Many public workers are overpaid relative to their private sector counterparts, especially in large, unionized states such as Wisconsin, Ohio and California. This may sound like a controversial claim, but it shouldn't. A consensus is building about the need for reform.

How have public-sector pensions responded to the financial crisis? By doubling down, thus jeopardizing taxpayers.

Nationwide, as governors and legislators seek to rein in labor costs, public-employee unions are protesting that their members are actually underpaid. But a growing body of evidence strongly suggests that their protests have no basis in fact.

We cannot say for sure how much job security is worth. But we can say it is worth something more than zero and we believe that our estimates are reasonable or even conservative.

Using fair-market valuation, Nevada PERS’ unfunded liabilities would rise from about $10 billion to almost $41 billion. Shifting PERS to a defined-contribution, 401(k)-type structure would ensure that benefit obligations are fully funded going forward and that everyone is clear regarding the pensions promises the government has made and its ability to fulfill them.

Market-based measures of public pensions funding may better informstate governments and taxpayers of the liabilities and risks they face.

Current pension accounting rules significantly understate state pension plan liabilities and overstate their funding health. Using accurate accounting, Washington’s combined plans would face a $50.6 billion short fall. By private pension standards Washington’s pension system would be considered endangered.

Public pension accounting standards encourage state and local governments to promise too much, fund too little and take too much risk with their investments.