Dwight Barker checks his mailbox each month for a $3,000 check from the Virginia Retirement System. And every month, it comes — along with newspapers reporting billions of losses in the pension fund that provides his income.

But Barker doesn’t seem too troubled.

“I guess they just think it was always there and always will be,” Barker said. “It hasn’t really bothered me all that much.”

In the last few years Virginia has lost $11.9 billion, or 21 percent of its portfolio. Currently funded at 80 percent, officials predict the trust could drop to 60 percent funding by 2013.

Virginia’s problem is pandemic. Conservative estimates of the unfunded pension obligations for state and local governments hover around $2 trillion.

Barker, 66, coached track and basketball at Chilhowie High School from 1955 until he retired seven years ago. If the Chilhowie resident has any qualms about the future of his pension, it has to do with his distrust of the General Assembly.

“If the General Assembly finds a way to get their hands on the money, I wouldn’t be as confident as I am now,” Barker said.

While Virginia officials haven’t stolen from the pension fund, legislators also haven’t done their fair share to contribute. Along with schools, state and local government, the General Assembly is responsible for contributing into the pension fund—26 percent, according to VRS Director Robert Schultze.

But in contrast to the other contributors, legislators can decide whether to contribute the amount recommended by the VRS to bring the pension up to full funding. Usually, they decide in the negative. Schultze estimated the fund would be $2.3 billion richer today if the General Assembly had met the required contribution every year since 1992. That estimate includes the contributions as well as the potential investment earnings.

But the $47.5 billion pension fund is affected by more than just economic dips and legislators’ contributions. How the funds are managed and projected are important factors as well.

In comparison to many private pensions, the public fund differs in how it’s invested.

Sixty percent of Virginia’s pension is invested in equities, real estate and emerging markets — regarded as high-risk investments — while another 15 percent is in medium to high-risk funds. A quarter currently sits in stable, fixed income investments, although that’s up from 20 percent in June 2008.

That’s too risky, according to Barry Poulson, a professor of economics at the University of Colorado, Boulder. Last year, Poulson published a study of the pension problems faced by nearly every state.

Seventy percent of Colorado’s pension funds were high-risk when he served on a commission formed in 2005 to reform the pension system, Poulson said.

“Our board voted to lower that ratio,” he said. “For pension funds to put 70 percent or more of their funds into stocks or other risky assets is really the problem here.”

Typical pension plans have about 40 percent of their investments in low-risk bonds, says David Krupstas, who manages private pensions at The Actuarial Consulting Group in Midlothian. He might advise a ratio of 30 percent low-risk to 70 percent high-risk for a small company, but that’s regarded as a chancy portfolio.

“Without doing anything, a pension plan’s liabilities can change and so now (the Financial Accounting Standards Board) is recommending that companies invest more in fixed income,” Krupstas said.

Another contrast between Virginia pension fund and most private pensions is how much managers assume they’ll make on investments. Regulated federally, private pensions are prohibited from assuming higher rates of return than the going rate for corporate bonds. Right now, that rate is about 6.5 percent.

“In the private sector, the government has kind of tied our hands behind our backs,” Krupstas said. “They prescribe the interest rate you have to use, generally based on corporate bond yields.”

While private pensions are heavily regulated by the U.S. Labor Department, public plans are not. Instead, they’re governed under different, and in some ways looser, criteria by the Government Accounting Standards Board. So while Krupstas can’t assume higher rates of return, Schultze can, and did. Until it was lowered to 7.5 percent in 2006, the assumed rate of return for Virginia’s retirement fund was 8 percent.

Most states assume 8 percent returns, Poulson said. He said that as a result, many inflate their growth predictions only to find themselves in a hole.

“The GASB requires states to show they can pay off these unfunded liabilities, and many of these governments will never be able to meet these requirements,” Poulson said.

Another contrast between standards for public and private pensions is in how much time they have to reach full funding, called the amortization period. Public plans can show a balance between assets and liabilities up to 30 years in the future, while private plans have to show how they’ll come into balance in seven years or less.

The result is that public plans can run greater deficits than private plans, not because they really have longer to make up for it, but because they can raise taxes or borrow to pay pensioners.

In Virginia the pension was amortized at 30 years in 2002 and gradually reduced to 20 years by 2008. Amortizing is a typical accounting tool, but it’s not optimal to predict how you will pay workers decades down the road when tomorrow’s workforce will have taken their places, Krupstas said.

“You don’t really want your amortization period to extend past the working time of your population,” Krupstas said. “As you have an aging population, that is going to become more and more of a problem.”

It’s true that Virginia’s 80-percent-funded pension is on a better track than those of many other states—like Kansas, at 58 percent, or Utah, at 65 percent. But according to Poulson, the state is still toeing the line he considers a safe zone.

“I think anytime you’re funding ratio falls below 80 percent, it’s a situation that calls for fundamental reform,” he said. “So I wouldn’t say you’re out of the woods by any means.”