WASHINGTON, D.C. – The good folks at Bellwether Education Partners created a web site called TeacherPensions.org in order to focus some much-needed attention on the structure of the retirement system and its financial implications. The site features a range of opinions about teacher pensions, including that of National Education Association president Dennis Van Roekel, who says flatly: “There is no teacher pension crisis.”
Van Roekel defends the defined benefit system, and explains that a key principle of the system is “When actuarial liabilities exceed actuarial assets, the state and/or employer must make the necessary additional contributions to amortize the unfunded liability in no more than 30 years.”
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That seems like a pretty simple solution, but if it were, perhaps Van Roekel’s own organization and its affiliates would not be experiencing their own mammoth shortfalls, due mostly to the pensions and retiree health care benefits they granted their own employees.
An Education Intelligence Agency analysis of 2011-12 Internal Revenue Service filings reveals 14 NEA state affiliates do not have the financial assets to match their liabilities and total almost $700 million in combined debt.
The ability of these affiliates to address their long-term debt by increasing pension contributions, as Van Roekel suggests, is compromised by their short-term debt. Nine of the 14 affiliates had deficits in 2011-12. In fact, the combined spending of all of NEA’s state affiliates exceeded their combined income by almost $24 million.
Even at the national level, NEA’s pension plan for its 2,600 employees and retirees was only 87.9 percent funded in 2012, down from 94.2 percent in 2010.
EIA has constructed a table that lists each of NEA’s state affiliates, its budget deficit or surplus for 2011-12 and its net assets, positive or negative, as of the end of the 2011-12 school year. For purposes of comparison, the table also lists the number of days each affiliate could operate solely on reserves based on its 2011-12 expenditures and net assets.
The 14 state affiliates with a negative net worth are:
* New York State United Teachers, with net assets of negative $302.8 million and a $24 million deficit in 2011-12. NYSUT contributed almost $30.8 million to its employee pension plan that year.
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* Michigan Education Association, with net assets of negative $160.5 million, and a $4.8 million deficit in 2011-12. MEA contributed $14.1 million to its employee pension plan, and instituted a three-year, $50 annual assessment on its members for the express purpose of funding the staff pension.
* New Jersey Education Association, with net assets of negative $77.5 million. NJEA had a $13.2 million surplus in 2011-12, even after contributing $17.1 million to pension costs.
* Washington Education Association, with net assets of negative $35.1 million, and a $3.7 million deficit in 2011-12. WEA contributed $8.1 million to its employee pension plan.
* Massachusetts Teachers Association, with net assets of negative $26.7 million. MTA had a $7.8 million surplus in 2011-12 after contributing $4.1 million to its employee pension plan.
* Illinois Education Association, with net assets of negative $17.7 million, and a $17.9 million deficit in 2011-12. IEA paid $26.3 million to its employee pension plan. Despite its own mess, IEA is adamantly opposed to the Illinois state government’s efforts to address public employee pension debt.
* Indiana State Teachers Association, with net assets of negative $16.4 million, and a $4.5 million deficit in 2011-12. ISTA paid $4.1 million toward employee pensions.
* Iowa State Education Association, with net assets of negative $12.7 million, and a $4.3 million deficit in 2011-12. ISEA paid $2.2 million into its employee pension plan.
* Ohio Education Association, with net assets of negative $11.5 million, and a $1.2 million deficit in 2011-12. OEA paid $8.2 million in pension costs.
* Texas State Teachers Association, with net assets of negative $11.3 million, and a $243,000 deficit in 2011-12. TSTA contributed $1.4 million to its pension plan, and holds a $1.6 million quasi-endowment “to sustain the association for the long-term.”
* Pennsylvania State Education Association, with net assets of negative $8.3 million, though it did have a $9.2 million surplus in 2011-12, suggesting another similar year would put it in the black. It spent $7.3 million on pensions.
* Virginia Education Association, with net assets of negative $5.1 million, and a budget surplus of $1 million. VEA contributed almost $2.2 million to its employee pension plan.
* West Virginia Education Association, with net assets of negative $2.2 million, and a budget surplus of $132,000. It is unclear how much WVEA contributed to its employee pension plan in 2011-12, but its pension liabilities totaled $3.7 million.
* Georgia Association of Educators, with net assets of negative $1.8 million, and a $476,000 deficit in 2011-12. GAE paid $746,000 to its employee pension plan.
NEA’s largest affiliates are overrepresented on this list. This is problematic because the health of the large affiliates, particularly in collective bargaining states with agency fee provisions, enables NEA national to funnel crucial subsidies to its small affiliates. Many small affiliates could not sustain themselves at current levels without those funds.
As a union, NEA believes state governments should extract more revenues from taxpayers to sustain the defined benefit system of public employees. As an employer, NEA is aware of the pitfalls of extracting more dues money from members to sustain the much more generous defined benefit system of union employees.
It’s a race against time for NEA as it attempts to stave off public pension reform before it is swamped by its own private pension costs.
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