Education advocates: Pension savings system reinforces inequities in Connecticut’s schools
Two Connecticut governors have tried — and failed — to shift some of the massive cost of teacher pensions onto municipalities, arguing it’s inherently unfair for the state to foot the entire bill.
Education equity advocates hope to resurrect that debate this year — with a big twist.
Rather than trying to bolster the state’s coffers, the Connecticut chapter of Education Reform Now (ERN) wants the state to bill the wealthiest school districts and use at least some of those resources to help the poorest communities.
“Connecticut schools and students cannot compete with the rest of the country if there aren’t sufficient, quality teachers in all districts,” said Amy Dowell, state director of ERN, whose chapter released a new analysis of Connecticut’s system for financing teacher pensions this week.
“If you have a really crowded classroom, it’s taxing. If you don’t have an aide in your classroom, it’s taxing,” she said. “That is how teachers burn out. … Who could blame them?”
But does the high cost of teachers’ pensions have any effect on the funding Connecticut provides local districts to operate their schools? The short answer is: Yes, quite a bit.
At more than $2.1 billion, the Education Cost Sharing grant not only is the state’s single-largest program to support local school operations but it is, understandably, 10% of the entire General Fund.
Connecticut’s second-largest education-related expenditure — about 7% of the General Fund or $1.44 billion this fiscal year — is the required annual contribution to the teachers’ pension fund. That hefty pension contribution consumes resources that normally would be spent on school operations or other core programs in the state budget.
For most states, this pension expense is much less. According to ERN, Connecticut is one of only seven states that spare towns from contributing toward teacher pension costs.
And Connecticut’s huge pension contribution wasn’t caused by the benefits pledged to current teachers. Only about $2 out of every $10 paid into the fund goes toward that. The rest covers fiscal sins of generations past. Connecticut has more than $18 billion in unfunded obligations in its pension fund for municipal teachers. That reflects contributions the state failed to make — and potential interest and investment earnings it forfeited — for more than seven decades leading up to the late 2000s.
But that’s only half the problem, according to the ERN analysis.
Current pension subsidies favor wealthy, pre-dominantly white towns
The other is that the pension system disproportionately benefits wealthy communities, reinforcing educational inequities along socio-economic and racial lines.
Teachers’ pensions are calculated, largely, based on salaries and years of service. Teachers who earn more throughout their careers will qualify for much larger pensions.
But while the state pays the pensions, the towns pay the salaries. And Connecticut — which has some of the most extreme income inequality in the nation — also relies heavily on municipal property taxes to fund its local schools.
That means wealthy suburban districts can spend far more on education, pay much higher teacher salaries, and recruit and retain the best staff.
And because the state covers all pension costs for towns, it reinforces this unbalanced system.
For example, the state paid, on average, $2,700 per pupil in 2020 to cover the pension contributions owed by the 25 highest-performing school districts in the state, and only $1,870 per pupil to cover the 25 lowest, the analysis found. The statewide average was $2,312 per pupil.
White students make up 51.5% of Connecticut’s student population, but the pension payments the state made on their districts’ behalf represented 68% of all contributions.
Similarly, students of color comprise 48.3% of the student population, but the payments the state made on their behalf were just 30% of the total.
A tough political fight ahead?
Gov. Ned Lamont and his predecessor, Dannel P. Malloy, both cited these inequities when they rolled out their pension contribution cost-sharing proposals in 2019 and 2017, respectively.
But they were more focused on fixing a different problem.
Malloy and Lamont primarily wanted extra funds from municipalities to pay off the state’s pension debt, not to help poor school districts.
Malloy’s initial plan in 2017 would have asked towns to cover one-third of the annual teacher pension contribution, more than $400 million.
Lamont asked two years later for a far-more-modest $50 million per year.
But the Legislature shot down both proposals as municipalities argued it would worsen Connecticut’s already extreme over-reliance on property taxes.
