Public pensions are an important part of the compensation package for public employees. In U.S. state and local governments, employees are covered by pension systems that are sponsored by governments. These systems have brought a significant fiscal burden to the sponsoring governments. U.S. public pensions are widely invested in the stock market and have been able to sustain its growth through investment returns. However, in recent years, because of investment losses and management problems, underfunding gaps started to accumulate in these systems, which created risks for both governments and public employees. State and local governments have adopted policy changes in response to the underfunding problem. In this research, we use actuarial modeling to simulate public pensions based on available data. We estimate costs, investment returns, and liabilities for these systems in the next ten years. Based on the simulation results, we discuss the long-term financial impact of public pension systems to government finance. This research also has implications for the public employee pension reforms in China.