That's how much California's public pension systems are underfunded, according to a report by a group of Stanford University graduate students. Part of that underfunding is the result of the recession, but much of it comes from years of overpromising (pension costs rose 2,000 percent from 1999 to 2009). All the pensions are guaranteed, of course, so the money will have to come from somewhere. In an LAT oped, Schwarzenegger advisor David Crane lays out the problem:
What can we do about this? For the promises already made, nothing. They are contractual, and because that $500 billion of debt must be paid, retirement costs will rise dramatically no matter what we do. But we can reduce the sizes of promises made to new employees and require full and truthful disclosure so that pension debt can never again be hidden.
The governor has made a big pitch for this two-tier type pension system, but he's not getting much of a response in the legislature.
State legislators are afraid even to utter the words "pension reform" for fear of alienating what has become -- since passage of the Dills Act in 1978, which endowed state public employees with collective bargaining rights on top of their civil service protections -- the single most politically influential constituency in our state: government employees.