The CPAs warned of the possibility of bankruptcy by the state should it fail to adequately fund its growing obligations. 

The two pensions sponsored at the state level— the State Employees Retirement System and the Public School Employees' Retirement System — could have unfunded liabilities of $65 billion by 2021, according to the report.

Mounting obligations have already forced downgrades from ratings agencies, resulting in higher borrowing costs for about $10.9 billion in debt.

The PICPA said the report's goal was to provide policymakers with technical assistance and strategic guidance, "much in the same manner CPAs advise their clients on a daily basis." 

While the group suggests current benefit levels for existing retirees not be touched, it does recommend a challenge to case law suggesting benefits to current employees cannot be changed. 

"If comparisons with private-sector employers indicate that benefits for current public employees are too rich, a realignment of benefits should be considered," the report said.

Such a "realignment" would most likely lead to a court battle. 

The CPAs also said new state employees and teachers should be enrolled in a defined contribution plan, and that a cap on defined benefits should be phased in, based on an average of the last five years of a worker's service.   

The report also said pension obligation bonds should be strictly prohibited, and that annual funding requirements strictly enforced, the deferral of which explains much of the Commonwealth's pension problem. 

At the municipal level, Pennsylvania is a unique case, given its sheer number of municipalities. More than 25 percent of local government pension plans in the U.S. are located in Pennsylvania. Only Illinois has more. 

Nearly all of those Pennsylvania plans — 98 percent — have fewer than 100 participants, and 70 percent are defined benefit plans. 

In the aggregate, those local plans account for $8 billion in unfunded liability. More than half of the plans are considered to be adequately funded, but they only cover 20 percent of the total participants. 

For those inadequately funded plans covering the rest of the state's municipalities and local pensions, the report recommends broad-based reform, including removing pension benefits from collectively bargained labor agreements, freezing benefits for local police and safety personnel unions, and increasing the retirement age and length of service required for pension eligibility. 

Pennsylvania Gov. Tom Wolf has said he wants to let state pension changes made in 2010 play out. Known as Act 120, those reforms helped address an anticipated spike in pension costs by "smoothing" the increases over a long period of time. That law also reduced benefits for new hires.