These days, Illinois’ virtually-insolvent defined-benefit pensions — along with those of Chicago — have become as much a topic of conversation for taxpayers in the state as last night’s Bulls or Cubs game. From the lawsuit filed earlier this year by a group of unions (including the National Education Association affiliate and that of the American Federation of Teachers), to the move last week by state legislators to help the Second City address insolvencies in two of its pensions, to the declarations of pension reform by both Illinois Gov. Pat Quinn and Republican rival Bruce Rauner, there will be more talk about how the Land of Lincoln must pay down its $95 billion in long-term pension obligations, the nation’s second-largest after California, according to data from the Pew Charitable Trusts.
But none of the discussions will matter unless the Land of Lincoln deals honestly with the level of insolvencies it faces. This is especially true when it comes to dealing with the Teachers’ Retirement System, which likely has the second-worst teachers’ pension deficit in the nation after that of the notoriously-underfunded California Teachers Retirement System. And based on TRS’ latest comprehensive annual financial report, the state is still refusing to deal candidly with reality.
The pension officially reports a deficit of $56 billion for 2012-2013. The problem is that the pension is understanding the level of its insolvency. For one, the underfunding only includes $1.6 billion in investment losses and not all of the losses (or gains) TRS has achieved over the past five years. This is because of an actuarial technique called smoothing, an actuarial trick the state forced the pension to adopt five years ago, which effectively allows the pension to effectively hide investment losses under the guise of keeping the volatility pensions experience with investments from wrecking havoc on state and district budgets. As a result, taxpayers and policymakers aren’t getting a full picture of the pension’s insolvency.
The bigger problem is that TRS is using overly inflated assumptions of investment growth over time. The pension assumes an eight percent rate of return even though it admits that its assets have only achieved a rate of return (net of investment fees) of just five percent between 2009 and 2013. In fact, TRS admits that its assets have only increased by 63 percent within the past 13 years (even as liabilities have increased by nearly a three-fold in that same period). What TRS should be doing is assuming a more-realistic actuarial rate of return, somewhere around 5.2 percent (or the five-year rate of return for investments, according to investment firm Wilshire Associates). This would then force politicians to deal more-honestly with the pension woes.
To get to the true level of TRS’ insolvency, Dropout Nation uses a version of a technique developed by Moody’s Investors Service, which assumes a more-realistic 5.5 percent rate of a return. [Moody's bases its rate of return on the performance of a bond index, which can range between four and six percent.] Based on those numbers, TRS’ true insolvency is likely $76 billion, or 36 percent higher than officially reported. This means that TRS’ insolvency has increased by seven percent (or $5 billion) within the last year, based on an earlier Dropout Nation‘s estimate of the pension’s unfunded liabilities. If Illinois state government was forced to pay down the insolvency over a 17-year period of amortization, it would cost taxpayers $4.5 billion, or more than double the $3.8 billion contributed to the pension this past fiscal year.
Getting to the heart of the numbers is particularly critical because TRS will face even more Baby Boomers heading into retirement over the coming years. On average, 6,404 teachers covered by TRS have retired every year over the past decade, based on a Dropout Nation analysis of the pension’s retirement data. Each retiree and their surviving spouse, on average, collects an annual annuity of $45,792. So TRS can easily expect to pay out at least an additional $293 million in annuities every year, and likely, even more than that; TRS reports that it paid out an additional $344 million in annuities in 2012-2013, higher than even Dropout Nation‘s estimate. Since the pension reform plan enacted last year, SB-1, still allows for teachers who joined payrolls before this coming June to cash in unused sick and vacation days in order to boost pension payouts — and still allows Baby Boomers to collect three percent annual cost-of-living raises for all but two of the first 1o years in retirement — this means that TRS will become even more insolvent than it currently is. And, in turn, estimates that the plan will reduce the state’s overall pension deficit by $24 billion over the next 30 years is likely an illusion.
With more-realistic numbers, state legislators and Gov. Quinn (or Rauner, if he beats Quinn in November) can deal with TRS’ woes more decisively. This should start with requiring teachers (and in many cases, thanks to collective bargaining agreements, the districts) to contribute even more than the 24 percent of annual contributions made to the pension every yearpercent of salary they currently pay toward retirement. It is increasingly clear that the state can no longer assume 71 percent of the burden. Addressing these issues will require Illinois officials to take bolder steps than they have been willing to do. This includes overhauling how TRS (along with other state pensions) are managed; as I noted today in this week’s column in Rare, the NEA’s and AFT’s state affiliates have long controlled pension operations and won’t give up that influence without a fight.
