The Observation Deck

Then become a public school teacher! Only during your first two or three years can you be easily terminated. And in fact a whopping 2% are. After that, forget it. No matter how poor a teacher is, unless he/she has intercourse with your kid they keep their job for LIFE. No matter how AWFUL they are. On average it costs over $200,000 for a district to fire a totally rotten but “tenured” teacher so of course it never happens. (Will someone explain to me how a seventh grade social studies teacher get “tenure”?)

How’s it feel knowing your kid may have a really TERRIBLE teacher, and everybody knows it except you? Well do something. Demand better. At the end of the next contract, tell the BOE to terminate them ALL and let the BOE and Superintendent do their jobs and choose from among Lakewood teachers, keep the best and replace the rest. After all, “it’s for the kids.”

Flow-chart on how to fire a New York city teacher:
http://reason.com/assets/db/12639308918768.pdf

New York teacher sends a lewd email to a student. 6 years of litigation finally got the teacher fired...and he received over $300K in salary during that time.
http://www.realclearpolitics.com/Commentary/com-2_15_06_JS.html

Favorite section:

Hundreds of teachers the city calls incompetent, racist, or dangerous have been paid millions.

And what do they do while they get paid? They sit in rubber rooms.

They're not really made of rubber, of course. They are big, empty rooms where they store the teachers they are afraid to let near the kids. The teachers go there and sit, hang around, read magazines, and waste time. The city pays $20 million a year to house teachers in rubber rooms.

Roy, if you get the sense that I’m very angry at public sector employment policies and especially public sector pensions, you would be right. Particularly here in Ohio, where it is probably WAY WORSE than even the awful “reported” numbers put out by STRS and PERS. And way worst than was reported in that lame series recently published in the Plain Dealer.

Roy it is already way too late to fix Ohio’s awful state pension plans. You can’t possibly tax working Ohioans enough to make the plans whole. Please read on….

At the end of 2007, Ohio’s five state pension systems combined (mostly STRS and PERS) reported that they were $75.3 billion short of what would be required to pay their retirement obligations to employees and retirees. That’s over $25,000 per Ohio tax filer who actually pays at least some income taxes. What’s worse, Ohio’s annual revenue from all sources in 2007 was “only” $24.8 billion. So in order to fully fund Ohio state retiree pensions, Ohio would have to completely shut down its state government for three years and turn over 100% of those revenues to STRS and PERS.

That was in 2007 and it’s undoubtedly quite worse now, because at the end of 2007 the S&P 500 was at 1,469. Now it is off 22% to 1,150. And state revenues are flat at best and probably down. So I’m pretty sure we’re closer to four years of state revenues to shore up its pension plans, and well over $30,000 per actual taxpayer.

But here’s the real kicker. It could easily be WAY worse than even that. Why? Because buried in the (under) funding levels reported by STRS and PERS is the assumption that those plans will earn 8% (the discount rate) from now to eternity. That seems to be a really tenuous presumption, when a return befitting the risk profile of a pension plan is much lower, especially these days, and expected to remain lower for some years to “stimulate” the economy. And even a small shortfall has a huge effect when considered over the many decades that a state employee will work, plus subsequent retirement. That’s how compounding works (or fails to work).

How huge? Please review this university research report (clicky).. It asserts that by assuming a discount rate suited for a pension plan that should not take inordinate risks, Ohio would have to shut down state government and turn over 100% of its tax and other revenues for 8.7 years to STRS and PERS if their funding is to be fully restored. And again, that was 2007. It’s more likely over ten years now, and perhaps even more. And who the heck even wants to calculate the per taxpayer liability. It could be six figures! That’s how bad it really could be.

By the way, Ohio ranks #1 in the U.S. in the number of years of state revenue required to cover its pension shortfall. Hooray!

Oh and I’m sure someone will contend that 8% is a realistic rate of return in the long run. Who knows. All I can say is, that’s what the geniuses at STRS and PERS contended and we’re now nearing a $100 billion (!) deficit even presuming such a lofty return. An 8% return didn’t happen in the past, why should we assume it for the future? The only reason this assumption is being made is to downplay the astonishing state pension problem Ohioans now face.

