Guest Column Submitted By Ed InghrimRecently New Jersey Gov. Chris Christie announced a freeze on spending and said pensions and benefits are the major driver of spending increases at all levels of government. He cited two examples of retired public employees. A 49-year-old retiree, who paid $124,000 toward retirement pension and health benefits, will get $3.3 million in pension payments and nearly $500,000 for health care benefits -- $3.8 million on a $120,000 investment. A retired teacher who paid $62,000 toward her pension and nothing for full family medical, dental and vision coverage, will collect $1.4 million in pension and $215,000 in health care benefit premiums over her lifetime.
I decided to check his math using the Saucon Valley School District teacher contract as a model. I assumed a teacher hired at age 24 at $40,000 would work 30 years and get an average pay increase of 4 percent a year (quite conservative) and contribute 7.5 percent of salary to the state retirement system. Retiring at 54, the teacher's total pension contribution would be $168,255. Assuming the teacher lived to 85 and got health benefits until Medicare eligible, he or she would collect about $3.4 million after retiring. Not a bad return. If the annual raise were 5 percent, the teacher would get a return of $4.2 million on an investment of $199,317.
Like New Jersey, Pennsylvania faces out-of-control spending and a seriously underfunded public pension system. Unfortunately, our elected representatives committed their taxing authority to correct any bad decisions they or the pension fund managers made to guarantee benefits. Perhaps Gov. Ed Rendell and our legislators should get a copy of Christie's budget speech and read it.
Ed Inghrim is the Director of Saucon Valley School Board in Lower Saucon Township
Ed, no teacher gets a 4% salary increase each year. Even when it's reported on the news, I must tell you, it's false. If a district negotiated 4% salary increase for a year that means that 4% was added to the total salary matrix. Meaning that teachers on some steps may receive 2%, some maybe 4%, and others possibly 1 or less. Also, teachers pay 8.5% and not 7.5%. Remember that all salaries are negotiated with the school board.
ReplyDeleteThe real fact is.. they probably get 6% to 9% increase and more in in the first four years of the salary matrix because of step increases and the matrix itself. The matrix front loads the salaries which enables the teachers to climb the pay ladder faster, not including education step jumps. The teachers at the higher range of the matrix have received their generous raises. Everybody could get a 4% evenly increase, if you stop the using matrix and step increases.
Delete