Teacher pensions may not be the topic of the next Taylor Swift Billboard topper, but those-in-the-know thought the topic was hot, hot, hot at a February conference in Nashville, sponsored by the National Center on Performance Incentives.

What proved so contentious? The DB camp (that's Defined Benefits in pension parlance) who were in the minority in attendance complained more than a few times of the decks being stacked by the DC majority (Defined Contribution). Speaking on behalf of the DC camp, economist Dan Goldhaber, asserted that the status quo was not an option: the necessity of pension reform, not any particular affinity for the kind of pension plans states chose to offer teachers, was the motivation for DCers.

There was also an argument over what is the appropriate "discount rate" for states to calculate their pension fund earnings, with what seemed like one lone actuary in attendance having to defend the current practice of using 8 percent over 4 percent. But a TIAA-CREF exec proved to be a turncoat. Jaws dropped right and left. (The traitor!) (The debate is not inconsequential as, for example, under an 8 percent discount rate, Massachusetts' pension fund is 70 percent funded, but under a 4 percent rate, it is only 44 percent funded.)

AEI's Rick Hess--wearing a tie!--offered some of the most important insights of the meeting on how states have gotten into so much trouble on the pension front. He argued that pension enhancements have been a politically easy way to keep teachers happy by providing more total compensation, but deferring the costs to future years.

Hess' point was well illustrated by a fascinating example on precisely those dynamics, supplied by economist Michael Podgursky. Podgursky pulled together the changes made to Missouri's pension system over a single decade.

As seen below, Missouri's legislature radically increased teachers' total pension wealth over a period of 10 years but probably without any real understanding on the part of said legislators, as the changes were made incrementally from one legislative session to the next. By gradually increasing COLA levels, introducing early retirement options, and changing the calculations for a teacher's average salary (FAS), Missouri teachers retired earlier with significantly greater benefits -- while across the nation other workers were retiring later with decreased Social Security benefits.