Retirement debt costs students

Retirement debt costs students

Louisiana public schools spend an average of 10% of their total revenue each year – including 25% of the money they get from the state – to pay back debt in the pension system that supports current and former teachers. This news comes from a new report by the Louisiana Legislative Auditor, which notes that the debt stems from previous generations of policymakers who promised benefits to educators without setting aside enough money to pay for them. The Advocate’s Will Sentell explains:

In 1987 voters approved a constitutional amendment that required the Legislature to come up with a plan to pay off the teacher and state employee debt that existed in 1988 by 2029. State laws enacted in 2009 and 2014 require that retirement obligations for teachers built up between 1988 and 2009 had to be paid by 2040 and by 2044 for former state employees. Public schools make a dent in that debt annually by paying a percentage of their employees’ salaries. 

Context: Louisiana teachers are paid about $4,000 per year less than their Southern peers. Their defined-benefit retirement benefits are calculated based on those salaries, multiplied by years of service. Teachers in the state pension system do not contribute to Social Security, so for many teachers their public pension is their primary source of retirement income.

Tax cheats get a reprieve 
The Internal Revenue Service has suffered through years of budget cuts that have made it harder for the agency to ensure people and corporations pay the taxes they owe. The Treasury Department estimates it could raise $700 billion over a decade just by cracking down on tax cheats. So when Democrats proposed ways to raise the revenue needed to pay for their plans to enhance the social safety net, one prominent option was to expand audits on people earning over $400,000 a year. But the banking industry and its lobbyists pushed back, and the Biden administration has caved, and now backs a narrower proposal. Alan Rappeport and Jonathan Weisman report for The New York Times:  

Critics of the proposal have incorrectly suggested that the I.R.S. would be tracking information about individual transactions. The administration has said the I.R.S. would not monitor specific customer transactions but instead use the account information to spot discrepancies between it and what individuals reported on their tax returns. … The Treasury Department said the Biden administration would back the narrower proposal because the I.R.S. already had information about American workers and retirees. While it would give the agency visibility into far fewer bank accounts, the Treasury said in a fact sheet on Tuesday that “only those accruing other forms of income in opaque ways are a part of the reporting regime.”

Black Louisiana farmers dispossessed
For decades, Black farmers across the country have lost land as they were shut out of loans by banks and the federal government. In this year’s American Rescue Plan, President Joe Biden’s administration tried to address the problem through debt relief targeted to farmers of color. But the initative has been held up by a lawsuit by 12 white farmers claiming reverse discrimination. Shalina Chatlani of the Gulf States Newsroom visits Iberia Parish to find out how the legacy of discrimination by private actors and the U.S. Department of Agriculture has affected Black sugarcane farmers: 

June and Angie Provost live on the small amount of farmland they have left. They once had leases to farm 5,000 acres of land. Between what they own and what’s contracted today, they now farm fewer than 100 acres. “It still hurts to see farmers right now in the field planting sugar cane and I don’t have that opportunity anymore because it was taken from me,” Provost said. June Provost is a fourth-generation farmer. He and his wife have even won awards for it. Now that legacy is all but gone. He says they have faced vandalism, fraud and bad contracts, and he has even filed a lawsuit against a local bank for fraudulently tampering with his loan applications so that he would get less money than what he asked for — leading to much of his land loss.

Workers have the upper hand
Enhanced unemployment benefits have ended, but the labor market has not boomed and many workers have not yet returned to work. As Ben Casselman reports in the New York Times, the reasons for this labor market slowdown are complex, but one important factor is that workers, rethinking their priorities during the pandemic, are demanding more of jobs that previously offered low pay, unpredictable schedules and little to no benefits. 

[A]rguably for the first time in decades, workers up and down the income ladder have leverage. And they are using it to demand not just higher pay but also flexible hours, more generous benefits and better working conditions. A record 4.3 million people quit their jobs in August, in some cases midshift to take a better-paying position down the street. “It’s like the whole country is in some kind of union renegotiation,” said Betsey Stevenson, a University of Michigan economist who was an adviser to President Barack Obama. “I don’t know who’s going to win in this bargaining that’s going on right now, but right now it seems like workers have the upper hand.”

Over 10,000 John Deere warehouse workers are entering the seventh day of the biggest private sector strike in the US in two years. Thousands more workers at Hello Fresh, Kellog’s, Kaiser Permanente and the International Alliance of Theatrical Stage Employees (IATSE) are all agitating for better working conditions and higher pay. 

Number of the Day
4 million The number of uninsured people that would gain health coverage under the U.S. House’s proposal for the Build Back Better plan, according to a new Congressional Budget Office estimate (Source: Center on Budget and Policy Priorities)