The value of state employee pension plans has plunged over the past three years, with the assets in the plans now worth less than the benefits they are committed to pay, according to a new study.

The report, by the investment advisory firm Wilshire Associates Inc. of Santa Monica, Calif., describes what it calls "a story of a rapidly deteriorating financial health of state retirement systems." The decline is the result of the slump in the stock market and a sharp rise in the plans' liabilities.

Overall, the total value of assets in these plans declined from 115 percent of liabilities in 2000 to 91 percent at the end of 2002. The 79 percent of plans that are underfunded is the highest in the history of the Wilshire survey, which dates back to 1990.

In fewer than a dozen states are assets equal to or greater than liabilities, and in about the same number assets are less than three-quarters of liabilities, the study found. In one state, West Virginia, assets are less than half of liabilities, it said.

The picture is similar to that of corporate pensions, which Wilshire estimates are about 86 percent funded overall. According to the Pension Benefit Guaranty Corp., the government agency that insures private pensions, corporate plans are currently underfunded by some $300 billion overall, the largest figure ever recorded.

Though they had not seen the report, state officials said it appeared to paint an unnecessarily bleak picture. They noted that the underfunding is based on current market value of assets, whereas states use an actuarial value that takes into account the long-term nature of pension investing. On that basis, the report shows, many plans are better funded, though not all are, and overall assets almost match liabilities.

State plans "are designed to withstand this sort of" market volatility, said Keith Brainard, director of research at the National Association of State Retirement Plan Administrators. State plans use "actuarial valuation methods that phase in gains and losses over a three-to-five-year period," he said. "It takes fluctuations of the market and smooths them out," so they don't plunge as rapidly as the market has recently, nor do they leap as the market did in the late 1990s.

Brainard and Stephen L. Nesbitt, senior managing director of Wilshire Associates, agreed that state workers will get their promised benefits. The problem, Nesbitt said, is that unless there is a strong market recovery, states will have to boost funding, either through tax increases or cuts in other programs.

Locally, Wilshire found that Virginia's assets equaled 99 percent of its liabilities, the District's 88 percent and Maryland's 78 percent.

In absolute terms, that would mean that Virginia has about $218 million in unfunded liabilities, the District $229 million, and Maryland $7.5 billion. Virginia's unfunded liabilities equal about 2 percent of annual state expenditures, while Maryland's equal 69 percent. The study did not compute a comparable figure for the District.

A spokesman for the Maryland system said the asset valuation used by the state currently puts funding at 94 percent of liabilities. Pensions are not in jeopardy, he added. "We still have $24 billion in assets and can pay benefits into the indefinite future. Retirees have to understand these fluctuations are going to happen. These benefits are safe and secure," he said.

The 79 percent of individual plans -- which include both those for general state employees and specialty plans such as those specifically for teachers -- that are underfunded is up from 31 percent in 2000.

The figures refer to traditional "defined benefit" pensions, which promise a lifetime stream of income to retirees, and not to 401(k) plans and their state counterparts.

Nesbitt said that in addition to asset declines, state plans have seen liabilities rise, both because the number of workers and retirees has risen and because states have improved benefits.

States have used the high returns they got during the bull market to add new benefits, and "you can't unwind those promises" in a bear market, he said. In that respect, "the private sector has been much tougher," Nesbitt added.