More on that problem here, and here. I suspect that we’re only beginning to guess at the extent of this situation nationally.

UPDATE: Reader Dave Ivers emails:

I teach Public Budgeting (aimed mostly at sub-state level budgeting) and have for the past 9 years in a Masters of Public Administration. You wouldn’t believe (well, maybe you specifically would) how many current or would-be local government employees have no idea how much money from the current budget it takes to fund future retirement benefits. It’s going to eat entire local budgets alive. I’ve been preaching this for the past nine years. Even a couple of my colleagues who should know better don’t usually address the problem much.

Roughly speaking, it’s not unusual for 2/3 or so of local operating budgets to be devoted to employee compensation, current and future. It’s also not uncommon to fund future benefits as meagerly as possible, counting on the growth of future revenues to bail the system out. At least 3 Michigan cities in the past decade have gone bankrupt and bailed out on their pension ‘promises’. It’s probably going to happen to more.

Getting local politicians *and* local unions to think more than a year or two is all but impossible. Do you realize that practically no local jurisdictions even have a Liabilities Budget?

Sheesh. It’s like banging your head against the wall.

Yeah. I think I may be glad that my retirement is all in 403(b) and related funds, not a state retirement system.