When the New York State and Local Pension fund announced last month that it had earned 14.6 percent on investments this fiscal year, a top NY union official said the robust returns “call into question the need for so-called ‘pension reform.’” Since then, however, the Standard & Poor’s 500 has dropped about 13 percent.

Though union leaders and their political supporters would seize on every upward market move to proclaim the end of the pension crisis, the current Wall Street upheaval should remind taxpayers that states and cities still need fundamental pension reform to lower the long-term risks for taxpayers and bring pension costs under control.

Because so many government pension systems are underfunded, their managers have been chasing high returns by betting heavily on volatile investments like stocks, producing wild swings in the value of the funds’ assets. Even with the run-up in the market earlier this year, New York’s pension assets were still some $9 billion lower than their peak in 2007 — before the financial crisis.

Those assets have now declined by perhaps another $10 billion to $15 billion in the current market debacle. Meanwhile, even as the fund struggles to get back to 2007 levels, annual benefits payments to retired workers have grown $2 billion in the last four years — more than $400 million a year.

New York is not alone. The giant California pension fund, CalPERS, in July reported its best returns in more than a decade. The chief investment officer declared its recent performance “powerfully affirms our [investment] strategy.” That strategy includes investing about two-thirds of its portfolio in risky stocks, according to The Sacramento Bee.

Union leaders in the Golden State argued that the improved returns make proposed changes in California’s pension system unnecessary. But CalPERS this month has already given back more than 40 percent of last year’s gains, according to The Sacramento Bee, a decline of assets estimated at $17 billion in virtually the blink of the eye.

Union leaders and their advocates do understand the risks in the stock market. They just want taxpayers to bear it.

But reformers now want to shift the pension risks away from taxpayers. They advocate 401(k)-style pensions for public workers, which would allow them to accumulate money in self-directed funds.

This approach is not always welcomed. The head of a union-backed group, Californians for Retirement Security, recently told the site CalWatchdog.com that, with the with the market’s decline, the 401(k) option being pushed in California, is “looking even worse than before.”

Translation: Public employees shouldn’t bear the risk of investment swings with the self-directed pension accounts now typical in the private sector. Instead, government employees want to retain their defined benefit plans, which guarantee them a certain pension payout — and force the taxpayer to pay for it if the market doesn’t.

That’s why it’s important not to buy into claims that just a few more good quarters in the stock market could bail out most state and local pension systems. In fact, even as pension funds were proclaiming that their assets were rising earlier this year, they were sending out bigger bills for pension contributions to cities and states, as they have been doing for years now.

New York City’s annual pension contributions have risen from $1.5 billion a decade ago to $8.4 billion. Anaheim, Calif., is already spending 22 percent of its $252 million budget on pensions. San Francisco’s comptroller has estimated that his city’s pension bill will rise from $357 million this year to $422 million next year. Detroit is spending 25 percent of its annual budget on pension contributions.

The bill for inflated, underfunded government pensions is here already. Just check your local school budget. Though the stock market will likely rebound sooner or later, the events of these past few weeks are a reminder that the taxpayer continues to bear the risk of unaffordable pension promises made to government workers in many states and cities.

E.J. McMahon and Steven Malanga are senior fellows at the Manhattan Institute.