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Fixing California's Public Pension System

Adam Summers
June 3, 2010, 12:57pm

State and local governments across the country are struggling with mounting public pension troubles, but California's pension problems are worse than most. A couple of recent studies put the state's unfunded pension liability at around a whopping $500 billion. A paper by University of Chicago business professor Robert Novy-Marx and Northwestern University finance professor Joshua D. Rauh estimates California’s unfunded liability at about $475 billion. Similarly, an April 2010 Stanford Institute for Economic Policy Research study calculated the state’s liabilities at approximately $535 billion. That translates to roughly $36,000 for each California household.

California, as well as numerous other state and local governments, will have to take significant steps to reform its public pension system. Here are some recommendations for reform from my new study on how California got into its current public pension mess and how to fix it:

See the full study here or the study summary here (.pdf files).

For a historical look at how a number of state and local governments got into their public pension problems, see my earlier pension study, The Gathering Pension Storm: How Government Pension Plans Are Breaking the Bank and Strategies for Reform (Full Study | Policy Summary).


Adam Summers is Senior Policy Analyst


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