Research finds defined benefits play important role in teacher recruitment, retention, and productivity
Robert Marrs is in his 40th year teaching with the Cypress-Fairbanks Independent School District and says he seriously considering retiring at the end of the current school year. The 61-year-old's pension is his only form of retirement savings. Leaving the profession he has spent four decades working in isn't an easy decision for him to make, but he says having a secure retirement makes going less scary. After all, being a public educator allowed him to build up a secure nest egg.
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“I will rely mainly on my pension for the remainder of my life,” he says. “If I retire this year, I will draw 92 percent of my top three salaries.”
Marrs is planning to meet with the Teachers Retirement System of Texas soon to start planning his departure from public education. He has already been giving the prospect of leaving his job some thought.
In Marrs' situation, he is divorced and his pension will impact no one but himself. However, because he will only be 62 by the time he retires, Marrs is sure he will want to obtain some sort of part-time job.
Several of his closest friends have already retired, and he often discusses with them what life will be like when he leaves the public education system behind. Their primary concern had to do with insurance, which Marrs is sure it will be his concern as well. All of his associates, however, feel good about their defined benefits, he says. He is already sure of that, too.
“Not having to worry if my portfolio is going to go crazy the wrong way kept me feeling safe over these years,” he says.
Another thing he is confident of is the career he chose for himself more than 40 years ago. Marrs received his Bachelor of Arts in Teaching from Sam Houston State University in 1978 and began teaching Texas history at Campbell Junior High School in Cypress-Fairbanks ISD that same year. During his time with the school district, he has been a seventh grade Texas history team leader and served as a social studies department chair, until that job converted to a content curriculum instructional specialist.
“I declined that role as it would take me out of the classroom, something I had no desire to do,” he says.
The educator says he has never considered leaving the teaching profession because he loves sharing the history of “the great state of Texas” and teaching is his passion. Knowing he will have a defined benefit retirement to live on made his decision to remain a teacher that much easier, Marrs says.
And staying in the teaching profession for four decades, he says, has improved his effectiveness as a teacher. His time in the classroom has taught him how to better deal with parents, many of whom he taught in earlier years, and helped him adopt a flexibility to deal with the annoyances and chaos that often comes in dealing with seventh graders.
Chairita Franklin, Cypress-Fairbanks ISD's assistant superintendent of human resources, says defined benefits are significant to retaining high-performing teachers, such as Marrs. And having teachers like him, she adds, has a direct correlation to students receiving quality first-time instruction.
Her opinion mirrors that of a new research brief that indicates defined benefits play an important role in teacher recruitment, retention, and productivity. The research brief, “Revisiting the Three Rs of Teacher Retirement Systems: Recruitment, Retention and Retirement,” is published by the National Institute on Retirement Security and authored by Ilana Boivie, a senior policy analyst with the DC Fiscal Policy Institute.
“The reality we face is that the nation's schools continue to struggle with a growing shortage of teachers and that teachers are paid on average as much as 60 percent less than similarly educated professionals across the globe,” says Diane Oakley, NIRS executive director in a news release announcing the research brief's findings. “Pensions play an essential role in recruiting and retaining our best and most experienced teachers. It's critical that states continue to leverage the magnetic effect of pensions to help students achieve at their highest potential.”
Public employees prefer pensions over 401(K)-type or defined contribution plans and that Americans strongly support teacher pensions to help address recruiting problems and the broad wage gap, according to the NIRS report. Also, the report finds:
• The more retention among midcareer teachers, the more the average productivity within a school increases.
• Teacher turnover doesn't just impact a school district financially. It affects a school district's productivity.
• The availability of defined benefits is a tool to recruit high-quality teachers and keep them employed and productive longer compared with defined contribution savings plans that force educators to act as their own investment brokers.
• According to data, in 2009, DB pensions helped to retain an additional 30,000 teachers throughout the United States. More tenured teachers produced more productive and efficient teachers, and that increased the overall quality of public education.
• But, as DBs help keep teachers in classrooms, reducing the profession's turnover rates, school districts save money. In 2009, districts nationwide saved between $131 million and $284 million in costs usually associated with teacher turnover.
The NIRS study also looked at state teacher attrition rates, the percentage of those who left the teaching profession in Texas during 2009. The state's attrition rate that year is 7.3 percent, which is higher than the national average of 6.8 percent. The Alliance for Excellent Education provided the data. Turnover costs for Texas were between $100 million and $250 million.
Those numbers could have been a lot higher, if not for DBs, according to the NIRS report. Texas saved between $14 million and $30 million in teacher turnover costs. And if the state would have had a 401(k)-like DC plan, the attrition rate is projected to have been 8.2 percent. Instead, according to the NIRS report, DBs are estimated to have prevented 3,235 teachers from leaving the profession that year.
There are about 1.5 million members in the Teacher Retirement System of Texas. The number includes both active and retirees. The largest public retirement system in the state, members include teachers and non-classroom public educators such as bus drivers, administrators, and cafeteria workers, for example. The TRS has assets of about $146 billion.
Marrs, the Cypress-Fairbanks ISD teacher, is considering retirement right at the average age of TRS members who retire, 61 years old. All TRS members become vested in retirement benefits after five years of service.
Rebecca Merrill, TRS' chief strategist, certainly sees some correlation between retirement benefits and longevity in public education. She says TRS data doesn't indicate how many teachers leave the retirement system before being fully vested. However, upwards of half of all new system members drop out of the system before reaching the five-year vestment period. Once members reach vestment, though, the dropout rate dramatically declines to 10 to 20 percent.
“Maybe after five years in the classroom they are comfortable and committed or maybe they are vested and feel they better stick around,” she says. “But there is a correlation of those who have been here five years; they stick around.”