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Teacher pensions consume a substantial portion of school budgets. If relatively generous pensions help attract effective teachers, the expense might be justified. But new evidence suggests that current pension systems, by concentrating benefits on teachers who spend their entire careers in a single state and penalizing mobile teachers, may exacerbate the challenge of attracting to teaching young workers, who change jobs and move more often than did previous generations. The design of teacher pension plans is a timely concern: like other public pension plans, those for teachers are becoming more costly. Employer contributions to pension funds tack on a larger percentage of earnings for public school teachers than for private-sector managers and professionals, and this gap is widening. Those data do not yet reflect the impact of the stock market decline since 2007: the drop in the value of pension funds means further increases in employer contributions will be required to fund promised benefits. As fiscal concerns force states to reevaluate the costs of teacher pension plans, officials might also consider the plans' consequences for teacher quality. In this article, the authors focus on the distribution of pension benefits among teachers of varying career lengths and the penalties for those who switch systems. They examine pension formulas in six state plans and develop measures of the redistribution of pension wealth from teachers who separate early to those who separate later. They compare existing defined benefit (DB) teacher pension systems to fiscally equivalent systems that treat all teachers equally and find that the former often redistribute about half the pension wealth of an entering cohort of teachers to those who separate in their mid-50s from those who leave the system earlier. The authors then show that this back loading produces very large losses in pension wealth for mobile teachers. Compared to a teacher who has worked 30 years in a single state system, a teacher who has put in the same years but split them between two systems will often lose well over one-half of her pension wealth. It is difficult to justify such a system of rewards and penalties on grounds related to fairness or teacher quality. (Contains 2 figures and 1 table.)

The ongoing global financial crisis is forcing many employers, from General Motors to local general stores, to take a hard look at the costs of the compensation packages they offer employees. For public school systems, this will entail a consideration of fringe benefit costs, which in recent years have become an increasingly important component of teacher compensation. During the 2005-2006 school year, the most recent year for which U.S. Department of Education data are available, the nation's public schools spent $187 billion in salaries and $59 billion in benefits for instructional personnel. Total benefits added about 32 percent to salaries, up from 25 percent in 1999-2000. The increase reflects the well-known rise in health insurance costs, but it also appears to include growing costs of retirement benefits, which have received much less attention. Conventional wisdom holds that teacher pensions (along with other public pensions) are more costly than private retirement benefits, for reasons dating to an earlier era of low teacher salaries over lifelong careers. In spite of dissent from this view by some researchers, in this case the authors find that conventional wisdom is right: the cost of retirement benefits for teachers is higher than for private-sector professionals. To track changes in retirement costs and compare employer contributions to retirement for public school teachers with those for private-sector professionals, the authors draw on recent data from a major employer survey conducted by the U.S. Department of Labor. These data show that the rate of employer contributions to retirement benefits for public school teachers in 2008 is substantially higher than for private professionals: 14.6 percent of earnings for teachers vs. 10.4 percent for private professionals. Moreover, the gap has widened over the four years the data have been available. Between March 2004 and September 2008, the difference more than doubled, rising from 1.9 to 4.2 percentage points. (Contains 2 figures.)

In the flurry of activity surrounding the implementation of No Child Left Behind's (NCLB) student proficiency mandates, the federal requirement to have a "highly qualified" teacher in every classroom by 2005 seemed like an impossible goal. However, 2005 has come and gone and the highly qualified teacher crisis never happened. In this article, the author explains how the dearth of qualified teachers is largely a myth. He also explains why the raising teachers' pay across the board would not bring significantly more qualified numbers to the profession. He asserts that the resources provided to most public schools are adequate to recruit and retain a competent teaching workforce, and contends that a much more productive line of inquiry is one that explores the costs of the inefficient, rigid structure of the teacher compensation system and the possible benefits of replacing it with a more market-based system. (Contains 3 figures.)

Discussions of teacher quality in U.S. public schools have tended to focus on teacher licensing. Reformers from diverse perspectives have proposed "raising the bar" for licensing by various means (e.g., harder licensing exams, more coursework, graduation from the National Council for Accreditation of Teacher Education teacher-training programs, elimination of emergency or provisional licensing). However, all of these proposals assume that teacher licensing plays an important role in determining teacher quality and performance. In this article I argue the contrary. Raising the bar for teacher licensing in ways that have been proposed is unlikely to have any significant short- or long-term effects on student achievement. Moreover, by shrinking the applicant pool for vacancies, these restrictive proposals may have the perverse effect of lowering average teacher quality, particularly for high-poverty or rural districts that already face thin applicant pools. A preferred approach is to swap regulation of inputs for accountability for outputs, that is, a more flexible licensing regime that relaxes entry barriers combined with greater accountability for student achievement gains. Such a proposal is based on a simple economic principle: Welfare is more likely to be improved if state regulators focus on what they can measure (student achievement), not what they cannot (teacher quality).

Review of public school compensation policies and comparison of teacher salaries with those of other white-collar workers found that public schools spend the same percentage of wage-rewarding seniority as other employers. A steeper wage-tenure profile reduces turnover, but turnover costs are likely not high enough to make this an optimal use of resources. (Contains 25 references.) (Author/SK)

The authors focus on the decision of public charter schools in the U.S. to develop their own retirement plans as public school teachers are required to participate in the state pension plan. Topics include the plan of charter schools to provide an alternative option to secure the retirement of their teachers, the high cost of pensions plans for teachers, and the decline in the number of charter schools participating in state pension plan.

State-specific licensing policies and pension plans create mobility costs for educators who cross state lines. We empirically test whether these costs affect production in schools – a hypothesis that follows directly from economic theory on labor frictions – using geocoded data on school locations and state boundaries. We find that achievement is lower in mathematics, and to a lesser extent in reading, at schools that are more exposed to state boundaries. A detailed investigation of the selection of schools into boundary regions yields no indication of systematic differences between boundary and non-boundary schools along other measured dimensions. Moreover, we show that cross-district labor frictions do not explain state boundary effects. Our findings are consistent with the hypothesis that mobility frictions in educator labor markets near state boundaries lower student achievement. [ABSTRACT FROM AUTHOR]