Given how convoluted and arguably fraudulent government accounting is, I expect things to get much worse for municipal and state governments.

San Francisco's public-employee pension fund is in weaker shape than many people realize, according to an analysis by Stanford University Professor Joe Nation released Tuesday. It is underfunded by some $6.8 billion, Nation's report finds.

The city's pension fund is officially underfunded by $1.6 billion. Nation's study argues that the pension fund is relying on a 7.75 percent annual rate of return that is unrealistic over the long term. The study argues for 6.2 percent, which it says was the average rate of return in the capital markets from 1900 through 1999.

The study was commissioned by city Public Defender Jeff Adachi, who is readying a ballot initiative to address the city's ballooning employee pension- and benefits costs. Nation was a member of the state Assembly from Marin County until 2006, and he has become a prominent authority on public finance issues since joining Stanford's Institute for Economic Policy Research.