Is There a Relationship Between Teaching and Scholarship?

The following claim is made on the University of Vermont's philosophy department's website:

The Philosophy Department at the University of Vermont is committed to pursuing philosophical scholarship while offering our students the highest quality undergraduate instruction. Our faculty are expected not only to be knowledgeable, but to be active contributors to their fields... We believe that students learn best when interacting directly with professors who are engaged in making philosophical progress.

Is there reason to share this belief?

I suppose the two arguments in favor of the claim are (1) those who are not up to date in the field will not have the complete sense of the topic when teaching it, and (2) the excitement that comes with mining the edge of a field would be communicated in the classroom, if the questions are live in the mind of the instructor, they will more easily be made live questions in the minds of the students.

The arguments against are (1) undergrads come nowhere close to the edge, so as long as the person has a solid grasp of the field, it is a matter of pedagogical talent and care which has nothing to do with an active research program, and (2) given that there are only 24 hours in a day, it becomes a zero sum game and time devoted to research is time not devoted to teaching and expecting your people to be active contributors to their fields will mean they will not be able to spend that time with students or mining the edge of recent pedagogical advances that would make them better teachers.

So, do you buy the UVM philosophers' claim? Is an active research trajectory either necessary or sufficient for successful college level instruction? Why or why not?