This is the Cato Daily Podcast for Tuesday, March 4th, 2014.

I'm Caleb Brown.

The state and local pension crisis will get worse before it gets better.

That much is clear, but there are some states that are moving ahead with positive reform.

Will Freeland is a research analyst at the American Legislative Exchange Council, we spoke last week.

When we evaluate the state pension problem,

state and local pension problem in the United States,

what do people still not get? I mean even lawmakers, what do they still not get about it?

They have a lot of rosy assumptions about how these types of things are going to work out.

So they don't realize how deep the problem is.

They often from their state actuary, they get reports that underestimate how bad things are

in their state pension, how underfunded it is because they don't look they have a say a rate of return that they're expecting it's just totally unreasonable and so if you have a higher expected rate of return, 8%, 9%, then what you need to fund and how underfunded

you are, it doesn't look so bad.

And so there's a lot of that.

Some of it's just political pressures, quite frankly, as well.

A lot of people don't want to

understand because it's not necessarily in their interest and people don't

probably understand that it's these lawmakers who are the people in charge of

hiring these actuaries yeah Yeah, that's right.

I mean, it's a whole system.

I mean, there's supposed to be some level of independence

for the actuaries, but we don't always see that.

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