Baltimore announced plans over the weekend to offer buyout incentives to teachers with more than 10 years of experience. Buyout plans–where states or districts offer up-front money to encourage experienced employees to retire–are tempting budgetary solutions, but they’re not viable long-term human capital strategies.
Using the Baltimore proposal as an example, they plan to give 350-750 experienced teachers 75 percent of their annual salary, spread out over five years, if they announce plans to leave the district by April 15. Because it’s open to anyone with more than 10 years experience, some of these teachers will be eligible for retirement benefits immediately, but some won’t. Many will be eligible for health care benefits as well.
Running the numbers from the proposal, Baltimore calculates they’re going to be saving about $14,000 per teacher ($5 million in savings if 350 teachers participate or $10 million if 750 sign up), but these numbers do not include some hidden costs. To begin with, the move will shift costs from the district’s salary rolls to the state’s retirement system, which will eventually trickle back down to Baltimore. With employees retiring earlier than they planned to, this means the state will be paying out an additional year of benefits to those who are eligible.
The savings also include budgeting for new hires to fill the vacated positions. So Baltimore will be replacing one experienced teacher’s salary and benefits with a new teacher’s salary and benefits plus the cost of the retired teacher’s pension and health care. It also costs money to hire, train, and retain new employees.
None of this gets to the fact that experienced teachers are, on average, more effective teachers than the unexperienced ones Baltimore plans to replace them with. Nor does this measure target individual teachers who are more or less effective in the classroom: The only basis will be years of experience, with only a slight nod to the area they teach (teachers from the same subject area will be ranked by seniority). Essentially, with this plan Baltimore will be buying a less expensive teacher workforce. The losses to students are incidental.
This blog entry first appeared on The Quick and the Ed.