After more than three decades in the educational system as a speech and language pathologist, Lisa Chattler is beginning to contemplate retirement from the Los Alamitos school district.
Chattler, 61, expects to have a decent pension. It will come to about 90% of her final salary, which is in the range of $100,000, including a benefit bonus she earned by reaching the 30-year career threshold.
On the other side of the ledger, she will have earned no Social Security for her years in the schools — and the small benefit she accrued during a few years of work in the private sector will be all but wiped by an offset imposed on many government workers. She funded much of her pension from her own paycheck, a contribution that comes to 9.2% of her pay this year. And knowledge that her pension would be there for her in retirement allowed her and her husband to devote their savings to putting their two children through college, without saddling the kids with debt.
Chattler is exactly the kind of employee the California State Teachers' Retirement System is designed to reward: an experienced educator who has spent 34 years on the firing line, acquired a master's degree and continued her professional training along the way, and currently carries a caseload of 62 children, many with autism, dyslexia or developmental disabilities, along with the responsibility of supervising student clinicians preparing to launch their own careers.
But benefits like hers are the target of a new focus by critics of public pensions. Moving away from the argument that public pensions in general are too lavish — a hard argument to make when the average benefit for California teachers is about $3,800 a month, with no Social Security — they're saying full-career employees get too much, at the expense of those who leave after only a decade or two.
"Teacher pensions, particularly in California, are profoundly unfair, because they really shortchange teachers who spend less than 25 years in the classroom," says Richard W. Johnson, a retirement expert at the Urban Institute. Adding to the disparity, he says, are legislative changes in the pension system that reduce benefits for all teachers hired after Dec. 31, 2012.
The chief culprit, according to Johnson and other critics, is the back-loading of all defined-benefit plans: employees typically rack up retirement credits much more rapidly toward the end of their careers. The issue affects millions of Americans who have switched employers one or more times during their careers and therefore will end up holding the short end of the pension stick.
That's not a bug in the system, but a feature. "This is a philosophical issue," says Ed Derman, CalSTRS' deputy chief executive. "Defined-benefit plans are designed to reward people who provide a full career."
Like most such plans, the key elements of the CalSTRS pension formula are the number of years of service and the employee's highest annual salary. (For post-2012 teachers, it's the average of the best-paid three consecutive years.) Proponents of such plans say teachers with the longest service and the most experience should be the most valued.
By contrast, 401(k)-style defined-contribution plans provide the most valuable credits to younger workers, because those will grow the most over time. "The benefits get less value as you age and gain experience," says Nari Rhee, a retirement expert at UC Berkeley who is analyzing employment data for CalSTRS. "The incentive structure is flipped."
Some critics — like Josh McGee of the Laura and John Arnold Foundation and Marcus Winters, a fellow at the Manhattan Institute — suggest that teachers are especially disadvantaged by defined-benefit plans because they're highly mobile, and thus less likely to spend a full career in one place. (The Arnold Foundation has been a major critic of public defined-benefit pensions.)
This may be true in some states, but it's misleading. In California, according to Rhee, 40% of teachers will drop out in the first five years — but of the rest, most will make it to a full career of 30 years or more. Of all California teachers, she calculates, barely more than half, rather than "an overwhelming majority," leave with less than 30 years of service.
Still, there's no question that many teachers leaving the profession short of a full career will face difficult retirements. That's the prospect facing Patricia Arian, 64, a third-grade teacher contemplating retirement after 17 years of service in the San Francisco schools. Arian became a teacher after working as a freelance photographer, but her service years will provide her with a benefit of only about 41% of her work income, a meager sum on which to live in San Francisco. She doesn't blame full-career teachers — "they're the people who are getting what they deserve," she says — but rather a system that shortchanges almost everyone, in part by leaving them uncovered by Social Security.
The most seriously shortchanged may be teachers who leave after a limited number of years and well before retirement age. Rhee agrees with McGee, Winters and Johnson (whose work also has been subsidized by the Arnold Foundation), that it might be fair to index their final salary to inflation so they don't lose ground in the interim. But fewer than 7% of CalSTRS members accumulate 10 to 19 years of service and leave before reaching retirement age.
The critics suggest that teacher benefits be redistributed so that equal credit is given for years of service no matter where they occur on one's career path. That would mean that longer-serving teachers would get less, so that those who leave early could get more. The prospect doesn't disturb Johnson, who questions the value of teaching experience. "After five or 10 years," he says, "there's really no growth in the productivity of teachers."
That's a dubious assertion that devalues the effort needed to become an effective teacher. "You can't do my job without continuing to grow and learn," Chattler says. She knows she's near the top of the pay scale at a well-paying district, but it wasn't easy to get there. Doing this job well means 50 to 60 hours a week year after year, weekends and summer school, sacrificing time with her family.
Recently, Chattler says, she received grateful messages from the parents of several former students. "That's why I work the long hours, helping kids to improve their communication and relationship skills. It's certainly not about the money. But if you ask those parents if I deserve my pension, I think they would say yes."