The Trillion Dollar Gap: Underfunded State Retirement Systems and the Road to Reform

This report from The Pew Center on the States shows that at the end of fiscal year 2008, there was a $1 trillion gap between what states had set aside for retirement benefits for government workers ($2.35 trillion) and the cost of the states' retirement promises ($3.35 trillion).

The report notes for every dollar spent to reduce that unfunded retirement liability, states will have one dollar less to spend on other priorities. The result could be far higher state taxes or cuts in important state services.

The report puts the blame for this situation squarely on the shoulders of past and current state government officials. "To a significant degree, the $1 trillion reflects states' own policy choices and lack of discipline."