Blatantly Self-Serving Post Commenting on Political Affairs

A nearby school district is making headlines by way of its refusal to pay into the pension system.

I can sympathize with the sentiments and frustration of that district's board and the taxpayers who support their protest. It's maddening to see government not meet its obligations. It's maddening to feel like one is in a situation in which one's tax dollars are simply being transferred to another citizen rather than paying for a service or good that benefits them or their community. Over the past couple of years, however, I've tired of being in the cross hairs of political anger and I guess my patience has worn down a little bit. If I look at the actions of the Quakertown board selfishly, I can't help but think that they are threatening my financial future, I guess just as they think a program that benefits me is threatening their financial present and future.

Since my wife is employed in the financial industry, and since I teach economics, I've given a great deal of thought over to the pension problem | crisis | uncomfortable conversation (circle one). In some ways, I'd be comfortable with transferring over to a defined benefit system for providing for my retirement. I see what such a system can look like when it's done well in the private sector. Savers are free to make financial choices, and live with the good and bad consequences of those decisions. Employers match employees' contributions, at least in part. There are tax benefits for savers if they properly make use of federal tax law. I could live with such a system.

If one looks closely at the most recent proposal in Pennsylvania for pension reform, it doesn't deliver those things, in general and in particular to my younger colleagues. Existing 403(b)(7) law limits the number of vendors who can serve a district, thus restricting the freedom to find the best retirement services provider. There is a limit as to the potential gains one can make on their savings decisions (but no limit on the potential loss). And, finally, there's no whiff of any option for an employee match.

In fairness, those latter two limitations come from the fact that pension reform attempts to maintain a stream of revenue to the pension fund to benefit older employees, which (*gulp) is what I am at age 39. But these speaks to one of the great political limitations of pension reform: It's still politically unpalatable to destroy benefits current retirees or people well in the system (like me) have earned. Therefore, even if we cut the youngest teachers out of a future pension there still must be a means of providing for the older ones. Ugh. That's a tough one.

I also don't see any situation in which there'd be political support for districts to match any portion of voluntary retirement savings by employees. Districts have a hard enough time justifying any sort of tax increase: justifying a tax increase to permit a match of, say, dollar-for-dollar for up to five percent of one's salary isn't going to happen.

All of this leads to some real political conundrums. Many want to treat teachers more like private sector employees. But the retirement savings match which is common in much of the white collar corporate world wouldn't take place in education. That being said, I'm conscious of how self-employed Americans never get an employer match. Yet, I don't see many making parallels between teachers' station in life and business owners. We're not consultants or contractors.

Many decades ago we decided, as a country that professionals in public service would receive pensions as a safeguard against financial hardship in their later years. This was, in part, a way to keep professionals in public service. It was also a way of offsetting the lower pay one typically earns in public service relative to private sector jobs where pay raises can be more impressive. Unraveling a decades-old bargain is difficult.

Quakertown's board is attacking just such a complicated bargain. Any solution will create losers, just like staying with the status quo creates losers. I guess I'm one of the many who need to fight so as to make it less likely I lose.