EDITORIAL: To bolster teacher pay, reform retirement plan

The Clark County School District's teacher contract dispute and ongoing teacher shortage highlight the need for major public employee compensation reform — and the Legislature's missed chance at accomplishing as much this year.

The school district froze the wages of teachers this year because the system lacks the operating funds to provide scheduled pay raises based on years of experience and graduate school advancement. But teachers' take-home pay has actually declined because of higher health care costs and a 1.125 percentage-point increase in their pension contribution rate.

Teachers want pay raises as well as a restructured salary scale with higher starting and maximum wages. The teachers' union and the school district appear headed to binding arbitration to settle their labor impasse, but both sides agree on increasing the starting teacher salary from $35,000 to $40,000 per year. They're convinced a higher starting salary will help the growing school district attract more applicants for job vacancies that total about 2,000 per year.

Set aside the flaws of a broken collective bargaining system and a pay scale not based on performance. The school district could pay new teachers higher salaries right away — and even higher salaries down the road — if new hires weren't locked into supporting a pension plan a great many of them will never draw from anway.

This year, the Republican-led Legislature declined to shift future government hires from the state's defined-benefit pension to a defined-contribution, 401(k)-style retirement plan, or a hybrid system that combines both elements. As a result of that failure to reform, new teachers still see a sizable chunk of their total compensation — an amount approaching 30 percent of their salary, or nearly $10,000 for a starting teacher — go into the state's pension fund.

To collect any portion of that pension in their golden years, however, new teachers will have to stay in the state for at least five years. And to collect full benefits, they'll have to teach here for 30 years. Such retirement benefits, unaffordable and unavailable in the private sector, are completely out of sync with today's employment market — especially the highly mobile Millennials the school district recruits.

Workers in their early 20s to mid-30s are, as a demographic, job hoppers. According to the Bureau of Labor Statistics, workers up to age 24 have a median job tenure of about a year. And workers ages 25 to 34 have a median job stay of just three years. Urban schools have turnover problems regardless, with various studies saying between 20 and 50 percent of such educators quit within five years.

A compensation structure that forces new teachers (and other public employees) to trade lower pay for higher, unportable retirement benefits — contingent upon staying in the same place for decades — does not serve Nevada well. The pension contributions for the thousands of teachers who leave the state before they reach five years of service are essentially forfeited to prop up the retirement benefits of senior educators — which helps explain why the teachers' union will only support a more costly version of the status quo.

Imagine, however, if new teachers received a starting salary of $45,000. Or a salary of $40,000 with a 10 percent match on 401(k) contributions and full vesting after four or five years. Teachers would still leave the state or the profession, but they would make more money and be able to take their retirement benefits with them.

Too bad we can't find out anytime soon how much it would help Nevada address some of its education and teacher-pay shortcomings. The 2017 Legislature must press the issue.