Seth Perlman, Associated Press
The Pew Center on the States releases a 50-state report that finds the gap between the promises states have made for public employees’ retirement benefits and the money they have set aside has grown.

The pension fund managed by Utah Retirement Systems on behalf of 100,000 public employees is falling short of its expected return on investments, meaning cities and other government entities may have to dig into their budgets to make up the shortfall.

To call the situation a crisis is perhaps premature. But to attack it as the symptom of a problem that strikes at the heart of responsible fiscal policy is appropriate. The issue is full of complexity, but the fundamental problem is itself not terribly complicated. Government has simply fallen into a situation where it is committed to spend more money than it has.

The Utah fund assumes a 7.5 percent annual return from investments — largely in equities markets. That level of return proved reasonable at the time it was established, but no longer.

Utah's predicament is hardly peculiar. A study by the nonpartisan and non-profit Pew Center on the States indicates that 31 states currently oversee pension funds that have fallen below 80 percent solvency. Several municipal governments have literally been bankrupted by obligations to funds that have sharply out-paced revenues.

While there is a great deal of debate over how best to reduce the federal deficit, there is markedly less discussion over the composite deficit of government pension funds managed on state and local levels. That is surprising given the eye-popping dollar figures involved. A recent analysis by the Republican Staff of the U.S. Senate Committee on Finance, headed by Utah Sen. Orrin Hatch, estimates the combined state, local and municipal debt as a result of pension fund obligations is at least $4.4 trillion.

That's a number that has to be reduced, one way or another, and that cuts to the core of questions over government's role in establishing and maintaining entitlement and benefit programs.

It is tempting to approach the pension problem by simply readjusting the numbers — down-size the benchmark rate of return and require more contributions from municipal governments or beneficiaries. That approach doesn't solve the problem.

It is time now for a thorough review on a molecular level of the entire public pension concept and apparatus.

On the tactical side, a question worthy of study is whether public pension funds going forward should continue to be managed by public entities, or might they be turned over to private investment brokers or consortiums who would compete for such contracts based on their ability to achieve and sustain necessary rates of return?

On a broader level, we need a healthy and honest debate over whether such funds should be considered sacrosanct. Certainly for those currently enrolled, obligations should be met. But to continue to offer such benefits to future public employees is another question entirely.

Governments have regarded them as incentives for workers who may otherwise opt for better paying jobs in the private sector. But in recent years private benefit packages have shrunk and often are smaller than those generally available to government workers.

The predominant issue before the current generation of politicians is how to get the nation's financial house in order. That cannot be accomplished without, among other things, acquiring long-term control over the expenditures required for entitlement and benefits programs, whether they are national or local.

Regardless of how our policymakers respond to that issue, they must respond. Government, like individuals, cannot live in a state of perpetual debt. Failing to address that reality will take us to a place where there is no safety net.