Few people work harder than teachers, who dedicate their lives to educating our children. Traditionally, teachers have been able to achieve a secure retirement with a defined benefit pension, but that isn’t the case for many charter school teachers in Louisiana.
Retirement security of charter school teachers is often overlooked. In 20 states that authorize charter schools — including Louisiana — schools are given a choice between participating in a public pension plan or offering an alternative. According to a new report from the National Public Pension Coalition, a majority of charters in Louisiana are opting out of the Teachers Retirement System of Louisiana. This threatens the retirement security of charter school teachers.
Louisiana state law recognizes five types of public charter schools. Only one of those five types of charter schools must participate in TRSL. Only 29 percent of charter schools in Louisiana are participating in TRSL, with other schools offering a defined contribution plan, either a 401(k) or a 403(b). Some charters, however, offer no retirement plan at all to their employees.
Public pensions are traditionally offered to public school teachers because they promote a stable workforce. This is beneficial to schools because teachers increase in effectiveness over time. A recent study from the Economic Policy Institute reports that teacher turnover is twice as high at charter schools as at traditional public schools. This turnover is harmful to students, who are unable to learn from experienced and effective teachers.
Unlike pensions, defined contribution plans are inherently risky and inadequate. They were never intended to be the primary retirement savings plan for working families. Instead, they were meant to be a supplement for Social Security and traditional pensions. My report compares the benefits a hypothetical teacher could earn through TRSL with those they could earn through an alternative retirement plan. I found that a teacher in a defined contribution plan would earn far less than one in the pension plan.
Even after making generous assumptions which assume the teacher takes advantage of the full employer contribution over a 35 year career, earns six percent annual returns, and does not take any withdrawals from the retirement account, this charter teacher would only be able to replace 55 percent of their income in retirement compared to replacing 86 percent through TRSL.
At a time of widespread financial anxiety, working people need the retirement security of a traditional pension. Louisiana charter schools do a disservice to their teachers when they choose not to participate in the TRSL. It’s time for a real debate about how best to provide for charter school teachers’ retirement needs.
program manager, National Public Pension Coalition