When it comes to discussions about what to do about traditional school discipline, they usually go like this. First comes more and more data showing that black children (as well as others from poor and minority households) are the ones most-likely to be targeted for out-of-school suspensions, expulsions, school arrests, and referrals to juvenile courts. Then comes additional evidence beyond all doubt shows that overuse of harsh school discipline harms the futures of children, especially young black men and women. Lastly, despite all of this evidence, traditionalists and even some reformers continue to ignore the data and evidence (or worse, try to argue that it is meaningless), arguing that the problem lies either with the children or their families or even the man on the moon.
So you can expect the report released this week by University of Pennsylvania’s Center on the Study of Race and Equity in Education to start off this usual pattern of discussion once again. Which is unfortunate. Because the Penn State study should instead force reformers and traditionalists to agree at least on one thing: It’s time to ditch the overuse of harsh school discipline once and for all.
Thanks in part to the efforts of the Obama Administration and the U.S. Department of Education’s Office for Civil Rights, more states and districts are taking some positive steps toward restricting how suspensions and other traditional discipline approaches are used in schools. In Illinois, legislators and Gov. Bruce Rauner enacted Senate Bill 100, which requires schools and districts to only use out-of-school suspensions after restorative justice and other approaches have been used. Meanwhile a video released last month by the American Civil Liberties Union showing a Kenton County, Ky., school police officer handcuffing an eight-year-old kid in special ed once again cast light on how American public education has escalated overuse of harsh discipline by using law enforcement to deal with behavioral issues that should be handled by teachers and school leaders.
But as a series of recent reports have shown, far too many states and districts are damaging the futures of children with practices that range from educational malpractice to criminal abuse. As a Penn State University professor, David Ramey, detailed in a study published last month in Sociology of Education, black children are more-likely than white peers to be suspended, expelled, and even sent to jail for the same acts of misbehavior; white children, on the other hand, are more-likely to be referred to psychologists and other medical professionals. Considering that nearly all suspensions are meted out for minor issues such as disruptive behavior (and not because of acts of violence, drug abuse, or weapons possession), this almost always means that black children are being dealt harshly by adults in situations in which white peers are let off the hook.
None of this is surprising. After all, John Wallace of University of Pittsburgh showed in a 2008 study on referrals to dean’s offices that young black men in 10th grade are 30 percent more-likely to be sent to dean’s offices for punishment than their white male peers — and 330 percent more-likely to be suspended afterwards than white counterparts. As both the American Psychological Association and Russell Skiba of Indiana University have determined, young black men are also viewed by teachers and school leaders as being older, less-innocent, and greater troublemakers than white counterparts. Just as importantly, data on school discipline bears out what Vanderbilt University scholar Daniel J. Reschly’s determined eight years ago on the matter of overlabeling of kids as special ed: Adults in schools end up labeling certain groups of students as troublemakers because they think they are destined to end up that way.
Which makes Penn’s latest evidence of overuse of suspensions against black children not shocking at all. But the data should outrage all of us anyway.
Culling through federal Office for Civil Rights data for 3,022 districts in 13 southern states, researchers Edward J. Smith and Shaun R. Harper determined that black kids were far more-likely to be suspended at more-disproportionate levels than white peers. Black children accounted for 48 percent of all children suspended one or more times in 2011-2012 even though they made up just 24 percent of enrollment. Black children accounted for all of the children suspended in 84 districts, and accounted for 75 percent or more of kids suspended in another 346 districts.
The overuse of harsh discipline is especially tough on young black men. They accounted for 65 percent of all young men suspended in the 13 southern states surveyed. Mississippi had the highest level of suspensions for young black men, with them accounting for seven out of every 10 young men suspended. But Georgia, Louisiana, and Alabama weren’t far behind, with young black men accounting for three out of every five young male students suspended. Meanwhile young black women were also harshly disciplined by schools and districts; they accounted for 45 percent of all young women suspended. Mississippi also topped the states for the highest level, with young black women accounting for eight out of every 10 young women suspended. In Georgia, Louisiana, and Alabama, young black women accounted for seven out of every 10 young women suspended.
