This an annual report on the financial status of state and local public pension systems, put into a historic context. State and local governments face a wide range of challenges in general – and some of the largest are growing and unpredictable pension costs. The scale and effects of these challenges are best understood by considering the multi-decade financial trends and funding policy decisions that have brought public sector retirement systems to this moment.
In April 2025, financial markets experienced a sudden and sharp decline, triggered by the Trump administration’s aggressive tariff proposals. For public pension funds, it was just another jarring market shock that wiped out hundreds of billions in asset values and threatened an already fragile system.
Like the Covid market crash of 2020 and multiple volatility shocks since then, state and local pension funds survived—but they haven’t thrived. Not only did the need to recover losses from April mean missed opportunities for growth, but the episode revealed how reliant public plans were on political events breaking in their favor to produce improved returns. State and local pension fund assets aren’t resilient as much they have been fortunate.
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more.