BOSTON (TheStreet) — Pension reform is a political football that has increasingly pitted state officials against state and municipal workers relying on retirement benefits.

“The confluence of the severe recession and the collapse of the housing bubble dramatically slashed tax revenues,” says a recent study by the Federal Reserve Banks of Cleveland and Atlanta. “The toll has been particularly heavy on public pensions, whose troubles with chronic underfunding predate the financial crisis. By one estimate, the nation’s 126 largest public pensions were underfunded by at least $ 800 billion in 2010. By another, 54% of the country’s state and local plans will have exhausted their funds as early as 2034. It now seems inevitable that sacrifices will be required from current employees, employers, and in some cases, retirees.”

How bad is the funding gap? The study calls it “a matter of debate,” but according to the funding-status measure prescribed by the Government Accounting Standards Board, the nation’s largest 126 pension plans were underfunded by around $ 800 billion in 2010, while critics of GASB’s accounting methods estimate the aggregate pension fund shortfall to be as much as $ 4 trillion.

…