MORE ON THOSE UNDERFUNDED PUBLIC PENSIONS, from Illinois:

This turmoil on Wall Street likely will result in taxpayers making up for investment losses within the state’s public-employee pension systems either with higher taxes or through state spending cuts. State pension assets dropped almost $14 billion in the period from Oct. 1, 2007, to Sept. 30.

What this means is that pension systems, underfunded by the state for years, face an even bigger gap between their assets and what they’ll ultimately pay retirees. For example, in June 2007, the Illinois Teacher’s Retirement System, or TRS, was at a funding level of 64 percent, making it one of the most underfunded public pension systems in the nation.

But the bear market has sent investments within the system into a tailspin. A June 30, 2008, audit found that due to investment losses the fund is now funded at only 56 percent level, according to a report issued Thursday by TRS.

Illinois, with its history of political corruption and mismanagement, is probably one of the more serious cases, but this problem is likely widespread. And I suspect things are much worse now than they were on June 30.

UPDATE: Reader Michael Grubbs writes:

I live in the metropolitan New York area. I love when the sniffy urbanites claim superiority to those living in suburban or rural regions of that great unknown west of the Passaic river. I point out that their dependence on big government and public services will bankrupt their institutions and ultimately their way of life. We had a transit strike when the city asked the transporation union members to chip in something akin to 3% of their health care cost. Never mind a toll booth attendant can make over 100k a year and retire in 20 years. Permanent disability claims are never investigated.

I like to remind those who nostalgically dream of living in the gritty New York of 1982 that they only need to wait. Somewhere down the line, the city will go bankrupt and need to raise taxes to an untenble levels. Anyone with who needs to earn money will set off for gentler climates. New York will be reduced to the idle rich and the idle poor.

That seems like a risk. And Tom W. Bell emails:

I thought, Glenn, that I at least once saw you speak in praise of describing problematic political pensions as “over-generous” rather than “under-funded.” I very much favor the former usage, for what I suppose are obvious rhetorical (and factual!) reasons. Allow me to kindly suggest you consider using it in lieu of the latter, more popular but misleading, label.

Good point. They’re underfunded in terms of providing overgenerous benefits, since people are really only willing to pay for the benefits they fund . . . .

ANOTHER UPDATE: Reader Donald Gately writes: “If my personal 401k plan is down, it is my problem. But if a public employees’ pension fund is down, it is also my problem. I’ll probably have to work a few more years to make up what I’ve lost in the past 6 months. Is it really too much to ask government bureaucrats to do the same?”