Here is an interesting talk about what is likely to happen in places like Detroit, Chicago, Philadelphia, and Nashville. It is long, so I will summarize:
- Cities bargain with municipal employees, but since employee unions support policitians, the bargaininig is far from "arms length."
- It is unlikely that overly generous, unfunded pensions will be restructured, except through bankruptcy.
- Fortunately, restructuring is likely to be found legal under the bankruptcy laws because funding is like "collateral."
- This will fix the balance sheets of city governments, but also give the unions a stake in funding the pensions (fix the income problem)