California is not bankrupt but it is insolvent. California’s liabilities vastly exceed its assets. A State cannot declare bankruptcy but that may change someday. See, The Case for Allowing U.S. States to Declare Bankruptcy
California has an unfunded pension liability estimated by some to be half a trillion dollars. See, California’s unfunded pension debts may be larger than acknowledged Here is one observer that says the debt is well over a trillion. Golden State Pension Deficit: $1.2 Trillion
Essentially, in order to have anyone willing to work a California government job—whether state, county or local, rather than pay up front, governmental organizations have hidden their rich benefits from the public by granting modest salaries but huge pensions.
These pension rights are staggering. Your typical firefighter in California retires with an income that would require a self-employed person to have saved over $3.5 million dollars to earn. An appropriate pay-as-you-go salary that would take the value of the promised pension and pay it up front would have most state employees taking home well over $500,000 per year. Politicians know that they are making promises they can’t keep, but the California miracle just keeps chugging along—they make just barely enough to pay their pension obligations and keep the state running, barely.
A dentist in one of California’s prisons retired at a salary of over $650,000 a year. See, California’s unfunded pension debts may be larger than acknowledged There are currently over twenty thousand people drawing a more than six-figure pension from the State of California’s pension fund. http://reason.com/blog/2016/08/0...
Look up what happened in the City of Bell. The City Manager and Police Chief voted themselves some incredible salaries and benefits because the citizens didn’t know enough about their government to object. http://timelines.latimes.com/bell/ In my opinion, exactly the same thing is happening in the State of California albeit on an exponentially larger scale, i.e. more dollars, more workers.
As did the citizens of Bell, the day will come when the good folk of California finally understand the sheer size and scope of the bill they have incurred for the retirement benefits secured by the various government workers’ unions. There was a brief glimmer of hope when Arnold tried to break the union’s power in this area, but that failed. All Four of Schwarzenegger's Ballot Initiatives Fail Had Arnold limited his reformatory efforts to just the unions, there may have been hope for the state. However, at present it is all but guaranteed that the State of California will have to restructure its obligations, i.e. default on its pensions.
Now, some people disagree. Some believe that California is such a huge and independent economy that it can, in essence, print its own money. Others are convinced that the State is too big to fail. Observers of our financial history will note that most large institutions in the United States are not allowed to fail—the federal government will ride to the rescue and force the state to scale back.
And, where does all the California Pension money end up? Most of the pensioners leave California and buy properties in other western states where the living is cheaper. In a real way, California’s taxpayers are subsidizing the economies of most of the intermountain west. Why CalPERS retirees flee California
There is a terrible disaster on the horizon—it will inflict incredible suffering on many innocent families who rely on California to keep its pension promises.