Teacher Pensions

Official Education Spending Figures Do Not Incorporate Full Cost of Teacher Pensions

“… Despite the centrality of pensions in debates over government budgeting and education policy, the NCES dramatically underestimates pension costs in its official education spending figures. States report to the NCES only the yearly contributions to teacher pension funds rather than the present value of accrued benefits. Since governments routinely contribute less than is needed to cover future pension benefits, correcting this accounting problem could add tens of billions of dollars to official education spending estimates—somewhere around $900 to $1,000 per pupil in ongoing year-to-year costs, plus roughly $700 to $800 per pupil in annual debt service. The NCES should join other federal agencies in measuring the cost of pensions with actual risk-adjusted pension liabilities rather than annual contributions. …”

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