What becomes clear from the Penn study is that young black children are placed on the school-to-prison pipeline more-often than children from any other socioeconomic background. Other data that has accumulated over the past three decades also shows these facts: That harsh school discipline almost never leads to improvements in behavior or in school cultures. That the underlying learning issues behind children misbehaving in school — especially low levels of literacy and the lack of intensive reading remediation to help kids struggling with reading — are often ignored. That the traditional system of recruiting and training teachers has filled far too many classrooms (and principal’s offices) with men and women lacking the subject-matter competency, empathy for children, leadership ability, and training in classroom management needed to not revert to tossing kids out of schools. And that reducing overuse of suspensions and expulsions improves school cultures for everyone as well as helps keeps kids often-targeted by traditional discipline practice on the path to graduation.
Perhaps the Penn study can rally all of us, be we reformer or traditionalist, to push for both traditional districts and charter school operators to stop overusing suspensions and expulsions. Maybe the Penn State study will lead all of us to support the Obama Administration’s crackdown on disparate use of those failed practices — and even extend it to all school operators. Possibly, it can lead to the embrace of practices such as those developed by Chuang Wang and Bob Algozzine of University of North Carolina at Charlotte that help kids improve behaviorally and academically. Surely, we can all agree that schools should lovingly discipline children the way parents who love their children do at home — which almost never involves kicking kids out of the house, subjecting them to solitary confinement, putting them in some form of bondage, or having them shot or shackled by cops. We may actually highlight the barbarity of these practices as a way to advance the reforms of teacher training and school systems that will help stem the nation’s education crisis.
But as your editor has noted, it’s more than likely that traditionalists and reformers will simply ignore the data and evidence, and complain that any effort to end or reduce overuse of harsh school discipline is merely some form of meddling. Education Next Editor Paul Peterson has already done his part with a screed in National Review complaining about the Obama Administration’s efforts on this front. Considering that Education Next has ran other pieces opposing any effort to stem overuse of suspensions (and Peterson’s defense of the magazine’s racially odious, indefensible American Gothic-inspire cover), Peterson’s piece isn’t shocking. Yet his response, along with similar views from others, does raise the question about some of those who call themselves reformers — as well as about the men and women who work in our traditional districts. If they are willing to defend failed school discipline policies that harm children in and out of schools, should they be trusted to do the right thing for kids on any matter of policy or practice?
On this week’s Dropout Nation Podcast, RiShawn Biddle discusses how the battle to reform American public education is a war for the lives, futures, and souls of every child — and offers eight mindsets reformers must embrace for long-term success.
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.
Before your editor tears apart the problematic thinking behind the latest version of the Center for Education Reform’s so-called Parent Power Index, let’s give the organization credit for at least providing a measure of which states are expanding opportunities for high-quality education. At the very least, reformers and Parent Power activists should be disturbed that only Indiana earned CER’s top rank, and that only four other states — Florida, Arizona, Georgia, and Utah — have (along with the District of Columbia) earned a B rating for addressing school choice, teacher quality reforms, and data transparency. Sure, CER doesn’t factor in matters such as transportation and other infrastructural issues that can make choice more illusory than real. But for shedding that light alone, CER deserves some praise.
At the same time, the praise for CER should only be faint. Why? Because the outfit, like so many Beltway-oriented reformers, is clinging to a limited notion of the role families should play in education decision-making at a time when parents are demanding to be lead decisionmakers in how schools and operators serve their children. For all of CER’s talk about Parent Power, it doesn’t understand that it means more than just choosing schools.
The biggest oversight of CER’s reform comes in its failure to rank states on how they have passed and implemented Parent Trigger laws that allow families to take over failing schools as well as gives them the ability to negotiate with districts on how those schools will be overhauled. The outfit could have easily looked at the laws on the books; after all, only seven states have Parent Trigger laws in place. It could have also talked to Parent Power activists on the ground — from Gwen Samuel of the Connecticut Parents Union to Parent Revolution’s Gabe Rose — about the efficacy of the provisions in each state. Rating states on this aspect of Parent Power alone would have been quite revealing about how far we have to go to provide families real decisionmaking power in education.
