State and local governments around the country have long underfunded their pension funds, covering the gap between what they have and what they have obliged themselves to pay by making unrealistic assumptions about the rate of return they expect from their investments.Now that the wave of Boomer retirement is starting to hit, the gaps are beginning to hurt. Cities and states all over the country are having to choose between paying for desperately needed services or making up the deficits in their pension plans.The latest news from the New York State pension funds points to the next dimension of this unfolding crisis. Given the financial market turbulence of recent years, pension funds aren’t even growing at modest rates. In many cases, they are shrinking due to losses on investments. In the third quarter of 2011, New York pension funds lost more than 7 percent of their value.States have over promised, under invested, overestimated rates of return and are now losing money in generally weak market conditions. Worse is going to come; after years of pandering, denial, evasion and distortion, some ugly truths can no longer be ignored. The Boomers will not get all the pension payments they expect; other generations will pay more toward those reduced Boomer pensions than they want to pay or think is fair. None of this will be pretty, and there are no easy solutions to be found.