States should rethink their licensure and pension systems in light of teacher supply questions across the country.
In principle, teaching is a highly portable profession, one that affords practitioners a great deal of flexibility to live and work in any part of the country. After all, wherever there are children, there are jobs for teachers. In reality, though, teachers often find that mobility comes with a price tag. Not only does every state have its own licensure system — and obtaining a new license can be a significant expense — but most state pension plans are designed to reward educators for staying in a particular state throughout their careers. For midcareer teachers, especially, moving to a new state can mean forgoing the chance to earn generous retirement benefits.
These barriers to professional mobility should be a concern because they may exacerbate the teacher shortages that are apparent in some states and dissuade talented people from considering a teaching career.
In a well-functioning labor market, workers go where there are jobs. When there are too many workers in one region and too few in another, some choose to relocate, easing shortages of labor. In the teaching profession, barriers created by pensions and licensure may dissuade the movement of qualified teachers from areas of surplus to areas of shortage. Moreover, the overall number of individuals seeking employment in the labor market may be reduced if barriers to mobility make the teaching profession less desirable, either because new entrants don’t consider teaching or inservice teachers choose to opt out of the profession following a move to a new state.
Our recent research suggests that state-level policies do in fact dissuade cross-state mobility in the teacher labor market. Using administrative data from Oregon and Washington, covering the period from 2001 to 2014, we were able to follow the movement of thousands of individual teachers as they changed jobs. We found that very few of those teachers crossed the border for a new position, even if they lived quite close to the state border (Goldhaber et al., 2015). In fact, teachers along the state border were almost three times more likely to make a within-state move of 75 miles or more than to make any cross-state move.
Why would so many teachers prefer to take a faraway job in their home state than a nearby job just over the state line? Below, we describe the ways in which current licensure and pension systems might influence teacher mobility, and we consider the potential tradeoffs involved in making it easier for teachers to relocate.
Moving from state to state is cumbersome for both novice and veteran teachers at a time when some states are facing teacher shortages and others have a teacher surplus.
State-level barriers to mobility
Broadly speaking, licensure requirements for public school teachers tend to be similar across the country. In most states, for example, an initial license is awarded after a candidate has graduated from an accredited teacher education program and passed a set of basic skills tests and subject-matter examinations. Typically, that license is valid for several years, after which the teacher must obtain a continuing license, renewable indefinitely, which may require completion of additional coursework, professional development activities, and/or the assembly of a portfolio demonstrating teaching proficiency.
However, when it comes to the details — such as which grade spans and subject areas they cover, the specific tests that must be passed, etc. — licensure systems differ in important ways. For example, one state might require a license to teach grades K-3, while another state’s license covers grades 1-6. Further, there tends to be a good deal of variation within state systems as well. Because licensure systems have evolved over time to accommodate new subject areas and teaching roles, each state has gradually stitched together its own patchwork of qualifications. The Oregon Teacher Standards and Practices Commission, for instance, lists 34 distinct teacher licenses, each with its own set of requirements (http://tspc.oregon.gov/licensure/licensure.asp).
Given that each state has a distinct and complex licensure system, establishing any meaningful degree of reciprocity between states can be difficult (Sawchuk, 2015). And, as researchers have noted, even where some level of reciprocity does exist, it tends to be limited: “With very few exceptions, each state has additional requirements that teachers must fulfill either at the time of licensure or within the license renewal cycle when moving to a new state” (Coggshall & Sexton, 2008, p. 10).
This lack of reciprocity for licenses requires many teachers to go back to the beginning of the licensure process when they relocate across state lines. Even the most seasoned teachers may need to take a basic skills test, pass a subject-matter examination, or complete additional coursework, just to obtain the sort of initial license they held many years earlier.
Anecdotal evidence suggests that this presents enough of a challenge to dissuade some teachers from staying in the profession. As reported in one study by the California Commission on Teacher Credentialing, veteran teaching candidates from out of state were deeply frustrated by the process, voicing “confusion about how to complete the many and varied requirements,” including some that they had already met earlier in their careers (Darling-Hammond & Sykes, 2003, p. 40). Similarly, after interviewing a number of teachers who were struggling to relocate, other researchers concluded that “the obscurity of individual state licensure requirements represents one of the largest obstacles to entry into the state’s licensed workforce” (Arbury et al., 2015, abstract).
