PERS did not take big losses simply because the economy went sour and there was a big general loss in the stock market.

PERS took it in the ear because its investments during the period when irrational promises were being made were receiving obscene profits because PERS (and the Washington state public employee pension fund) were invested chiefly in Kohlberg, Kravis and Roberts, the New York leveraged buy-out kings.  KK&R bought and raped private companies, including many regional companies here in the Northwest.  They dismembered perfectly good, profitable companies (and some not so profitable) for the sole and illegitimate gain of our public employees - who had no care about the impact it was having on private sector employees.

The profits that KK&R delivered were unsustainable - far in excess of that delivered over time by the over all economy - which has not and never will repeal the national/international business cycle.  

The PERS promises were criminal in nature.