At the peak of the stock market boom in the late 1990s, state and local public pension systems experienced an unprecedented growth in their asset value. As a result, pension benefits for public employees were increased in many states and at the same time government employers reduced their contribution to the pension systems. The stock market downturn between 2000 and 2002, however, brought this almost perfect combination to a halt. All of a sudden, most public pension systems were facing large deficits and the annual pension contribution also skyrocketed for many state and local governments. This all happened at a time when these governments also faced one of.
