That’s Attractive

The Shelby County School Board will review proposed changes to benefits for future employees at today’s meeting, Chalkbeat reports.

The move comes as the district seeks to realize cost savings by reducing long-term costs:

Memphis leaders have been grappling for years with how to cut a $1 billion-plus liability for retiree benefits through Shelby County Schools. But even as they’ve put options on the table, they’ve never settled on a sure-fire reduction plan.

Now school board members are exploring one extreme option anew: eliminating all retiree benefits for employees hired after January of 2018.

Currently, employees must work 15 continuous years in Shelby County Schools to be eligible for retirement benefits beyond the state pension. District leaders say that savings will be realized in 20 to 30 years. It’s not clear what the total savings would be, but the district says about $570 of current per pupil spending goes to these benefits.

One concern is the impact the benefit elimination would have on attracting new teachers. Some suggest that impact could be lessened by raising salaries, but the savings from the reduction won’t come for 20-30 years and the salaries would need to be increased now in order to make up for the benefit loss.

When a proposal was floated in Nashville for teachers to trade their pension for higher pay during their years of service, I did an analysis on what it would cost to make up the difference.  It’s an expensive proposition. While these benefits are not as costly as a pension (which is managed by the state), it’s not difficult to imagine a pay raise of $5,000 or more per year being necessary to offset the future benefit loss.

Additionally, one promise of a teaching career historically has been the promise of a secure retirement. No one gets rich off a teacher pension, but having that guaranteed income combined with access to affordable health insurance certainly makes life easier.

It will be interesting to see how Shelby County leaders handle this issue and how that action impacts the recruiting of new employees.

For more on education politics and policy in Tennessee, follow @TNEdReport


 

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