You've just hit upon a major problem: handling retirement funds on a cash-flow rather than an accrural basis. Unfortunately, there's not really any 'right' way to handle the situation: there are many people who took jobs at lower salaries than they would otherwise have demanded on the basis of promised retirement benefits. It is not really fair to such people to declare that they do not deserve the benefits for which they have already paid a substantial opportunity cost if not a direct cost.
The real problem is that if a politician reduces a teacher's salary by $1,000 in exchange for extra benefits whose present-cash-value is $1,500, the books will show that the politician has reduced the budget by $1,000--not that he's increased it by $500.
BTW, speaking of cash-flow versus accrural accounting, there's a certain other retirement program which is being run on a cash-flow basis and it's going to be a whole lot worse.