Teachers and their pensions: Doing the math

By Jim Waters - Bluegrass Beacon

Lots of retired teachers bared their angry fists at me following my recent column about the soon-to-retire public school administrator who will, if he fulfills life expectancy, collect pension checks for longer than he worked, enjoy annual cost-of-living increases that most workers only dream about and amass a KTRS-funded $5.6 million fortune by retiring at 49 years of age after working 27 years.

“Please be accurate rather than (highlight) one exceptional pensioner!” one retired emailer scolded.

However, it behooves all of my retired-teacher friends to remember: the same shrinking KTRS kitty that’s billions upside down yet which they depend upon for their own pensions also struggles to fork over the money for that administrator’s lavish benefits.

Yet while highly paid administrators have both hands in Kentucky’s pension pot, some basic mathematics reveals that many retired teachers overdo it with claims of humble pensions.

According to Daviess County Public Schools’ published certified salary schedules for the past three years:

· Rank 1 teachers with at least 21 years of experience earned gross salaries of $62,364, $62,988 and $64,248, respectively, during the three most recent years—presumably their three highest annual salaries—for a total of $189,600 and an average of $63,200.

· Daviess County teachers who teach 33 years and retire in their mid-fifties with those three highest years of salary will, according to the “Benefit Estimator” on the KTRS website, receive a total service credit—a complicated part of the pension formula used to determine retirees’ benefits—of 84 percent. (The total service credit is established through multiplying the first 30 years by a 2.5 percent per-year service credit and the final three years by an enhanced annual 3 percent credit and combining those totals.)

· The average salary of $63,200 multiplied by the 84 percent service credit results in a $53,088 gross annual—or $4,424 monthly—pension check.

Sounds reasonable so far, right?

Let the unreasonableness begin:

· According to KRS 161.155, 33-year employees are allowed 10 sick days a year and can count up to 300 unused ones toward their annual salaries used to determine their retirements.

· State law requires that 30 percent of the total amount of the average daily salary of these 300 days be incorporated to decide a retiring teacher’s final annual salary. KRS 161.623 dictates this be done by dividing the teacher’s salary in the final year he or she worked “by one hundred eighty-five (185) days.”

· The final year’s salary in Daviess County of $64,248 divided by 185 days reveals per-day pay of $347.29. Teachers who accumulate half—or 150—of those days at the end of their career boost their pensions by $15,628, giving them annual retirement payments of $68,409, or $5,701 monthly.

· None of this even includes the annual cost-of-living increases (COLAs) and rich, but nearly free, health-care benefits KTRS recipients receive.

· “But we don’t get Social Security,” I can hear even now as fists shake faster and angrier. True. I will have some thoughts in a future column on how to remedy that policy in favor of KTRS and the taxpayers.

This brief mathematical study shows that Daviess County teachers who save even half of their sick days will receive more in gross pension benefits during their first year of retirement than in the final year they worked.

If they fulfill their life expectancy, they will amass more than $2.1 million in taxpayer-backed retirement bucks—plus tens of thousands of additional dollars in the form of health-insurance benefits and COLAs for a lifetime.

It behooves all Kentuckians to consider: the burden of a system allowing teachers to retire in their mid-fifties and collect hefty public-pension, health care and cost-of-living checks is funded by taxpayers struggling to make ends meet in their own homes, and who—if they even have a retirement plan—are largely funding it themselves.

Plus, they’re certainly working more than 185 days a year.

Who should be angry here?


By Jim Waters

Bluegrass Beacon

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at [email protected] Read previously published columns at www.bipps.org.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at [email protected] Read previously published columns at www.bipps.org.

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