New Mexico’s budget is in free-fall (along with oil prices). Yet politicians of all stripes in Santa Fe have expressed a desire to pay (especially young and new) teachers more.
The case for higher teacher pay is questionable. According to the somewhat dated information over at the website “Teacher Salary Info,” New Mexico teachers are paid 16th-most in the nation.
Nonetheless, IF your desire is to pay teachers more, pensions must be reformed. In a recent article by Marcus Winters of the Manhattan Institute, he discusses a recent paper for the Center for Analysis of Longitudinal Data in Education Research which found that 10 percent of the earnings for an average public school teacher goes toward paying for pension liabilities accrued on the behalf of prior cohorts of teachers. That’s money they could be taking home in salary.
As Winters continues, “most teachers earn very little retirement compensation for each of their first two decades of teaching and then suddenly accrue large amounts of pension wealth during their late career years. The vast majority of teachers leave the system before they receive the large payouts. The money those who exit leave on the table goes to fund the comfortable retirements of the few who stuck around for their entire career.”
Obviously, reforming teacher (and other government pension systems) will be challenging and potentially-expensive in the short-term, but in the long-term, a defined-contribution (401K-style) system will attract more young, highly-qualified teachers who may want to do the job for a few years before moving on to other career opportunities.
For further research on teacher pensions in New Mexico, check out this report from the National Council on Teacher Quality. The report gives New Mexico a “D” grade for its teacher pensions and overall has a great many concerns bout their funding and fairness.