According the the Center for Budget and Policy Priorities (CBPP), only 3.8 percent of a state or locality's operating budget goes to funding pension funds. One solution to bridging the gap between future benefits and current contributions would be to raise the states' contributions.
Many see this move as unlikely as it would take funds from other services provided by the municipalities. So states are taking or considering other steps raising the retirement age, cutting future benefits for current employees, or asking employees to contribute more of their own money to their pensions.
States have little choice but to put more of a burden on current employees, says Don Boyd, a senior fellow at the Rockefeller Institute of Government. Cutting benefits for future employees has little immediate impact on the funding problem and cutting pension payments to retirees is almost impossible given pension payments are protected by states' constitutions.
"In the broad middle, raising employee contribution rates is going to be a significant part of the solution," Boyd says.
As for giving less to current retirees, it's an option that's been legally explored, but has yielded little success. When it comes to retireess, states can cut benefits other than pensions, whether it be eliminating cost of living increases or asking the retirees to shoulder a bigger share of their health care costs.