Another oversight comes in the failure to rank states on whether families have strong roles in shaping education decisions within the school systems that serve their children. Given that both traditional districts and charter schools are public schools and serve the vast majority of school-aged children, ranking them on such matters as whether parents have seats on oversight boards for individual schools is important to ask. Even ranking states on the number of education lawsuits filed by families to challenge the array of near-lifetime job protections and teacher dismissal policies that harm children would have been good to determine.
I can imagine CER President Kara Kerwin and the outfit’s founder, Jeanne Allen, asking why this should have been considered. Here’s the answer: Because Parent Power isn’t just about school choice.
This is clear in Anaheim, Calif., where families of children attending Palm Lane Elementary are using the Golden State’s Parent Trigger law to take over the seize control of the failure mill from the traditional district there. The families, with help from former California Sen. Gloria Romero, filed suit in April after the Anaheim City School District rejected their Parent Trigger petition. Last month, Superior Court Judge Andrew Banks concluded that the district’s process for vetting the Palm Lane petition was “unreasonable, unfair, and incomplete” and gave families the green-light to proceed with the takeover. [The Anaheim district has filed an appeal.] The efforts of the Palm Lane parents, along with those in Adelanto, Calif., and in Los Angeles (where parents have either successfully taken over schools or forced districts to negotiate over much-needed reforms) show the desire families have to take the lead in shaping curricula and instruction for their kids.
This is also clear in New Orleans, La., where families are as frustrated as they are pleased by the expansion of school choice and overhaul of public education that has happened in the decade since the devastation of Hurricane Katrina. Certainly those families are happy that the reforms have improved student achievement. But the reality that many kids must travel as long as two hours away from home in order to attend school (often on inefficient public transit) has also put a strain on the Crescent City’s poorest families, who, like middle-class households, want high-quality schools within their own neighborhoods. The fact that the reforms — including the shutdown of tdistrict schools that were as much community institutions as they were failure mills — were implemented without the input of families is also upsetting. What they want and deserve is real decisionmaking that goes beyond simply choosing between mediocre and high-quality schools.
Meanwhile the push for families as real decisionmakers in education can be seen in New York City, where Mona Davids and the New York City Parents Union has pushed for families to have real power in education. This includes the Vergara suit it filed last year to abolish New York State’s teacher dismissal and reverse-seniority layoff rules, as well as taking advantage of Big Apple Mayor Bill de Blasio’s poor relations with Gov. Andrew Cuomo and state Senate Republicans by pushing for mayoral control to be extended for only another year. The parents union, along with the parent empowerment efforts of StudentsFirst’s New York affiliate (which is helping families in the Big Apple’s traditional district fight for school libraries as well as lobby for teacher quality and other reforms), is actively helping families do more than just have a voice.
What is clear from all three situations is that families aren’t simply satisfied with passive roles in education decisionmaking. Especially for families from poor and minority households, the ones whose children have been afflicted the most by the nation’s education crisis and who have often been shunted aside in school decisions, they are no longer interested in just hoping that school operators, be they traditional districts or charters, will do the best by their kin. Certainly expanding choice is important. But for these families, it isn’t enough. they want to play more-prominent roles in shaping the curricula, instruction, and school cultures in which their children will be immersed for nearly all of their youth.
For Black, Latino, and American Indian families, in particular, being lead decisionmakers in education allows them to transform cultures in existing schools in order to provide both high-quality education and environments in which their cultures are respected. For their children, the ability to see peers and other adults who look like them striving and succeeding is a key to building their self-esteem, especially as they will be adults in economic and social circles in which being black is wrongly-considered inferior. This need for cultures that reaffirm the self-worth of poor and minority children (and ultimately, allow for them and their communities gain the knowledge needed to determine their own destinies) is why historically black colleges and universities, along with other minority-serving higher ed institutions, still exist. It is also why charters such as Cesar Chavez in Washington, D.C., have emerged within the past two decades.
This is more than just a narrow vision of the role of families as merely being able to move their kids out of failure mills and dropout factories. This is an ethos that embraces the concept of families choosing the very structure of education for the children they love, as well as the ability to advance and sustain reforms directly within their communities and the contexts in which they live. For many of these families, this starts with taking over the traditional district school within their own neighborhoods — and that means being able to utilize Parent Trigger laws that allow them to do so.
