But according to Tom White, partner in the law firm Arnstein & Lehr, something changed around 2008. Low interest rates combined with a substantial market decline, creating fewer assets and decreasing the funding ratio.

"Some people called it the perfect storm," he said. "Everything that could have gone wrong for these plans did, so you went from really well funded to very poorly funded."

Ary Rosenbaum, an ERISA attorney at the Rosenbaum law firm, said government budgets are also a factor.

"The state and local governments have these budget deficits and one of these tremendous budget deficiencies has been the funding of pension plans," he said. "So the state and local governments are under a huge amount of stress. It's similar to what's going on with Social Security."

And in some states, like Illinois, the government decided not to fund the pension at the normal level for a number of years, according to White. These contribution holidays, combined with "spiking" practices that gave some employees much higher pensions than the actuaries had calculated, left the pension funds much lower than they should have been.

Two sides of the story

For public employees who have put in their time, the possibility of losing their pension or getting less than they anticipated is a real concern.

"I worked for 30 years in a jail environment and nobody wanted my job," said Jeffrey Byer, who retired eight years ago. "I earned my pension and I feel I deserve my monthly stipend. …. The people who are complaining don't realize all the services they were provided by these public servants and now do not want to pay for these services which were provided for many years."

Byer added that he thinks the real issue lies with administrators and those who abuse the system by pulling down multiple pensions.

Eli Lehrer, the national director for the Center of Finance, Insurance, and Real Estate at the Heartland Institute, said he can certainly see where public employees are coming from.

"There's a good case for saying that workers should receive pensions exactly as promised, and certainly public workers," he said. "There's an implicit idea that they work harder for less wages and other benefits, including pensions."

But regardless of whether public employees deserve the pensions, the fact is their state and local governments may not be able to fund them for much longer.

"Defined benefit plans are a tremendous financial obligation," Rosenbaum said. "Governments are financially strained, and as people grow older and live longer, and stock markets underperform, they don't meet their targets. Pensions are underperforming. … So the thought is if we cut back on funding for future employees or replace pensions with 401(k) style plans, they can get their fiscal house in order."

Another potential issue is retiree health care. White said that most jurisdictions provide their retirees with health care for the remainder of their lives. And with health care costs being nearly impossible to estimate, that can be dangerous to the budget.

Reform possibilities

Though labor unions are still battling to keep the best plans possible for their members, some reform plans have started to come out of the woodwork that seem like a first step in solving the pension budget issues.

Lehrer said there are about 35 states where there are no pension troubles. And while it's difficult to generalize because every state has a different pension system, in the states where reforms are needed, progress is being made.

"In general, reform plans involve switching to a two-track system," Lehrer said. "Employees that are currently employed get benefits under the old system, which is more generous, and new hires get different benefits."

But Lehrer noted that switching to a two-track system wasn't a cure-all: Illinois switched a few years ago, but the state has still not resolved their funding issues.

White said the problem with the two-track system in Illinois, where he resides, is that it doesn't affect the current underfunding problem. He thinks higher contributions are on the horizon for Illinois, though he's not sure where the money will come from.

"The problem with higher contributions is that a state, a county, a city, they don't have more resources," White said. "So what's going to decrease to cover it? Sure, you can increase taxes, which Illinois did, but there's only a finite amount of resources…so what's going to get cut?"

California cut back services to the poor in order to fund pensions, White said, and it's likely Illinois will follow suit — and that layoffs will occur, too.

New York moved to a tracked system as well, Rosenbaum said, and increased the amount that employees have to contribute to their plan. But only time will tell if the reforms will stick, he said.

"Some states will be more successful [in their reforms] than others," Rosenbaum said.