Public Pension Perils: A Call for Protecting Missouri's Educators

Public Pension Perils: A Call for  Protecting Missouri's Educators

As the 2024 Missouri Legislative Session begins, the Missouri Retired Teachers Association and Public School Personnel (MRTA) is concerned about potential changes to public pensions by the legislature. Public pensions are relied upon not only by teachers and school employees, but also many other public sector workers, including police, highway patrol, state, county, and city employees. Public pensions play a vital role in ensuring financial security for these public servants, supporting the economy, and bolstering the education system for the students of Missouri. 

 
North Dakota's Underfunded PERS Plan
In 2023, North Dakota faced a funding crisis with its Public Employees Retirement System (PERS) plan, as the legislature had consistently underfunded it since 2003. The decision to close the plan for new hires starting January 1, 2025, raises apprehensions about the long-term impact on teachers' retirement security. Insights from Michigan and Alaska provide a glimpse into the potential ramifications of such decisions.

Michigan's Prolonged Struggles
Michigan's closure of the State Employees Retirement System (SERS) plan in 1997 serves as a cautionary tale, especially for teachers. More than 26 years later, thousands of active employees in the closed plan are still dealing with the consequences. The decision has not only resulted in increased costs of over $300 million for the state but has also affected the retirement security of teachers who were part of the closed plan.

Alaska's Teacher Turnover Crisis
Alaska experienced changes to its pension plans in 2005. While not a complete closure, the changes made have had a significant impact on teachers there. Higher turnover and resignation rates among staff in defined contribution plans as compared to those in the now-closed pension plans pose new challenges in retaining educators. The National Institute on Retirement Security (NIRS) Center for Retirement Research found that pension cuts increase employee turnover, and Alaska's case is no exception.

Impact on Teacher Recruitment and Retention
Teacher recruitment and retention are severely affected by pension plan closures, as seen in Alaska, where nearly half of newly hired teachers leave before their third year. This turnover rate poses challenges for education quality and student instruction. In contrast, according to NIRS research, pensions provide a financial incentive for teachers to stay on the job. As a result, when educators are a part of a pension plan, schools have more experienced teachers in the classroom, which ultimately benefits students and education.

Addressing Challenges
Efforts in Alaska and Michigan to reassess pension plan decisions indicate a recognition of the challenges posed. Communicating the enduring costs of higher turnover, especially in the education sector, remains a crucial aspect of policymaking. It is imperative that decisions impacting the retirement security of teachers are made with a comprehensive understanding of their long-term effects.

MRTA's Commitment
The Missouri Retired Teachers Association reaffirms its commitment to advocating for students, public schools, school employees, and retirees. Our vision is to secure Missouri’s education retirement systems by promoting and protecting public education resulting in a financially secure retirement/pension. The Association stands against legislation that could adversely affect these groups while actively working to maintain and enhance current funding, cost-of-living adjustments (COLA), and accounting standards.  MRTA is the best investment to protect your largest asset - your pension!