You are Entering the Government Pension Zone …

You are Entering the Government Pension Zone … [Michigan Capitol Confidential]:
"An alternative universe of finance and accounting practices

Most people don’t understand how government defined-benefit pension systems operate, which is one of many obstacles to reforming the deeply underfunded systems. 
Part of the problem is that the methods used in pension funding and accounting are very different from anything a regular person ever faces in their own personal finances.
For example, people rarely buy a product, including a financial product, without knowing its cost.
But projecting the cost of pension systems requires making various assumptions about the future to decide how much must be contributed to meet defined-benefit pension promises.
Making a wrong assumption can put taxpayers on the hook for billions of dollars in unfunded liabilities.
Complicating this, the incentives are strong for policymakers to make “rosy scenario” assumptions that let them get away with paying less now to prefund future benefits.
.....In the real world, individuals who don’t make required payments on their obligations face penalties. 
In the pension zone, the state continues to pay less into the school employee pension system than the amount its own actuarial accountants say is needed to cover future pension benefits without extra penalty.
All these factors have contributed to unfunded pension obligations growing so large they are diverting resources from other vital needs including road repairs and public safety.
Yet those who urge a common-sense reform like “stop digging a deeper hole” – close the systems to new employees and give them 401(k)s instead – are put off with false claims of excessive “transition costs.“"