Here's That Devastating Report On The Coming California Demographic Timebomb

California Baseball

Photo: AP

There’s been a ton of talk lately about demographics and the coming pension crisis in the US.Getting buzz today is this report from the Milken Institute and authors Perry Wong and I-Ling Shen.

The basic gist: California’s demographics are rapidly worsening, and will put serious strain on the state’s pension benefits system.

Here are some key points:

  • By around 2012 or 2013, the three major state pensions’ obligations will be more than five times as large as total state tax revenue.
  • Not only will California’s growing senior population depend on Medi-Cal and other state services, but public school enrollment is likely to rise in the coming years. The state can ill afford to fund pensions by cutting back on these services.
  • In 2009, the pension liability came out to $3,000 per working-age adult in the state. By 2014, it will triple to over $10,000 per working-age Californian.
  • ¬†Raising employee contributions alone will be less effective over time as the ratio of actively contributing members to benefit recipients continues to decrease.


Here's how big the states key funds are

California has gone from overly funded during the tech bubble to clearly unfunded across all of the state's pension plans.

Here's the problem: The working age share of the population is clearly shrinking

The public school system will be stretched as Hispanic children -- who go to public school at the highest rates -- will continue to expand their ranks

Of course, life expectancy post-65 in California continues to grow

Here's how much the funds pay each year

And as you can see, the ratio of active workers to benefits receivers is collapsing

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