Secret payments made by the pension's money managers or other investment services providers, such as the custodian to the fund, to any of the potential parties mentioned above at a minimum undermine the integrity of the pension's investment program and almost certainly detrimentally impact investment performance.

Rhode Island state lawmakers are continuing their review of Gov. Lincoln Chafee's $8.2 billion state budget proposal by giving close examination to education funding. Chafee's proposal would increase public education spending by $30 million.

The state Retirement Board unanimously adopted its consultant's annual report on pension valuations on Wednesday, meaning that taxpayers' contributions to the retirement system will increase from $380.3 million next fiscal year to $404.5 million in FY2014.

Superior Court Judge Sarah Taft-Carter ordered both sides into mediation to reach an agreement regarding the lawsuit filed by several labor unions that seeks to overturn the state's landmark pension reform law.

A top state lawmaker joined the treasurer in opposing Gov. Lincoln Chafee's call for negotiations with labor unions seeking to overturn sweeping changes to the state's retirement system.

According to data released this week by Milliman, Inc. and by the Pew Center on the States, there was a $859 billion gap between the obligations of the country's 100 largest public pension plans and the funding of these pensions.

A look at 10 states that have taken steps to address unfunded pension liabilities - or the amount of money the state has to pay out but for which it has no funding in the pension pool.

According to the job specifications, the OMB director "will be responsible for providing strategic leadership and direction to the state budget office, office of regulatory reform, performance management office and federal grants management office.''

Governor Chafee says the $8.1-billion state budget he signed into law Friday is "by no means a perfect" one, but has at least "some measures" to help Rhode Island reach a "more stable and prosperous future."

Senate members shot down several amendments, including a proposal to ease the need for new taxes by requiring state lawmakers to pay a 25 percent co-share for their health insurance and taking money from the General Assembly's controversial legislative grants program.

Rhode Island state lawmakers are continuing their review of Gov. Lincoln Chafee's $8.2 billion state budget proposal by giving close examination to education funding. Chafee's proposal would increase public education spending by $30 million.

The state House of Representatives will be asked to vote next week on a new $8.1 billion state budget for the year starting July 1, following the budget's introduction and swift approval by the budget-writing House Finance Committee, shortly before midnight on Thursday.

Superior Court Judge Sarah Taft-Carter ordered both sides into mediation to reach an agreement regarding the lawsuit filed by several labor unions that seeks to overturn the state's landmark pension reform law.

While President Obama proposes to freeze the pay of federal employees for the next two years, there is no such effort to freeze the wages of the thousands of state workers who are slated to get a 3-percent across-the-board raise on Jan. 2 and another 3-percent raise in mid-June.

The last across-the-board raise for state workers was 2.5 percent in July 2009. Their next anticipated raise - originally scheduled for July 2010 - was delayed for six months as part of a deal that Governor Carcieri struck with the major state employee unions last fall to save an estimated $36 million over his final 15 months in office.

To better understand best practices in Medicaid reform, we explore five recent state-level Medicaid reforms and their ability to simultaneously reduce costs, maintain or increase access, and survive the politics of reform.

Secret payments made by the pension's money managers or other investment services providers, such as the custodian to the fund, to any of the potential parties mentioned above at a minimum undermine the integrity of the pension's investment program and almost certainly detrimentally impact investment performance.

The state Retirement Board unanimously adopted its consultant's annual report on pension valuations on Wednesday, meaning that taxpayers' contributions to the retirement system will increase from $380.3 million next fiscal year to $404.5 million in FY2014.

Superior Court Judge Sarah Taft-Carter ordered both sides into mediation to reach an agreement regarding the lawsuit filed by several labor unions that seeks to overturn the state's landmark pension reform law.

A top state lawmaker joined the treasurer in opposing Gov. Lincoln Chafee's call for negotiations with labor unions seeking to overturn sweeping changes to the state's retirement system.

According to data released this week by Milliman, Inc. and by the Pew Center on the States, there was a $859 billion gap between the obligations of the country's 100 largest public pension plans and the funding of these pensions.

A look at 10 states that have taken steps to address unfunded pension liabilities - or the amount of money the state has to pay out but for which it has no funding in the pension pool.

