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Josh B. McGee

Dillon Fuchsman, Josh B. McGee, Gema Zamarro.

Many states have recently made or are considering changes to their teacher retirement systems. However, little is known about how teachers value various elements of their retirement benefits versus other aspects of their jobs and compensation. To help alleviate this gap, we use a discrete choice stated preferences experiment embedded in a nationally representative survey of teachers to estimate their willingness-to-pay for various retirement plan characteristics and other non-salary job components. We find that teachers would be indifferent between a traditional pension and alternative retirement plan designs if the alternatives were paired with 2 to 3 percent salary increases. Our results indicate that experience is a significant mediator of retirement plan preferences. While more experienced teachers are willing to pay more to keep their traditional pension plans, inexperienced teachers do not have strong preferences around retirement plan type. However, teachers’ willingness-to-pay for traditional pension plans is less than their willingness-to-pay for many other elements of their compensation, including the value of retirement benefits, retirement age, salary growth, healthcare coverage, and Social Security enrollment.

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Jessica Goldstein, Josh B. McGee.

Jackson, Wigger, and Xiong (2020a, JWX) provide evidence that education spending reductions following the Great Recession had widespread negative impacts on student achievement and attainment. This paper describes our process of duplicating JWX and highlights a variety of tests we employ to investigate the nature and robustness of the relationship between school spending reductions and student outcomes. Though per-pupil expenditures undoubtedly shifted downward due to the Great Recession, contrary to JWX, our findings indicate there is not a clear and compelling story about the impact of those reductions on student achievement. Moreover, we find that the relationship between K-12 spending and college-going rates is likely confounded with contemporaneous higher education funding trends. While we believe that K-12 spending reductions may have negative impacts on student outcomes, our results suggest that estimating generalizable causal effects remains a significant challenge.

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Robert M. Costrell, Josh B. McGee.

Our goal in this paper, presented at the 2020 Brookings Municipal Finance Conference, is to better understand teacher pension funding dynamics with a focus on sustainability and intergenerational equity.  The origin of this paper is our analysis of the funding policy recommended in a highly publicized paper first presented at the 2019 Brookings Municipal Finance Conference (Lenney, Lutz, and Sheiner, 2019a; 2019b).  That proposed policy aims to alleviate rising pension payments that crowd-out classroom expenditures and teacher salaries by abandoning the attempt to pay down pension debt.  While the problem of crowd-out is real, we show that, with uncertain investment returns, the recommended policy would carry significant risk of pension fund insolvency and a jump in contributions to the pay-go rate, which is much higher than current rates. We close by proposing a policy evaluation framework that better incorporates risk and the intertemporal tradeoffs between current contributions and likely future outcomes.  We illustrate throughout with data from the California Teachers Retirement System (CalSTRS).

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