NEW YORK (CNN/Money) - More than half of all public pension plans are underfunded, due chiefly to steep stock market losses, a newspaper reported Friday.

The number of underfunded public plans is up 31 percent from two years ago and is expected to continue rising, the Wall Street Journal reported, citing information from Wilshire Associates Inc., a Santa Monica, Calif., consulting form that advises public pension plans on investments.

According to Wilshire's study of 93 pension plans for teachers, firefighters and other state and municipal employees, the percentage of underfunded public plans will rise to 75 percent, the paper reported.

The last time three-quarters of public plans were underfunded was in 1993, amid a recession.

The stock market is mainly to blame for the median return of a loss of 5.8 percent in the year ended June 30, according to the Wilshire study.

West Virginia Teachers' Retirement System is the worst-funded plan. Assets as a percentage of liabilities are just 21 percent. The Indiana Teachers' Retirement Fund is next at 43 percent, followed by the Oklahoma Teachers' Retirement System, at 52 percent. Unfunded liabilities at the plans in the study jumped to $94 billion in 2001 from $50 billion the prior year, according to the report.

Part of the problem, in addition to poor market performance, was the timing of investments. Many public pension plans began investing in stocks only within the past few years, when the market was at the top.

Additionally, inexperienced fund managers, some of whom have nonfinancial backgrounds, led to poor asset-allocation decisions at some plans, the paper reported.

Also, money intended to fund public pensions is often diverted to other projects such as building highways, renovating schools and other needs marked as more urgent by elected officials than funding pensions that won't be paid until after the officials have retired, according to the report.

While current retirees will continue to receive their pensions, current employees are likely to feel the pinch. When plans become underfunded, employees are often required to kick in more of their pay. Nevada public employees must contribute 9.75 percent of their pay toward pensions.

To combat the problem, some states are thinking about converting to systems that mirror what corporations have done, putting new employees in less-generous plans and converting the pension systems to 401(k)-type plans, which would shift all the funding and investment risk to employees.

But not all plans are in bad shape. Florida, Arizona and New Jersey operate with a surplus of cash, the paper reported. And this is not the first time pension plans have been in this situation. The rise in underfunded plans mirrors that of a decade ago, but as the bull market picked up steam in the 1990s, the percentage of underfunded plans dropped to 31 percent from 68 percent, according to the report.