But addressing TRS’ insolvency isn’t just about the red ink. One of the problems with SB 1 (and similar pension reforms across the country) is that the brunt of the changes are borne not by Baby Boomers, but by younger workers, who are both forced to subsidize veteran colleagues (both in the form of contributions as well as taxes they also pay) and at the same time, lose out on opportunities to truly save for their own retirements. Under the pension reform plan, for example, younger Illinois teachers will lose out on five three-percent cost of living raises during the first 10 years of annuity payments. This means they lose money twice, both in the form of contributions (which are supposed to be savings, but actually goes to fund the retirements of others), and in money they expected to get in exchange for subsidizing other people’s pensions.
Moving away from defined-benefit pensions to hybrid pension plans that features defined-contribution accounts as well as cash-balanced accounts that guarantees an annual savings rate to actually save for their old age, would help younger teachers reap the rewards of their labors in their senior citizen years. This, along with overhauling the rest of traditional teacher compensation, would particularly benefit high-quality teachers in the first 15 years of their careers, who deserve reward for all they do to help children succeed.
But none of this is possible until Quinn and his colleagues get real about the true extent of TRS’ virtual insolvency as well as deal with the state’s other long-term debts. Until this happens, Illini will be merely toying with their problems.
Last year, Dropout Nation had cast a skeptical eye on the Broad Foundation’s selection of four districts — Houston, San Diego Unified, Corona-Norco Unified in California’s Orange County, and Cumberland County, N.C. — as nominees for its annual Broad Prize. From where your editor sat, neither of the districts lived up to the Broad Prize’s goal of highlighted what high-performing urban districts should be nor did they go beyond achieving first-generation reform aims of improving graduation rates and basic literacy.
This skepticism was proved correct when it was revealed this past December when data from the most-recent National Assessment of Educational Progress revealed that Houston, which won the Broad Prize, saw a five percentage point increase in the number of functionally illiterate fourth-graders as measured by the federal test of student achievement, as well as excluded 34 percent of fourth-graders in special ed and 30 percent of eighth-graders in special ed ghettos from the exam.
So your editor couldn’t help but be a little pleased today when Broad Foundation announced that Gwinnett County, Ga., and Orange County, Fla., were the finalists for this years’ edition of the award. Not necessarily because both districts epitomize what school operators should be doing in an age when children must attain college-preparatory learning in order to succeed in the economy and society — more on that later — but because Broad acknowledged that it had to do better in weeding out districts doing better by kids from those who are just achieving average results. Yet the data on the two districts selected shows that Broad Foundation may need to raise the bar even higher.
By acknowledging that most of the urban districts considered for the Broad Prize were merely making “incremental” progress instead of aggressively improving student achievement of children — especially those from poor and minority households — in their care, Broad Foundation has sent a message to reformers that they can no longer simply give pats on the back for merely making the grade. The fact that the committee in charge of awarding the prize selected just two finalists (instead of five as it did the last go round) also shows that Broad Foundation is attempting to both raise the bar for success and be more-discriminating in which districts it will pick. Particularly for districts such as Houston which have rested on the laurels of early success in achieving the basic goals of improving student achievement, this should be a wake-up call to them to step up and do better by children.
This isn’t to say that Broad Foundation still doesn’t have some work to do. On one end, it may be time to rethink who sits on the committees involved in selecting finalists and winners of the award. Some on the review committee, for example, have been involved in selecting finalists for four or more years; a few, such as American Enterprise Institute scholar Rick Hess, are retreads. Bringing in some fresh eyes, including Parent Power activists such as Gwen Samuel of the Connecticut Parents Union, Kenneth Campbell of Black Alliance for Educational Options, and Ben Austin of Parent Revolution, would help; so would bringing in other researchers, policy wonks, and even reporters and filmmakers who haven’t previously been involved with the award. Certainly your editor can understand how hard it is to put together a jury to review award data. But it can be done. At the same time, additional data points may also be needed to further weed out which districts should be considered for the award. Suspension and expulsion data on districts considered for the award, for example, could be helpful in determining the true commitment to providing high-quality education to all children.
Ultimately, words are only as good as the actions taken. In the case of the latest Broad Prize selections, both Gwinnett (which had won the Broad Prize four years ago) and Orange have shown some progress, but little else in the way of success, in key areas of preparing kids for success in higher education and beyond.
