By 2012, California's three major pension funds will have combined liabilities of more than 5.5 times the state's annual tax revenue, according to a Milken Institute report. Here's one more: From 2000 to 2050, the size of the state's senior population is expected to more than triple, from 3.6 million in 2000 to 11.6 million in 2050. The Milken report recommends raising the retirement age, increasing employee contributions, and eventually moving to a risk-sharing retirement plan so that the state won't be entirely on the hook. From the report:
These changes are more sweeping than simply making a technical fix to the pension funds' financing. They will involve a great deal of political wrestling. It will take will and courage from both legislators and union leaders, as well as broad public support, to make such changes a reality. But a swift and equitable resolution for the pension crisis is urgently needed so that the state can put its budget in order and prioritize expenditures on the services and investments that Californians deserve.
Sadly, it's hard to imagine that fundamental changes to the pension program will be made unless the state - and the cities for that matter - run up against an actual financial disaster that impacts everybody's lives. As in, laying off a quarter of the police force and suspending garbage pickup and permanently closing all the libraries. Only then will the voters be ticked off enough - and elected officials will become brave enough - to take the sort of drastic steps that are required to restructure the pension system.