Retirement may be something teachers fantasize about, but for policymakers it is a nightmare. Unfortunately, reality is confronting policymakers head on in the coming years as droves of baby boomers retire, and health care costs soar.

In easily accessible language that you may find yourself wishing you didn't understand, economists Robert Costrell and Michael Podgursky lay it on the line, giving us a scary glimpse of just how fundamentally broken state pension systems are. While it's not news that states are facing unfunded liabilities of a size that will bring down many a state economy absent radical change, Costrell and Podgursky also assert that pensions systems work against the best interests of teachers, teacher quality and the economy.

Here are some important takeaways and points to consider:

Teacher pension growth is not linear. The notion that a teacher's pension grows with each year of service is in fact erroneous. Instead pension payouts actually peak, typically when the teacher is in her early 50s, and then decline if the teacher chooses to stay in the classroom, thus creating a huge financial incentive to retire. Though quite complicated to compute, unions have financial advisors telling teachers exactly when that peak retirement year is. Beyond this "sweet spot", pension wealth actually decreases if the teacher continues to work.

Current pension formulas are fiscally irresponsible. Unfortunately for states, teachers who retire relatively young likely draw pension benefits for at least as many years as they taught. This contributes to the unfunded liability comes in--what teachers collect in their pension bears little relation to what they paid into the system. Couple that with retiree health benefits (needed because Medicare doesn't kick in until age 65) and costs skyrocket.

This push-pull effect of teacher pensions may be bad for teacher quality. Podgursky and Costrell argue that the system encourages bad teachers to stay until retirement and good teachers to retire earlier than they might have otherwise. However, it may also be true that the system encourages good teachers to stay rather than leave the profession to pursue other career options. Either way you spin it, however, adults are having to make decisions based on the finances involved and not their commitment to children.

A possible solution? While unions argue that states ought to raise taxes to meet the needs of these pension systems, Podgursky and Costrell insist that the profession needs to move towards a defined contribution system that the private sector now uses. These pension plans would also allow the retirement plan to follow a teacher if she moves to another state, something most current plans do not permit. As important, the retirement payout would be in proportion with each person's dollar investment. In other words, states (and ultimately taxpayers) wouldn't have to pick up the tab when promised pension payouts exceed available funds in state coffers.