A local advocate for public pension reform calls the $17.3 billion Minnesota owes in unfunded pension obligations a “ticking fiscal time bomb,” despite legislators’ attempts to shore them up.

In a four-prong fix-it plan out Wednesday, the Center of the American Experiment said the state should maintain the pension system for current state employees and retirees but create a new defined-contribution plan, such as a 401(k), for state employees in the future.

The center also said the state should be more transparent about what the pension system costs and accelerate efforts to pay down the unfunded liabilities.

Legislators have known for years that they need to tackle the public pension costs and have made serious efforts at reform, but the fixes haven’t addressed the underlying problems, according to the center, a conservative think tank based in Golden Valley.

State numbers show that Minnesota’s combined pension funds, on which more than 500,000 Minnesotans depend for their retirements, were only about 74 percent funded in 2013, down from 100 percent funded in 2001.

But pension officials dispute the center’s numbers as outdated and say recent returns on investments have improved the picture, while changes to cost-of-living adjustments and other reforms have saved $6.4 billion in pension costs.

Susan Barbieri, a spokeswoman for the state’s three largest public pensions — the Minnesota State Retirement System, Public Employees Retirement Association and the Teachers Retirement Association — said the funds have grown by $23 billion over the past five years. Preliminary estimates for the fiscal year that just ended indicate that the funds’ assets posted an 18.6 percent return on investment, far surpassing the 8.5 percent target rate, she said. That will shrink the plans’ unfunded liabilities.

David Bergstrom, executive director the Minnesota State Retirement System that covers more than 70,000 current and retired state employees, dismissed the report as “alarmist.”

Edward Burek, deputy director of Minnesota’s Legislative Commission on Pensions and Retirement, said he thinks the plans are now underfunded only by about $10 billion. The state released the estimate of $17.3 billion in January and will update that number in December.

Burek said the commission and the Legislature have been dealing with the underfunding of pensions seriously for several years and made reforms in 2010 to help shore up the balance sheet.

“This is really getting to be a nonissue,” Burek said. “Let those steps work their way through and let the markets do what they’re going to do to help fund these pension plans.”

That’s not how Kim Crockett sees it. Crockett, an executive at the Center of the American Experiment who wrote the pension reform paper, said people unfairly trivialize the underfunding problem. Ten billion dollars is not a nonissue, she said.

She said the recent pension reforms don’t address the fundamental problem plaguing the country’s public pensions, which is that they make generous promises without enough money to back them up.

Crockett noted that Burek is a state employee and that when he retires, the state has promised to pay him 85 percent of his pre-retirement income, based on an average of his five highest-paid years, with cost-of-living adjustments, for the rest of his life.

Burek did not want to say how many years he has worked for the state, but called Crockett’s estimate “a considerable exaggeration.”

Barbieri said that a hypothetical public employee with 35 or more years of service would get about 60 percent. The average Minnesota public employee has far fewer years of service, she said, and the ratio would be around 25 to 30 percent, depending on which of the state’s three major plans they belong to.

Crockett said that she plans to push a new measure when legislators reconvene in January and that she’s working hard to find DFL partners.

“This isn’t a right-wing thing. This is a mass problem,” Crockett said. “Members from both parties made this mess over the last 15 years. Members from both parties need to step up and help us solve it.”