The striking LAUSD non teachers are demanding a 30%raise, plus more benefits. The teachers who are also striking are demanding a 15% raise, plus more benefits. At the same time, students are fleeing this failed system. In other words, for failing our kids, these union folks want more money.
“In 2021, the CalSTRS system required that local districts contribute 17.10 percent of employee pay to their pension plan. The state also contributes to CalSTRS, with that contribution being 10.328 percent. The total contribution by both district and state (not including any employee money) was an incredible 27.428 percent of the employee’s pay.
California teachers do not participate in Social Security, so part of this contribution makes up for the 6.2 percent the employer would normally contribute. Adding the common private company retirement account match of 4 percent we see a private employee would typically get contributions from their employer of about 10.2 percent of their pay.
This is where the 17-percent additional benefit number comes from. This means a teacher receives 17.228 percent more in retirement contributions from their employer than private employees receive from theirs. This is the “benefit advantage.”
In a private system, if you fail, you are fired. In government schools the bigger the failure, the bigger the raises. Another reason for school choice.
Real Pay for Teachers? At Least $107,000 a Year
Todd Maddison, Transparent California, 3/22/23
| Dear Friend, In this series we’ve done an in-depth dive into Transparent California’s pool of compensation records, with actual data on how K-12 education employees are compensated. We’ve seen data on teachers, administrators and support staff, and we’ve been able to take a close look at how K-12 employees are paid based on real data from school district payroll records. But paycheck compensation isn’t everything. Money in the bank pays the bills, but employer-provided benefits are also important. A good benefits package is often a key consideration when choosing a job. Let’s look at the value of those packages in K-12 employee compensation and see how they compare to typical private worker benefits. Many individuals prepare for the future by contributing to a retirement account, usually a private IRA or an employer-sponsored 401K plan. These are called “defined contribution” plans, because the only defined part are the contributions being made. What you get out of it is dependent on how you manage your funds. The typical 401K plan is structured so employee contributions are “matched” by contributions from the company, up to a limit. According to the latest data from Vanguard, the median for that contribution is an amount equal to 4 percent of the employee’s pay. That is a very good deal for the employee. If you put in $100, the employer puts in $100, which means you immediately double your money. If an employee making $50,000 contributes 4 percent of their pay ($2,000) they are given $2,000 on top of that from the company. Now, what would you say if your company didn’t put in just 4 percent but rather 17 percent of your income? An individual earning $50,000 would net an $8,500 contribution if their employer put in 17 percent of their income. And what if they did that regardless of how much you contributed? During a 30-year career, the company’s money alone would amount to almost $400,000. With prudent investing, it could easily grow to nearly $2 million. So, how do you get that kind of deal? Where do you find employers who will contribute 17 percent of your income to your retirement? Easy, go to work for a public school district. Now, K-12 employees typically do not have 401K (or similar) defined contribution plans. They have pensions, instead. These are called “defined benefit” plans, because they pay a specific defined amount monthly on retirement, regardless of how much is contributed. The employer’s money isn’t put into an account in the employee’s name, it’s given to a pension system – in the form of annual contributions to either the California State Teacher’s Retirement System (CalSTRS) or California Public Employee Retirement System (CalPERS), for non-teaching employees. Let’s use some real numbers to see how these contributions work. We’ll use certificated employees (teachers) for our example since their compensation usually represents 60 percent or more of K-12 compensation. In 2021, the CalSTRS system required that local districts contribute 17.10 percent of employee pay to their pension plan. The state also contributes to CalSTRS, with that contribution being 10.328 percent. The total contribution by both district and state (not including any employee money) was an incredible 27.428 percent of the employee’s pay. California teachers do not participate in Social Security, so part of this contribution makes up for the 6.2 percent the employer would normally contribute. Adding the common private company retirement account match of 4 percent we see a private employee would typically get contributions from their employer of about 10.2 percent of their pay. This is where the 17-percent additional benefit number comes from. This means a teacher receives 17.228 percent more in retirement contributions from their employer than private employees receive from theirs. This is the “benefit advantage.” In 2020, according to public records published here on Transparent California, the median full-time certificated employee (teacher) in the state made $91,067 in total pay. That means that additional 17.228 percent benefit advantage is worth $15,689 annually. That’s $15,689 – every year – that a private employee does not get from their employer. And of course that would grow over time, as pay increases. That extra money, over a 30-year career, will add up to more than $700,000 from their employer (the district and state). If that money were invested prudently it would likely be worth about $3.5 million at retirement. In our discussion of teacher pay we focused on paycheck compensation – the median $91,067 number. In reality, if a private employee wanted to fund their retirement to the same level as a teacher, they would have to take an extra $15,689 from their check to do that, meaning in order to have the same “cash in the bank” to spend after that deduction as a teacher has, they would have to earn $106,756. CalPERS – the pension system used for many non-certificated administrative employees – uses a similar system. Why do we never see this mentioned when education employee pay is discussed? Seems like compensation equal to $107,000 per year is pretty far from “underpaid,” and most people would consider having an additional $3.5 million available at retirement to be significant. Keep this in mind when you’re reading media stories about the “plight” of the education worker, and when you hear that your local school board is about to approve yet another bonus raise for employees – using money that could instead be used to improve the education of our kids. Let’s make data-based decisions on these matters, rather than relying on anecdotal stories, and let’s use that data to drive investments in better education for future generations. Todd Maddison is the Research Director for the public pay watchdog website Transparent California, and a parent activist working to improve K12 education in our state. |
