The myth of great teacher pensions

The Greek myth of Sisyphus is a story of a man condemned to repeatedly push a boulder up a mountain, only to have it roll down again. To meet the demands of his task he must believe that the rock will eventually topple over the other side once he reaches the summit. Yet, the boulder rolls backwards and he realizes with crushing disappointment that his toil must continue with little hope of reward at the end. So it is with teachers today. 

Minnesota educators nearing the end of their career entered the profession expecting a good pension would await them as a reward for an arduous career with modest pay at best. But in 1989, just as these young, idealistic graduates were entering the workforce, the state legislature reduced their retirement benefits and added severe penalties for retiring before age sixty-six. Teachers who have worked for over 30 years are now, like Sisyphus, realizing that the boulder has rolled down the hill and they are condemned to keep pushing for another ten or more years. The great pension that teachers, and the public, have long associated with the teaching profession is now a myth. 

There are two classes of teachers in Minnesota today: Tier 1 (hired before 6/30/89) and Tier 2 (hired 7/1/89 and beyond). For example, a Tier 1 teacher, after 34 years of service, will receive $39,340 each year if she retires at age 59. A Tier 2 teacher with the same salary and 34 years of service, but hired one day later, will receive $16,730 per year if they retire at the same age. Both teachers contributed the same amount towards their pension but are worlds apart in retirement. 

The Teacher Retirement Association (TRA) is an account in which teachers and their employers contribute funds to be dispersed under TRA rules. Like many public employee pensions for police, firefighters, etc., this pension was a way to recruit and retain workers to a career of service that did not pay well but provided an attractive benefit at the end of a career. In 1989, the Minnesota legislature changed the TRA benefit structure, creating a new "lower class" of teacher (Tier 2) that had to pay more, would receive less employer contributions and be severely penalized for retiring before reaching 66 years of age. Teachers entering the field after college must now teach for 44 years in order to receive a full pension. Tier 2 teachers who might choose to retire at age 60 after 37 years of service would be penalized 43% of the pension that they paid into. 

Minnesota has underfunded pensions for decades, and the legislature chose to balance the books on the backs of Tier 2 teachers who are trapped into working a decade or more longer than their Tier 1 counterparts. Of the 8.75% "employer contribution” towards a Tier 2 teacher's TRA, only 1.66% of that 8.75% goes towards towards the Tier 2 teacher’s retirement. The rest helps fund the Tier 1 teachers who were allowed to retire 10 years earlier. Almost inconceivably, a Tier 2 teacher’s paycheck continues to show an 8.75% employer contribution as a benefit.

Why does this matter?

Minnesota is experiencing severe labor shortages across five industries: technology, health services & caring professions, manufacturing, construction trades and education. In 2022 there were more than 13,000 education job vacancies reported across Minnesota, nearly double the number prior to the pandemic (DEED). The current shortage of teachers is not because there aren't enough teachers, but because those trained to teach are quitting or never entered the profession out of college in the first place. 

New teachers are leaving the profession after a few short years because the job is so difficult today. Just 7.3% of workers in education are under 25 years of age, compared to 13.8% across all industries (DEED). They see our best veteran teachers handcuffed to a pension system with severe penalties for retiring before age sixty-six, and can't imagine the Sisyphean effort it would take for a career educator in Minnesota to make it across the finish line. 

Veteran educators, who have traditionally been the main inspiration for aspiring teachers, are discouraging young people from entering the profession. Despite the incredible financial penalty, many of our best teachers are seeing no alternative but to leave the profession, opting out of a full, well deserved pension because they can't keep pushing that boulder up the mountain any longer. 

Many occupations experiencing shortages, such as nursing and the trades, see an increase in wages to attract and retain employees. However, as Minnesota’s education industry is experiencing the highest number of job vacancies in history, median wages have not risen. In fact, they’ve declined. Adjusted for inflation, teachers are making $3,644 less than they did a decade ago (NEA). 

All other industries, including those facing tremendous labor shortages, rely on a quality public education system to educate and develop a talented workforce. As a sense of urgency to address labor shortages escalates in our state, recruiting and retaining high quality teachers should be our highest priority.

What can you do?

It's time for a paradigm shift. Minnesota now has one of the worst teacher pensions in the country. If we don't act now, we will not have enough professionals to teach our children and train our workforce, and the few that remain may not be of the quality we have come to expect in Minnesota.

It's in everyone's best interest to support pension reform. Without public support or pressure on the legislature, we face an educational crisis that will be as difficult to reverse as a large boulder crashing down a mountain, with no one left to push it back up again.