Today is a celebration of teachers across the nation. Most of us can likely reflect with gratitude on one or more of our teachers in college, high school and even elementary school who had a profound impact on our learning. As Bill Gates once said, “Technology is just a tool. In terms of getting the kids working together and motivating them, the teacher is the most important.” We at RSI certainly agree.

Teaching has always been considered an under-appreciated, under-paid job in comparison to the importance the position holds in helping form and educate a student’s mind, and, in a larger context, to its relation in the continuity of a free society. Sadly, though, as old-school public pension systems across the U.S are continually underfunded, it’s the teachers who are paying the price.

“When governments are dedicating hundreds of millions of additional dollars to pay for market losses, they can’t afford things like teachers,” said RSI Board Member and former Utah Senator Dan Liljenquist last year in Forbes. “When pension costs explode, teachers’ salaries typically become stagnant. In Utah, for example, we typically fund pensions first, healthcare second, and then whatever resources are left over go to salaries. And that’s not the way things should be.”

One needs to look no further than Chicago to see what happens to teachers when pension systems run amok. Just last year, the school district had to lay-off more than 500 teachers and an additional 500 school workers, due in part to rising pension costs coupled with underfunding of the system. In Chicago Public Schools, 89 cents out of every new tax dollar goes to pay pensions, leaving only 11 cents out of every dollar for the rest of education.

Aside from pensions being underfunded, other costly problems can arise for teachers due to the way many pension systems are built and administered. Take for instance Missouri, which uses a ‘three-year rule’ to determine a teacher’s final pension. Under the system, which is shared by many teachers’ pensions throughout the country, all teachers contribute the same percentage of pay annually to the pension fund, but because the pension is based on the last three-years of a teacher’s career, rather than a career-long average, it’s the teachers who get bigger raises toward the end who will earn a larger pension.

Usually it is rural teachers who get the short end of the stick, explained James Shuls, assistant professor of educational leadership at the University of Missouri-St. Louis last month in the St. Louis Post-Dispatch. “The poorer school district gives much smaller raises over time,” Shuls explained. “They have a relatively flat salary schedule.” In his latest study, Shul explains that well-funded districts can be more generous in pay, which results in a huge discrepancy in pensions.

Shuls’ latest study will appear this spring in the Journal of Education Finance. He has written about other issues with teacher pensions, including their growing cost and the risk they pose for taxpayers.

For more information on what's eating teachers’ salaries and pensions, check out report, “What Do Pac-Man and Pensions Have in Common?”