Teacher pension funding in Conn. is inequitable

In Connecticut, wealthier towns paying higher salaries have an advantage in recruiting teachers to their school districts. This is an inequity that the state legislature has sought to balance by providing greater state aid to school districts in lower-income areas. But without knowing it, the legislature has been undercutting their own efforts with a subsidy worth more than a billion dollars a year that resoundingly favors wealthy school districts.

Figuring out how to fix this problem is the subject of our new report, “Who Benefits? How Teacher Pension Financing Impacts Student Equity in Connecticut.” We pulled together data on how much the state contributes to the State Teachers’ Retirement System each year on behalf of each school district. Then we divided this subsidy by each district’s student enrollment figures to establish a new metric for Connecticut: the per-pupil pension subsidy. This tells us exactly how much Connecticut allocates for every student in each public school district when spending on teacher pensions.

Unfortunately, what the metrics show is that the state’s per-pupil pension subsidy is very inequitably distributed. For decades, the state of Connecticut has allocated more dollars to highly affluent, less diverse school districts — putting districts with the greatest need at a structural and systemic disadvantage in terms of resource equity and how they compensate their teaching workforce.

How did this happen?

Public school employers across the state hire teachers, pay them salaries and enroll them in health care benefits. School districts, however, don’t contribute to teacher pensions through the State Teachers’ Retirement System. Instead, the state of Connecticut covers all costs for the pension fund.

That might sound like an efficient handling of taxpayer cash. But this technical artifact of state financing turns out to have meaningful implications for an equitable distribution of public school resources across the state.

Connecticut allocates a larger per-pupil pension subsidy on behalf of high-performing districts with low resource needs than it does for districts with lower performance.

The state provides twice the subsidy to districts with students from high-income families as to their less wealthy peers.

It also provides twice as much of this subsidy on behalf of white students as compared to students of color.

Compounding these challenges for students, disadvantaged districts have lower-paid, less-experienced teachers. So the districts with the greatest level of need generate lower pension benefits, and the state pays a lower subsidy on their behalf, exacerbating inequities.

To be clear, the problem here isn’t with pension benefits or districts setting their own pay schedules. We have a moral and strategic obligation to maintain a healthy pension system to support educators long into the future. And any retirement plan fully paid for by the state would have the same issues. Nevertheless, few states still use the outdated model at work in Connecticut.

The precise problem is that by directly paying for all retirement benefits, the state has shielded school district employers from the total costs of their compensation packages. Since pension costs are paid as a percentage of salary, this means that districts offering larger wages to attract and retain teachers are avoiding the escalating pension costs that come with those salaries.

Connecticut cannot continue to sustain this practice now that it has been exposed for this level of implicit, systemic discrimination. We must all consider the consequences of these findings for students’ educational experiences.

Especially given the state’s sunnier economic outlook, it’s time to be purposeful about building education financing systems that ensure that students — all students — are the ones who benefit.