Pandemic Recovery and State and Local Pension Reform

In 2019, few could have predicted that state and local pension funds would be faced with a pandemic that would slash state and local tax revenues and harm investment returns. Nevertheless, fund managers should have spent the past decade preparing for an inevitable market downturn. Instead, just as when the 2008 financial crisis hit, policymakers have spent the previous decade valuing their pension liabilities and assets as if investments always go up. This policy brief explores the deep-seated problems in US state and local pension finance, including underfunding, poor investment choices, and potential avenues for reform.