Both Gwinnett and Orange are doing well in providing high schoolers with advanced math courses they need to prepare for college. The percentage of Gwinnett’s black high school students taking Algebra II increased from 10 percent to 17 percent between 2006-2007 and 2010-2011, according to data from the U.S. Department of Education’s Office for Civil Rights, while the percentage of Latino and American Indian high schoolers taking Algebra II increased, respectively, from nine percent and 13 percent to 15 percent and 25 percent in the same period. [The percentage of white and Asian-Pacific Islander high school students taking Algebra II increased, respectively, from seven percent and six percent to 13 percent and 10 percent.] Meanwhile in Orange County, the percentage of black, Latino, and Native students taking Algebra II increased from, respectively, 16 percent, 16 percent, and 22 percent, to 25 percent, 23 percent, and 31 percent. The percentage of white students taking Algebra II increased from 21 percent to 25 percent, while the percentage of Asian students taking Algebra II declined slightly from 24 percent to 23 percent in that same period.
But it isn’t all roses. Neither are doing as well as needed in providing kids with other forms of advanced math, including statistics, geometry, and trigonometry. In fact, both Gwinnett and Orange have seen declines in the percentage of high schoolers taking such courses, which are critical for high-skilled blue- and white-collar work. The percentage of Gwinnett’s black students taking advanced math declined from 16 percent to seven percent in the same period, while only 23 percent Orange’s black children taking advanced math in 2011-2012, the same as it was in 2006-2007.
Gwinnett is clearly doing better than Orange in providing its high schoolers with Advanced Placement courses that are key to helping kids prepare for success in higher education. Between 2006-07 and 2011-2012, the percentage of Gwinnett’s black high schoolers taking Advanced Placement courses increased from three percent to 20 percent, while the percentage of Latino peer taking such courses increased from three percent to 22 percent,; the percentage of American Indian children taking AP increased from zero to 37 percent in that same period. At the same time, more white and Asian kids took AP as well, increasing from eight percent and 10 percent, respectively, to 35 percent and 53 percent. Orange County’s gains in AP participation weren’t nearly as dramatic. The percentage of black kids taking AP increased from just 12 percent to 14 percent between 2006-2007, while the percentage of Latino kids taking the college prep courses increased from 15 percent to 19 percent. The percentage of white, Asian, and Native students taking AP declined, from, respectively, 39 percent, 56 percent, and 35 percent, to 36 percent, 48 percent, and 34 percent, in the same period.
And while both Gwinnett and Orange have increased the percentage of seventh- and eighth-graders taking Algebra 1, the critical course for preparing kids for success with other forms of college-preparatory math, both are still not doing enough to help all middle-schoolers get such learning. Such data does not seem to be considered in selecting candidate districts or finalists for Broad Prize consideration. The percentage of Gwinnett’s Native seventh- and eighth-graders taking Algebra 1 increased from five percent to 27 percent between 2006-2007 and 2011-2012. But the percentage of black and Latino middle-schoolers taking introductory algebra increased from just, respectively four percent and four percent, to six percent and nine percent in the same period. [The percentage of white and Asian middle school students taking Algebra 1 increased, respectively, from 11 percent and 17 percent, to 15 percent and 23 percent.] Orange’s students fared little better. A mere 11 percent of black middle schoolers took Algebra 1 in 2011-2012 versus nine percent in 2006-2007, while a mere 14 percent of Latino middle school students, and 35 percent of Asian peers took introductory algebra in 2011-2012, versus 12 percent and 29 percent five years earlier. [The percentage of white middle schoolers taking Algebra 1 remained unchanged at 23 percent.]
This isn’t to say that neither district isn’t showing progress. You also cannot expect districts that have struggled mightily in past years to provide poor and minority kids with high-quality education to do so overnight. So let’s give Gwinnett and Orange credit for achieving results. Whether or not either district deserves to be a Broad Prize winner? This is an open question — and it offers an opportunity for the selection committee choosing between the finalists to send a message demanding all school operators (and American public education, in general) to push harder in transforming education for all kids.
The Program for International Student Assessment (PISA) is a program of the Organization for Economic Cooperation and Development that documents the performance of students in dozens of countries. PISA has just released the results of the 2012 assessment. The headline in major media outlets is that “U.S. 15-year-olds Perform Above OECD Average in Problem Solving.”
Twelve percent of U.S. students were “top performers,” scoring at levels 5 and 6, which was similar to the OECD average. Eighteen percent were “low performers,” scoring at level 1 or below level 1. This was better than the OECD average of 21 percent “low performers.”
Yet the report highlights the extraordinary lack of equity in the American educational system. For all the debate over whether there is too much focus on all children receiving college preparatory learning, the reality remains that our black, Latino, and low-income children aren’t being provided any of it.
While, on average, 18 percent of U.S. 15-year-olds were “low performers” and 12 percent were “high performers,” students attending schools where the percentage of students eligible for free or reduced-price lunch was 75 percent or more had much different outcomes. These schools managed to educate their students to the “high performing” level in problem solving only 4 percent of the time, and left their students at the “low performing” level 34 percent of the time.
