Life comes at you in waves. You graduate high school, watch friends start careers, get married, and have kids. Then social media shows you their children repeating the cycle. As a member of the Pacific High School Class of 1999, I didn’t expect to reach the retirement wave so soon.

Yet a recent post stopped me: a high school classmate, still in his mid-40s, announced his retirement after 25 years in Missouri public schools. Most recently a principal earning roughly $130,000 per year, he is now eligible for approximately $71,500 in annual (with cost-of-living adjustments) pension benefits for the rest of his life. He can also continue working and earning additional income.

He is retiring at exactly the age when most professionals hit their career peak—when experience, leadership, and judgment are most valuable. And that’s the problem.

Missouri’s Public School Retirement System (PSRS) is pushing talented educators out of the classroom at the very moment students and schools need them most. This isn’t just a fiscal issue. It’s a direct loss to Missouri’s school children.

My classmate is doing exactly what the system incentivizes him to do. The “25-and-Out” provision hands him a guaranteed lifetime annuity worth over $3 million in today’s dollars. He’d be foolish not to take it. But Missouri schools are left without a proven leader right when his institutional knowledge and expertise could have the greatest impact.

This is the perverse reality of the current defined-benefit system. It encourages strong teachers and administrators to leave mid-career, creating turnover, knowledge gaps, and disruption for students. Districts then spend time and money searching for replacements, often settling for less experienced candidates.

Reform is long overdue. What could Missouri do?

• Raise the minimum age or service requirements for unreduced early retirement.
• Adjust benefit formulas for new hires to match longer careers and lifespans.
• Offer new employees a hybrid or defined-contribution plan with portability and shared risk.

Current retirees and vested members should be protected. But going forward, incentives should align with what’s best for students. Competitive benefits matter, but not at the expense of keeping great educators in our schools during their most productive years.

The post Life Comes at You in Waves—And Sometimes It Brings Early Retirement appeared first on Show-Me Institute.

The Reason study finds that U.S. state and local governments held approximately $6.1 trillion in debt at the end of FY 2023. That figure breaks down roughly as $2.66 trillion at the state level, $1.4 trillion among municipalities, $1.27 trillion in school districts, and $757 billion in counties.

For state governments alone, Reason reports $2.7 trillion in debt as of end of 2023, which is about $8,000 per person nationally. The methodology includes near‑term liabilities (like unpaid bills and payroll) plus long‑term obligations (bonds, pensions, and retiree health).

Missouri ranked 25th in combined state and local debt at $53.34 billion. Broken down per capita, Missouri ranked 43rd at $8,829.

Truth in Accounting’s evaluation looked only at the state budget and divided the amount by taxpayer—while Reason considered state and local debts and divided by population. TIA concluded Missouri had a Taxpayer Surplus™ of approximately $200 per taxpayer. Lastly, Reason relied on 2023 data while TIA used 2024 numbers.

The TIA result is reassuring at first glance—but that’s because it looks only at the state obligations. Reason’s analysis reminds us that local governments carry significant obligations beyond what the state government balance sheet shows.

Missouri’s fiscal position is better than many states—but neither the TIA nor Reason analyses justify complacency. Policymakers at every level of government in Missouri should focus on liabilities, funding discipline, and structural reform. This includes being mindful of the long-term commitments we have made to fund government employee pensions and healthcare plans.

A lot of attention is focused on cutting taxes, and that is worthwhile. But fiscal restraint is not merely about cutting taxes—we must rein in our spending too, and that includes long-term commitments.

The post New National Debt Analysis Offers Fresh Lens for Missouri’s Fiscal Picture appeared first on Show-Me Institute.

TIA uses full accrual accounting, which tracks not just current bills but also long-term promises such as pensions and retiree healthcare. Unlike state budget reports that can hide liabilities, TIA’s numbers tell the fuller (and often less flattering) story.

This year, Missouri reported a Taxpayer Surplus™ of $200 per taxpayer, meaning the state had enough money on hand to pay all its current bills with a small cushion left over. By TIA’s definition, that just clears the bar for a “B” grade, which applies to states with a surplus between $1 and $9,999 per taxpayer.

The grade reflects a genuine, if modest, improvement. In 2023, Missouri’s shortfall stood at $700 per taxpayer. That was enough to earn a “C” and a middling 25th-place finish nationally. In years prior, the story was worse: in 2020, the state’s Taxpayer Burden™ was $4,400.