In a study of cross-state mobility patterns in different professions, Johnson and Kleiner (2015) found that individuals in certain licensed occupations (including teachers, nurses, lawyers, barbers, and cosmetologists) exhibited significantly lower rates of cross-state migration than their unlicensed peers, even though their rates of within-state mobility were similar. For instance, teachers made within-state moves 7% less often than their unlicensed peers, but they moved between states 42% less often. Among the five licensed professions studied, teachers and lawyers exhibited the largest disparities between within-state and cross-state mobility. This evidence suggests, in short, that existing state licensure systems do serve to discourage mobility among in-service teachers. (On the other hand, we are aware of no research that provides insight into whether the barriers to mobility imposed by licensure dissuade individuals from pursuing a teaching career in the first place.)
Teacher pensions also can inhibit cross-state mobility, though for reasons that are more complex. Currently, teachers in most states are enrolled in defined benefit pension plans that pay a lifetime annuity depending on formulas based on years of service and end-of-career salary. Benefits tend to accrue slowly until the latter part of a career, when they accrue rapidly. For at least three reasons, this means that teachers who move from one state to another are likely to accumulate substantially less retirement wealth than would have been earned had they completed their careers within one system. First, teachers must become vested in order to be eligible to receive an annuity in retirement, typically by accruing five to 10 years of service. Teachers who split years of service between two states are less likely to become vested in either state’s pension plan.
Second, the dollar value of the annuity typically stays fixed following separation from employment and is therefore more vulnerable to inflation. For example, assuming a 2.5% rate of inflation, a teacher who leaves a state at age 45 with a $20,000 annuity would see the purchasing power of that annuity decline by nearly half — to roughly $12,500 in constant dollars — by the time she retires 20 years later, at age 65.
Third, most defined benefit plans allow teachers to retire at younger ages and collect more pension payments during retirement after crossing a certain threshold of experience (e.g., 25 or 30 years of service). But a teacher who splits time between two states is less likely to achieve early retirement eligibility in either state, which means that she cannot take advantage of this benefit, which would have dramatically increased the value of her pension. For example, a teacher who retires at age 60 with a $40,000 annuity will end up collecting roughly $200,000 more in pension benefits than one who retires at age 65. In fact, Costrell and Podgursky (2010) estimate that teachers who split a 30-year career between two states will often retire with less than half the pension wealth of teachers who completed their careers under a single pension system. While there is little direct evidence that these costs factor into teachers’ decisions about whether to cross state borders, those who make the move do tend to be at a significant financial disadvantage, and it is hard to imagine that teachers (or any employees) would ignore them.
Lowering the barriers to mobility
To make it easier for teachers to take a job in a new state, a good place to start would be to find a way to ensure a meaningful level of reciprocity among licensure systems. But with 50 separate systems in place, that could be a tall order.
One option might be for the federal government to play a mediating role, establishing a common licensure framework that states can choose to adopt. Indeed, a bill was recently introduced in the U.S. Congress — with bipartisan sponsorship — that would address some of the difficulty of aligning the many systems. The Interstate Teaching Mobility Act (ITMA) would authorize the creation of a shared teaching application, allowing candidates to be granted initial licensure in participating states without additional requirements. A state would be eligible for participation if its licensure procedures met certain criteria and are judged to be sufficiently rigorous by an organization such as the Council of Chief State School Officers.
However, a program like ITMA has serious limitations. Not only will such a bill have to navigate a sharply divided Congress but, as written, it promotes reciprocity only in the case of initial teaching licenses — it does nothing to enable veteran teachers to transfer their licenses from state to state. Here, the National Board for Professional Teaching Standards (NBPTS) does play a role as most states accept National Board certification in lieu of satisfying their own professional licensure requirements. However, the proportion of teachers certified by NBPTS is small, ranging between 0.1% and 16.9% across states, and the process is time-consuming and expensive to complete (Exstrom, 2011).
Change also might come from states themselves, where licensure-related barriers to teacher mobility have begun to receive significant attention. Recently, for instance, a group of teachers sued the state of Minnesota over claims that it arbitrarily denied licenses to qualified teachers, particularly those from out of state (Star Tribune Editorial Board, 2016). As a result, the Minnesota Board of Teaching has been ordered to restart an alternative portfolio-based licensure process, though the case is under appeal (Wastvedt, 2016). Meanwhile, New York has considered waiving a requirement that teacher applicants who were certified in another state take New York’s own certification exams, and Utah has dramatically reduced its licensure standards — the state now requires only a bachelor’s degree and passage of a subject-matter exam (Felton, 2016).
When it comes to teacher pension systems, the most straightforward way to lower barriers to mobility would be to move toward the defined contribution pension structures already prevalent in the private sector, typically in the form of 401(k)s. State and local governments are prohibited from creating new 401(k) plans, but they can and in some cases do sponsor the equivalent in the form of 403(b)s.
