Pension payouts can negatively impact education systems
- The New York Times profiled the growing economic crunch that Oregon's pension system is having on secondary education, and features higher education as an example of its long-term binding consequences. The article cites former University of Oregon head football coach and athletic director Mike Bellotti, who upon retiring in 2010, began drawing $559,000 annually, an amount comprised of earned pension and revenues from the university's licensing fees and endorsements.
- The impact of pension payouts has substantially affected education funding in the state. According to the Times, the Beaverton School District had to cut 75 teachers in 2017 in the aftermath of required pension payments increasing by $14 million. That cut followed a 340 cut teaching positions in 2012.
- The pension troubles in Oregon trace back to the 1970s when lawmakers in a flourishing market began increasing rates for matching employee contributions. As years became financially leaner, state courts rejected attempts by the state to reduce payouts, and while pension plans now have decreased obligations, retirees with grandfathered in high rates are expected to be a drain on the system for the next 20 years.
Pension payments is a primary source of higher ed funding decreases in recent years. As of 2016, 59% of colleges and universities analyzed in a survey by Plan Sponsor Council of America make matching payments to employees' retirement accounts, and most institutions carry at least 70% of eligible employees for retirement support with accounts exceeding $109,000.
Growing pension payouts are impacting direct state support to campuses. In Louisiana, for example, several public institutions are financially considered private, as they pay more to the state to cover pension and other worker benefits than they receive in appropriations.
There is no easy solution that can satisfy employees, labor unions, institutions or states. But the answers for colleges and universities will include finding ways of trimming non-instructional costs while looking to create public-private partnerships that can fill in the gaps.