So what’s behind the jump from “C” to “B”? Mostly, factors outside the state’s control. According to TIA’s report (page 83): “Missouri may lose $6.5 billion in federal funding (16 percent of expenses) if allocations return to 2019 levels, adjusted only for inflation.” That funding came largely through pandemic-era support, and it helped cover immediate costs. But it isn’t permanent.

Meanwhile, strong stock market returns—especially in 2022—helped reduce Missouri’s reported pension liabilities. Yet these gains are fragile. They can quickly disappear in volatile markets, as TIA’s report explains, and they don’t fix structural imbalances in how pension systems are funded.

Those structural issues remain. As Sheila Weinberg, founder and CEO of TIA, put it in a recent correspondence: “even with a 26% investment return in 2022 and an additional $1.1 billion contribution in 2023 . . . the state’s contributions and investment income are not enough to keep pace with the interest and new benefits accruing on the pension debt.”

That’s a concern taxpayers should take seriously. Missouri’s pension systems, especially the Missouri State Employees’ Retirement System (MOSERS), have long carried unfunded obligations. The surplus reported today is in part a reflection of how those liabilities are calculated—not a signal that they’ve been resolved.

That brings us back to the bigger issue: standards. Missouri, like nearly every other state, follows Governmental Accounting Standards Board (GASB) rules, which permit states to understate liabilities and delay recognizing certain costs. TIA recommends moving instead to the standards used by publicly traded companies: full accrual accounting and ERISA (Employee Retirement Income and Security Act)-like funding requirements for pensions.

Judi Willard, TIA’s communications director, summarized the case for changing standards plainly: “[these reforms] will create long-term stability for the states, create transparency in government spending and protect the taxpayers from unscrupulous elected officials who would rather spend now and pay later, which sadly the current accounting standards allow.”

There’s merit to that argument. Missouri’s improved ranking may be encouraging, but it is not a sign that long-term fiscal problems have been solved. The gains are largely circumstantial. Without broader reform in how the state budgets and reports its obligations, today’s surplus could just as easily become tomorrow’s deficit.

So yes—credit where it’s due. Missouri’s “B” grade reflects careful budgeting, a resilient economy, and a short-term boost from federal aid. But structural pension pressures remain. Federal dollars are fading. And the state’s accounting standards still obscure the true cost of government.

A budget that only looks balanced on paper won’t protect taxpayers in the long run.

The post Missouri Earns a “B” in New Fiscal Report—but Don’t Pop the Champagne Yet appeared first on Show-Me Institute.

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Kansas City and St. Louis are notably highlighted for their fiscal challenges. Kansas City is ranked 57th, while St. Louis is positioned at 59th. Both cities have been assigned “D” grades, indicating significant financial distress. This distress is quantified through the “Taxpayer Burden” metric, representing the amount each taxpayer would need to contribute to settle all municipal debts. In Kansas City, this burden amounts to $8,800 per taxpayer, whereas in St. Louis, it escalates to $9,800. ​

A primary factor contributing to these burdens is the underfunded pension liabilities in both cities. Unfunded pensions place taxpayers and city services at risk, leading to increased debt and financial instability. ​

The implications of such financial distress are profound. Residents may face reduced public services, increased taxes, or both, as cities strive to balance their budgets. Moreover, fiscal instability can deter business investments, stymie economic growth, and erode public trust in local governance.​ This is in addition to both cities’ struggles providing public safety.

Addressing these challenges necessitates a multifaceted approach. Cities must prioritize fiscal responsibility, ensure transparent accounting practices, and engage in proactive financial planning. Fostering economic development can help alleviate fiscal pressure, but it must be real development, not the sort we have seen for decades that merely transfers tax dollars to corporate cronies.

There is an urgent need for comprehensive fiscal reforms in both of Missouri’s largest cities. Without prompt and effective action, residents will bear the brunt of past financial mismanagement for years to come.

The post Can We Handle the Truth . . . of Our Cities’ Financial Status? appeared first on Show-Me Institute.

I’m skeptical, and you should be too.

This is a claim that cities and states like because it makes their leaders look financially responsible. But it’s often just a result of bookkeeping sleight of hand. Governor Mike Parson made the same claim in January, and it wasn’t true then, either.

