GM and Ford made big headlines as they painfully restructured their pension and benefits programs for their employees, last year.  Many employees had to take discounted payouts or early retirements for GM and Ford to avoid possible bankruptcy.

Now, the same thing is occuring in virtually every municipality across the country.  Rising health insurance and pension costs are far oustripping the funding sources that cities, counties and states have traditionally used to pay for these programs.    Here's a quick snapshot of the growing problem from a recent study.
            
        Communities with less than 75% funding for programs
                        Pension Type                   1999        2007
                    Police Pension                        11%            67%
                    Firefighter Pension                  8%             45%

    This means that a growing number of communities will have to find new methods for increasing their pension funding.  There are three options for the communities and states in this predicament:
    
            1. Increase taxes
            2. Reduce the workforce
            3. Take bankruptcy

      Valejo, CA was the most recent community to opt for #3.  Much to the dismay of the union leaders, Valejo took the only viable option available to them, and took bankrupcty.

    In the next few years, you will see a growing focus on this problem.  The consequences of which, are likely much greater than the current US housing debacle.