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StudentsFirst Founder Michelle Rhee discusses how higher pension costs can impact the U.S. school system.
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All right what I've got to a startling -- before you -- is from Illinois.
The teacher's retirement system in that state has paid more than one point three billion dollars in fees just.
Three years to money manages that's over the past ten years.
This is fees just for handling the pension fund one point three billion dollars and that pension fund is drastically underfunded.
-- this is not just Chicago and not just to Chicago story.
Rising pension obligations across the company threatened to close schools and cut funding to real education on the ground.
Michelle -- is -- found out of students for us she joins us from California Michelle it is it possible is it likely is it happening.
That the demands of paying off on pensions.
Means that schools will be closed and teaches cup from the lay before us.
Is that happening.
Well it's it's a huge problem and there's just no way to -- -- if you look across the country.
We have one trillion dollars in unfunded pension liabilities.
For public sector employees that we -- -- very significant portion of those.
Being teacher so nobody can and content can doubt the fact that this is a significant problem that is going to become a big -- and Begin to impact the budgets of our schools.
People who pay the price.
Will be the teachers and the children and the schools and the existing school system they will have to pay the price full paying off.
Already retired workers that's it.
Right.
That.
That's exactly right not only that I mean it you know could do the pension funds and the structures have to be changed absolutely because of the unfunded liabilities but if you also look at that general structure.
Of these pension funds they're not beneficial for teachers in general so let me explain take -- take a state like Missouri and if you're a teacher and Missouri.
For the first seven years of your career you're paying in about 15%.
Of your salary.
Into a pension fund and this this this this school district in the state.
Our our our giving another 15% that they could've been paying you but they're paying that and the pension fund -- If you leave the classroom in that anywhere intact and that seven year period.
You can't take any of that money with -- that's that's left behind so you basically locked out of your own money after you -- after that seventh year.
If you tried to leave before your retirement age you can only take 130.
Of your retirement wealth with you 130 of the -- so you're basically locked into the system until the full retirement age.
So that is the kinda system that absolutely does not make sense for teachers either so there's incentive on both sides to want to change the way that we do that's.
I just get a comment from you on the one point three billion dollars paid to manage the pension funds of the Chicago school system over a ten year period.
That seems like an extraordinarily high number one point three billion in fees alone in ten years -- comment.
Well think about what you could do with one point three billion dollars think about the number of teachers that you could hire that that the number of computers that you can buy the facility upgrades.
That you could implement in these schools it really is tremendous and this is one of the reasons why we have to really start thinking.
About winner of the money that we are currently spending on education is going because.
What you've heard for decades now across the nation is what we need in our schools is more money what we need in order to fix the system is more money.
But in reality if you look at the trajectory of the amount of money that we spent.
In this country on public education it has more than doubled over the last couple of decades.
And -- the achievement rates has stagnated and people wonder why and it's because our money is not going into the classroom where it's gonna have the most impact with teachers and kids.
It's going to things like that's.
Michelle rate we hope you can do something about this because it is a mess and we're relying on you.
Michelle thank you very much for joining us it is a real pleasure to have you with us thank you very much for --
