New Issue Brief Finds Teacher Pension Debt Squeezing K-12 Budgets, Forcing Cuts to Educator Pay, Support Programs

At least one-third of school districts report funding cuts due to rising pension costs in the last five years

NEW YORK, June 11, 2025 /PRNewswire/ -- A new issue brief from Equable Institute reveals that rising teacher retirement costs driven by pension debt are placing significant financial pressure on K–12 school districts across the country—resulting in cuts to educator compensation, support services, long-term savings, and more.

The analysis, based on a survey of over 1,000 school district leaders and board members nationwide, finds that at least one-third of school districts have cut or deferred spending due to rising pension costs over the past five years. In states where legislatures pay pension costs directly, half of school leaders believe those expenses have led to lower state funding for public education.

Key findings of the brief include:

• Pension Debt is Driving Increased Costs: While retirement costs have surged by 220% nationwide since 2001, state and local K–12 spending has only grown by 33%, creating a hidden cut to education budgets.
• Wide-Spread Cuts: At least 32% of district leaders report cutting or deferring current or future investments explicitly because pension costs increased.
• Uneven Impact: Larger and suburban districts were significantly more likely to report cuts or deferred spending due to pension costs, with low-wealth districts facing greater difficulty absorbing the impact.

The most common areas for cuts were:

• Teacher support and recruitment
• Educator compensation
• Building maintenance, security, and utilities
• Savings and rainy-day funds
• Student support services and extracurricular programs

The brief also highlights that how pension costs are shared between states and districts significantly shapes how local districts are impacted by rising costs.

"For several years, we have been documenting how pension costs are rising and putting pressure on state and local government budgets generally, but this is most comprehensive view to-date of how widespread hidden education funding cuts have become," said Equable executive director Anthony Randazzo. "There are at least one-third of school districts nationally adjusting their budgets explicitly because of growing pension debt costs — and there are plenty more who likely don't even realize some of their budget pressure is coming from increasing pension contribution requirements. That is a significant scope that should lead every state in the country to do an assessment to understand how much faster school district and teacher retirement costs have grown compared to retirement costs."

The full issue brief and additional analysis is available here.

About Equable Institute
Equable is a bipartisan non-profit that works with public retirement system stakeholders to solve complex pension funding challenges with data-driven solutions. We exist to support public sector workers in understanding how their retirement systems can be improved, and to help state and local governments find ways to both fix threats to municipal finance stability and ensure the retirement security of all public servants.

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SOURCE Equable Institute