I didn't think the state could default on pension and retirement obligations but maybe they can if a second great depression occurs.
The important lesson is that in the absence of a dedicated judicial process for preserving the governmental functions of a state in debt renegotiations, sovereignty may offer meager protection for the interests of the general public and public employees. In the event of a severe state fiscal crisis, all parties may have to share the burden of putting the state’s fiscal house in order.
When States Default: Lessons from Law and History