The teacher strike in Chicago has again put teacher compensation in the news. And while most of the coverage tends to focus on salaries, retirement benefits—and their costs—are often ignored along. As a recent column in The Wall Street Journal pointed out (“Teachers Want Higher Pay, but Pensions Swallow Up the Money”), these are no small sums.

Though Chicago’s pension crisis is its own animal, it can offer insights on how Oklahoma can improve its own pension system. There have already been a number of reforms to improve the fiscal health of Oklahoma’s various pension programs, including the Teachers’ Retirement System of Oklahoma (TRS). These reforms have helped Oklahoma shrink its unfunded liabilities with Oklahoma now ranking 18th in the Tax Foundation’s most recent ranking of each state’s funding ratio. That ranking is based on the state’s entire pension system, but TRS has steadily increased its funding ratio since 2011 when major pension reform was passed.

Before those pension reforms, TRS had a funding ratio of around 50 percent from 2000 until 2010. Since 2010, TRS’ funding ratio has grown from 48 percent to 73 percent. During that time the system’s unfunded liability has fallen from $12.3 billion to $6.3 billion when adjusted for inflation.

HB 2132 alone, passed in 2011, decreased the TRS unfunded liability by an estimated $2.9 billion. The rest of the improvement has come from a record-setting stock market. A downturn in the stock market, however, could lead to an increase in unfunded liability which would shift more of the burden onto taxpayers to keep the system afloat. Taxpayers have already been increasing their payments to OTRS. Since 2000 taxpayers’ contributions to OTRS have grown from $399 million annually to $759 million annually, when adjusted for inflation, with taxpayers share of total contributions growing from 57 percent in 2000 to 70 percent in 2018. The possibility of a market downturn leading to asset losses is not unlikely; TRS has reported an asset loss in 10 of the last 19 years.

While Oklahoma has made strides in improving its public pension systems, the only way to completely avoid any risk of beneficiaries not receiving what was promised them—or of taxpayers being forced to foot the bill—is to switch from a defined-benefit (DB) to a defined-contribution (DC) plan. Oklahoma has already made this switch for new enrollees in the Oklahoma Public Employees Retirement System (OPERS). A DC plan for TRS would not only give more flexibility to educators (as it more closes resembles traditional 401(k) plans), it would also protect taxpayers from a system that can become unsound due to short-sighted political promises.