Teaching Profession

One More Way High-Poverty Schools Get Less: Teacher Pensions

By Liana Loewus — August 23, 2017 4 min read
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Teachers who work at high-poverty schools and with mostly students of color are paid less than their peers at affluent schools with mostly white students—but the disparity is worse than people think, argues a new paper from Bellwether Education Partners, a Washington-based consulting firm.

That’s because retirement contributions are often left out of analyses of what it costs to employ a teacher.

Max Marchitello, a senior analyst at Bellwether and the report’s author, looked at 10 years of data on the salaries and pensions of Illinois educators, and then compared those with student demographics.

“I wanted to pivot and put students at the center of the debate” about pensions, he said in an interview.

And considering that most people’s eye glaze over at the mention of the word pension (actuarial tables, it turns out, aren’t exactly enticing), it’s possible this could be a useful tactic in getting more attention to issues around pension reform.

Marchitello found that “after accounting for teacher pensions, the disparity in school-level personnel expenditures between high- and low-poverty schools increases dramatically,” according to the report, which was released today. That pattern was also true when looking at race: Schools with the highest percentages of black and Hispanic students put less money toward teacher retirement.

The data show Chicago teachers in particular were really losing out on pensions—the disparities were much smaller, though still present, without those teachers.

“Spending on teacher pensions is yet another way that states invest fewer resources into schools serving the highest concentrations of low-income students and students of color,” Marchitello writes.

Pensions Raise Pay Gap by 200 Percent

The amount an employer contributes to a pension is based on a percentage of an employee’s salary. The most experienced teachers—and thus generally the highest paid—tend to work in low-poverty schools and those serving fewer students of color, Marchitello explains.

So in looking at how much schools spend on teachers, “if you don’t include pensions, you’re underestimating the gaps,” he said. “And the gaps mirror and amplify the underlying inequities” in how teacher salaries are distributed across schools.

The Illinois analysis was somewhat complicated by the fact that the state has two pension systems: one for Chicago and one for the rest of the state. The Chicago plan puts a smaller percentage of teachers’ salaries toward their pensions.

(Both of those pensions systems, it’s worth pointing out, are severely underfunded right now, and risk not being able to deliver what they’ve promised to teachers.)

Here are some of the report’s findings:

  • When pensions are added to an analysis of Illinois school funding, the gaps between high- and low-poverty schools increase by more than 200 percent. Looking at 2012, low-poverty schools spent $582 more per pupil on teacher salaries than high-poverty schools. But when pensions were included in the calculation, low-poverty schools spent $1,243 more per pupil.
  • The gaps between schools serving high and low concentrations of black and Hispanic students go up drastically—by more than 250 percent—when pensions were added in as well.
  • When Chicago was excluded from the analysis, the same trend emerged, but to a lesser degree. The funding gap between high and low-poverty schools went up 24 percent ($211 per pupil) by adding pensions. And the gap between schools serving high and low concentrations of black and Hispanic students increased by 24 percent ($156 per pupil) with the inclusion of pensions.
  • Rural and urban districts receive far less for pensions per pupil than other districts.

The analysis does seem to have some far-reaching implications, Marchitello said. St. Louis and New York City, among other large urban districts, have separate pension systems from the state, and are likely to show the same trends in pay gaps.

Illinois’ financing formula has long been criticized as among the nation’s most inequitable. In other states with more equitable funding systems, though, the disparities would likely still exist but to a lesser degree (possibly looking more like the analysis that excludes Chicago).

“Nationally, it’s fair to say if there are inequities in teacher’s salaries, there’s going to be inequities in pensions,” said Marchitello. “And if you put them together, whatever we think the gaps are—they’re going to be bigger.”

Chart: From “Illinois Teacher Pension Plans Deepen School Funding Inequities,” Bellwether Education Partners’ TeacherPensions.org project

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A version of this news article first appeared in the Teacher Beat blog.