Because of America’s unusual school funding system, based on local property taxes, schools attended by students living in poverty are less well-funded than those attended by students from better off families. It is not surprising that student attending poorly- funded schools do less well than those attending well-funded schools.
The PISA report also documents racial and ethnic disparities in student performance. White students scored at the “high performing” level 16 percent of the time. Black students scored at the “high performing” level 1 percent of the time. Hispanic students scored at the “high performing” level 6 percent, while Asian students scored at “high performing” levels 28 percent of the time. At the “low performing” end of the scale for U.S. 15-year-olds we find 10 percent of White students and 44 percent of Black students (along with 23 percent of Hispanic and 5 percent of Asian students).
The problem solving performance of American black 15-year-olds is similar to (but slightly better than) that of 15-year-olds from Middle Eastern (including Israel), Latin American and Balkan countries, worse than those of students in countries that make important investments in education, such as those in the European Union. Black students are much more likely to attend schools in poor neighborhoods than other students. As a result they are much more likely to attend schools that are poorly-resourced. The lesson is clear: internationally and within the United States, student performance varies with educational resources.
The consequences are not surprising. Tragic, but not surprising.
On this week’s Dropout Nation Podcast, RiShawn Biddle takes a look at a new study on the impact of advanced curricula on the achievement of kindergarten students, and explains why all children need challenging, comprehensive college-preparatory curricula.
You can listen to the Podcast at RiShawn Biddle Radio or download directly to your mobile or desktop device. Also, subscribe to the podcast series, and embed this podcast on your site. It is also available on iTunes, Blubrry, Stitcher, and PodBean.
A study published in the April issue of the American Educational Research Journal, for example, finds that kindergarten students learn more when they are exposed to challenging content such as advanced number concepts and even addition and subtraction. In turn, elementary school students who were taught more sophisticated math as kindergarteners made bigger gains in mathematics, reported the study’s lead author, Amy Claessens of the University of Chicago.
Another study, published last year by Dr. Claessens with co-authors Mimi Engel and Maida Finch, concluded that as things stand, many children in kindergarten are being taught information they already know. The “vast majority” of kindergarteners have already mastered counting numbers and recognizing shapes before they set foot in the classroom, Dr. Claessens and her co-authors noted, yet kindergarten teachers report spending much of their math teaching time on these skills.
The students don’t gain anything from going over familiar ground: In the article published this month, Dr. Claessens and her colleagues report that pupils do not benefit from basic content coverage, but that all the kindergarteners in the study, regardless of economic background or initial skill level, did benefit from exposure to more advanced content.
Discussions about how to improve learning for young children usually focus on the length of the whole school day or the number of students in classes, but rarely on what is taught during the hours school is in session. Increasing the time kindergarten teachers spend on more advanced math concepts may be a simpler and more cost-effective way to boost learning.
Annie Murphy Paul, in the New York Times, pointing out another reason why arguments against providing all children with comprehensive college-preparatory learning just don’t wash. Every child thrives when given challenging curricula.
The young mother’s voice shook with anxiety. She had just gotten her son’s third-grade test results from his school, and he had scored at the absolute bottom level in reading, and only a little bit higher in math.
“All year,” she said, “my son got mostly B’s on his homework and report cards. I monitored every one. And now I learn that all of that was a lie.”
Like many other low-income mothers of color in America’s urban centers, this Portland mother knew what low performance, especially in reading, meant for her son’s future. She’d even heard that Oregon’s prison planners used third-grade reading test data to determine how many new cells to add.
If she and her son’s school couldn’t find a way to turn those results around — and soon — she feared they amounted to a virtual death sentence.
I hear her words — and remember the fear in her eyes — every time I hear about yet another effort to eliminate the longstanding federal requirement that children in American public schools be tested once per year in grades three-eight and at least once in high school. Proponents of this change argue that students should be tested only once, each during elementary, middle, and high school, if that often.
I can only imagine how frightened that Portland mother would be if she didn’t have an objective check on what her son’s school told her at least by the following year — but, instead, had to wait all the way until he hit eighth grade. In the meantime, all she would have are the grades that research and experience tell us too often paint a too rosy picture of student performance.
Yes, I get that a lot of the anti-testing voices are from affluent parents. Certainly, when the results of state tests just reinforce the message (one they so often get) that their children are sailing along just fine, getting that reaffirmed next year doesn’t seem so important… But that so many policymakers don’t see through all this — and can’t imagine the anxiety of that mother and millions like her who can’t afford to wait five years for an honest evaluation of their children’s preparation for the future — is worrisome.
Education Trust President Kati Haycock, in the Huffington Post, offering a reminder of why testing is so important in helping all children get the high-quality education they deserve.