Fringe Benefits; Educational Finance; Resource Allocation + Suchen Sie Ihr Suchwort? Retirement pay; Ruhegehalt; Cost; Kosten; Sozialabgaben; Bildungsfonds; Ressourcenallokation
Abstract	The value of pension benefits varies widely, by a teacher's age of entry and exit. This variation is masked by the uniform rate of annual contributions, as a percent of pay, to fund benefits for all. For the first time, we unmask that variation by calculating annual costs at the individual level. In California, we find that the value of a teacher's benefits ranges from about 4 to 22 percent of pay, and exhibits some idiosyncratic patterns, as is endemic to traditional pension plans. The variation in individual cost rates generates an extensive but hidden array of cross-subsidies, as winners receive benefits worth more than the uniform contribution rate, and losers receive less. Almost two thirds of all entering teachers, past and present, are losers in California. By contrast, a prominently invoked study finds that nearly all active teachers are winners there. That result is shown to be highly skewed by excluding the losses of prior entrants who left early, thereby violating the funding fact that the gains and losses of winners and losers must offset each other. Our main policy conclusion is that cash balance plans can rationalize or eliminate the current system of cross-subsidies and provide the transparency lacking in traditional plans. (As Provided).
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Erfasst von	ERIC (Education Resources Information Center), Washington, DC
Update	2020/1/01