Under a defined contribution plan, a proportion of a teacher’s salary is contributed to an individual investment account. A teacher’s retirement wealth depends on how much salary is contributed to her account and the performance of her investments. If she takes a teaching position in a different state, she can leave her assets in her existing account, where they will continue to earn investment returns, or roll them over to a retirement savings account associated with her new employer. In other words, her defined contribution retirement benefits are portable.
Concerns have been raised that moving away from traditional defined benefit pensions structures, which incentivize long careers, might lead to higher levels of turnover in the teaching profession (NEA, 2016). Our recent analysis of teacher turnover in Washington state, however, shows that this is not necessarily true (Goldhaber, Grout, & Holden, 2016). We failed to find evidence that the introduction of a hybrid defined benefit/defined contribution plan in 1996 has resulted in higher levels of teacher turnover. In fact, teachers who chose to transfer from Washington’s traditional defined benefit plan to the new hybrid plan had lower levels of turnover than those who stayed in the defined benefit plan. Whether defined benefit plans are effective at lowering turnover, some have questioned whether it is appropriate to use teachers’ primary pension plans as retention programs (McGee & Winters, 2015).
To make it easier for teachers to move, ensuring licensure reciprocity among states would be a good place to start.
Concerns also have been raised that moving away from defined benefit pensions would be detrimental to teachers’ retirement security. A teacher who contributes too little or makes bad investment decisions may end her career without the means to retire comfortably. These concerns are not without merit — recent coverage in The New York Times highlighted problems with the supplemental retirement savings plans offered to many teachers in the form of 403(b)s, which are held to lower fiduciary standards than 401(k)s (www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html). That said, research has found that plans can be designed to encourage good choices regarding contribution levels, asset allocation, and withdrawals in retirement (Choi, Laibson, & Madrian, 2004). In Washington, for instance, we found that the state’s hybrid defined benefit/defined contribution plan was likely to provide teachers with a level of retirement wealth that was comparable to or greater than that provided by the state’s traditional defined benefit plan (Goldhaber & Grout, 2016).
In recent years, a number of states have introduced alternative plan structures to their teacher pension systems. Six states now offer teachers a choice between their traditional defined benefit pension and a defined contribution plan. And seven states have chosen to offer new teachers a hybrid plan, with both defined benefit and defined contribution features (NEA, 2016). Moving forward, policy makers can look to these states’ experiences to better understand the implications of adopting alternative pension structures.
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Choi, J.J., Laibson, D., & Madrian, B.C. (2004). Plan design and 401(k) savings outcomes. National Bureau of Economic Research Working Paper No. 10486. www.nber.org/papers/w10486
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Costrell, R.M. & Podgursky, M. (2010, Winter). Golden handcuffs. Education Next, 10 (1), 60-66.
Darling-Hammond, L. & Sykes, G. (2003). Wanted: A national teacher supply policy for education: The right way to meet the “highly qualified teacher” challenge. Education Policy Analysis Archives, 11 (33), 1-55.
Exstrom, M. (2011). National Board for Professional Teaching Standards certification: What legislators need to know. Denver, CO: National Conference of State Legislatures.
Felton, E. (2016, August 30). States loosen teacher-licensure rules amid shortage fears. Education Week. http://blogs.edweek.org/edweek/teacherbeat/2016/08/states_loosen_teacher_licensure_shortages.html
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Johnson, J. & Kleiner, M.M. (2015). Does occupational licensing reduce interstate migration? Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
McGee, J. & Winters, M.A. (2015, Winter). Modernizing teacher pensions. National Affairs, 2015, 107-123.
National Education Association (NEA). (2016). Characteristics of large public education pension plans. Washington, DC: Author.
Sawchuk, S. (2015, May 13). Minnesota lawsuit raises questions about teacher-licensure portability. Education Week, 34 (30), 6-7. www.edweek.org/ew/articles/2015/05/13/minn-lawsuit-raises-questions-about-teacher-licensure-portabilit.html
Star Tribune Editorial Board. (2016, January 21). Open more pathways for teacher licensing in Minnesota. Minneapolis Star Tribune. www.startribune.com/open-more-pathways-for-teacher-licensing-in-minnesota/366133981/
Wastvedt, S. (2016, August 16). Appeals court: Teacher licensing lawsuit can proceed. MPR News. www.mprnews.org/story/2016/08/10/teaching-board-licensure-lawsuit-can-proceed
Originally published in February 2017 Phi Delta Kappan 98 (5), 55-60. © 2017 Phi Delta Kappa International. All rights reserved.