All across the United States, demographic changes, along with years of irresponsible fiscal policy, are combining to create a perfect storm that may herald the end of the public education system of the United States as it currently exists. Although there are many serious problems facing the U.S. public education system today, one of the most serious is the increasingly severe funding shortfalls of teachers’ pension systems and the intractable negotiations that are resulting from this dire problem.
As goes Kentucky, so goes America
One of the more dire examples of a quickly failing teachers’ pension programs is that of the state of Kentucky. So badly managed has the Kentucky Teachers Pension been that some analysts estimate the whole of the Kentucky public pension system, of which the teachers’ pension is the large majority, may be underfunded by up to $85 billion. This figure is not only staggeringly high, it is simply not mathematically possible for the government of Kentucky to meet anywhere near that level of obligations while maintaining anything like its current budget.
The downward spiral
The system is in such bad shape that some teachers are even admitting that the problems currently threaten the viability of public education in Kentucky. One of the problems brought up is that, under a bill that has just been proposed by the state’s legislature, all teachers hired after 2014 will need to immediately begin transitioning from a defined benefits program to a defined contributions, 401(k) account. But many in the teachers’ unions are sounding the alarm that this may have irrevocably deleterious effects on the ability of the state to continue attracting talented young teachers.
In Detroit, where public pension liabilities ultimately led to the city declaring bankruptcy, the local school system is in shambles. This is despite the fact that the Detroit Public School System gets massive appropriations from the state government. In Kentucky, things could ultimately turn out to be substantially worse, as the state’s schools will likely not receive significant federal funds.