Even if school choice fully flourishes, families are going to want real choices in their own communities. As Center for Reinventing Public Education noted in its series of reports on school choice in Detroit, New Orleans and other cities, the lack of robust transportation options (along with the lack of data infrastructure needed for shopping for schools) can often make choice illusory. Single-parent households, in particular, have to also think about childcare, especially since they must pick up their kids from school and daycare. It just makes sense for families to take charge of neighborhood schools from central bureaucracies and teachers’ union affiliates distant from their concerns for their children, or at the very least, use Parent Trigger laws to become lead decision-makers in the school with the district paying heed.
Then there is this other reality: That systemic reform, and ultimately, the mission of building brighter futures for all children, cannot be sustained without mothers and fathers in the lead. As the last three decades of school reform has shown, the most-successful efforts have been — and continue to be — done by parents and others who didn’t know much about education, but were spurred to take action by moral, social, and economic concerns for the futures of their children. From Virginia Walden Ford’s work in D.C., to those of Samuel in Connecticut, to the Parent Trigger actions of families throughout the country, it is these impromptu leaders who have done the work of jump-starting and sustaining reform that Beltway and operator-oriented reformers, often more-concerned about policy and management than with rallying critical support from people on the ground, almost never do.
This empowerment goes beyond overhauling American public education. When families know that they can transform public education for their children, then they will take on the other challenges outside of schoolhouse doors that also damage their futures. They can take on criminal justice reform, battle for general government reform, even take on the other legacies of state-sanctioned racialism that still affect them and their kin.
If it makes sense for families to be lead decisionmakers in education, it also makes sense to measure states and even districts by how they empower those parents to transform education within their own communities, starting with schools in their backyards. To implicitly say otherwise, as CER has done in its latest index is unfitting of the school reform movement’s ultimate goal of providing every child the capacity to shape their own futures.
But at least CER tries to embrace the name (if not its true meaning). As I have noted ad nauseam over the past few years, this myopia on Parent Power is a problem among nearly all Beltway and institution-oriented reform players. And this is a moral and intellectual problem that the movement must finally address.
There is a vast professional literature demonstrating that the American descendents of enslaved Africans do not fully participate in the American economy, that they are less healthy, live shorter lives, receive inferior educations, have lower rates of educational attainment and higher rates of unemployment, are paid less for similar work and suffer astronomical rates of incarceration, in large part simply for being Black.
Gary Becker, the Nobel Prize-winning conservative economist, wrote The Economics of Discrimination in 1957, and laid out the costs of racism to the descendents of enslaved Africans and other residents of the United States. Victor Perlo, a Communist economist, published Economics of Racism USA: Roots of Black Inequality in 1975, updating it in 1996. I covered much the same ground last year in The Chains of Black America.
All this is well-known. The pertinent questions today are what is to be done and who is going to take personal responsibility for doing it.
It is time to name names.
We can begin with Milwaukee, that poster city for racial inequality, with its pitiful rates of educational achievement, antebellum rates of incarceration for Black men, radically inequitable enforcement of the laws, and carefully designed and enforced geographical segregation. There are seven officials who could fundamentally change the condition of the descendants of enslaved Africans now living in Milwaukee. It is something for which they have personal responsibility.
The first is the former Milwaukee County Executive, now Wisconsin governor (and Republican presidential candidate), Scott Walker.
The second is Tony Evers, Wisconsin’s longtime State Superintendent of Public Instruction. He is a longtime school leader and player in the state education agency.
Third is current Milwaukee County Executive Christopher Abele, a philanthropist from Massachusetts whom Walker is placing in charge of education in Milwaukee, in effect as boss of Superintendent Darienne Driver.
Finally, there are the overseers of the local criminal justice system: Milwaukee County District Attorney John Chisholm, Milwaukee Chief of Police Edward Flynn and the Chief Judge of Milwaukee County, Maxine White.
With the support of Governor Walker, Evers, Abele, and Driver could improve educational opportunities for Milwaukee’s children. It would not take further research: Address teacher quality; provide early childhood education for three- and four-year-old; longer school days and school years; more-challenging curricula. [Other school reformers offer other approaches, including the expansion of high-quality charter schools serving Black children, which could also help.]
Together, these political leaders could address these issues. We are they going to do so? Why haven’t they done it as yet?
