BAY AREA, Calif. - TelAve -- Santa Clara, Santa Cruz, Monterey, and SLO Counties

Dear California Public Employees,

If you're a teacher, firefighter, police officer, nurse, or state worker counting on your defined benefit pension for retirement security, you have every right to feel uneasy.

"Will the system have enough money to pay my pension when I retire?"
"I'm already retired. Are they going to run out of money to fund my benefits?"

These are tough but entirely reasonable questions.

California's public pension system — long marketed as a rock-solid "guarantee" — is showing increasing financial strain. California Public Employees' Retirement System and California State Teachers' Retirement System together face roughly $250–$300 billion in unfunded liabilities statewide, depending on assumptions. These numbers are not abstract. They represent real promises made to real people like you that are becoming more difficult to fund.

The Hard Truth Behind the "Guarantee"

Your pension is only as safe as the money actually set aside to pay it.

Today's systems rely heavily on long-term investment return assumptions of 6.5%–7%. When markets deliver less — and they often do — the shortfall doesn't vanish. It grows, compounds, and eventually must be addressed.

Unlike the federal government, California cannot print money to fill the gap. The state operates under strict balanced budget rules and real taxpayer limits. That leaves only three difficult options when returns fall short:

• Higher taxes on working Californians
• Deep cuts to public services
• Changes to future benefit structures

None of these are easy. All of them are becoming harder to avoid.

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Local Impact Hits Close to Home in CA-19 Counties

The strain is already visible right here in our district.

San Luis Obispo County carries over $1 billion in unfunded pension liability. Santa Cruz County faces hundreds of millions in pension debt (depending on measurement and reporting methodology), with combined pension and OPEB liabilities closing in on $1 billion when broader local government obligations are considered. Santa Clara County and Monterey County carry unfunded liabilities in the multiple billions, placing heavy pressure on county budgets, school districts, and public safety services amid longer lifespans, aging workforces, and volatile investment returns.

What was designed for a different demographic era is now straining under today's realities.

Demographics Are Working Against You

Longer lifespans mean your pension checks may need to last 25, 30, or even 35+ years in retirement. At the same time, fewer active workers are contributing into the system relative to the growing number of retirees.

This retiree-to-worker imbalance is not temporary — it is structural and getting worse.

Optimistic Assumptions Are Shifting the Risk to You

Every year policymakers use rosy return forecasts, they delay facing reality. That delay quietly transfers the cost to future taxpayers — and ultimately puts existing promised benefits at greater risk.

Public employees did not create this problem. You worked hard, paid into the system, and trusted the promises made. But the math is becoming increasingly difficult to sustain under current assumptions.

A Candid Path Forward — Protecting What Matters Most

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The goal should not be to cut earned benefits for current retirees or long-serving employees. The responsible approach is to face reality now so the system can actually deliver on its core promises:

• Use honest, realistic return assumptions
• Provide full transparency on true liabilities
• Introduce shared risk models for new hires
• Shift newer employees toward hybrid plans that combine defined benefit security with defined contribution flexibility

These changes protect the system's ability to honor commitments to those who have already dedicated decades of service, while making the overall structure sustainable for the long term.

Conclusion: Your Pension Deserves Honest Math

This is not about blaming public employees. It is about refusing to let wishful thinking put your retirement security at risk.

California still has time to fix this — but only if we stop kicking the can down the road. Honest accounting and pragmatic reform are the best ways to protect the pensions that hardworking teachers, first responders, and state workers have earned.

Public employees deserve real security — not a promise that depends on assumptions that may not hold.

About the Author

Peter Verbica is a candidate for U.S. Congress in California's 19th District. He is a Certified Financial Planner® and a small business owner.  His work focuses on risk, incentives, and the long-term consequences of financial decision-making.  For more information on his positions: https://www.peterverbica.com

Disclosure

This material is for informational purposes only and does not constitute investment, legal, or tax advice.

Paid for by Verbica for Congress.