How to Pay For High-quality Teachers

We all want high-quality teachers, right? What are we doing about it? The state has started to push teacher evaluations across the state, and that is great. Especially great because for far too long school managers and supervisors did not perform regular evaluations, which at the very least are useful for professional feedback and growth.

I do have my doubts that a bureaucratic, one-size-fits-all evaluation system is terribly useful besides the obvious fact that it will require more people to fill out paper. My doubts are practical ones. If you are running a school and seeking to peg its performance at a very high level, there are times when you want your teachers to focus on improving their individual performance; and there are times when you want to build the sense of team. No bureaucratic rule is going to get you there. In addition, any performance pay scheme has to start at the top. At the very least, this new system has to be implemented for superintendents, administrative professionals, principals and supervisors first; if not, it will again feel like something that is being done to teachers.

So, if we want high-quality teachers, let’s start with some basic, well-known facts:

1. The intellectual capacity of individuals seeking to join the state’s and the nation’s teacher corps is too low. We’ve known this for a long while, but the 2006 report Educating School Teachers led by Arthur Levine, former president of Teachers College, Columbia University, does a pretty good job of making the case. The report notes that not only are teachers unprepared in technology, curriculum development and assessments, and dealing with ELL and special needs students, but “the SAT and GRE scores of aspiring secondary school teachers are comparable to the national average, the scores of future elementary school teachers fall near the bottom of all test takers, with GRE scores 100 points below the national average.”
2. Teacher quality is the one of the most important elements in improving the quality of our schools.
3. There is no way to attract aspirants to the profession if starting salaries are not higher. Starting salaries can often be in the $30,000+ range. That’s not enough to attract the top tier of young, ambitious and smart graduates, which is what we need in our classrooms. That is especially so for math and science graduates, who have many more high-paying prospects in the private market.
4. We are arguably investing a lot of money for teacher compensation but have the compensation built in a way that is not attracting high-quality teachers. The current compensation system maintains low initial salaries and rewards “system” people. The average teacher in Massachusetts now makes $70,000, a good salary (especially given that many pursue summer work in July and August) which is part of an extraordinarily rich benefits package well beyond the reach of mere private sector mortals. In 2010, Wisconsin teachers were estimated to have an average salary of $56,000, but when their benefits were included the average annual compensation package calculated out at just over $100,000. I’ll look up the Massachusetts benefits overall later and share, but the WI numbers are likely not terribly richer (perhaps 20-25% richer if that?) than our own. Then there is the fact that the benefits schedule truly kicks in around 20 years of service, when the proverbial hockey-stick effect is observed and future benefits skyrocket in value.

So here’s a question: Why can’t we “frontload” some of the overall compensation by reducing the richness of the benefits package in order to make room for salaries for starting teachers?

One objection is that surveys of current teachers suggests that they like the make-up of their compensation package. Yep. I get that, but the objection misses the point. The point is not to ask the current teacher corps what got them into the business and how they like it. The point is to attract a significantly different group with different career options into the profession. Why not survey graduating students who are significantly above average in terms of SATs, GREs, and collegiate accomplishments? That would be more meaningful.

Another objection is that teachers self-fund their pensions and therefore it is up to the current teacher corps to do whatever the heck it wants with their pensions. OK. Two things I would like to bring out: (1) That ducks the question of how to attract high-quality teachers to the profession, and (2) it is absolutely untrue. On the first point, even if teachers did self-fund their pensions, the current compensation schedule stinks as a way to recruit high-quality teachers to the profession. On the second point, teachers don’t self-fund their pensions.

The state has a multi-billion dollar unfunded pension liability for a reason, which is that teacher pensions are not self-funded. Here are the figures from the state’s Public Employee Retirement Administration Commission report for 2011. Please see the chart on page 11 (Section 5, labeled ‘Audit Information: Part B / GASB Statement No. 27’) showing the Massachusetts and Boston Teachers’ share of the ‘state pension fund payment;’ i.e., the annual required contribution by the state to ensure that pensions are whole.

Of the state’s annual obligation of $1.35 billion for state and certain local pensions, the Massachusetts and Boston Teachers make up the lion’s share of the total. In the chart, teacher pensions are broken out into “normal cost” and “amortization cost.”

• The “normal cost” of $107 million is what the state’s pays into the pension fund this year to properly fund what is expected to be paid out in future pensions to Massachusetts Teachers. For Boston Teachers the number is $8.5 million. So in 2011, the state is paying over $115 million to make the Massachusetts and Boston Teachers’ pensions whole. That’s not fully-funded.
• The “amortization cost” is this year’s payment to pay down the unfunded liability. For Massachusetts teachers the number is $661 million; for the Boston Teachers it is $86.2 million. That’s a total of $747.2 million that the state, again, is paying in.

All tallied up, payments on teachers’ pensions make up $862.7 million of the annual $1.35 billion the state pays down on pensions.

That’s quite a bit short of “self-funded.”

What I am arguing for is decidedly not a 401(K) plan for teachers. Teachers should be treated fairly and in fact attractive retirement benefits is of course helpful in attracting high-quality people to the profession. What I’d suggest is that we create a defined benefit package that is more in line with what Social Security provides and then when a teacher makes above a certain salary, s/he can additionally buy into a 401(K) with matches from the state. That’s what we do in the private sector — and it would allow greater ability to flow to and from the teaching profession.

It would also allow us to pay starting teachers quite a bit more. I think that’s a good thing. How to do it? For now, here are some things you might want to read to get some perspective on the issue. This piece by Jacob Vigdor in EducationNext is a great overview on the topic. This EdWeek piece from 2009 points at many of the challenges and the thinking of some superintendents and unions. This study tries to take a look at both backloading (current system) and frontloading. More to come on the topic.

Crossposted at Boston.com’s Rock the Schoolhouse. Follow me on twitter at @jimstergios, or visit Pioneer’s website.