Governor Walker and County Chief Executive Abele could design a regional public transportation system that would make suburban jobs accessible for urban residents. They could implement planning to break-up the nearly totally segregated housing patterns of Milwaukee County. They could put in place effective job-training and other school reforms that can help adults poorly-served by public education gain the knowledge they need for economic success.
Walker and Abele, working together, could do this. When are they going to begin doing so? Why have they not done it as yet?
With the support of Gov. Walker, Judge White, Chief Flynn and District Attorney Chisholm could devise ways to bring equity to the Milwaukee County criminal justice system. They could reform police department policies concerning stops and arrests, prosecutorial policies concerning indictments, court policies on sentencing. Milwaukee sorely needs those reforms, as does the rest of Wisconsin.Walker does deserve credit for signing into a requirement that deaths at the hand of police officers are to be handled by independent investigators. But that’s not enough.
Walker, White, Flynn and Chisholm could do this. When are they going to begin doing so? Why have they not done it as yet?
Wisconsin is a wealthy state. The facts are well-known. These people have the authority needed to make it possible for Milwaukee’s children to have bright futures. It is their personal responsibility. Why have they not done it as yet? When are they going to do it?
While watching the sorry spectacle of education policy making in the current session of Congress, we must remember above all else the main lesson of the last 20 years in education in America: Accountability works!
The evidence behind the effectiveness of these policies is now clear and abundant. For me, of all the research that has been presented over these many years, the most convincing are the charts showing student achievement patterns on the Long Term National Assessment of Educational Progress.
Both before and after the peak of the accountability movement, student results were and have become again relatively flat. But the gains between 1999 and 2008 were significant.
For nine-year-olds: African American students advanced more than 1½ grade levels in reading and a little less than 1½ grade levels in math; Hispanic students advanced 1½ grade levels in reading and over two grade levels in math; and white students advanced about a grade level in both subjects. This means all subgroups of students advanced substantially, and, because disadvantaged students advanced the most, the achievement gap narrowed at the same time.
For 13 year-olds, all three subgroups advanced about a grade level in math, with the greater gains for African American and Hispanic students. In reading, where the results have unfortunately been flat over the long term for all students, African American students gained a grade level.
The data for students with disabilities show sizable gains as well.
One would think, in a rational world, that intelligent policy makers, looking at these charts, would quickly conclude that something good is going on, and it ought to be preserved. Even if there were problems associated with the policies, one would at least expect an approach of “mend, don’t end.”
But, amazingly, this is not the case. Educrats who have been pressed to change and improve under accountability policies never liked the pressure. So, they organized a ferocious campaign and poured millions of dollars into tarnishing and destroying the reforms.
If results mattered, the reforms would be preserved, improved, and extended. Instead, in today’s sad political environment, the reforms are deemed “much maligned,” and are in jeopardy of being tossed.
Ironically, perhaps, it is the Democrats, who count teachers and other education special interests among their strongest constituents, who are responding positively to the appeals of civil rights groups to preserve at least basic elements of accountability policies.
But, what’s with the Republicans who control the Congress? Are they insisting on real and significant parental choice? Are they standing behind their traditional position of refusing to borrow and spend on a function some believe can best be performed by the states? Are they supporting the honorable and sound conservative position from the early 2000s that accountability and choice ought to be the condition for federal dollars that are spent? No, no, and no.
Here’s the current prevailing Republican view at the federal level, and it’s one their sponsors are very proud of: Let’s continue to tax and borrow billions of dollars, ship them in large part to local bureaucrats and unions to spend without any requirement they prove results or to expand parent choice, and spout to the world that all of a sudden every child in America will now be well educated.
Even more stunning than all this is how these Republican leaders can feel so very proud of themselves as they jump into bed with the very folks who do more than virtually all others in money, organization, and nasty campaign rhetoric to taint, destroy, and defeat not only education reformers, but also Republican candidates for office at every level.
How very ironic that NEA and AFT stand poised to win their biggest political victory in 20 years — money without accountability or choice – delivered to them on a silver platter by a smiling Republican Congress.
Maybe it’s just quaint to think results should matter in the making of policy. Maybe it’s become quaint, too, even to think that common sense ought to matter in the making of policy. But as the Congress crawls back, even in the midst of a huge budget deficit, to “revenue sharing” as the model for this generation’s contribution to the Elementary and Secondary Education Act, I can only shake my head.
