State pension plans lost $122 billion in assets due to the sharp market decline of the past year, depleting their assets-to-liabilities ratio by 9%, according to a report by Wilshire Associates. The net result is that major state retirement systems' liabilities have outpaced growth in assets, according to the report, authored by Steve Nesbitt, senior managing director at Wilshire.

The financial outlook for underfunded systems has also declined. In 2001, pension plans' total underfunded liabilities ballooned to $94 billion from $50 billion the year before.

For the first half of this year, Wilshire predicts a 10%-15% decline in funding ratios and a 52%-75% increase in underfunded state pension plans.

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