Recent actions by the accounting world are about to light up a serious national issue and one that also plagues the Land of Enchantment. The new GASB pension standards will require that the unfunded liability of public pension plans be part of the reporting requirement. The net pension liability is the difference between the total pension payout and the assets set aside to pay those liabilities. In New Mexico that insolvency number for the Public Employee Retirement Act and the Education Retirement fund is over $11,000,000,000. That is almost double the entire state budget. Nationally this problem is 757 billion bucks. Because that is not part of the report or included in balance sheets and newsletters many public employees are unaware. That makes it even more difficult to enact the reforms necessary to fix the problem. We currently have a cost of living adjustment of 3% that happens every year despite the actual cost of living index. During the recession when the COL was basically 0 the pensions were paying out at 3% while the slipping economy was significantly reducing the assets of the funds. This result is a double whammy for the funds. We have enacted some reforms to chip away at the problem with the ERB, and PERA is proposing action for the upcoming session of the legislature, but both fall short of fixing the problem. It is not an easy thing to fix. While those of us on the private side have watched our retirement funds fade with the markets, the public sector has seen the steadily promised increases. Without at least a formula tied to the economy and changes for existing plans I don’t believe there is a way to fix the problem. All we need is another downturn in the economy and that future problem could be sooner than later.