Conventional wisdom says that most states and school districts will make budget cuts in the most boneheaded manner possible: lay off their young teachers, eliminate art and music classes, decimate sports programs, and so forth. And evidence from the current recession indicates that this conventional wisdom is usually right. But as John Edwards might have said, it doesn't have to be that way.

Consider New Mexico, where legislators from both sides of the aisle are proposing commonsense changes to the state's pension systems in order to save money and respond to dismal market conditions. Under the reforms, public employees, teachers included, would have to work 30 years before becoming eligible for retirement (up from 25), would see a greater share of their paychecks go to the retirement fund, and would make larger contributions to the state's health care system for retirees.

"We just have to have a system where people work longer and contribute more for that system to make it fly," said the state's House Republican Leader, Tom Taylor. The Democratic sponsor of the bill went one step further: "If we don't do something to bring these plans into some sense of being funded completely, then I don't think the Legislature has any other option than to go to defined contribution plans--401(k)."

Those are fighting words to the unions, of course, which want Governor Bill Richardson to veto the measure. The head of the state's AFT affiliate told the Associated Press: "This budget forces school employees to pay for education cuts with their own pension funds, a truly unconscionable political decision at a time when these working people are cash strapped, struggling to stay in their homes and feed their families."

But is it any less "unconscionable" to expect taxpayers, many of whom have seen their own 401(k)s go through the basement and are struggling mightily themselves, to continue to support incredibly generous defined-benefit retirement plans for people in their early 50s? Would the AFT be open to the obvious alternative solution: trimming benefits for today's retirees? That would at least hold "working people" harmless.

These are uncomfortable conversations, to be sure, but ones that have been long delayed. While the market crash is forcing legislators to face the issue, it didn't create the problem, which is structural. House Leader Taylor put it succinctly: "You just can't design a system where you work a shorter period of time than you are retired. It doesn't take an actuary to figure that one out."

How long until legislators in other states figure this out, too?

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