Every where you turn these days, the news about pension plans is bleak.

Much of the ink spilled on the issue involves corporate plans guaranteed by the Pension Benefit Guaranty Corp. Thanks largely to the steel and airline industries dumping billions of unfunded pension liabilities on the PBGC, the federal agency could run out of money in 2020, according to the Center on Federal Financial Institutions.

Recently, government-sponsored pension plans are garnering more grim headlines. In San Diego, debilitated city and county pension plans are an issue in the race between incumbent Mayor Dick Murphy and his challenger, county supervisor Ron Roberts. The city's plan has enough money to pay 68 cents of every dollar in pension benefits it has promised, while the county plan has money to keep 75 percent of its promises.

To Pittsburgh, Murphy and Roberts look like Daddy Warbucks. At the end of 2002, our fair city's pension plan had just 41 cents for every $1 in benefits it has promised. The stock market's strong performance last year improved things, but the plan is still only 52 percent funded, according to latest estimates.

This is not the outcome city fathers were hoping for in 1996 and again in 1998, when they tried to fix the city's pension problem with two rolls of the dice. It involved pension bonds, government debt that is sold to investors with the proceeds being invested in underfunded pension funds.

Selling pension bonds is the path of least resistance. For elected officials, it is easier than raising taxes, cutting spending or making less generous promises to workers in order to meet pension funding obligations. That explains why state and local governments issued more than $18 billion in pension bonds from 1990 through 2002, according to Duquesne University finance professor James Burnham, who has examined the issue.

Burnham says some actuaries believe pension bonds can make sense, but not given Pittsburgh's already debilitated finances.

"Pittsburgh is a poster child for the case against pension bonds," Burnham wrote in the June 2003 issue of Government Finance Review.

Pittsburgh issued $38 million in pension bonds in 1996 and another $256 million two years later. Interest on the bonds, which yield an average of 6.5 percent, is paid out of the city budget and amounts to $19 million, or 21 percent of the interest the city pays annually on all of its debt.

Theoretically, investing the bond money would generate returns fat enough to reduce the city's overall pension-related costs -- including interest on the bonds -- and put the plan on firmer footing. As long as the city could rely on irrational exuberance, the scheme worked. The city's pension plan went from being 18 percent funded in 1996 to 67 percent funded at the end of 1999.

Since then, the bonds have dug a bigger, deeper hole for city taxpayers and the retirees and workers the pension plan covers. The pension plan lost $43.8 million on its investments in 2002. Assets tumbled 33 percent, from $467.6 million at the end of 1999 to $312.5 million at the end of 2002.

Because of the sharp decline, the city's minimum pension contributions under state law increased from $18.4 million in 2002 to $23.9 million last year and are estimated at $31.6 million for the current year. The figures come from the Act 47 team appointed by the state's Department of Community and Economic Development, one of the city's two fiscal babysitters.

The team includes the Downtown law firm of Eckert Seamans, which highlighted two other pension tricks Pittsburgh has relied on in a recovery plan it presented in June. The first is making most of its annual pension contributions late in the year, thereby foregoing what the money would have earned if it had been invested sooner.

The second is rosy assumptions about how much the pension fund will earn. The greater the assumed return, the less the city has to contribute. The city is currently assuming a return of 8.75 percent vs. the 8 percent return U.S. Steel assumes on its pension plan.

Eckert Seamans and its Act 47 partner, Philadelphia consultant Public Financial Management, have recommended ways to address the pension problems. But there's a major problem they can't fix.

If the city was like millions of homeowners who have refinanced their homes one or two times as interest rates fell to 40-year lows in recent years, it could have refinanced the pension bonds at lower rates, reducing its interest costs. But the terms under which the bonds were issued prohibit that.

No one knows that better than Eckert Seamans, which represented the city when it issued the pension bonds.

"It is our opinion that the financing structure of these bonds was ill-advised and a tragic error," the Intergovernmental Cooperation Authority wrote in an April 12 report.

The authority, a five-member oversight board chaired by insurance broker Bill Lieberman, is the city's other fiscal caretaker. It was appointed by the state legislature.

Monday morning quarterbacking won't be of much solace to city workers as they join the ranks of steel workers, airline pilots, mechanics and other workers concerned about the pensions.