We waited seven years of an overdue reauthorization for this? I hope to wake up and find it’s all been a bad dream.
New York City Mayor Bill de Blasio hasn’t had a good year so far. State Senate Republicans, angered over his effort with the American Federation of Teachers’ Empire State affiliate last year to end their control over that legislative body, weakened his control over the Big Apple’s traditional district by extending mayoral control for just another year. De Blasio’s arch-rival for supremacy as the Empire State’s most-powerful politician, Gov. Andrew Cuomo, steamrolled over him during the legislative session, convincing legislators to increase the number of public charter schools that can open, and allowing the Board of Regents to take over 62 of the district’s failure mills if their performance doesn’t improve within a year. Cuomo also made sure to remind De Blasio who was boss last month when he declared that the mayor must prove that he deserves to keep control over the city’s traditional district.
De Blasio’s successful tag-team with public-sector unions and Big Apple political bosses to put Carl Heastie in control of the state assembly didn’t work out as expected: Heastie, who succeeded the notorious Sheldon Silver as Assembly Speaker in February after his indictment on corruption charges, largely gave in to Cuomo’s demands and those of his Senate Republican colleagues. Meanwhile mayor’s unnecessary alliance with the American Federation of Teachers’ Big Apple local, the United Federation of Teachers, has also not proven to be of much value; the local, along with the AFT’s state affiliate, New York State United Teachers, lost big in Albany as Cuomo and school reformers succeeded in enacting another teacher evaluation regime.
But none of those current problems facing De Blasio are as big as the long-term fiscal woe facing him and Big Apple taxpayers: The city’s virtually-busted teachers and school employee pensions. As a Dropout Nation analysis reveals, the pension shortfalls for the Teachers Retirement System and the Board of Education Retirement System continue to increase unabated.
Start with TRS, the larger of the two pensions. It officially reports a shortfall of $25.8 billion (as of 2012-2013, the latest year available), a 3.4 percent increase over the underfunding in the previous fiscal year. But as readers already know, the official numbers do not reflect reality. For one, this doesn’t include $5 billion in unrealied gains that have been left out as part of “smoothing” efforts by the city to avoid dealing with the shocks that come with the volatility of financial markets. If those gains were calculated, TRS’ unfunded liability would be a just slightly more manageable $20.7 billion. Such accounting tricks can either make pensions more-solvent — or in the case of TRS, less-solvent — than they really are, making it difficult for policymakers to make smart fiscal decisions.
The bigger problem lies with the fact that TRS assumes an investment rate of return of seven percent. That’s higher than the six percent median rate of return Wilshire Associates expects over the next decade. In fact, TRS’ rate of return for 2014-2015 so far is just 4.46 percent, or more than two percentage points below the assumed rate, according to data from the New York City Comptroller. As a result of this inflated rate of return, TRS (and ultimately, the Big Apple) understates what is likely the true level of insolvency that taxpayers will ultimately have to bear.
To figure out TRS’ true 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 on investments. [Moody’s bases its rate of return on the performance of a bond index, which can range between four and six percent.] Based on the formula, using just TRS’ officially-reported number, Dropout Nation concludes that the pension is underfunded to the tune of $30.9 billion. This is 20 percent more than it officially reports. If the shortfall had to be made up (or amortized) over the next 17 years, Big Apple taxpayers and teachers would have to contribute an additional $1.8 billion a year, or 59 percent more than the $3.1 billion paid into the pension in 2012-2013.
That number, of course, doesn’t include the unrealized gains. Account for those and Dropout Nation estimates that TRS’ insolvency is $25 billion, 20 percent more than the unfunded liability adjusted for unrealized gains. Based on a 17-year amortization schedule, taxpayers and teachers would have to pay an additional $1.5 billion a year, or 48 percent more than contributed to the pension in 2012-2013.
