Pensions and other retirement benefits have become a multi-trillion-dollar black hole for state and local government budgets, sparking fierce battles between elected officials and voters on one side and public sector unions on the other.
Estimates of the public pension fund gap for police, firefighters, teachers and other municipal, county and state employees range from about $1 trillion to nearly $3 trillion. The gap does not include the cost of retiree medical care promised to many public sector workers, likely adding hundreds of billions more.
The underfunding could lead to significant cuts in government services, tax increases or both, according to experts. But it’s also provoking a backlash that could reduce many of the benefits promised to more than 19 million current state and local government workers nationwide.