Written by Keegan Shepherd, Policy Coordinator for the Texas Pension Coalition
Today’s blog post is part of the Texas Pension Coalition’s ongoing series highlighting the realities workers face during their careers and the subsequent impact on their retirement. While these profiles are based on fictional workers, the salaries, contributions, and cost of living data are all factual.
Throughout the Lone Star State, millions of hardworking Texans depend upon their pensions in order to plan for a dignified retirement. Most of these workers are public employees––people who serve our communities and provide day-to-day necessities for our towns and cities. This includes over 350,000 public school teachers, who work in all 254 of our counties.
Being a public school teacher in Texas comes with considerable financial challenges. While teachers did receive an across-the-board raise during the last legislative session, they still lag in take-home pay compared to their colleagues in other states. This means many educators are still left working extra jobs just to make ends meet. Furthermore, the pay ladder is relatively flat in most school districts; there isn’t a tremendous amount of difference between an employee’s base pay at the beginning of their career and the end of their career. On top of this, many teachers provide supplies and other materials for their students––stretching their salaries even further.
All of this means that pensions are an essential component in ensuring educators in Texas have enough saved for retirement. Through a defined benefit pension, teachers are promised a modest amount every month after they retire.
Pensions ensure that teachers stick with the profession for the long haul. Take Linda: she is a fifth-year teacher in the El Paso Independent School District. At the end of the year, she will be vested in the Teachers Retirement System (TRS), the statewide pension system for public school employees. Although El Paso is an affordable city, the same expenses exist regardless of location, like food, insurance, mortgage payments, and medical costs. Linda’s base-level pay has gone up less than a thousand dollars since being hired. Even though she receives a small boost from a stipend for teaching extra periods of math and coaching soccer, it’s nowhere near the boost she would receive with her degree of experience in the private sector.
Linda is at the point where she has to consider whether to stick with teaching or move on to a new profession. Despite her talent for teaching math, the pay isn’t great––especially since she would like to be a homeowner and currently helps with her grandmother’s everyday expenses. One major factor in her decision to stay, however, is becoming vested in TRS. With every paycheck, 7.7% of what she makes is put into her pension; this is matched by a similar contribution by the state and a smaller contribution from her school district. Linda knows that by the time she is ready to retire, she will have a pension that can cover her needs. Although modest, this pension will make ends meet for as long as Linda needs it.
Linda also knows that if she sticks with her career in teaching, the credentials she builds on top of her baseline pay will help make her final pension more livable. Even after thirty years, a teacher in El Paso does not make much more than a new hire with their base pay. That said, continuing to add credentials––taking on more leadership roles, becoming Board Certified, finishing her master’s degree––will notch up her overall pay, which will raise the final pay range that her pension is based on. If Linda stays in teaching for thirty years, her final pension will be just under 70% of her final salary range: not a lot, but enough to get by. In fact, most TRS retirees receive a modest retirement––on average, just under $2100 per month, and rarely with any Social Security benefits.
Teachers like Linda commit themselves to their community. People who spend a full career as teachers help instruct, mold, and nurture multiple generations of children, transforming countless lives. They also have a huge economic impact through their commitment to a specific area. In El Paso County alone, over 6,700 retired teachers brought well over $260 million into the local economy through their TRS pensions during the 2018 fiscal year. Pensions allow them to not only give their all while they work but also to continue contributing to the well-being of their towns after they are no longer in the classroom.