In the June 30 Wall Street Journal, Daniel DiSalvo of the Manhattan Institute discusses the issues presented (see below).
The NJEA has made clear that it expects greater funding to provide for COVID-related safety measures, but with tax revenues lower and budgets strained, where will the extra money come from? What will be the NJEA’s reaction if there are proposed layoffs or salary freezes? Or if the state pension payment is not made? Might they strike or refuse to do in-person schooling, as DiSalvo suggests? And what will the reaction of hard-pressed parents be if they are confronted with such resistance? More questions than answers at this point, but DiSalvo frames the issues well.
Teachers unions know how to play hardball. Last year saw teachers strike across the country, from Los Angeles and Oakland, Calif., to Denver and West Virginia. This year, amid the coronavirus pandemic, leaders of the National Education Association and the American Federation of Teachers have signaled that they would consider strikes if schools reopen without sufficient safety protections.
The NEA’s and AFT’s safety concerns are reasonable. But looming behind the debate is a coming spike in the cost of unfunded pension obligations. A one-two punch of increased pension costs and recession-dented revenues may influence whether some schools reopen.
Unless Washington provides more education funding, the pension tab will force states and school districts to slash spending that reaches the classroom. That will drive the teachers unions to oppose reopening schools—while claiming the moral high ground of student safety.
The reopening of public schools poses an economic conundrum: If the schools aren’t open, many parents will lack child care and be unable to return to work. If parents can’t work, the economy can’t recover. Teachers unions are thus in a position to hold the economy hostage.
The problem is that pension costs are assured to increase, even as revenue plunges. In the first quarter of this year, public pensions lost up to $1 trillion in market value. Teacher pension plans were in bad shape even before state and local tax revenues collapsed due to the economic shutdown.
As Jonathan Moody and Anthony Randazzo show in an Equable Institute report, the share of education spending on pensions has nearly doubled, from 7.5% in 2001 to 14.4% in 2018. Even as states spend more, less money reaches the classroom. This trend is about to be magnified.
Pension administrators will soon send their state governments a large bill. To pay it, school districts will be asked to accept lower state education spending, raise employer contributions, or some combination thereof. Teachers may be asked to increase their contributions as well, reducing their take-home pay. Some teachers may also have their salaries frozen. Others may be laid off.
Expect the unions to push back. Emboldened by successful strikes in 2018 and 2019, they appear to be in a strong position. Unions have shaped districts’ online instruction since the lockdown. They have sought to limit work hours and secure new protections for teachers. Some unions have requested a new round of collective bargaining to deal with ground rules for video-conference teaching and to reimburse educators for the costs of working from home.
Teachers unions will seek to block any cuts, especially layoffs, salary freezes, and increased employee pension contributions. Unions are asking for additional funds to reopen schools on top of the $13.5 billion provided by the Cares Act. On June 10, the AFT demanded an additional $117 billion in federal money. Without this, the union said, “school buildings will stay shuttered and America’s families will endure another academic year of at-home learning.”
School districts are also asking for more money and warning state governments that without it they will not be able to reopen. Recently, school superintendents from Los Angeles, San Diego, Long Beach, Oakland, Sacramento and San Francisco wrote to California’s elected officials that any budget cuts will keep schools closed even after “clearance from public health officials is given.”
To address these challenges, policy makers will need parents on their side. Parents are fed up with remote learning. Superintendents, school boards and elected officials can win them over if it becomes clear that teachers are refusing to return to the classroom over issues of pay and benefits. A reopening strategy will need the flexibility to establish staggered class times, temperature taking, physical distancing, intense cleaning of buildings, and wearing protective gear, among other measures.
Once schools are ready to reopen, elected officials can drive a harder bargain with teachers unions. The steep drop in pension funding should spur state legislators to condition aid on moving toward defined-contribution plans for new teachers. Pension plans that fall below 50% funding are unlikely to recover. There’s no sense in throwing good money after bad.
Mr. DiSalvo is a senior fellow at the Manhattan Institute and a professor of political science at the City College of New York.