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Detroit: A Teachable Moment on Teacher Compensation

Matthew Holland

There have been many ideas floated around about how best to compensate teachers for their work. Some ideas link teacher pay to student performance, some rely on a step scale connected directly to teacher tenure, other ideas are a mixture of both proposals. Regardless of what compensation method you propose, however, the reality is that there must be funding to support such compensation. In today's economy, that funding is shrinking, and cities and towns can no longer hand out the benefits they once promised government employees.

Readers need only look at the financial mess facing Detroit for a stark realization as to where some of our municipalities may be heading in the next couple of decades. Currently Detroit is about 18 billion dollars in debt. According to the Washington Post, about half of that debt, 9.2 billion, represents health and pension benefits for retired city workers. Many of those retirees now risk having their benefits significantly reduced in order to save the faltering city.

Teachers did not put Detroit in this economic conundrum, but they are going to face the effects of its fiscal mismanagement. The events of Detroit should give pause to all teachers in the public sector. The percentage of their paycheck going towards their local and state retirement systems may not be there when they need it down the road. After all, the money being withdrawn each check is not going towards their retirement; it is being used to stabilize the shaky pensions for those government workers who have come before them. Are many of our teachers prepared in case their municipality one day faces the same financial mess now facing Detroit?

One solution may be to offer teachers a choice. Teachers who wish to continue to contribute to their local and state retirement systems may do so with the understanding that there may come a day when that system becomes insolvent. It would be an enter-at-your-own risk deal. Other teachers who do not wish to continue to contribute to their local and state systems would see that portion of their pay become part of their net income, allowing them to take home more money each paycheck. Teachers would be able to make the decision to either spend that money or put it into a private retirement fund.

Detroit, though an extreme example, is just one of many U.S. cities facing this pension problem. Teachers, pay attention.

Matthew Holland is a public school elementary school teacher in Alexandria, Va.

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