Reforming Teacher Pension Plans: The Case of Kansas, the First Teacher Cash Balance Plan

Autor/in	Costrell, Robert M.
Titel	Reforming Teacher Pension Plans: The Case of Kansas, the First Teacher Cash Balance Plan
Quelle	In: Education Finance and Policy, 17 (2022) 4, S.641-665 (25 Seiten)Infoseite zur Zeitschrift PDF als Volltext Verfügbarkeit
Sprache	englisch
Dokumenttyp	gedruckt; online; Zeitschriftenaufsatz
ISSN	1557-3060
Schlagwörter	Teacher Retirement; Retirement Benefits; Teacher Salaries; Costs; Comparative Analysis; Elementary Secondary Education; Kindergarten; Risk; Employers; Kansas + Suchen Sie Ihr Suchwort? Retirement pay; Ruhegehalt; Lehrerbesoldung; Lehrervergütung; Cost; Kosten; Risiko
Abstract	The ongoing crisis in teacher pension funding has led states to consider various reforms in plan design to replace the traditional benefit formulas, based on years of service and final average salary (FAS). One such design is a cash balance (CB) plan, long deployed in the private sector, and increasingly considered, but rarely yet adopted, for teachers. Such plans are structured with individual 401(k)-type retirement accounts, but with guaranteed returns. In this paper I examine how the nation's first CB plan for teachers, in Kansas, has played out for system costs, and the level and distribution of individual benefits, compared with the FAS plan it replaced. My key findings are: (1) employer-funded benefits were modestly reduced, despite the surface appearance of more generous employer contribution matches; (2) more importantly, the cost of the pension guarantee, which is off-the-books under standard actuarial accounting, was reduced quite substantially. In addition, benefits are more equitably distributed between short-term teachers and career teachers than under the back-loaded structure of benefits characteristic of FAS plans. The key to the plan's cost reduction is that the guaranteed return approximates a low-risk market return, considerably lower than the assumed return on risky assets. (As Provided).
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Erfasst von	ERIC (Education Resources Information Center), Washington, DC
Update	2024/1/01