In terms of funding ratios for its various pension funds, California is hardly among the worst of states. But that could change easily, and uncertainty accounts for its inclusion here.
study by Stanford University
found that between June 2008 and June 2009 CalPERS, CalSTRS and UCRS1, three public pension funds covering 2.6 million Californians, lost a combined $109.7 billion in portfolio value and, at that time, were underfunded by nearly a half-trillion dollars. A more recent study by the the Stanford Institute for Economic Policy Research found that none of the state's public pensions are at the recommended 80% funding level.
Not only are its pension funds a financial drain; the health care benefits offered to retired public employees are adding to the economic stress.
report in February
by state Controller John Chiang showed that the 30-year cost of providing health and dental benefits for state retirees is $62.1 billion. The unfunded obligation as of June 30 grew $2.2 billion from the $59.9 billion obligation identified as of June 30, 2010. While state pensions are pre-funded, allowing investment returns to reduce liabilities, California pays for retiree health benefits on a "pay-as-you-go" basis, or the minimum amount needed to fund the costs as they are due.
Pre-funding benefits, he says, could reduce that liability by as much as one-third.