The threat posed by underfunded pension liabilities is hardly unique to state government. A recent back and forth between Mercatus Center scholar Eileen Norcross and officials from the town of Warwick, Rhode Island demonstrates the blindness of some public officials to recognizing the approaching fiscal fiasco. Although this instance specifically regards a city pension, lessons can be drawn that apply equally to state pensions. 

Just weeks after overhauling the state's public pension system, Rhode Island lawmakers plan to consider giving cities and towns the power to revamp municipal pension plans.

For pension reformers in Texas and across the country, Rhode Island was just a matter of time and a bellwether.

Rhode Island's Supreme Court is declining to hear an appeal from state officials who sought to reverse a lower-court ruling that public pensions amount to a contract and cannot be arbitrarily changed.

Time to add a new diagram to the state budget and policy playbook--your state's highest paid employee is probably a football or basketball coach.

The bombshell Oregon Medicaid study released this week should give all states pause as they consider plans to expand Medicaid under the Affordable Care Act. States must now ask what the point of Medicaid is in the first place. 

To help prevent union strong-arming that fleeces taxpayers, we should know precisely what public union officials are demanding and what government employers are offering in any collective negotiation about employment terms and conditions.

And it isn’t just individuals who must reconfigure budgets, the states are looking at smaller “paychecks” as well.

Just as state spending should identify performance outcomes, tax preferences should as well.

State and local politicians may think they can relax as third quarter tax revenues showed 12 consecutive quarters of growth year over year. But that would be a mistake in light of pension investments that again failed to erase any of more than $5 trillion owed to government workers.

This map looks at state government budgets - specifically, how much of each state's budget comes from the federal government. Mississippi tops the list with 49% of its general revenue coming from Washington; Alaska, by contrast, gets only 24% of its general revenue from the feds.

A National Insistute on Retirement Security brief on proposals to freeze local and state defined benefit pension plans in a shift to defined contribution plans that limit taxpayer risk ignores is what protections are needed against endemic public pension corruption and offers no explanation of who is going to sacrifice to pay this massive hidden debt.

The "State of the States" report released this week puts hidden state and local debt at $7.3 trillion, stating: "States do not account to citizens in ways that are transparent, timely or accessible." If state and local governments fail to act decisively now, cities, towns and counties will go bankrupt, and states could fall beyond a fiscal event horizon into perpetual debt.

The U.S. Census Bureau today released its Annual Survey of State Government Finances for 2011, and it shows the "revenue crisis" politicians have been blaming on the Great Recession is false.

From Fiscal Years 2007 through 2011, politicians and government pension fund managers blew all the money taxpayers and government workers contributed. All of the $611 billion that was supposed to be invested is gone. So is the $609 billion earned on investments. According to the latest U.S. Census Bureau Annual Survey of Public Pensions: State-and-Locally-Administered Defined Benefit Data, more than $1.22 trillion came in to the pension plans and more than $1.29 trillion went out instead of growing to pay guaranteed future benefits. Those promised benefits grew by about $1 trillion over the same period. 

Members of a state and municipal workers organization recently got a dose of reality on pension reform at a gathering of public workers who have benefited from defined contribution plans for 40 years. A key fact from the presentations was stated by Ken Parker, city manager of Port Orange, Florida: "Note: the only way a governmental entity can truly fix its cost related to retirement is to change from a Defined Benefit Plan and adopt a Defined Contribution Plan."

Of all accounting frauds state leaders commit to push devastating costs onto future generations, the worst is deluding citizens about the security of so-called catastrophe insurance funds. Hurricane Sandy and a tsunami scare in Hawaii at the same time should be warning enough for governors to start paying the premiums.

When a "premier global consulting and actuarial" firm proves in its first Public Pension Funding study that those government pensions are doomed, it is past time for action. Milliman's study showing a 33 percent increase in pension debt over official numbers from a minute change in accounting should be enough to spur reform.

No matter what the Government Accounting Standards Board says or how grossly state and local politicians pervert new guidelines to continue looting workers' pension funds, reality will triumph when the real reckoning comes. Just ask the National Association of Bond Lawyers, municipal bond rating agencies and actuaries who do the calculations.

Anyone interested in the state and local government pension crisis - and all Americans should pay attention to this hidden $4.6 trillion hidden black hole in our economy - must read Alicia H. Munnell's new book, "State and Local Pensions: What now?" It is the best primer on this complex issue except for one missing factor: Reality.

