The question on the table is: Who pays the teachers' pensions, and more specifically where does the money come from? Is it a state fund, a county fund, or a city fund?
All school districts in Wisconsin (as far as I can tell) participate in the Wisconsin Retirement System (WRS). Any municipal employer in Wisconsin can participate in the WRS, and the State of Wisconsin and the Milwauke Public School system are participants. Milwaukee County and the City of Milwaukee have their own retirement programs and do not participate in WRS.
Chapter 40 of the Wisconsin Statutes governs the operations of the WRS.
http://nxt.legis.state.wi.us/nxt/gateway.dll?f=templates&fn=default.htm&d=stats&jd=top
The laws governing the WRS require that both employers and employees contribute a percentage of employees' wages to the public employee trust fund administered by the WRS. Under existing law, employers can agree to pay their own contributions AND the employees' contributions. The Budget Repair Bill would prohibit such agreements.
The employer and employee contributions go into the public employee trust fund, not the general budget of the State of Wisconsin. The WRS has the power to assess additional contributions against municipal employers and employees to deal with unfunded liabilities, usually due to market downturns. Municipal employers who fail to remit full contributions on behalf of their employees can have their delinquencies withheld from their municipalities' state aid. The State's only liability to the WRS is for contributions on behalf of state employees. All retirement benefits for participating state and municipal employees are paid entirely out of the public employee trust fund.
On a related note, many supporters of the Budget Repair Bill cite the fact that public employees can retire at age 55. While that is true, the vast majority of employees, including teachers, cannot collect their full retirement benefits until age 65. Police, firefighters, and elected officials are the major exceptions. Regardless of when public employees draw retirement, their benefits come entirely from the public employee trust fund with no impact on the State's annual budget. Reports are that retirement benefits from the public employee trust fund are fully funded for the next 19 years, however since contributions to the trust fund are percentages of wages, public employee layoffs and decreased wages will negatively affect contributions to the trust fund, possibly resulting in unfunded liabilities earlier than 2030.
The following link is to the website of the Wisconsin Department of Employee Trust Funds, and contains a wealth of interesting facts: http://etf.wi.gov/news/2011_Contribution_Rate_FAQ.pdf
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