As local school systems are dealing with a teacher shortage, a new report ranks Missouri and Kansas in the bottom half of the pack nationally when it comes to state educator retirement programs.
But a teachers union representative and the director of Missouri’s retirement program say Missouri’s ranking is unfair because the state’s program is strong where it counts — rewarding long-term service.
The report puts Missouri in the top 10 for benefitting teachers who stay in the profession for decades.
“Our pension system in the state is solid as a rock, and I think it’s universally seen as one of the best things we have going for retaining and recruiting teachers,” said Mark Jones, communications director for the Missouri National Education Association.
Overall, the Aug. 31 report from national nonprofit Bellwether Education Partners ranked Missouri 35th and Kansas 30th. Nationally, South Dakota, Tennessee and Washington got the highest overall scores.
The report considers states’ teacher retirement systems from the point of view of taxpayers and teachers who stay for various lengths of time.
Its methodology argues it’s important to consider the systems from multiple perspectives because teachers who don’t stay until retirement, or who move to a new state, deserve consideration as well.
In that light, Kansas ranks in the top 10 when it comes to retirement benefits for short-term teachers — those who stay less than 10 years. Short-term teachers are best served by plans that allow them to take benefits with them when they leave or don’t require high contributions to the program, the report says.
But union members and retirees who taught long term in Kansas are advocating for improvements to the program, which doesn’t provide the recommended income level for retirees to maintain their standard of living.
“I knew that just one thing (income source) wasn’t going to be enough,” Ruthe Goff, who taught for 30 years in the Shawnee Mission School District, said of her retirement in 2017. “And I’m learning even more being involved (in advocacy) as a retiree.”
Missouri’s retirement system is for the ‘career educator’
Though Missouri ranks low in the report for short-term retirement benefits, Dearld Snider, executive director of Missouri’s teacher retirement system, said he doesn’t envision the program shifting to cater to short-term teachers.
Currently, teachers who leave after a few years can get their retirement contributions returned to them with interest, and it only takes five years of employment to earn a pension.
But, using a formula that increases retirement benefits as wages and years of teaching increase, the system gives the best rewards to those who stay for decades, Snider said.
“Sometimes we do have people say, ‘Hey, wait a minute, it’s not as good if you leave after three, four, five, seven years?’ And I say, ‘Yes, that is by design,’” Snider said. “This type of retirement security is really for that career educator. I oftentimes say, ‘So when is it a sin to reward those people who stay and serve your community and serve your children?’”
Union members are happy with that focus and believe the program works well for retired teachers, said Jones of the Missouri teachers union. He criticized the way Bellwether weighed its various factors to come up with a low ranking for Missouri.
“To me, it seems a little disingenuous when you say the system is great for people who actually retire from it, but we’re gonna find a way to make it seem like somehow it’s in trouble,” he said.
Kansas City Public Schools uses a separate retirement system, which was not accounted for in the Bellwether report.
Missouri’s Public School Retirement System — used by the other Missouri districts in the Kansas City metro area — is a defined benefit plan, meaning retirees receive a guaranteed payment determined by a formula based on salary and years worked.
Most Missouri teachers aren’t eligible for Social Security, so their retirement benefits are meant to cover for that.
The Bellwether report says the retirement system replaces about 75% of wages, which was within the 60%-80% range the report estimated plans should cover.
The program is funded through teacher salary contributions of 14.5% that are matched by the school district.
Since funding for the retirement system comes directly from school districts rather than the state’s general revenue, legislators aren’t tempted to shortchange the program when money gets tight, as happens in some other states.
“We’ve been fortunate that they’re (Missouri’s pension systems) not underfunded by the government,” Snider said. “And that’s certainly the case with our school districts and with our members; they have always paid the exact amount that’s been asked of them since 1946.”
How the teacher retirement system in Kansas works
In Kansas, teachers fall under the Kansas Public Employee Retirement System. Funding for KPERS depends on how legislators choose to allocate state revenue. For many years, they haven’t contributed enough to bring the system up to recommended funding levels.
KPERS is becoming more financially stable in the wake of reforms, said Terry Forsyth, director of political advocacy for the Kansas branch of the NEA.
Program changes mean there are three different tiers of KPERS for employees.
For KPERS 1 and 2, the formula is similar to Missouri’s, using salary and years of service as its basis. The benefits teachers receive in Kansas are lower, in part because Kansas teachers are eligible for Social Security.
For newer employees, the state offers a “cash balance” program. The formula for retirement benefits is more complicated and harder to predict. Employees contribute 6% of their salary and are guaranteed at least 4% interest on those contributions.
They also receive “credits” each year based on a percentage of their salary, which increases along with years of service. The credits earn interest and are used to calculate retirement benefits, but the website doesn’t fully explain how the formula works.
Forsyth said that’s because the calculation changes each year depending on the system’s level of income. Employees can request an estimate based on their information in the KPERS system.
The KPERS website says the system plus Social Security will generally not be enough to replace 80% of salary. The site suggests employees save on their own as well and offers a voluntary savings plan.
“I appreciate their honesty,” Forsyth said. “Our push has always been, just let people know where they’re going to be … so their planning for their retirement can be done with confidence.”
Forsyth also said Kansas can revise the formula to increase benefits, something KNEA will support.
Goff, the teacher who retired from Shawnee Mission, is a lifetime retired member of KNEA and is also working with the Kansas Coalition of Public Retirees to advocate for a cost of living adjustment for retirement benefits.
“There are retirees out there that haven’t seen the amount that they get monthly for their KPERS increase in 24 years,” she said. “And you think about that, 24 years ago, what did a gallon of milk cost as opposed to what it costs today?”
Before she retired, she made $78,000 a year from teaching. She also had other household income and was able to put aside extra savings once her children were grown.
KPERS has been a “blessing,” Goff said, allowing her to postpone drawing on Social Security even though she stopped substitute teaching for extra income because of the pandemic.
Still, she’s had to make some careful choices to create a secure retirement and maintain health care, Goff said. She worries about older retirees, those from districts with lower pay scales and those who face a less predictable formula under the new KPERS plan.
How teacher retirement systems affect recruitment, retention and competition
Forsyth, Jones and Snider said they weren’t aware of a clear pattern of Kansas City-area teachers being drawn to either side of the state line for the retirement system. They agreed prospective or early career teachers might not think about retirement when making plans.
While Missouri’s retirement system is strong, “I don’t think any normal person thinks at that granular level,” Jones said.
Instead, teachers likely focus on salary, working conditions or whether a retirement system will still exist when they need it, he said. But teachers can be motivated to stay as they begin to understand the system.
In Missouri, data shows retention rates improve the longer teachers stay.
Missouri’s system helps teachers feel they can “have a retirement that allows me to live without fear of poverty, that allows me to retire with dignity and recognizes, to some degree, the service that I’ve rendered, which is spending my lifetime working with students and children to help them become lifelong learners and leaders,” Jones said.
Jones said if Missouri wants to reduce teacher shortages, it should maintain its strong retirement system and focus on raising starting teacher salaries. The National Education Association ranks Missouri 50th in the nation for average starting salary.
“Other states are literally putting billboards in our state saying, ‘Hey, tired of what you’re getting paid in Missouri? Come across the state line,’” he said. “One of the ways that we can retain and attract and keep educators is the fact that our retirement system is arguably one of the best in the nation.”
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