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Since pension obligations are so extensive, these two Texas cities have found it difficult to hire police officers, repair potholes, and carry out other routine operations in the city

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Since pension obligations are so extensive, these two Texas cities have found it difficult to hire police officers, repair potholes, and carry out other routine operations in the city. In addition to the ballooning obligation, investment returns have fallen short of expectations. In recent years, most investment funds have earned far below the 8 percent that is built into funding plans. This increases the gap between funds available and benefits promised. For instance, Chicago city officials' inability to address their pension funding gap means that the city can pay for only one-quarter of the benefits it has promised. Therefore, Houston and Dallas can see what will come next if they are unable to address their funding gap in public pensions.

Questions

1. How would you address this pension funding crisis if you were a city official in Houston or Dallas? How would you address this problem if you were a member of one of the public unions?

2. What might city residents/citizens do to prevent such problems from occurring? What are the potential challenges associated with your strategy?