When You Are In A Hole

The problem with today’s political debates is they’re loud, clanky, and breed confusion rather than spreading light.

Lately, I’ve been hearing a lot from the NCAE (the teacher’s union) about how wrong it is to only pay teachers, on average, $41,000 a year. So, I looked into the numbers and, well, like a lot of numbers in political debates they don’t quite tell the whole story.

Teacher salaries are $41,000 a year on average. But, in addition, like other state employees, teachers also receive benefits (like health insurance and retirement benefits) – which my friends in small business would consider generous.

Let’s look at health care benefits: A teacher receives the standard state government health insurance package, which is a deluxe package, for free. In addition, if he or she chooses, they may upgrade to an even better package by paying 5% of the total premium out of pocket.

Not long ago, a teacher wrote me, taking me “to task” for saying the state pays for her health insurance as part of her total compensation. She made it very clear she was paying for her own insurance and the money is deducted from her paycheck. In fact, it appears she’d chosen to pay for the upgrade and believed the 5% that came out of her paycheck covered the whole cost of her health insurance. She’d simply missed the fact the state was paying around $5,000 per year for her health insurance in addition to the $250 she was paying for the upgrade.

The story doesn’t end there: The State has also promised to pay nearly $30 billion in health insurance benefits for teachers and state employees after they retire. Here’s how these benefits work: After teaching for twenty years and after age 50, a teacher is eligible to stop teaching and to continue to receive his or her state health insurance (paid for by the state) for the rest of his or her life. That’s called a ‘health care’ retirement benefit. Except unlike most retirement benefits it doesn’t start at age sixty-five – a teacher can claim this benefit when he or she is fifty,  fifty-five, or sixty years old.

Right now, North Carolina spends $1.35 billion a year to provide health insurance to public school teachers. Of that, one third ($450 million) goes to pay for health insurance for teachers who are no longer teaching. Even teachers who are on Medicare continue to receive a state healthcare benefit as a supplement.

The NCAE’s reaction to all this has been to say we should be ‘talking salaries, not benefit packages.’ But paying $450 million in benefits to folks who don’t teach is a pretty big number. If the legislature had $450 million to spend to give teachers pay raises, it would be an average raise of $4,500 per teacher.

It would be simple to say, Well, let’s just do that. Let’s just pay health insurance for teachers who are teaching. And use the $450 million to fund pay raises. But we can’t because the state has made a commitment to pay that $30 billion in health care retirement benefits. We can’t just say, Well, yes, we did make that promise – but that was then and this is now.

The hard truth is the state’s on the hook for a $30 billion debt and that $450 million is just this year’s payment on it.

Here’s my point: Instead of a system that pays teachers who are teaching more, we have a system that provides benefits to teachers who don’t teach. That’s another big flaw in how North Carolina pays teachers that needs to be fixed.

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