Budget & Finance

Do High Pensions for Superintendents Encourage Status Quo?

By Jaclyn Zubrzycki — August 02, 2013 2 min read
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In St. Louis, more than 10 percent of operating costs go to pensions. Chicago’s school district leaders cited high teachers’ pension costs as one of the reasons behind their most recent round of teacher layoffs. And, of course, public-sector pensions are one of the major factors in Detroit’s historic bankruptcy.

Most of the conversation about doomed pension plans in the education world has focused on teachers’ pensions. But what about superintendents and administrators? Education Next recently published an article examining how school and district administrators’ pensions play into this picture—and why those leaders have very little personal incentive to reform the pension system.

Superintendents and principals are generally enrolled in the same pension programs as teachers, Education Next reports, but, since they’re receiving higher pay at the end of their careers, they draw significantly more in pension than the average teacher. “Promoted individuals, who have large late-career salary increases, benefit disproportionately from a formula that determines the value of the annuity based on the highest few years of earnings,” write Cory Koedel, Shawn Ni, and Michael Podgursky, all in the economics department at the University of Missouri, Columbia, in an analysis of data from Missouri educators’ pension system.

In Missouri, superintendents’ expected benefits are 89 percent higher than teachers’, and their average contribution is just 53 percent higher. The authors suggest that a system that prioritizes early-career take-home pay instead of pensions might attract more talent to the profession.

Whether or not you agree with the authors’ conclusion that administrators are “on the same side of the table” as labor in terms of reconsidering pension programs, it’s interesting to see this particular facet of the pension issue in the spotlight. Pension programs in other states may look different than in Missouri, and in charter schools, most teachers and administrators don’t have traditional pension programs at all.

Another point from the piece: Pensions systems are designed to reward those who stick around, but to eventually encourage them to retire. Superintendents and principals, like teachers, are likely to retire around 55 or 56, the article reports.

One question this raised in this reporter’s mind: Could this incentive to retire at a (relatively) early age be related to why there’s so much churn at the top of districts? Are superintendents simply encouraged by their retirement plans to retire once they’ve hit a certain point in their careers?

A version of this news article first appeared in the District Dossier blog.