Teacher compensation debates tend to focus on average salaries. A recent report from the American Enterprise Institute shows that just 3% of media coverage during 2018’s teacher walkouts quantified pension benefits.
While annual wages make up the largest portion of teacher compensation, they are not the whole picture. Examining data from the Oklahoma Teachers Retirement System (OTRS) allows for a more complete look at teacher compensation.
First, a comparison of contribution rates between the average 401(k) account (according to Vanguard’s How America Saves) and the OTRS aggregate rate shows a considerable difference. For private 401(k) accounts, the combined employer and employee contribution rate was 10.3% of the employee’s annual salary. OTRS recipients contribute a rate of 7% while the employer rate is 9.5%. This gives OTRS participants an aggregate contribution rate of 16.5% of the employee’s annual salary.
Second, data from the Vanguard report and OCPA’s data tool allow for a comparison of the total benefits between OTRS benefits and 401(k) account holders. The average retirement age for OTRS recipients is 59.7 while the median potential benefit is $278,963. The median 401(k) account balance for retirees of a similar age (55-64) is $71,105.
Leaving retirement benefits out of the conversation on teacher compensation ignores the cost to taxpayers. According to the fiscal year 2017 Comprehensive Annual Financial Report, taxpayers contributed $715 million to Oklahoma’s teacher retirement system. Just like discussing teacher shortages, having all the facts is crucial to finding the best way forward.