Digging the hole
Teachers’ pension benefits are a big part of the problem; they alone account for $13.6 billion in unfunded actuarial liabilities.
The average Massachusetts teacher’s salary was $60,029 in 2009, according to the PERAC report. Teachers hired after July 1, 2001 pay 11 percent of their earnings into the pension system, which means that these teachers may end up paying an average of about $6,600 into the retirement system per year.
Retired Massachusetts teachers, meanwhile, earned an average annual benefit of $35,750 last year. An immediate annual annuity of $35,750 from the national average teacher retirement age of 58 costs approximately $502,841 for Massachusetts men and women, according to Annuity Quick Quote. With a total of 89,788 teachers active in the workforce and 52,107 retired teachers receiving benefits in 2009, the gap between teacher pensions and contributions represents a major financial headache for the state.
http://www.advisorperspectives.com/newsletters10/Massachusetts_Pensions_in_Crisis.php