State Financial Health
A study cam out analyzing the funding status of each state’s pension funds. It is not pretty. And these are funding levels using assumptions like 8% or 8.5% portfolio returns. If the returns are lower, the funding shortfall will be worse.
NPR has a nice graphic of the data you can play with here.
And the Center on Budget and Policy Priorities has published a table of state budget shortfalls.
This shows that the states are facing a shortfalls a little more than twice as bad as the previous recession. I haven’t found numbers for earlier ones to give it a greater context. But it seems clear that the main danger is if these shortfalls continue beyond 2012. I predict this will result in higher volatility for municipal bond funds than we have seen historically.