We propose an economic reformulation of contribution policy integrating: (1) formalization of sustainability as the steady-state contribution rate, incorporating both the expected return on risky assets and a low-risk discount rate for liabilities; (2) derivation of contribution adjustment policies required for convergence toward the target funded ratio and contribution rate; and (3) a stylized optimization framework for simultaneous determination of the target portfolio return and funded ratio. This analysis provides new theoretical insights into the basis for pre-funding vs. pay-as-you-go, resting on the convexity of the long-run risk-return relationship, and also potentially practical guidelines for contribution policy.
Costrell, Robert M., and Josh B. McGee. (). Toward An Economic Reformulation of Public Pension Funding Policy. (EdWorkingPaper:
-674). Retrieved from
Annenberg Institute at Brown University: https://doi.org/10.26300/wrsb-as16
Teacher shortages and lack of teacher diversity have led to growing efforts nationally to recruit teaching assistants (TAs) to be classroom teachers. Substitute teachers are not typically considered in these efforts.