Retirement costs fuel teacher cut fears

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Teacher unions are worried a looming $63 million cost to pay for retirement scheme contributions for school staff will mean cuts in teacher numbers.

Education and health will be hardest hit by a change in the Budget which requires state sector employers to take on the cost of paying workers' super scheme contributions from July 2012.

The contributions have previously been paid centrally by the State Services Commission and last year cost $165 million across the public sector.

The hardest hit areas are education - which will have to find an extra $63 million by next year - and health, where district health boards will have to come with $46.5 million in 2012/13.

Passing the cost on to government departments to meet from their existing budgets is expected to save $650 million over three years.

Ms Tolley's spokesman said it was likely the Ministry of Education would take on the bulk of its increase - the contributions for approximately 20,000 teachers who were in KiwiSaver or the Teachers Retirement Savings Scheme which closed in 2008.

PPTA president Robin Duff said it would inevitably result in cuts within education.

"We will be nipping bones out at this stage. All the fat has gone."

He said the bulk of education spending was on staff costs, meaning the only way to make significant savings was to cut staff.

That would impact on students' education.

It was also not yet known whether boards of trustees or the Ministry would pay the costs for support staff and extra teachers whose salaries were paid out of schools operational funding.

School Trustees Association president Lorraine Kerr said she was concerned schools would be forced to cut the number of extra staff they took on if the cost was passed on.

She said schools were barely keeping on top of increased costs and the STA was discussing the issue with the government.

There are about 22,000 support staff in schools, including teacher aides and administrative staff.

Several thousand teachers were also employed directly by schools, although many were part time.

Teacher unions were also worried about the impact the new $63 million bill would have on the wider education budget, which this year reached $2.2 billion.

NZEI president Ian Leckie said if the $63 million had to be funded within existing funding, it was effectively a cut to education funding despite the government's promises to keep increasing it.

"I am concerned it will mean savings in other education areas - and the only way to make savings is to cut."

Labour's education spokeswoman Sue Moroney said loading extra costs onto the education budget made a mockery of the government's promises to keep increase funding for the sector.

"The Key line was that health and education were going to get increases. They didn't go on to say 'but we are also going to ask them to pay for more.' They have misled people on the education budget."

Health minister Tony Ryall said the increase for DHBs' was "entirely manageable."

DHBs had over a year to prepare for it and it was less than 0.5 per cent of their $10 billion plus budgets. However, Labour's health spokesman Grant Robertson said it would be difficult to do without cutting health services.

The Changes:

* From July 2012 the State Services Commission will no longer pay the employer contributions to all public servants' KiwiSaver or retirement schemes.

* Individual government departments and state agencies will have to cover the contributions for their workers from their own funding.

* Expected to save $650 million over three years in total.

* Cost to education: $63 million in 2012/13

* Cost to district health boards: $46.5 million in 2012/13.