Unrealistic Pension Accounting

By their own accounting, state and local government pension plans are in bad shape. In total they face an estimated shortfall of $628 billion. But that reckoning is off by five-fold. If the rosy accounting rules used by pension funds are stripped away, the real funding gap is closer to $3 trillion--a debt in excess of all outstanding state and local government bonds. The damage done by bad accounting has a real price to be borne by taxpayers.