When a widely recognized world pension expert refers to current defined benefit and defined contribution plans as "dysfunctional," it is time for politicians to stop their lying and denying that this fiscal catastrophe is spiraling out of control.

When State Budget Solutions started looking at real total state debt, just the staggering size of the numbers alone did not tell the whole story. So how to get a fix on the real burden taxpayers must bear in each state? Per capita is the usual way. But even that does not tell the whole story.

The worst news is that earnings on investments were a negative $14.2 billion, a $66 billion decline from the same quarter last year. These pension funds paid out $53.4 billion in the second quarter, putting a year-over-year hole of at least $68 billion in capacity to pay future benefits.

If current state and municipal workers and retirees refuse to accept their fair share of sacrifice on retirement benefits, the looming taxpayer backlash will sweep away a century of progress. Workers must act voluntarily now because politics and law never will resolve this crisis before the money runs out, and legal protections they are counting on may be as false as politicians' promises.

Maryland Gov. Martin O'Malley told Democratic faithful gathered at the national convention Tuesday that "Democratic governors are balancing budgets," when he knows that is a lie, especially in the Old Line State. Twenty Democratic governors account for about 53 percent of total state debt, according to a study released last week by State Budget Solutions.

Vice presidential candidate Rep. Paul Ryan of Wisconsin and New Jersey Gov. Chris Christie put on cheery faces for the faithful this week at the Republic National convention, but both know the catastrophe states are hurtling toward because of hidden debt.

They just keep on letting politicians pick their pockets. Latest official public pension data - the most optimistic available -- compiled by Census show investments administered by states fell short more than $1.2 trillion even by their own trick accounting from Fiscal Year 2007 through 2011. Yet managers scraped off at least $45 billion in "Other Payments" to enrich a handful of insiders.

"Unsustainable" is the word state officials heard from experts for the first time at their annual National Conference of State Legislatures gathering here, where one of four sessions on the pension crisis drew a standing-room only crowd of more than 300.

When U.S. Sen. Dick Durbin of Illinois tried to fire up a ballroom full of state legislators here Tuesday morning, he used the phrase "states rights." It popped up a few other times as the National Conference of State Legislatures met to its annual "Build Strong States" summit. The only problem: There is no such thing as "states rights."

We're going to pay enough for 2,000 "Curiosity" Mars rover missions, but the money will produce no government services or benefits of any kind. Yet, nowhere does a state legislative directive on pensions approved Tuesday mention how states are going to pay this debt.

National Conference of State Legislatures members meeting here ended their first day with even more bad news about municipal bonds, debt interest that takes more than 20 cents of every dollar they spend each year and that pays for essential public works, among other things.

The word "taxpayer" appears only 14 times in 165 pages of the Securities and Exchange Commission's Report on the Municipal Securities Market released Tuesday. Only two of those mentions in the body of the report refer to looking out for our interests.

Question: When does 80 percent of something equal 100 percent? Answer: Never, except in the fantasy world of public pension accounting. The American Academy of Actuaries Tuesday sent a letter to Sen. Orrin Hatch, R-Utah, puncturing that fantasy in a committee report he released six months ago.

Push past the spin. Most public workers covered by defined benefit pension plans - and taxpayers stuck with the tab - don't have to wait years to find out what's happening to their money. They can get quarterly reports from the Top 100 funds representing 89.4 percent of "financial activity."

If our states and municipalities were trauma victims, they would be bleeding out while doctors argued about injuries. Even as financial gurus Paul Volcker and Richard Ravitch studied the municipal and state fiscal crisis for a report released this week, public pension debt alone grew to an untreatable $4.6 trillion, according to analysis released Wednesday by economist Andrew Biggs for State Budget Solutions.

Anybody who doubts whether public pensions can push state and local governments beyond a fiscal event horizon into a black hole of perpetual debt should read an auditor's note in Montana's latest annual report: "The Unfunded Actuarial Accrued Liability amortization period is infinite ...."

It may be equally as worrisome to know that the Department of Labor is also engaging in the practice of publishing one set of rosier numbers, only to amend them to the real numbers days later, thereby avoiding dissemination of the worst numbers.

Public pensions just keep falling further and further behind. In fact, they have fallen so far they never can get up again. The local and state pension crisis got at least $300 billion worse in the first quarter of this year compared to 2011, according to analysis of latest data released by the U.S. Census Bureau. That added at least $1.5 trillion to the shortfall -- calculated at $800 billion to more than $4 trillion as of 2010 -- future taxpayers must make up on top of all other taxes and rate hikes.

