Why teachers should worry about retirement bills this year

Some legislators are upset that teachers and school employees are calling them about retirement issues. They point out that current K-12 educators are not included in the governor's attacks on state retirement systems this year. They say that teachers and school employees have nothing to worry about this year.

On a very simple and misleading level, they are correct. Currently employed K-12 teachers and school employees were carefully edited out of some retirement bills, although higher education faculty members of the Teachers Retirement System are definitely at risk.

Simply saying that K-12 educators aren't affected this year, however, does not mean they have nothing to worry about. If the so-called "reforms" pass this year, it is almost certain that teachers and school employees will be added to the list in upcoming legislative sessions.

But that's not the only reason for teachers and school employees to oppose attacks on the retirement systems of other workers.

First of all, we owe it to other employees to support their interests, especially if we ever hope to have their support when we are under the gun. The more we stick together, the better our chances of having decent and sustainable retirement plans for all of us.

And if you are looking for a more technical and layered reason for concern, we have that for you as well.

If the proposed retirement system changes go through, teachers and school employees will be indirectly but definitely affected. Here's how LFT Legislative Director Mary-Patricia Wray explains it:

The investment strategy of the board will change, and the decisions made on behalf of all plan participants, new or old, will be influenced by the changes made to final average compensation, retirement eligibility, DROP eligibility, employer and employee contribution rates and the proposed institution of a cash balance plan.

The prospective language in the bills is a facade that fails to fully disguise the retroactive nature of these bills. The governor's package, if adopted in whole or part, will increase the unique investment interests of plan participants since different members will be eligible to retire at different ages, under different styles of pensions, and with vastly different income levels.

The board managing of each retirement system will have a fiduciary duty to all members, making the wisest investment decisions for each fund. Meanwhile they will have to change past investment strategies to accommodate new hires who will have completely different levels of tolerance for risk-taking. Ultimately it will impact the funded ratio of the system, and thereby every single member of the system, whether a career employee or a new hire.