Z-gram 03: Why does the worst teacher in every school get a 26% salary boost prior to retirement?

One item adding to the huge pension unfunded liability is automatic 6% salary increases for teachers four straight years prior to retirement. This 26% (compounded) increase goes to any teacher retiring with 30 years-service credit. And remember 30 years-service credit usually means 28 years work plus 2 years sick-leave credit so 28 years actually worked. This compares to 45 years work for Social Security recipients starting work at age 22 and retiring at the full Social Security retirement age of 67. Do you know anyone one who retired on Social Security at age 67 and received a 26% increase starting at age 63? Me neither. And of course teachers can retire at age 54.

The reason I say “worst teacher” is that there is no performance rating system that would choose say the Top 10% of teachers. No, there is no judging in our schools. Just give 26% increases to the best teacher and the worst teacher and send the salary tab and pension tab to the taxpayers.

Here is the actual contract language from Stevenson School District 125’s Teacher Contract for the years 2011 – 2014:

Retirement Incentives:

• Salary: Upon announcement of a certificated employee’s intent to
retire, the District will provide a six percent (6%) increase per year
over  the four years of the retirement window.

Notice the beautiful bureaucratize “retirement window”. I wonder how much it cost to produce this monstrous 54 page contract. One can only guess.


So with 10,801 teachers with salaries over $100,000 let’s look at what it actually cost one of those teachers to increase their pension by $850,000 over their expected lifetime.

$37,900 Total employee contribution $ 100,000 salary

$43,589 Total employee contribution with 6%/yr. salary increase for four years.
$ 5,989  Increased employee contribution for increased pension.

So for less than $6,000 cost to the teacher he gets an extra $850,000 in pension payments over his expected lifetime assuming he retired at age 55.

So if the purpose of taxes is to provide for the common good, tell me what common good is provided by adding $63,000 in salary increases and $850,000 in pension increases to the worst teacher in every school?

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  1. One needs to examine the total package of this fraud. There is a 50% over staffing and compensation level for starters. This 50% over compensation plus the additional 6% guaranteed minimum increment during the last 4 to 6 years prior to retirement adds between 126% to 141% extra to the real salary at minimum. The basic retirement package for all teachers is a multi-million package including the COLAs of 3% or more that double the payout at minimum every 15 years and the Cadillac Health Plans. Yet the contribution level of the individual is only 3% more than that of a private sector employee where (12.4% of salary is Social Security with employer contribution and here it is 18.4%). The Public Sector operation is a huge fraud on the taxpayers considering the operational costs and the pension scam. Especially when the pensions are invested into Hedge Funds and high Beta investments and the normal market risks and losses for an annual rate of 7.75% return need to be covered by the taxpayers – again and again. A basic analysis of this pension plan using a conservative investment model and a 30 year span indicates that there should not be a payout of over $44K annually under ideal conditions. If one examines the recent decade the net investment return has been essentially zero if one remained in the market at all times. In fact in real terms one would have a net loss at this time, but then these plans do not operate under real market conditions. These are the ultimate in Utopian Plans where the taxpayers get soaked coming and going. This is the reason why the US at the Federal, state and local levels is bankrupt and only the monetizing of the debt by Fed has presented the appearance of a recovery. The rape and robbery of the taxpayers is at epic levels by these Public Sector operations, and it is time for major restructuring and reform here.

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