What Every New Teacher Should Know

In mid-August, I spent some time at the New Teacher Workshops talking to teachers new to Minneapolis Public Schools about their pension and how the Committee of Thirteen tries to protect their interests at the Legislature. It’s not surprising that many did not know about public employee pensions, how they are structured or how they are controlled. It was clear that, for many,  having their own savings plan seemed simpler, but we know that’s not true. Those of us who have investment plans in addition to our pensions are keenly aware that it’s not simple at all.

Every three months for years, I looked over all my accounts, occasionally adjusting the funds in which they were invested and to which money was allocated. Such adjustments need to be done seldom and with care, because changes cost. I attended workshops, often provided cost-free by our union. I learned about equities and bonds, and growth and risk, balanced investment and fees. Then, in 2008, I took a crash course called the Great Recession. Yet in all this time, my Teachers Retirement Association (TRA) defined-benefit pension plan went ahead without my attention, building value toward my retirement.

The TRA’s pension fund has recovered nicely since 2008, largely due to the pension fix (2010-2011 Financial Sustainability Provisions) supported by the Committee of 13 and other public employee lobbying groups. That was when I was a new Committee of 13 chair, and in the six years that I served as the chair, I learned a lot about the politics of public employee pension finance and the economics of the retirement years. On one side of the pension issue are the multi-billion dollar equity firms and investment houses. On the other side of the issue are the millions of public workers, such as teachers, and retirees in this country.

Here’s something to think about in understanding why you are important to these forces. Look at one of your utility bills. There’s likely to be a small, legally applied fee on there for something. Let’s say there’s one for 50¢. Okay—you pay hundreds for utilities—so what? What’s 50¢? That 50¢ for 150,000,000 U.S. households adds up to $75,000,000 a month—$900,000,000 a year—going into deep pockets somewhere. And it’s not just utility bills that are making someone very rich; long-distance access fees, landfill dumping fees, affordability charges and investment brokerage fees.

If you have an investment account somewhere, look at any statement of fees paid. Calculate their worth over a year and multiply it by the 200,000 public employees in Minnesota alone. And these are paid year after year. There are investment professionals who are looking at the potential wealth represented by those fees, were our State Board of Investments (SBI) not waiving them for you. These investment professionals and the equity houses with which they are associated are willing to wield their considerable wealth and influence to try to get the legislatures, the county commissions and city councils to try to change the rules so that we would pay the professionals the fees instead of paying the SBI nothing at all. And that’s not all.

Our TRA manages payments to currently retired teachers and principals, as well as collecting active member and employer contributions. The Legislative Commission on Pensions and Retirement (LCPR), sets the rules for the TRA and other funds’ (PERA and MSRS) management, approved through the Legislature. Who sits on the LCPR, the senators and House representatives, matters. What they hear from voters and lobbyists influences their decisions, and consequently the quality of your later years. The LCPR decides what the payroll deductions will be, what the cost of living increases for retirees will be and ultimately and whether or not you will have a defined benefit plan or not. And if Minnesota were to switch to a defined-contribution, 401(k) style, plan, the LCPR would decide what the employer’s contribution would have to be, if any. You, me and the health of our three state pension plans strongly influences these and other decisions.

The health of our pension funds depends on investment returns as well as payroll contributions. Recessions and employee reductions in numbers or salaries are therefore threats to the fund’s health, though our state investment managers have done exceptionally well in maintaining our funds’ health. However, against these risks, the state holds a liability to make promised pension payments upon legitimate demand. That means state revenues could be on the line if the fund were to implode, as in a massive market collapse. That would of course take personal accounts as well.

We know how some folks are about paying taxes. They don’t see public safety, good roads, education, public health, or clean air and water as the standards of civilization for which our taxes pay. They see these attributes, our quality of life, as lost dollars from which they get no return. And they spend millions to save tens of million in taxes. So removing the liability of public employee pension funds is one step on the road to recovering more “lost” income for the wealthy. Privatizing the funds simply puts that liability on you. But it wouldn’t stop there.

Their next step would be the elimination of the employer’s responsibility to contribute to pension accounts, making the amount or even the fact of an employer’s contribution an option. After all, the employers, such as MPS, are funded by taxpayer dollars through legislated public school finance. Scary? What if the same could be done to eliminate Medicare and Social Security? We would be right back where we were in October 1929. That’s in the works too, and that’s terrifying.

Could it happen? Yes. Will it happen? Not if we can rebuff the efforts of the corporate world to divide us from our communities of interest and placate us with an endless stream of “things.” But how?

Speaking out with others, your voices will be heard. Step forward and tell your story—share your vision of what living the life of a teacher in Minnesota should be. Tell us on the Committee why you teach, and what you expect in return for giving so much to help kids in Minnesota have good and meaningful lives. Send us your stories for our blog post, in our newsletter, or in testimony to the Pension Commission. The Committee of 13 can be your voice, if you wish, but we would rather carry your voice to the Legislature. Teachers are encouraged to speak to the Pension Commission directly at times. Your participation in your interest is meaningful. If all you can do is contribute with paycheck deductions, then do that. The combined dollars increase the strength of our voice.

The days of belonging to hierarchic institutions is waning. The time of grassroots organizing is on the rise. Joining with others who share your interests—who are facing the same threats is the best hope against domination by plutocrats. If you’ve read this far, you know more than most of your colleagues. Talk to others at your site. You understand that knowledge is your best protection against exploitation. Share your knowledge with your colleagues. Join the team. Stand up for yourself with others.

You should not have to work until you drop. You deserve better. You give so much to Minnesota. Minnesota owes you a retirement with dignity. Stand up, join in and speak out.