The accounting trick consists of merely looking at the cash you have on hand and not considering your long term-debts. Truth in Accounting (TIA), the indefatigable men and women who pore through annual reports, issued its State of the Cities report in February 2024. St. Louis ranked 64th in financial health out of the top 75 cities examined. The authors wrote:

St. Louis’ financial condition appeared to improve due in part to increased tax collections and federal COVID relief funds. Despite the good news, it still had a Taxpayer Burden™ of $11,100, earning it a “D” grade from Truth in Accounting. But the improvement is deceiving, because the city used outdated pension data.

On pages 150 and 151 of the report, available online here, TIA lists St. Louis’s assets and liabilities. The report must use 2022 data because St. Louis is not a stickler about releasing its financial data in a timely manner. Despite being in the red, St. Louis’s cash-basis accounting allows it to consider the money it has on hand without considering its long-term debts. It’s akin to getting a cash advance on your credit card and pretending you’re richer as a result.

If the comptroller wants to make such claims, she should release a complete and to-date copy of the city’s books. Until then, I am going to assume that if it sounds too good to be true, it probably is.

The good news is that we here at the Show-Me Institute, and the fine folks at Truth In Accounting, are dedicated to making sure people understand the truth about city and state finances.

The post Be Skeptical of Claims St. Louis is Running A Surplus appeared first on Show-Me Institute.

Now there is one more “doom loop” article about the challenges facing St. Louis. Governing magazine wrote recently about how declining downtown activity leads to economic decline. Its observations are similar to those in the Journal. Cities like St. Louis, where vacant office spaces drive down property values, are experiencing a vicious cycle where diminished tax revenues lead to reduced public services, further pushing businesses and residents away. According to Jason Bram, an economist interviewed in the article, “It’s a very slow-moving, long-term trend that’s only gotten worse.”

This pattern of urban decline is related to the broader challenges facing cities that fail to address fundamental issues like public safety, infrastructure, and housing. St. Louis, already burdened by economic stagnation, could face further setbacks unless city leaders refocus on foundational public services.

Flashy developments like downtown stadia won’t cut it; St. Louis needs to avoid repeating those expensive mistakes. Instead, cities should prioritize core services. For St. Louis, that means investing in improving public safety, maintaining infrastructure, and focusing on policies that encourage growth.

Without addressing these fundamental issues, St. Louis risks being caught in a permanent cycle of decline. Other cities should also heed this warning and ensure that they focus on sustaining a healthy urban core before chasing grandiose development projects.

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Fast forward to 2024, and that sales tax is up for renewal. However, because the pension system is much better funded now, city leaders don’t want to renew the 3/4 cent sales tax as it is. That would generate more money for the pension than it needs.

So Springfield leaders put a commission together to come up with ways to alter the tax revenue distributions before it goes to voters in November.

A Kinsley Gaffe is when politicians accidentally say something truthful they didn’t mean to. (This is the second such gaffe worth highlighting in Missouri in the past few months.) In this case, the statement is filtered through the media, I admit, but the reporter must have got the gist of it from local leaders:

The tax will sunset at the end of March 2025, hence why the city has been adamant to put a replacement tax on the November ballot to avoid a lapse in the sales tax that local shoppers would feel. (emphasis added)

A lapse that voters would feel? Meaning a tax reduction Springfield residents may actually like? Dear Lord, we certainly can’t have that. If they like the reductions, they may not vote to increase the tax when we want them to, Oh, the humanity.

The new proposal is for voters to keep a 1/4 cent sales tax for public safety—which can still include pension costs—and change the rest of the tax (1/2 cent) to fund “comprehensive plan capital and parks projects and neighborhood and community initiatives.” (More on that issue later.)

Springfield still has a defined-benefit pension plan for its public safety employees. It should have switched to a defined-contribution plan years ago. At least the city, according to the article, closed the old plan to new members several years ago and, presumably, replaced it with a less generous plan for new hires. That’s progress, but a defined-contribution plan for Springfield employees would have been better for the taxpayers and the city. Throwing tax dollars at the pension fund appears to have worked for now, but further change is needed. As former Show-Me Institute Chief Economist Joe Haslag wrote about the Springfield pension situation years ago: “The existing approach got Springfield into this situation. Some reform is needed to avoid the same problems in the future.”

The post Springfield Wants to Be Darn Sure Its Sales Tax Rate Doesn’t Ever Go Down appeared first on Show-Me Institute.