Leaders of the Connecticut Conference of Municipalities and the Connecticut Council of Small Towns said this week that any new billing proposal likely would come under fire again.
Betsy Gara, COST’s executive director, noted that state binding arbitration laws actually drive the contracts that set local teacher salaries — and by extension pension benefit levels — in most cases. And while state aid to cities and towns increased over the past year, that was nowhere near enough to reverse decades of minimal-to-no-growth that hasn’t kept pace with inflation.
Adding teacher pension costs now “would overwhelm property taxes in many of our small towns,” Gara said.
Joe DeLong, CCM’s executive director, noted that state aid for education and general government combined still falls about $1 billion below the full-funding levels pledged in statute.
And while DeLong said CCM fully supports any debate on closing educational inequities in Connecticut, it also has to include a more candid discussion about the benefits paid to teachers and the depth of the problem the state faces.
“Our public education services should not be vastly different, depending on a child’s zip code,” DeLong said. “As long as they are, we’re failing our kids.”
But while the legislature has scaled back pension levels for state employees twice in the past decade through concessions deals with unions, no proposal to reduce teacher pensions has been discussed at length by lawmakers.
According to the Legislature’s nonpartisan Office of Fiscal Analysis, the average pension for a teacher taking full retirement in 2021 was $58,371. Most Connecticut teachers neither pay into the Social Security system nor receive that benefit.
Dowell said Education Reform Now’s proposal does not endorse curbing teachers’ pensions.
Spokespeople for the state’s two major teachers’ unions, the Connecticut Education Association and AFT-Connecticut, declined to comment Wednesday.
The spokesman for Lamont’s budget office, Chris McClure, responded to the ERN report by noting Connecticut has made huge strides in recent years to stabilize the teachers’ pension fund, including a supplemental $900 million payment this fall.
And while eliminating billions of dollars in pension debt will take decades, “Governor Lamont is committed to seeking real solutions for Connecticut’s taxpayers, particularly relief with local property taxes,” McClure added. “… But to address our long-standing issues, we must be ever-mindful of the short and long-term impacts and the solutions should make sense for all of those affected.”
Dowell acknowledged the concept of billing any community for teacher pensions is politically tricky, but she was optimistic the latest debate would be different.
ERN intentionally focused on the concept of fairness rather than the method for achieving it. In other words, the analysis does not recommend which wealthy communities should pay, and which low-income communities might receive new aid, nor does it say by how much.
The analysis does suggest the state could use some of the proceeds from the teacher pension bills sent to wealthy towns to bolster existing education grants to needy districts or create a new source of funding to help them with teacher recruitment.
The report’s findings “have a real-life impact on children,” Dowell said, adding that advocates hope progress can be made over time.
“The politics of pensions are sometimes the politics of trade-offs,” added Anthony Randazzo, executive director of the Equable Institute, the Queens-based policy group that prepared the analysis for ERN. “The status quo, though, is clearly inequitable. … There is no reason why the distribution of per-pupil pension subsidies should align with the performance of schools.”
Coronavirus pandemic may open door to education reform debate
Some key lawmakers said this week that the Education Reform Now report is asking the right questions at just the right time.
“I do think it’s worth exploring,” said Rep. Bobby Gibson, D-Bloomfield, co-chairman of the General Assembly’s Black and Puerto Rican Caucus, noting that longstanding inequalities in many areas, including education, are beginning to draw increasing attention at the Capitol.
The pandemic has exposed inequalities in education, health care, economic opportunity and other areas like never before, said Rep. Toni Walker, D-New Haven, longtime co-chairwoman of the legislature’s Appropriations Committee.
Students were separated from normal school routines for much of the past two years. Districts with large numbers of experienced teachers coped far better than poorer, understaffed districts, Walker said.
“I think it’s a good concept,” the New Haven lawmaker said of the ERN report. “What it’s trying to do is, as much as possible, equalize the education delivery system. We can no longer have lip service and say ‘we believe in equable education and then do nothing.”