California's authorities are under increasing financial pressure as public employers face $118bn (€80bn) of healthcare liabilities and the state's public pension funds are underfunded by $63.5bn, according to a report commissioned by state governor Arnold Schwarzenegger.

The report found that the state's public pension funds, including the two largest US pension funds Calpers and Calstrs, have a combined unfunded liability of $63.5bn. As a result, their funding ratio - the proportion of assets against liabilities - stands at 89%. The ratio stood at a peak of 118% in 2000, but the current statistic is still higher than in the early to mid-Nineties, according to the report.