If I offered you $100,000 a year for the rest of your life to retire from your current job, would you take me up on the offer? What if I said you could have the money and also get a different job if you wanted? If you would answer yes to these questions, you have gone a long way toward understanding why turnover is high among public school superintendents. We financially incentivize them to “retire.”

Take a look at the recent article from Springfield News-Leader’s Claudette Riley, in which she discussed the problem of superintendent turnover. Nearly every person cited in the report was a superintendent who has retired and is working another job. Doug Hayter retired as superintendent of Branson Public Schools; he now draws his retirement benefit and serves as the executive director of the Missouri Association of School Administrators (MASA). Kelly Hinshaw and John Jungman, also quoted in the report, are retired administrators who now work for MASA.

Given the rules of our current state pension system, it makes financial sense to do just as these folks have done. Consider some of the other retiring superintendents listed in Riley’s report. Shawn Randles is retiring from the Logan-Rogersville School District. After a 31-year career, he’s eligible to draw 75 percent of his final average salary of $152,002 for the rest of his life. Depending on the payout he chooses, this could be as much as $114,000 a year. According to Riley, Randles “plans to start a second career in an education-related field.”

Chris Ford, Fordland’s “retiring” superintendent is in a similar position. He’s eligible to draw $108,000 a year for the rest of his life while continuing to work. He has taken a position at Evangel University.

We are told turnover among superintendents is high because the job is stressful. It is curious then that many retire and take up similar positions in other states. Take Crane’s retiring superintendent, Chris Johnson, who has accepted the superintendent post in Prairie View, Kansas.

Stress may be a factor, but the truth is that superintendent turnover is high because our state’s pension system makes it financially beneficial for our veteran administrators to leave. They can earn more by retiring than they could if they kept working.

As Riley’s piece explained, superintendents are eligible to retire after 30 years of service in the profession or after their years of service plus their age equal 80. This means that someone who starts teaching right out of college could be eligible for retirement by their mid-50s. These individuals can then draw their pension and take on new roles, as long as those roles are not covered by Missouri’s Public School Retirement System.

We should applaud efforts to mentor and train superintendents, but if we truly want to reduce turnover the solution is clear—we must change our retirement system. This does not have to mean abandoning the current defined-benefit pension system, though offering a defined-contribution option is something that should be considered. The solution could be as simple as allowing superintendents to draw early disbursements from their pension fund while retaining their current jobs. This would diminish the financial pull to retire and take up a new job in another state or outside of PSRS.

As long as we continue to make it financially lucrative to retire, we will continue to see our best educational administrators retire shortly after they hit year 30.

The post To Reduce Superintendent Turnover, Change the Pension System appeared first on Show-Me Institute.

Daniel DiSalvo is a senior fellow at the Manhattan Institute and a professor of political science in the Colin Powell School at the City College of New York–CUNY.

Read Big City Pensions and the Urban Doom Loop here.

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Chad Aldeman is the Policy Director of the Edunomics Lab at Georgetown University. Prior to joining the Edunomics Lab, Chad worked at Bellwether Education Partners and the U.S. Department of Education. He has published reports on K-12 and higher education accountability systems; school choice; and teacher preparation, teacher evaluations, and teacher compensation. He also served as the founding editor for TeacherPensions.org. His work has been featured in the Washington Post, New York Times, and Wall Street Journal. Chad holds a bachelor’s degree from the University of Iowa and a master’s of public policy degree from the College of William and Mary.

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The post How We Fund Schools with Chad Aldeman appeared first on Show-Me Institute.

The cities covered in the report are:

• Ballwin
• Blue Springs
• Cape Girardeau
• Chesterfield
• Columbia
• Florissant
• Independence
• Jefferson City
• Joplin
• Kansas City
• Lee’s Summit
• O’Fallon
• Springfield
• St. Charles
• St. Joseph
• City of St. Louis
• St. Peters
• University City
• Wentzville
• Wildwood

Click here to read more, or download the report by clicking on the link below.

The post Tax Burden in Missouri’s 20 Largest Cities appeared first on Show-Me Institute.

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Missouri is in that majority.

Missouri’s debt burden was $8.2 billion in fiscal year 2020. That’s $4,400 per taxpayer needed to fully pay the state’s bills, up from $4,300 the year before. Much of this debt burden comes from unfunded retirement obligations, for which “the state had only set aside 60 cents for every dollar of promised pension benefits and 6 cents for every dollar of promised retiree health care benefits.” This debt burden earned Missouri a “C” grade and a ranking of 24 out of the 50 states for fiscal health.

