Motley,
We may soon be facing a true "Constitutional crisis".  The PERS problem isn't only happening to Oregon,  From what I have read, Oregon is in relatively good shape compared to a whole lot of other states.

"The Constitution is not a suicide pact."
https://en.wikipedia.org/wiki/The_Constitution_is_not_a_suicide_pact

When the bubble finally bursts, let's hope we have a Lincoln in the White House as opposed to a Buchanan.  We have seen what a Buchanan can lead to in Europe already.

P.S.  I would add that those Tier 1/2 contracts could be renegotiated (collectively or individually) if the receivers were willing.  Unlikely, but hey, I thought I would throw that out there.