Despite the obvious need for maintaining these funds, many state lawmakers deplete or insufficiently fund the reserves to cover costs elsewhere, leaving constituents to fend for themselves during bouts of extreme weather.

Now, 70 percent equals 100 percent. The people crashing municipal and state pension plans into a bottomless fiscal abyss just released a "study" they claim finds them "solidly funded" despite irredeemable losses in the recession and lagging growth since. They did it by lowering their standards. No problem, they expect taxpayers to make up the difference.

Maybe average Wisconsin voters didn't consciously know each household must pay $1,563 in extra taxes every year for the next 30 years just to fund public pension shortfalls. But they probably realized they don't have a pension anymore, even if they have jobs. And any lucky enough to have jobs know that before Scott Walker became governor, they were paying higher taxes while working harder and longer at lower pay with slashed benefits.

Politicians are forcing public pensions to take more risks with taxpayer money and public workers' retirements. Recent accounting reforms actually will make the crisis worse, according to a study just released by three economists. They call for "drastic reform." Congress actually has the power to impose something drastic now.

The threat posed by underfunded pension liabilities is hardly unique to state government. A recent back and forth between Mercatus Center scholar Eileen Norcross and officials from the town of Warwick, Rhode Island demonstrates the blindness of some public officials to recognizing the approaching fiscal fiasco. Although this instance specifically regards a city pension, lessons can be drawn that apply equally to state pensions. 

This all boils down to who gets to pick taxpayers' pockets first, public pensioners or municipal bond investors? More people are waking up to the hard reality that when it comes to state and local government, somebody has to lose money over the next few decades. The National Association of Bond Lawyers is worried enough about it to issue "Considerations" for advising clients who think they're getting safe investments.

Despite an organized campaign to stop public pension reform, reality is beginning to break through.  One recent report outlines a possible path to long-term solutions and another details the necessity of states and municipalities finding their own way because federal bailout is impossible.  And Chicago Mayor Rahm Emanuel released a plan that could have been based on both reports.

Hey, young public employees, what are you going to do when your pension checks bounce after you paid in for decades? That is what will happen in many - maybe all - states and municipalities sooner or later if they do not reform right now. If you want to see the future, just look at Illinois. One citizen there did, and came up with a real reform plan that might work.

Public employees should take their pension money now and run to avoid risk of getting reduced benefits - or nothing - in the future. It's the best deal for them and for taxpayers. A growing chorus of credible voices including the Government Accountability Office, a Federal Reserve bank and now the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government confirm state and local government finances are "spiraling out of control" and even draconian reforms only make it "more likely" that future benefits will paid in full.

Hey, young public employees, what are you going to do when your pension checks bounce after you paid in for decades? That is what will happen in many - maybe all - states and municipalities sooner or later if they do not reform right now. If you want to see the future, just look at Illinois. One citizen there did, and came up with a real reform plan that might work.

This is what it sounds like when the Federal Reserve Bank screams: "Much has been written about the various headwinds restraining economic activity over the near term. However, our economy also has other headwinds to confront over the medium- to-longer-term. ... the finances of some state and local governments are also under stress and in need of serious adjustments."  - Federal Reserve Bank of Cleveland President Sandra Pianalto

Woonsocket, a city of 41,186 residents in northern Rhode Island, remains in the dark after the city deferred plans to turn its 1,200 street lights back on this month. The city's plans changed when local school officials announced an unexpected $2.7 million deficit left over from last year's school budget.

Michigan directly tackled its pension problem in 1997 by replacing the traditional "defined-benefit" pension plan with a 401(k)-style "defined-contribution" retirement plan for new state employees. The Michigan reforms have been immensely successful. Unfortunately, the story in Illinois is not nearly as encouraging.

Frozen funding, mismanaged distributions, and states' fiscal uncertainty relating to disaster relief is increasing frustration over the failed disaster management practices of FEMA-the need for reform is clear.

Bob Williams' review of developments in pension legislation and law suits from around the country.

New York and Rhode Island leaders are working to reduce the cost of state pensions.

As states across the country struggle to balance their budgets perhaps no single issue is hampering their options more than the federal restrictions of the Medicaid program. This is why Congress needs to provide states Medicaid flexibility.