There is no one monolithic entity of "the states," here. On an individual basis, yes, of course some states have not provided for what they have promised, and/or have raided the funds, to use the money for other purposes. Kentucky is a perfect example of this - foolish and heinous action on the part of governors and state legislatures, to the extreme.
No, most pension plans call for 7-9% returns. And the closer the pension returns are to actual returns then the funds arent fully funded. US Treasuries, which account for many pension funds 50% base, has hovered around 2-3% since 2007. How can the financial predictions have such disparity between actual bond rates vs estimated pension fund rates? Everyone involved, politicians, pensioners, pension fund managers, are living in financial fantasy land. Short term band-aids and save my job extensions need to be replaced with smart budgeting decisions. There should also be a universal standard per state. Citizens as well as pensioners need to be more involved in pension decisions while migrating to a defined contribution plan.
-In 49 states, “balanced budgets” are required by constitution or by statute; Vermont,
the sole exception, follows the practice of its peers. In truth, however, there is no common
definition of a balanced budget, and many states resort to short-term sleight of hand to
make it appear that spending does not exceed revenue. The techniques include shifting the
timing of receipts and expenditures across fiscal years; borrowing long term to fund current
expenditures; employing nonrecurring revenue sources to cover recurring costs; and delaying
funding of public worker pension obligations and other postemployment benefits (OPEB),
principally retiree health care. (truth and integrity)
-Overall funding rates were the worst in Illinois (with just 39% funded) and Kentucky (44%), where pension funding levels have declined for three years in a row. Just two states managed to finish the year with 100%-funded pensions: South Dakota and Wisconsin. (yahoo)
-There are a number of ways for states to retire their pension debt more effectively, the report notes. Those include shorter amortization periods; steady, level interest payments instead of deferring larger payments until later; and using defined payment schedules rather than refinancing the debt every year. (yahoo)