California’s state and local agencies are in fiscal crisis and face an unsustainable future, not because of the economy but because of the need for pension reform.  CalPERS’ pension debt increased by $170 billion since 1999. This massive growth in pension debt puts public employees and retirees at risk when cities run low on money. Lackluster earnings by pension trust funds, revised actuarial projections and impacts of benefit increases are compelling the systems to sharply increase mandatory “contributions” from public employers.

Nevertheless, pension systems have seen their “unfunded liabilities” continue to increase – giving California one of the nation’s widest gaps between earning assets and pension obligations.


Estimates vary broadly on just how large California’s unfunded pension liabilities actually are.  The state’s annual bill for retirement obligations is expected to reach $11 billion by the time Gov. Brown leaves office in January 2019 — nearly double what it was eight years earlier. Total savings from the Public Employee Pension Reform Act of 2012 are estimated at $28 to $38 billion over 30 years for the state’s main pension fund, the California Public Employees’ Retirement System, and $22.7 billion for the state’s teacher pension fund.  The savings are a fraction of the two plans’ unfunded liability — the gap between the benefits owed to current and future retirees and the money set aside to pay for them. CalPERS’ unfunded liability is estimated at $93 billion. For the teachers’ fund, it is $76 billion.

At the local level, it is estimated 20 percent or more of budgets are spent on retirement costs in some cities and counties. In addition, “Other Post-Employment Benefit” (OPEB) debt, which is mostly retiree healthcare (which grew more than 80 percent over the past decade), for the State of California itself, 53 counties, 352 cities, the state trial court system, 282 school districts, and the University of California system totals over $150 billion. California has promised $74 billion more in health and dental benefits to current and retired state workers than the state has put aside. These liabilities mean less money for our social safety net, our schools and universities, and infrastructure investments that are so critical to a successful economic recovery.

With several municipalities in bankruptcy and many more on the brink, it becomes increasingly apparent that significant reforms are needed to rein in these spiraling costs.  It is urgent that reforms are put in place quickly.

What We Seek

Meaningful statewide pension reform that addresses the structural issues that lay at the heart of the unfunded liability we now face, including:

  • Increasing employee contributions
  • Creating a hybrid pension plan for new employees
  • Fixing the structural issues at the heart of the unfunded liabilities including changes to existing employees’ pensions
  • Diversifying the CalPERS Board to be more accountable, transparent and representative