Roy the state pension situation, especially in Ohio, is nothing short of tragic. There is no sense even discussing a plan to rescue STRS and PERS. It can’t be done. There is no happy ending, especially for young people like you, Roy. I don’t know how it will resolve. I do know this. The enormous amount of taxes required to shore up these plan (tens of thousands of dollars per taxpayer), or the amount of program cuts in the State of Ohio (years of no programs whatsoever), if attempted, will just cause people to move to another state. California is learning the hard way that raising taxes can in fact raise tax revenues – for Oregon, Arizona, Idaho and other nearby states! Not for California.

Is a federal bailout of state pension systems in the offing? Might be. But the amount of newly-printed money needed to bail out all 50 states, and the thousands of underwater county and municipal employee pension plans, and pay federal employees who also retire in their 50’s and live 25 more years (all this on top of the money already printed for “stimulus”) will surely cause severe inflation. You can’t throw $5 or $10 trillion dollars onto a $1.7 trillion dollar M1 money supply ($8.5 trillion M2) and not cause severe inflation.

But inflating away these obligations may be the only option palatable to the politicians, partly because there are other federal government obligations that can be inflated away too, especially given how easy is it for the government to lie about the actual level of inflation. And here in Ohio, STRS (stupidly) adopted a COLA that is not pegged to inflation. Instead, it is a fixed amount, currently 3%, which they seem willing to negotiate down to 2%. Can you believe they did that and did not invoke the CPI or some other measure of inflation in their COLA? I guess teachers really don’t understand compounding. Their students certainly don’t. If our kids understood the real ramifications of the policy decisions that are being made now, and that have been made in the past, there would be a million of them in the National Mall forever. Come to think of it, maybe that’s why our government seems unconcerned that we are neck and neck with Latvia trying to break into the top 20 countries in math achievement. Who needs all those pesky protesters?

You are 100% right.

Our current government work force is squandering the legacy of generations.

Unfortunately we have already reached the tipping point where more people are dependent on government than are not dependent on government. In that environment the majority of the voters don't give a hoot about jobs or economic growth. They just want the gravy train keeps on rolling.

I agree with you Tim. I'd pull out of PERS if I could (I'm still investigating that possibility). I've said it before. I could do a better job investing that 10% of my paycheck.

I hate to inflame things further, but as I recall, when the state was working on its budget this past year, one of the things they had to do to balance that budget was to borrow from PERS. I don't remember the exact amount though.
...
Wait, maybe not, [url="http://www.dispatch.com/live/content/local_news/stories/2009/07/13/budget14.html?sid=101"]this article[/url] says the plan was scrapped.

However, if they were willing to try it then, watch them in the future.

Roy with all due respect, you’ve got it pretty much all wrong. Whether you can outperform the investment returns made by PERS is not at issue. For starters, you probably can’t. You might be able to come close, but why try?

You see, from the perspective of a state employee, PERS is a “heads we win, tails we don’t lose” proposition. If investment returns are sufficient to make the obligated payments, then the obligated payments are made. If investment returns are not sufficient to make the obligated payments, as will be the case when the fund inevitably runs dry, then PERS points to the Ohio constitution, and the obligated payments are still made. This is presently a constitutional requirement. That’s why state employees have not brandished the pitchforks. They believe they are backstopped.

Someday I’ll sit down and do the math, but I don’t think there’s a snowball's chance in hell you can invest your proceeds wisely enough to fund the retirement promises made to you by PERS. I don’t think anybody can, the promises are just too enormous. In fact, PERS and STRS couldn’t and they pay hundreds of people to try and they have Cordray (and others before him) extorting hundreds of millions of dollars from companies for “settlements” that go right into PERS and STRS and not to anyone else even though their salaries are paid by taxpayers. And PERS and STRS obviously have all the right political connections.

Roy there is only one operative question for you. Will PERS make the promised retirement payments to you, all of which are decades away? Sure it’s in the constitution, but as we have seen recently with the casino issue, the constitution is pretty easy to change, even capriciously. Especially by 90% of Ohioans who don’t work for the state and are not state retirees, and who will someday face enormous additional taxes on behalf of the 10% who are. Roy that’s the question you have to consider.

There may be another issue to consider, and that is, will the Obama administration bail out the 116 pension funds in 50 states and the thousands of other county and municipal pension funds. Right now he does not seem inclined to. California has reached out and Obama has said no. I think he knows the enormity of the flood that will come when those gates open. The UAW bailout was a drop in the lake compared to this.

