Government Schools are a Ponzi Scheme

Texas state Rep. Gene Wu (D-Houston) inadvertently admits that government schools are nothing more than a Ponzi scheme. According to Wikipedia, a Ponzi scheme “is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.” This is precisely what Wu describes in opposing school choice:

Even a, like, one- or two-percent change in school populations has dramatic, multi-million dollar consequences for these schools. And it’s not just that. It’s also retired teachers. Whenever you have fewer students, you’re going to have fewer teachers. Fewer teachers mean fewer teachers paying into teachers’ retirement which is barely solvent right now.

Teachers are not investors in the traditional sense. Teachers are forced to contribute to the Teacher Retirement System of Texas (TRS), regardless of their own desires or needs. However, current teachers are paying for the benefits given to retired teachers.

According to Wu, more funding for government schools is necessary to retain teachers. And teachers should be retained so that they can continue to “contribute” to the retirement system. Actually educating students is a secondary consideration.

As of August 31, 2022 the TRS had assets amounting to 79 percent of the system’s incurred liabilities. In other words, TRS owes more money than it has. Current estimates project that the system will be fully funded in twenty-three years. To do this, current teachers will be forced to increase their “contributions” beginning in fiscal 2024. However, if the state’s teachers union has its way, that won’t be enough to increase the system’s funding ratio.

The Texas chapter of the American Federation of Teachers (AFT) Retiree Plus program

focuses exclusively on educating members and lobbying the state Legislature about the Teacher Retirement System of Texas, protecting your pension and TRS-Care.

The Texas AFT is currently coordinating a campaign in support of a cost of living adjustment for retirees. If successful, this will increase the system’s liabilities. This will likely result in increased “contributions” from current teachers. No matter what happens, the fact remains that without continuing and increasing contributions from current teachers, the system will go broke. And that is a predicament ultimately faced by every Ponzi scheme, including government schools.