Optimal Wage for Public Employees?

The Buckeye Institute is a libertarian organization whose website (9/2012) suggests has the primary goal to reduce  the salaries of public employees.  This begs the question of what is the optimal salary of public employees?  Should we pay teachers and police at the minimum wage?  Arguably, one of the reasons that poor countries have poor-quality governments is that they pay public servants too little.  That leads to corruption.  If public employees are indifferent about losing their jobs, then they will be more tempted to be corrupt.  I think it is best to err on the side of having well-paid public servants and demanding a lot out of them, but they could certainly be overpaid.  The market signal is the number of applicants for public-sector jobs relative to private sector jobs.  If there is a bigger applicant pool for public jobs, then they are paid a higher real market wage, but the Buckeye Institute does not look for market signals.  Instead they ask readers to compare their own salaries with the salaries of public servants like teachers (the most common public-servant job).  This is a good way to develop public resentment, but teachers have college degrees and 70% of Americans do not, so a more apples-to-apples comparison would compare teachers salaries to other college-educated professions. 
Furthermore, Buckeye inflates teacher incomes.  For example, they claim that the lowest paid teachers get a salary of $38k and a total compensation of $53,898.70.  But Bluffton elementary school teachers salaries start below that according to Buckeye's own data and although Bluffton is well below the state average, Bluffton pays better than some districts.

A real problem in financing public servant wages is that politicians are always tempted to promise to pay more later rather than to pay more now.  That is one reason why public-sector employement has such large pension promises.  It is easier to cut taxes now in exchange for bigger pensions later because some other politician will face the burden of paying for the pension.  This kind of tradeoff is particularly unprofitable because most individuals have a very high discount rate and that makes these deals expensive.