Why Does The City Want Veteran Teachers To Leave? It's All About The Pension.

 





The teacher shortage that is widespread throughout the country has reached the Bronx, where vacancies abound as few qualified candidates actually apply, and is ominously looming for the rest of New York City, especially after 2020.  Yet from the Chancellor on down into the school administration there is a deliberate push to remove veteran, in particular senior teachers out of the New York City schools.

One would think that schools would cherish their veteran teachers since they bring with them good classroom management skills, deep curriculum knowledge,  and a stable presence to the students.  Moreover, the veteran teacher is a role model for the many "newbies" being hired and possesses that hard to replace institutional memory of how schools need to be run efficiently.  However, the City and the DOE does not see it the way educators see it.  Instead to them its all about money.  They see the veteran teacher as a liability that's highly paid and worse the potential pension the City and the DOE must pay out if the veteran teacher when he or she reaches full retirement age.

Starting this school year, approximately 70% of teachers fall under the Tier IV pension provisions.  Most of the rest are Tiers V and VI, with the majority being Tier VI since Tier V lasted only two years.  For argument sake, let's assume that the remainder of the teaching staff are under Tier VI (30%). Since the schools hire about 4,500 teachers annually, the teachers under the Tier VI plan will be a majority by 2020, when a mass exodus of Tier IV teachers are expected to occur between 2018 and 2020.

Why is that so important to the City and the DOE?  Not only will they initially save money since a teacher at top salary makes twice what a Tier VI "newbie" makes but more importantly,  the veteran teacher's Tier IV pension benefits are far superior to the Tier VI plan. How superior is the Tier IV plan for veteran teachers than for the Tier VI "newbie"?  Let me count the ways.

Tier IV Veteran.............................Tier VI "Newbie"

Employee Contribution.............Employee Contribution
3% first 10 years......................3.5% < $55,000
0% thereafter............................6% > $100,000

Final Average Salary................Final Average Salary
Top 3 consecutive yrs..............Top 5 consecutive yrs

Multiplier..................................Multiplier
1.67% first 19 yrs......................1.67% first 19 yrs
2.0%  20 yrs..............................1.75% 20 yrs.

Full Retirement Age.................Full Retirement Age
62 years of age.........................63 years of age

Special Requirements
30/55 and 25/55.........................None

Reduced Age Factor................Reduced Age Factor
55 - 0.73....................................55 - 0.48
56 - 0.76....................................56 - 0,56
57.- 0.79....................................57 - 0.61
58 - 0,82....................................58 - 0.68
59 - 0.85....................................59 - 0.74
60 - 0.88....................................60 - 0.81
61 - 0.94....................................61 - 0.87
62 - 1.00....................................62 - 0.93

 Almost as important is that under the Tier VI plan it takes 15 years to get vested for retiree health benefits and a ten year vesting period to receive a minimal pension.  Unfortunately, the majority of Tier VI teachers will never be vested, even to get a minimal retirement and fewer yet will be vested for retiree health benefits.  Finally,  by 2018 all Tier VI teachers will be paying a minimum employee contribution of 4.5%  What follows are some examples of potential maximum pension calculations using different assumptions of time served and Final Average Salary (FAS) when comparing Tier IV and Tier VI.

Example 1:  Minimum Pension, Age 62
Tier IV................................Tier VI
10 years.............................10 years
FAS = $83,000....................FAS =.$78,000
Pension = $10,119..............Pension = $6,252

Example 2: Low Pension, Age 62
Tier IV................................Tier VI
15 years.............................15 years
FAS = $90,000.............,......FAS =.$85,000
Pension = $22,545..............Pension = $19,802

 Example 3:  Average Pension, Age 62
Tier IV................................Tier VI
20 years.............................20 years
FAS = $110,000..................FAS =.$104,000
Pension = $44,000..............Pension = $33,852
'
Example 4:  Maximum Pension, Age 62
Tier IV................................Tier VI
25 years.............................25 years
FAS = $120,000..................FAS =.$112,000
Pension = $60,000..............Pension = $45,570

Example 5:  Maximum Pension, Age 62
Tier IV................................Tier VI
30 years.............................30 years
FAS = $130,000..................FAS =.$120,000
Pension = $78,000..............Pension = $58,590

Example 6:  Special Pension, Age 55
Tier IV................................Tier VI
30 years.............................30 years
FAS = $130,000..................FAS =.$120,000
Pension = $78,000..............Pension = $30,240


Example 7:  Special Pension, Age 55
Tier IV................................Tier VI
25 years.............................25 years
FAS = $120,000..............,...FAS =.$112,000
Pension = $60,000..............Pension = $23,520

Now you know why the City and DOE wants to get rid of veteran teachers.  It's all about the pension.