Roy, I believe that PERS offers something more resembling a defined contribution plan and if I were you I would surely look into it. Not because I think you will outperform the returns generated by PERS, but for other reasons. I know STRS offers something but they don’t publicize it, they don’t want teachers to opt into it and it’s pretty darn opaque. Remember too Roy that taxpayers also kick into your pension plan. I don’t know much about PERS but I know that with STRS, taxpayers kick in 14% in addition to the employee’s 10%. (And believe it or not, in many districts, taxpayers pick up all or part of the employee’s 10%. Strongsville for example, where taxpayers pay all 24%. It even has a name, the practice is called “employer pick-up” and it is quite common.) So Roy you will probably have to be very careful when evaluating the other options. Good luck to you.

As far as Tim's point goes about Roy's remaining with PERS. that's one of the areas where I can find some agreement with him. STRS and PERS, on the whole, have been excellent pension plans, developed years ago; due in part to the relatively abysmal salary that public employees make for about two thirds of their careers.

Regarding those public employee pension plans? There have been so many wild allegations out there from time to time, that I've decided not to even try to dignify or rebut ANY of them. People who care, need to fact/check these so-called points on their own, and I'm sure that they will do so.

At the same time, have there been mis-steps along the way with some pension plan investments? Well, human beings are in charge of them, so that pretty much tells that tale.

How have ALL of our investments been doing lately, for that matter?

To return, in an academic sense, to the first issue addressed here, this discussion demonstrates an excellent reason why the tenure issue came up for teachers in the first place.

Let's look, for a moment, at the unbridled pursuit of knowledge; which is what education really should be all about. Ever since public education first came along, it has come under assault from various special interest elements, each of whom had their own reasons for coloring, or even limiting the pursuit of knowledge through the lenses of their own perspectives.

The public school classroom is supposed to be a neutral playing field for the free exchange of knowledge and ideas. Because of public education, the free pursuit of knowledge, and the freedoms we enjoy, America assumed, (and has maintained) a technological leadership role in the world.

Now, has the educational system been perfect? Of course not. Has it even historically favored some groups over others from time to time? I think probably. Nonetheless, the free public education system has produced more successful schooling and opportunities for more students than anything else ever has, this I do believe.

From time to time, teachers have been challenged for what they taught in the classroom. In the past, they might have been fired for raising controversial topics, or because this or that special interest group disagreed with what was taught. There had to be some protection for teachers under the academic freedom banner.

This was called tenure.

Even if tenured, a teacher can certainly still be fired for quite a few different reasons. Like all Americans however, they are entitled to due process and fair hearings. There are many spurious, vindictive or revenge-minded claims made against teachers that, when placed under objective scrutiny, are found to be without foundation.

A teacher may, of course, be removed from regular teaching duties while this due process transpires. I seem to recall several times in area school districts around here, that whenever these types of issues arose, that things were certainly handled professionally, and in good time.

Whether level a teacher may be teaching at, they must go through a strenuous process before tenure is awarded. They are generally evaluated by their colleges, administrators on several levels, and oftentimes these days, by their peers, before tenure is awarded. We're not talking a rubber-stamping process here, whether with tenure or in obtaining a teaching license. Accountability is paramount in the selection of Ohio teachers; especially since the bar was raised, by law, from "competent" to "highly-qualified".

There should also be no reason why a middle school teacher should not have the same opportunity for tenure as a teacher from any other level of instruction.

I would suggest that the Lakewood Schools teaching staff, administration and students are among the finest in this county. The proficiency exams show it, the graduation rates show it, and the many fine programs in music, sports, and extra-curricular activities show it.

Now for the real test. Is Lakewood willing to support that continued excellence by passing the school levy?

Please support your public schools. They are the bedrock of your community.

Tim Liston wrote:Roy with all due respect, you’ve got it pretty much all wrong. Whether you can outperform the investment returns made by PERS is not at issue. For starters, you probably can’t. You might be able to come close, but why try?

