I was furious to read a Wall Street Journal opinion essay by former NYC Schools Chancellor Joel Klein on the effect of teacher pensions on public education. Not because of what he said – I’ve said as much myself. But because of what he didn’t say, and when he said what he did. Come on Mr. Klein; you’ll have to do better than that.
Since the WSJ is behind a pay wall, let me hit the highlights. Klein notes that even if pensions were not underfunded and retroactively enhanced, they would still shift total teacher compensation away from cash pay for doing their jobs while they were working, to more years paid to do nothing for anyone in retirement. More years in retirement, relative to years worked, than is true in just about any non-public field. On the front end, this discourages qualified applicants though low cash pay (and little value in pension accruals) early in a teaching career. On the back end, it encourages burnouts and those who chose the wrong field to hang around waiting for the pot of gold at the end of the rainbow, perhaps while not giving a full effort.
More importantly, however, Klein observes that politicians can hike the expected rate of return and use this as an excuse to underfund the pensions (even if they also increase pension benefits), and that they have done so. As a result, Mr. Klein has suddenly discovered, “children currently in our schools, as well as future students, will be high among those paying the price. To cover the underfunded pension obligations to teachers and other public employees, cities and states have little choice but to divert money from what would otherwise be their operating budgets. And since schools make up a big part of those operating budgets, education will get significantly shortchanged as we make up for past underfunding.”
Presumably through a vastly diminished education, said Klein, “today’s and tomorrow’s students will long be subsidizing retired teachers who never taught them.” And since nothing can be done about it after the fact, these costs are “hollowing out public education.”
Let’s consider that phrase again: hollowing out public education. That is what Joel Klein believes is happening, or so he said. Why does he believe this? What city’s public education is he most familiar with? Funny, but I don’t remember hearing the future of public education talked about this way a month ago, or a year ago, or five years ago.
Let’s consider what ex-Chancellor Klein didn’t talk about – the 2008 deal to drastically, retroactively enhance the pensions of New York City teachers, partially funded by cutting the take home pay of future teachers throughout their careers, and partially funded (though it wasn’t admitted at the time) by hollowing out public education. To a greater extent than it would not have been hollowed out anyway due to the 2000 pension enhancement, the 1995 pension enhancement, and past underfunding.
Now one might say this is a national opinion piece in a national newspaper, and not specific to New York City. But who (from the point of view of education) the hell is Joel Klein, and who would care about what he thinks about education, if he had not been the chancellor of the New York City schools? How about that deal, Mr. Klein? That’s what he didn’t talk about in the article. And back when that deal was being done is when he didn’t talk about its effects. That’s the too little, and the too late.
The state legislature had passed, more than once I believe, a 25/55 retroactive pension deal for New York City teachers, without any “no” votes. Joel Klein could have talked about it then. Bloomberg cut a deal with the UFT to study the issue. Joel Klein could have talked about it then. Bloomberg cut a deal, during his non-campaign for President in 2008, to provide New York City teachers with a 25/55 pension and claimed it would cost nothing. Randi Weingarten called it a “win for children” and didn’t mention “hollowing out.” Joel Klein could have talked about it then. The deal didn’t pass the state legislature, yet again, for several more months. Then Governor Spitzer didn’t sign it for a couple of weeks. That was your time, Mr. Klein, to publicly threaten to resign in protest – and follow through with it if need be. Nothing.
And as for this being a national story in a national newspaper, does it really make sense to discuss at the same time the pensions of New York City teachers and the pensions of California teachers? California teachers who have been paying 8.0% of their own salaries into their pension funds, do not get Social Security for their time as California teachers, and are penalized by Social Security for the Social Security benefits they otherwise would have earned in other jobs before or after they were teachers? Do the pensions of teachers in California, where Social Security income (which they don’t get) is exempt from state income taxes but public employee retirement income is not, have anything to do with the pensions of teachers in New York City, where public employee pension income is exempt from state and local income taxes at any age?
As discussed previously, independent actuary John Bury has gone through all the state pension plans, and all the plans of major cities. He found that New York City’s teacher pension plan was the most underfunded of all teacher pension plans, and the third most underfunded of those he has studied so far. I wonder why?
Let’s consider that phrase yet again: hollowing out public education. New York City’s public education was hollowed out in the 1970s, following the rich Lindsay Tier I pensions and massive debts (yup, we have those again too). They are much less hollowed out today, as of January 10, 2011, the date of this article. So why does Joel Klein use this phrase?
Perhaps because New York City’s public schools are about to be hollowed out. At just about the highest state and local tax burden as a percent of personal income in the United States, and at a per student level of spending that is now really high, even adjusted for the cost of living, compared with anyplace other than the rest of New York State and New Jersey. The teacher pension plan for the State of Oklahoma is also one of the most underfunded in the country. That is a low-tax, heavily Republican state. While I expect its schools to be hollowed out too, having your schools hollowed out because you pay low taxes and vote Republican is an entirely different thing that what is happening in New York.
So now, I am convinced even though he hasn’t said it, we know the reason Joel Klein decided to resign (or was fired) as head of the New York City schools. Because he knows the schools are going to be hollowed out. Because he now knows (if he didn’t before – and he should have) that past pension underfunding, and retroactive pension enhancements, will have a greater effect on New York City children three, five, ten and twenty years from now than anything he did as chancellor.
And perhaps we know the reason for the new job he has chosen – coming up with a computer-based school curriculum for a private company. Perhaps he saw the same future I did when I wrote the essay “Education in an Era of Institutional Collapse.” A future of “privatization” and “placardization.”
By placardization, I mean that to the extent that public sector has anything worthwhile to offer, it will not be able to afford to offer it universally, and it will be allocated instead to insiders and those with connections by a variety of means. The way scarce parking is allocated to those with the connections to get placards, legal and illegal. By “privatization” I do not mean that the government will provide universal, equal benefits by hiring private contractors rather than public employees, as it does in the Medicare program or under a school voucher program. I mean that those who have the resources to provide what were once public services for themselves will be permitted to do so (as long as they are grateful for that permission), while those who lack such resources will be left to do without.
For the rich – exclusive private schools. For the connected – special deal schools, and an end to that “fair student funding” nonsense. For middle class parents with enough education themselves to make it work, assisted homeschooling, perhaps through cooperative groups who hire private tutors part time, perhaps using software Joel Klein’s new venture will sell them. For those without college educated parents – the social landfill of schools as prisons, just as in New York City’s public schools in the wake of the 1970s. No more equality of opportunity. No more Joel Kleins.
Which might also explain my Mr. Klein, approaching age 65 and presumably financially secure feels the need to get a big bucks job with some corporation. To earn enough to create an endowment big enough so that no descendent of his will have to attend public school.
C’mon Mr. Klein. There are lots of New York City-specific publications that would love to hear a real exit interview. And they don’t, just send it to me and I’ll post it here.