The estimated underfunding of America’s state public-pension plans is larger than ever, with the American Legislative Exchange Council (ALEC) putting the total at $5.6 trillion or almost one-quarter of the federal deficit. But as disturbing as this number is — and as hard as it will be for legislatures and municipalities to dig out of their financial holes — the pension problem has some redeeming features.
Recent court decisions, for example, suggest that judges in California, Connecticut, and other states with low pension reserves are finally becoming skeptical of laws and practices that inflate post-retirement benefits or shield unproductive public employees.
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