This report provides further evidence that Missouri was not in a financial position to successfully weather the economic downturn that followed the COVID-19 pandemic, something my colleague Elias Tsapelas and I have written about. Re-evaluating our tax structure and tackling pension problems (by shifting employees to defined contribution accounts, for example) would likely improve Missouri’s grade and ranking in this report. Fixing the state’s fiscal health is a big task, but it’s something that lawmakers should start to prioritize.

The post Missouri Is in Poor Fiscal Health appeared first on Show-Me Institute.

In the 2021–22 school year, 39 percent (yes 3-9 percent) of education dollars will be spent on pensions. While education spending has grown 17 percent since 2000, teacher and administrator pension costs have risen 458 percent. 458 percent!

When the pension part of the state spending pie grows, the other slices of the pie shrink. That means that money that could be going to today’s teachers is going to yesterday’s.

Pensions are a perfect storm for governmental jiggery-pokery. The bill for bad decisions doesn’t come due for years after most of the people making decisions are out of office. The benefits are clear to those receiving them but are opaque to taxpayers (who tend to focus on metrics like teacher salaries, not total teacher compensation). Legislators can hide behind actuarial alchemy to obfuscate the magnitude of their decisions. Everyone wants teachers to have a safe and solid retirement, so quibbling with how much is spent can come off as teacher bashing.

Thankfully, Missouri is not nearly in the dire straits that Illinois is. Now, Missouri pensions are unfair. They invest in riskier assets to chase higher returns when they are underperforming. And, they are a bad deal for most teachers. But Illinois still serves as a cautionary tale for us.

And ballooning pension costs are bad for everyone (except, to be fair, those who are receiving them). It is bad for current teachers and students, who miss out on funding that could be used to support them. It is bad for current legislators, who have less money to spend on higher education, healthcare, roads and bridges, and more. And it is bad for future teachers, students, and legislators, who will be hemmed in by the decisions that their forebears made.

The great political philosopher Edmund Burke argued that the social contract is “a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.” Irresponsible pension policy violates that social contract and should be roundly criticized. Well done to the good folks at Illinois Policy for doing so.

The post Why We Need to Take Pension Costs Seriously appeared first on Show-Me Institute.

Truth in Accounting’s report ranks the country’s 75 most populous cities by their taxpayer burden (or surplus for a few cities), a number calculated by dividing the money needed to pay the city’s bills by the estimated number of city taxpayers. A larger taxpayer burden means a larger rank number.

According to the report, Kansas City went into the pandemic in poor fiscal health, with a $1.7 billion debt burden. This equates to a taxpayer burden of $11,300 per person and lands Kansas City at 57th in the country. St. Louis City is in even worse shape. Financial decisions have left St. Louis with a debt burden of $1.3 billion and a taxpayer burden of $14,600 per person. St. Louis ranks 63rd out of the 75 cities in the report. Missouri’s two largest cities both received a D grade for fiscal health.

All the cities on this list, including Kansas City and St. Louis, have balanced budget requirements, meant to “prevent elected officials from shifting the burden of paying for current-year services to future-year taxpayers.” As explained in the report, “if a city has a balanced budget requirement, then spending should not exceed earned revenue brought in during a specific year. Unfortunately, in the world of government accounting, things are often not as they appear.” Cities can do things such as keeping pension and other employment compensation costs out of the budget to give the illusion of a balanced budget. For example, Kansas City has $870 million and St. Louis has $380 million in underfunded pension benefits for city employees, so they each clearly need to be contributing more each year to the city pension funds to achieve true financial stability (as well as moving forward, not backward, with pension reforms).

Times are tough for individuals, businesses, and governments, but we shouldn’t forget the importance of accountability and balancing the budget. Truth in Accounting has released this report in previous years, and St. Louis and Kansas City have continuously ranked in the bottom third of cities. Show-Me Institute researcher Patrick Tuohey wrote this years ago and it still holds true: Instead of chasing shiny new projects and schemes, policymakers “should focus on the less glamorous but more important task of regaining sound fiscal footing.”

The post Kansas City and St. Louis Receive D’s in Fiscal Health appeared first on Show-Me Institute.

