What major challenge threatens state and local sustainability as per the text?

Pensions and Other Post-Employment Benefits (OPEB) represent a significant challenge for state and local governments when it comes to sustainability. These obligations often constitute a large portion of a government's budget and can place considerable strain on financial resources. As public sector employees retire, governments are required to pay these benefits, which can lead to funding shortfalls if not managed appropriately.

Moreover, the funding of pensions and OPEB can be complicated by factors such as economic downturns, changes in life expectancy, and fluctuations in investment returns. These challenges can result in increased liabilities and impact the government's ability to allocate resources for other essential services. Therefore, addressing pensions and OPEB is critical for maintaining financial stability and ensuring that state and local governments can sustain their operations and meet their obligations to both current and retired employees.