Beyond the Wall of Debt: Detailing California’s Debt and Unfunded Liabilities.
California state and local governments face more than $443 billion in outstanding liabilities from borrowing, deferrals, and other unfunded financial obligations.
Using the most recent reports published by the state controller, state treasurer, the California Department of Finance and the Employment Development Department, CalTax tabulated state and local debt and unfunded liabilities to determine the size of the financial obligation that California faces.
- California has $443 billion in total quantifiable state and local debt and unfunded liabilities.
- Local governments owe more than $144 billion on borrowing and unfunded liabilities, not including K-12 school districts and total unfunded liabilities for local retiree benefits.
- The financial obligation equates to more than $11,600 per Californian (U.S. Census Bureau, Quick Facts).
The total liabilities may be much higher than the amount tabulated by CalTax but information is not available to identify a significant amount of California’s other debt and unfunded liabilities. Our calculations do not account for interest accrued after the cited reports were issued, as much of this is dependent on market forces that dramatically affect how much California state and local governments owe on bonds and loans. Extended payment schedules may significantly increase the size of state and local debt. In addition, due to a lack of information available, our calculations do not incorporate any data on school districts’ outstanding debt from school bonds.
The following graphs and data table detail the components and magnitude of the debt and unfunded liabilities facing Californians.i
California Department of Finance, California State Budget 2013-14, June 27, 2013.ix
Employment Development Department, May 2013 Disability Insurance Fund Forecast.
United States Department of Labor: Employment & Training Administration, Trust Fund Loans: Outstanding Loans from the Federal Unemployment Account as of August 16, 2013.
California State Controller’s Office, Comprehensive Annual Financial Report, March 26, 2013; Cities Annual Report, September 11, 2012; Public Retirement Systems Annual Report, May 22, 2013; Counties Annual Report, August 1, 2012;Community Redevelopment Agencies Annual Report, May 1, 2012; Special Districts Annual Report,May 22, 2013.
California State Treasurer’s Office, Debt Affordability Report, October 2012.
City and County of San Francisco Controller’s Office, Comprehensive Annual Financial Report, June 30, 2012.
- Amounts reported do not include interest accruals, nor changes to unfunded liabilities due to legislative action or fluctuations in investment returns. Estimates were taken from the most current date available, causing time periods to differ for some subjects.
- When state agencies offered different numbers for the same subject, CalTax used the more conservative estimate.
- Represents the state’s delay in paying the fourth quarter employer contributions for employee retirement. It is unknown if this amount includes a contribution toward the unfunded pension liability.
- Interest paid on the federal loan was borrowed from the state disability fund: $303.5 million for the interest payment made on September 30, 2011, and $308.2 million loan for the interest payment made on September 30, 2012. The Employment Development Department expects that California will owe $261.5 million on September 30, 2013, which is scheduled to come from the state’s general fund, pursuant to the state’s 2013-14 state budget.
- This report accounts only for the total dollar amount of bonds that have been issued. While the state has received authorization from the voters to issue additional bonds, it has yet to act on this authorization. In the event that the state does issue all currently authorized bonds, the state would incur an additional $40.26 billion in debt.
- Unfunded pension and retiree benefit liabilities reported here are based on the agency’s estimate of its rate of return on investment (ROI). Both the California Public Employees’ Retirement System and the California State Teachers’ Retirement System assumed a 7.5 percent ROI. However, studies conducted by independent organizations report a higher unfunded liability based on a lower ROI estimate. Also, retirement fund liabilities exclude retiree healthcare benefits, which are separately stated.
- This number is unknown because no government agency tracks the cumulative amount of outstanding debt for local school districts.
- No comprehensive report of current local governments’ unfunded retiree healthcare liabilities is available.
- The numbers from the governor’s budget are a projection of the amount outstanding at the end of fiscal year 2012-13, as of the 2013 Budget Act.