State and local tax revenues have taken a hit from the COVID-19 pandemic. In many cases, the fiscal health of public pension plans have gone from bad to worse. Elected officials are insufficiently incentivized to adequately fund pension systems, and voters are not incentivized to closely follow pension investment practices. Public-sector unions also tend not to pay much attention to pension funding, but rather focus on advocating for increased benefits.

In their new policy brief, Eileen Norcross and Emily Hamilton explore the problems in US state and local pension finance, including underfunding and poor investment choices, and some potential solutions.