There are other sorts of inequities, however, that are much stealthier. They are no less unfair, just less noticeable. Take for example the Public School Teacher’s Retirement System of Missouri. Most public school teachers love this retirement plan. It allows many teachers to retire by their mid-fifties and earn a steady income for the rest of their lives. But most teachers don’t know that this system has been built with a structural flaw that favors some individuals over others.

As Andrew Tipping and I demonstrate in our forthcoming peer-reviewed article in Educational Researcher, “Cross-subsidization in Teacher Pension Benefits: Examining Rates of Return Among School Districts,” teachers in some school districts get disproportionately larger returns on their retirement contributions. We calculated the rate of return for a career teacher in 490 school districts. The rate of return is the interest rate that would be needed, based on all contributions, to pay out a specific benefit for a pre-determined period of time. For instance, if I put $100 into a savings account and wanted to take out $110 in a year, I would need to earn a 10 percent return. We simply do the same sort of calculation, but over a 30-year career and a 30-year retirement. We find a tremendous disparity in the rates of return among career teachers in different school districts. The variation of rates of return among school districts is displayed in the histogram below taken from our article:

Source: Authors’ calculations on the basis of Missouri School Boards’ Assocation (2015), Public School Retirement SYstem of Missouri (2016), and district salary schedules.

We found that in general, smaller, lower-paying school districts have lower rates of return and larger, higher-paying school districts have higher rates of return. This occurs because of the structure of the system. So why does this happen?

Let me try to explain. Imagine you and I decide to pool our investments, and we each invest $500 for a total of $1,000. Only, we do not invest our money all at once. We do it over a period of five months. You invest $100 every month for five months. I invest $65 the first month and increase my investment each month with a final contribution of $123 in the fifth month. I somehow convince you that we should base the payout on just the fifth period and not our entire investment. We earn a 10 percent return on our $1,000 investment, but distribute the funds based on our final period five contributions, which leads to a 45/55 split, despite both investing the same amount of money in total.

That is essentially what happens in the pension system and no one seems to notice.

Teachers in poorer school districts contribute more in the beginning of their career relative to the end, and because of the way the system works, they end up subsidizing the retirement benefits of teachers in wealthier school districts. This cross-subsidization of pension benefits occurs because benefits are not tied to total lifetime contributions. In fact, only the final three years out of a teacher’s entire career are used to determine benefits. It is this design of the system that allows this unfairness to occur. Yet, unlike my first graders, no one seems to be shouting out “That’s not fair!”

The post Unfairness in Missouri Teacher Pension System appeared first on Show-Me Institute.

Advocates for Missouri’s current defined-benefit pension system argue that this type of system, where teachers are promised a generous and guaranteed pension once they retire, is needed because it increases teacher retention. Yet, there is little evidence that this type of system is a cost-effective method for increasing teacher retention. Rather, the example of these superintendents demonstrates how the system pushes out high-quality individuals. It does the same for teachers (teachers and superintendents are in the same pension system). When teachers hit 30 or 31 years, regardless of their quality or their desire to continue teaching, the financial incentive of the pension pushes them out.

Recently, Gov. Parson asked school superintendents to come up with a plan to increase teacher pay. One solution, which I have little hope will ever be recommended by the superintendents, is to change how we compensate teachers. A pension is basically a form of delayed compensation. We require teachers and their districts to contribute 14.5% of their salary to the pension system (the numbers are different in St. Louis City and Kanas City). That’s 29% of a teacher’s salary that is going into a pool that they may have access to if they make it to retirement.

We could give teachers in Missouri a 10% raise next year, with minimal cost to the state, if we just change this system.

Currently, teachers in the Public School Retirement System (PSRS) do not contribute to Social Security. The pension system is their only required retirement savings. In this proposed scenario, the teacher would receive a 10 percent raise on his or her salary. The teacher would begin contributing to Social Security (6.2 percent from the individual and the employer) and would be eligible for Social Security benefits. Additionally, the teacher and his or her employer could contribute a combined 5 percent of salary to a defined-contribution retirement account, such as a 401k or a cash balance plan. Of course, with a smaller raise the teacher could contribute more to retirement. 

There are numerous benefits to this proposal. First, teachers would own their retirement accounts. They would not lose any money if for some reason they do not vest at five years. They could also continue to work past 31 years and their accounts would not lose value. Teachers could also choose to invest more in their account, as many do now in 403b accounts.

The biggest benefit is that teachers would have higher salaries today. If we want to keep our best teachers and superintendents, higher salaries are a much more effective tool than outdated pension systems.

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