Regional Educational Laboratory - Southwest

1
Using Pension Data the case of Arkansas
Presented by Robert M. Costrell University of
Arkansas
June 8, 2009 Institute for Education
Sciences Washington, DC. Edvance Research, Inc.
Regional Educational Laboratory - Southwest
2
Outline

• Incentive Structure
• Pension Wealth Accrual
• Data to Analyze Labor Market Response
• Dept of Education Teacher Retirement System
• Raw Tabulations
• Econometric Analyses
• Policy Simulations
• Research Questions
• (presentation based on joint work with Mike
  Podgursky, Josh McGee)

3
Incentive Structure

• Pension formulas embed strong incentives
• A pull to work until reaching pension spike
• A push to retire shortly thereafter
• Incentives embedded in wealth accrual
• Net present value of discounted benefits
• Annual accrual is deferred income from additional
  year of work
• Can be calculated from benefit formulas
• Eligibility rules for normal early retirement

4
Annual Accrual in Arkansas
The pull to the spike
The push negative accrual (without T-DROP)
5
Data Sets

• ADE Teacher Longitudinal Files
• Can be used to track separations
• Teacher characteristics
• ATRS Pension File Snapshot
• Active, inactive, retired
• Years of service, DOB, final average salary
• Other pension characteristics, esp. DROP
• ADE-ATRS cooperation in linking files
• Identifier replaced to preserve confidentiality

6
Raw Data on Retirements
7
Econometric Analyses

• CA Brown (2006, 2009)
• PA Ferguson, Strauss, Vogt (2006)
• MO Podgursky, et. al (2009)
• AR Costrell McGee (2009)
• See NCPI Conference papers.
• www.performanceincentives.org/conference/papers200
  9.asp
• Other states at earlier stage of data acquisition

8
Predicted Separation Probabilities-ATRS Accrual
AR Estimation Linked Data
25-year old entrant
9
Predicted Separation Probabilities-Constant
Accrual
AR Policy Simulation (preliminary)
25-year old entrant
10
Research Questions

• Differential Labor Market Responses
• By demographics (e.g. urban/rural M/F)
• By teaching field (HS/elem science/math)
• Policy Simulations
• Changes in pension parameters
• Changes in pension regime (e.g. cash balance)
• Fiscal Analyses
• Transition costs for policy changes

11
REL Southwest Forum

• Educator Staffing, Quality, and
• Teacher Retirement Benefit Systems
• Wednesday, July 29, 2009
• Omni Dallas Hotel at Park West
• Dallas, Texas
• To learn more contact Kimberly Bruster
• kbruster_at_edvanceresearch.com or 210-558-4133