But there’s another catch: Because of the actuarial tricks used by TRS, the pensions assets can be overstated or understated compared to market value. As Dropout Nation noted in its analysis last year, TRS overstated the actuarial value of its assets by $1.1 billion in 2011-2012. This time around, the pension understated the value of its assets on an actuarial basis by $1.7 billion; on a market value basis, the assets are worth $36.9 billion. Subtract that number from the $61 billion in annuity payments owed to Big Apple teachers, TRS’ insolvency would stand at $24 billion. Over a 17-year period, taxpayers and teachers would have to contribute an additional $1.4 billion to TRS, or 46 percent more than what was paid into the pension in 2012-2013.
But TRS’ virtual insolvency isn’t the only pension woe weighing on New York City’s finances. There’s also the Board of Education pension, which is also busted.
Board of Education officially reports a shortfall of $1.6 billion for 2012-2013, an 11.6 percent increase over the previous year. But like TRS, Board of Education’s numbers don’t reflect reality because it also assumes an investment rate of return of seven percent. The pension is only earning 4.86 percent so far into 2014-2015, according to the City Comptroller. Based on the Moody’s formula, which uses a more-realistic 5.5 percent rate of return, Dropout Nation concludes that Board of Education is actually underfunded to the tune of $1.9 billion, or 20 percent more than officially reported. If the shortfall had to be amortized over 17 years, taxpayers and school employees would have to pay an additional $110 million a year into the pension, 47 percent more than the $235 million paid in 2012-2013.
Altogether, the Big Apple must pay down as much as $33 billion in shortfalls for the two school pensions. This, of course, doesn’t include the virtual insolvencies of the city’s pensions for cops, firefighters, and other city workers. How big a drain is that on the city and its traditional district? The two pensions account for 38 percent of the $85 billion in total pension insolvencies facing New York City, according to a Dropout Nation analysis of the municipality’s pension shortfalls, a difficult burden for taxpayers to bear.
The additional $1.9 billion that the New York City would have to pay to bring TRS and Board of Education to solvency over 17 years would have forced the city’s traditional district to devote 27.3 percent of its budget to pensions and debt service on capital projects in 2012-2013, versus the 19.3 percent that those costs actually took up. More than likely, the city would have either had to increase taxes, shut down schools, or reduce the number of guidance counselors and so-called classified staff (including janitors and other employees).
For De Blasio and for New York City taxpayers, matters on the pension front aren’t going to improve anytime soon. The most-recent bull market has helped TRS and Board of Education (along with other state and local teachers’ pensions) avoid even-faster increases in unfunded liabilities. But the financial meltdown in China — whose economy accounts for as much as a fifth of revenues for many companies — is now leading to declines in stock market prices. This bodes ill for TRS and Board of Education, because stocks make up the bulk of their investment portfolios. Because of actuarial smoothing techniques, the likely losses will be hidden on an actuarial basis for at least the next five years, resulting in both appearing in better financial condition than they actually are.
Certainly De Blasio isn’t responsible for much of the mess. The blame can be laid at the feet of predecessor Michael Bloomberg, who struck more-than-generous pension and salary deals with UFT and other school worker union in order to gain support for his otherwise-laudable reform efforts. New York City teachers contribute a mere five cents of every dollar put into TRS, while other school employees pitch in a slightly-higher 17 cents for each dollar contributed to Board of Education. Thanks to Bloomberg’s fecklessness, TRS’ liabilities increased by 84 percent between 2004 and 2013, even as the actuarial value of its assets increased by a mere 6.1 percent; Board of Education’s liabilities increased by a two-fold in that same period while assets increased by just 31 percent. As in the case of other busted teachers’ and school employee pensions, the bet was that stock market gains would cover boosts in pension payouts. It didn’t panned out.
But De Blasio hasn’t exactly helped matters during his two years in office. The contract De Blasio struck last year with the United Federation of Teachers, which increases salaries by 18 percent, didn’t require teachers to contribute more toward their retirements. That the deal included an eight percent salary increase to those teachers who retired from the city’s employ by the end of June 2014 — which led to 777 more teachers retiring last year than the previous period — adds to the city’s pension woes; after all, annuity payouts are based on the salary a teacher earns in the last year before retirement. Given De Blasio’s cold war with Cuomo and Senate Republicans, he can expect no help in the form of a pension bailout.
At this point, De Blasio may only have two years left on a tenure that was never all that promising in the first place. He just as well go ahead and address New York City’s pension woes while he has time.