Retirement benefits for state and local employees have come under enormous funding pressure because of the recession, slow recovery in tax receipts, and cutbacks in federal stimulus and support spending. The 2010 shortfall in public pension and healthcare benefits was nearly $1.4 trillion, according to a report from the Pew Charitable Trusts. That's the difference between what the states have on hand and the benefit obligations they have promised to pay retirees.

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The retirement prospects of public employees are, of course, directly affected by the adequacy of retirement benefit funding. But the health or weakness of state retirement benefits also affects a state's broader tax and spending environment. States with well-funded retirement systems are less likely to boost taxes on their residents than states with public retirement programs in poor financial shape. If you're nearing retirement, a state's fiscal health may play a big role if you're considering moving to a place.

Pew says 2010 is the most recent year when it could review data on all 50 states. It notes that nearly every state took steps in 2011 and 2012 to narrow its pension shortfall and that many acted on healthcare benefits as well. "States have responded with an unprecedented number of reforms that, with strong investment gains, may improve the funding situation they face going forward," Pew says, "but continued fiscal discipline and additional reforms will be needed to put states back on a firm footing."

Pensions. States set aside funds to cover future pension obligations. Pew says states' total funding shortfall for pensions was $757 billion in 2010. Closing that gap would mean states had achieved 100 percent coverage of their pension obligations. Pew and other experts say adequate pension funding should achieve at least an 80 percent ratio of pension plan assets to retiree payment obligations.

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Here are the 10 states with the highest percentage of funded pension obligations in 2010:

Wisconsin: 100 percent

North Carolina: 96 percent

South Dakota: 96 percent

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State Retirement Benefit Gap Getting Wider