Missouri Charter Schools and Teacher Pension Plans: How Well Do Existing Pension Plans Serve Charter and Urban Teachers

Note: An erratum to this report was published August 27, 2014. The initial report was inaccurate in stating that there is not reciprocity between the Missouri Public School Retirement System (PSRS) and the Kansas City Public School Retirement System (KC).The correction also examines rigidities in the transfer agreement that cause educators to face significant pension penalties in moving districts.

For decades, education has been a political football. From differing opinions over funding levels and diversity, to arguments over what to teach and how to teach it, education debates are often proxies for ideological disputes. While these arguments still rage, there is an emerging consensus that the central actor in improving educational outcomes is the teacher. And, therefore, the locus of change and reform is the teacher.

To some, this may sound rather obvious: haven’t teachers always been central to education? Yes, but ongoing education debates often treat teachers as incidental. With teachers at the center, we can focus on public policies that support the entire system of teaching—from new teacher training to working conditions to ongoing professional development to a facilitative labor market. Organizations across the political spectrum are working on these issues, and all recognize that there is no “one solution” that will address the challenges at once. Each dimension is nuanced and embedded in years of institutional tradition.

The Ewing Marion Kauffman Foundation focuses much of its education work on urban school districts, where the general challenges of American education are especially acute. Urban districts are a crucible of many teacher-related issues. Our experience with the salient characteristics of urban education systems—frequent teacher turnover in the early years, difficulties recruiting teachers and leaders, performance gaps, funding constraints, and so on—led us to identify the teacher labor market as a potential point of change in enhancing support for teachers.

One important dimension of the teacher labor market is pensions; this, too, has sometimes been a source of contention among teachers, administrators, and policymakers. But those arguments (usually concerning money) miss broader points. How do we design teacher pension plans that align with labor market realities and the interests of all teachers? Can alternative designs help address challenges of recruitment and retention, especially for urban districts? These are the questions that Podgursky, Koedel, Ni, and Xiang explore in this paper with respect to Missouri.

It turns out that Missouri is a good place to examine these questions because of its tripartite educator retirement system. Uniquely, the state has three separate pension systems: the Kansas City Public School Retirement System (KC), the Public School Retirement System of the City of Saint Louis (STL), and the Missouri Public School Retirement System (PSRS). The KC and STL retirement systems cover employees of district and charter schools only in the two respective city school districts. The statewide system, PSRS, covers everyone else.

Because of this fragmented structure, with the two urban districts carved out separately, Missouri is a microcosm of larger national issues concerning teacher pension systems—particularly the ability of teachers to move between systems. A well-functioning labor market improves the “match quality” between teachers and schools, which helps teachers be more effective and improves school quality. But, a well-functioning labor market also requires, among other things, transportability and reciprocity, which are absent or have significant limitations between the three Missouri systems. This and other features of the urban district pension systems are burdens on teachers and schools.

The absence and rigidness of transfer agreements among the systems exacerbates the challenges already facing the KC and STL urban districts. For example, state data show that, within eight years of starting employment in either the KC or STL systems, between 80 percent and 90 percent of teachers have left the systems. Only a small fraction of teachers make up the “pension wealth mountain” that the authors describe. The urban districts also face pension-related challenges in recruiting school leaders. The rising share of charter schools in KC and STL (now between 30 percent and 40 percent of educators) underscores the importance of exploring issues related to pension systems and ways to design systems that ensure retirement security for teachers and buttress the ability of urban districts to recruit and retain teachers and leaders.

At the heart of this research paper and the Kauffman Foundation’s support for it is the question regarding how well Missouri’s system of retirement plans serves the educators working within those plans. We also are interested to know if there are ways those plans, or different plans, could serve as a more effective tool to recruit and retain teachers in the state’s two urban centers.

Teachers deserve supports that make the fruits of their labors as secure and robust as possible, while also allowing them to work in different locations without fear of losing benefits for which they have worked so diligently. Students deserve the best possible education professionals in their schools, and we hope this research provides insight into ways Missouri can better make that possible.