The problem with teachers’ pensions isn’t just the underfunding, argue Chad Aldeman and Andrew Rotherham in Better Benefits: Reforming Teacher Pensions for a Changing Work Force (pdf) . 

 The way the plans are structured can negatively influence the teaching work force as a whole. At a time when improving the quality of classroom instruction is a national priority, key structural elements in teacher retirement plans impair the ability of schools to recruit, hire, retain, and compensate high-quality teachers and principals.

The report outlines ways to redesign pensions to match the needs of today’s teacher workforce.

Underfunded Teacher Pension Plans: It’s Worse Than You Think is the cheery title of a new report by Josh Barro, Manhattan Institute fellow, and Stuart Buck, University of Arkansas doctoral fellow.

If public employee pension funds used the same assumptions as private sector plans, the aggregate estimates of unfunded liabilities would more than double, from approximately $332 billion to $933 billion. Unless it is addressed, this gap between pensions’ payment obligations and their investment assets will result in tax increases and cuts in services—a phenomenon already happening in some states.

All the pension funds that cover teachers face shortfalls: Unfunded liabilities to teachers total $332 billion, Barro and Buck estimate. Only five plans — in D.C., New York, Washington, North Carolina and Tennessee — are 75 percent funded or better. West Virginia’s plan is only 31 percent funded.

The stock market drop accounts for less than one quarter of the problem, the authors write: “The Dow Jones Industrial Average would have to nearly double overnight to make up for the present underfunding of these plans.” Fund managers have assumed that stocks will go way up to cover promised benefits. That allows public officials to commit fewer dollars now, pushing the problem off for a few years.

California’s public-employee pensions, including the Teacher Retirement System, are underfunded by $200 billion to $350 billion, concludes a new study by Stanford public policy students. They suggest “reducing pension benefits or moving to a hybrid system in which retirees receive a smaller fixed pension combined with a 401(k)-style plan.”

Connecticut is in big trouble too, says the Yankee Institute for Public Policy.

More than 3,000 retired California educators collect pensions of $100,000 or more per year, complains the California Foundation for Fiscal Responsibility.  I checked the list (pdf) and found a retired community college president and several administrators, but no teachers. Cameron McCune, a retired superintendent getting more than $20,000 a month, may be the top recipient.

My pension from Knight Ridder newspapers represents 15 percent of my peak pay.