Maybe I can, maybe I can't, but I earned that money and isn't it my right to do what I want with it? Who is the government to step in, take that money from me before I've even gotten my paycheck and "save" it for me?
It lends itself to something I've said for a while, the government thinks we are stupid and unable to take care of ourselves so they MUST step in and save us from ourselves. Thanks, but no thanks. I think I know what's better for me than they do.

Tim Liston wrote:You see, from the perspective of a state employee, PERS is a “heads we win, tails we don’t lose” proposition. If investment returns are sufficient to make the obligated payments, then the obligated payments are made. If investment returns are not sufficient to make the obligated payments, as will be the case when the fund inevitably runs dry, then PERS points to the Ohio constitution, and the obligated payments are still made. This is presently a constitutional requirement. That’s why state employees have not brandished the pitchforks. They believe they are backstopped.

Someday I’ll sit down and do the math, but I don’t think there’s a snowball's chance in hell you can invest your proceeds wisely enough to fund the retirement promises made to you by PERS. I don’t think anybody can, the promises are just too enormous. In fact, PERS and STRS couldn’t and they pay hundreds of people to try and they have Cordray (and others before him) extorting hundreds of millions of dollars from companies for “settlements” that go right into PERS and STRS and not to anyone else even though their salaries are paid by taxpayers. And PERS and STRS obviously have all the right political connections.

Did you say earlier that PERS pays an 8% per year return? I'm invested in 4 closed-ended funds now that earn me in excess of 10% and pay out monthly. Now, do I know they're going to continue at that rate? No, but I'm also not even 30 years old, so I can make adjustments as needed.

Tim Liston wrote:Roy there is only one operative question for you. Will PERS make the promised retirement payments to you, all of which are decades away? Sure it’s in the constitution, but as we have seen recently with the casino issue, the constitution is pretty easy to change, even capriciously. Especially by 90% of Ohioans who don’t work for the state and are not state retirees, and who will someday face enormous additional taxes on behalf of the 10% who are. Roy that’s the question you have to consider.

There may be another issue to consider, and that is, will the Obama administration bail out the 116 pension funds in 50 states and the thousands of other county and municipal pension funds. Right now he does not seem inclined to. California has reached out and Obama has said no. I think he knows the enormity of the flood that will come when those gates open. The UAW bailout was a drop in the lake compared to this.

Roy, I believe that PERS offers something more resembling a defined contribution plan and if I were you I would surely look into it. Not because I think you will outperform the returns generated by PERS, but for other reasons. I know STRS offers something but they don’t publicize it, they don’t want teachers to opt into it and it’s pretty darn opaque. Remember too Roy that taxpayers also kick into your pension plan. I don’t know much about PERS but I know that with STRS, taxpayers kick in 14% in addition to the employee’s 10%. (And believe it or not, in many districts, taxpayers pick up all or part of the employee’s 10%. Strongsville for example, where taxpayers pay all 24%. It even has a name, the practice is called “employer pick-up” and it is quite common.) So Roy you will probably have to be very careful when evaluating the other options. Good luck to you.

Roy there's no such thing as an investment that makes a reliable 10% these days. I bet you my dollar against your dime that a big chunk of that 10% is actually a return of (not on) the money you invested, which is not at all unusual for closed end (bond) funds. Your year-end 1099 will distinguish the real earnings from the return of capital because only the “real” earnings are taxable. The only other explanation is that these funds are invested entirely in junk bonds, in which case you can expect a portion of your invested capital to be defaulted. Right now a fund holding decent quality bonds (say Bbb and above) in the 5-7 year maturity range is yielding about 4%.

Don't take this as an endorsement...just check it out yourself:
IGD

Says its ALL stocks.

If my memory serves me correctly, one of my former high school teachers was fired for making fun of a student's hat. It didn't even happen during school. it happened during a golf club meeting. He was a decorated teacher, with several decades of experience.

Roy Pitchford wrote:Maybe I can, maybe I can't, but I earned that money and isn't it my right to do what I want with it? Who is the government to step in, take that money from me before I've even gotten my paycheck and "save" it for me?
It lends itself to something I've said for a while, the government thinks we are stupid and unable to take care of ourselves so they MUST step in and save us from ourselves. Thanks, but no thanks. I think I know what's better for me than they do.

Roy, does society even need libraries? Get a job at Barnes and Noble or Waldenbooks: they will pay you what you are worth.