This NY Times article reveals a scam that New York AG (“attorney general” or “aspiring governor,” take your pick) Eliot Spitzer won’t touch with a ten-foot pole:
Every year since 1999, New York City has reported that it has all the money it needs to pay for the pensions that have been promised to city workers.

With the retirement plans said to be financially sound, state politicians have happily showered city employees with generous pension enhancements ó annual cost-of-living increases, holiday bonus payments, early retirement with full benefits ó that are the envy of private-sector workers, whose pension benefits have eroded.
But a close inspection of city pension records shows that the funds committed to the plans may fall well short of the cityís promises to hundreds of thousands of current and retired workers. They look fully funded chiefly because the city has been using an unusual pension calculation that does not comply with accepted government accounting rules. Even the cityís chief actuary, who helps produce the annual reports, says the official numbers are ìmeaninglessî when it comes to showing the plansí financial health.
The chief actuary, Robert C. North, has prepared a little-noticed set of alternative calculations showing that the gap in the pension funds could be as wide as $49 billion. That is nearly the size of the cityís entire annual budget and the equivalent of the cityís publicly disclosed outstanding debt.[ . . .]

Senior New York City officials bristled at the suggestion that their annual reports were flawed and strongly disagreed with any suggestion that the pension plans might be under-funded.
ìThe cityís pension funds are 99.6 percent funded by acceptable methods for evaluating and disclosing pension fund assets and liabilities,î said Martha Stark, the New York City finance commissioner. . . .
Ms. Stark said that she was sure of the pension fundsí health because the city was contributing responsibly to them every year, and because she was confident that the investments in the funds would meet their targets of 8 percent average annual returns over the long haul. Many other public plans have investments targets in this range. [. . .]
Asked why the pension funds appeared to be fully funded back in 1999, when they were swollen with gains from the stock market boom, and still appear to be almost fully funded now ó after losing billions of dollars in the stock market and granting billions of dollars worth of new benefits ó she said that the numbers were ìsmoothedî to avoid short-term fluctuations. She also noted that the city had been increasing its annual contributions in recent years.

Arnold Kling observes that “if you assume 8 percent annual returns, many things are possible. Until the actual returns come in.” As noted in this earlier post regarding accounting for other government liabilities, the government bears the entire risk of a shortfall in regard to these public pension plans and, thus, the only way they remain viable is through the same type of alleged accounting gimmicks and deficient disclosure for which the Justice Department prosecuted Arthur Andersen out of business, Ken Lay to death and Jeff Skilling to prison, probably for much of his remaining life.
So, what is Spitzer or the Justice Department going to do about the same type of activity in regard to public pensions?