The state money problems drew the largest protest in Sacramento on Wednesday afternoon. But the financial situation is about to worsen, after a recent report by Stanford University showed that the public pension system is $500 billion underfunded.
Thousands of public employees arrived at the Capitol, capping a 48-day, 365-mile journey that some made from Bakersfield to protest years of funding cuts to public services.
While they grumbled about money woes outside, inside the building Republicans warned about another looming crisis: public pensions.
"If it continues unchanged, it will lead to fiscal ruin for California," St. Senate Minority Leader Dennis Hollingsworth, R-Murrieta said.
The California Foundation for Fiscal Responsibility says more than 9,000 retired government employees, mostly public safety officers, receive more than $100,000 a year in pensions and more than 3,000 retired teachers or school administrators are in the same club. When you add in the rest of the retirees, pensions costs the state $3 billion a year.
Gov. Schwarzenegger threw his support behind Hollingsworth's new bill that includes raising the retirement age and making workers contribute more to their retirement.
"Paying those pension promises is already crowding out funding for higher education, for parks and other areas like healthcare and so on," he said.
The proposal only affects new hires.
Still, current state workers oppose it. They point out those high pensions are unusual and most accept lower pay in exchange for better benefits. They think wealthy people like Schwarzenegger are the problem.
"The people who are holding this state together with their labor and sacrifice are not the issue. It's his friends [Schwarzenegger's] with the yachts and the boats that are not paying their taxes," SEIU Worker Rob Robbins said.
Public employee unions have stymied past efforts to reform the public pension system.
"The public sector unions in California are very powerful entities, that's partially because they have a lot of money to spend on politics," Derek Cressman from the California Common Cause said.
A recent report by the Fair Political Practices Commissions shows the teachers' and public employee unions have spent $300 million over the past decade, the most of any lobbying group, to influence public policy. So this year may be another uphill battle to change pensions.
