How Much Debt Is California In? Bonds, Pensions, and Retiree Healthcare

California is carrying roughly $350 billion or more in total obligations, made up of about $82 billion in outstanding bonded debt and more than $250 billion in unfunded pension and retiree healthcare promises.¹ So when people ask how much debt California is in, the answer depends on whether you count only bonds the state has sold or also the retirement benefits it has promised but not fully funded. The full picture includes both.

The state also holds about $23 billion in reserves against future downturns, which is meaningful for a bad budget year but small next to the long-term obligations.

Bonds California Has Sold

The most concrete piece of the debt is bonds. California sells them to pay for roads, schools, water systems, parks, and other large projects, and it pays bondholders back with interest over decades.

As of June 30, 2025, California had about $71.9 billion in outstanding General Obligation bonds and $8.9 billion in Lease-Revenue bonds, for a total of roughly $81.7 billion.¹ General Obligation bonds are backed by the state’s full taxing power and must be approved by voters at the ballot box.²

On top of what has already been sold, another $49.7 billion in bonds has been authorized by voters but not yet issued, bringing the combined outstanding-plus-authorized figure to about $131.4 billion.¹ Because bond repayment stretches 25 to 35 years, the eventual cost to retire this debt runs well above face value once interest is added.³

Voters keep adding to the pile. In 2024 they approved two $10 billion measures: one for K-12 and community college facility repairs, and one for climate-related projects including drinking water and wildfire programs. Those $20 billion in new authorizations account for much of the gap between what’s outstanding today and what’s been approved for future issuance.

Unfunded Pension Promises

California’s biggest long-term liability isn’t bonds. It’s the difference between what the state has promised current and future retirees and the money set aside to pay them. Two systems hold most of that gap.

CalPERS

The California Public Employees’ Retirement System is the largest public pension fund in the country. As of December 31, 2025, it held about 84 percent of the assets needed to cover all present and future benefits, with roughly $563 billion in total assets.⁴⁵ That 16 percent shortfall works out to more than $100 billion in unfunded liability spread across the state, counties, cities, and special districts that participate. The state’s own share is a portion of that, but because CalPERS is administered by the state, the full gap is typically counted when tallying California’s obligations.

CalSTRS

The California State Teachers’ Retirement System covers public school educators. It reported an unfunded actuarial obligation of about $88.7 billion as of June 30, 2024, up roughly $2.1 billion from the year before, with a funded ratio near 76.7 percent.⁶

Why the State Can’t Simply Cut These Costs

Article XVI, Section 17 of the California Constitution gives pension boards full authority over investment decisions and fund administration.⁷ California courts also enforce what’s known as the “California Rule”: benefits promised to a worker at hiring generally cannot be reduced unless replaced with something of comparable value. A 2020 California Supreme Court decision allowed the state to close certain pension-spiking loopholes, but the core protection stayed intact. That leaves the state with very limited ability to shrink the pension shortfall by changing terms for current employees. The gap has to be closed by contributions and investment returns, not benefit cuts.

Retiree Healthcare

Separate from pensions, California owes retired public workers healthcare and dental benefits, known as Other Post-Employment Benefits or OPEB. Unlike pensions, these were historically paid year to year out of the general budget with little set aside in advance. According to figures from the State Controller’s Office, that pay-as-you-go approach has produced an unfunded liability of roughly $90 billion.

Add that to the pension shortfalls and total unfunded retirement obligations across pensions and healthcare exceed $250 billion.

What It Works Out to Per Resident

Combine the pieces: about $81.7 billion in outstanding bonded debt, over $100 billion in CalPERS shortfalls, roughly $89 billion at CalSTRS, and about $90 billion in unfunded retiree healthcare.¹ The total lands around $350 billion, sometimes higher depending on the measurement date and the actuarial assumptions being used.

Against a population of roughly 39.4 million as of July 2025, that’s about $8,900 per resident.⁸ Narrowed to the roughly 19 million people who file state income taxes and fund the General Fund, it rises to about $18,400 per taxpayer. These figures are approximate. Pension liabilities move with investment returns, and CalPERS costs are shared among state, local, and school employers rather than sitting entirely on the state government’s books.

Budget Deficits Are a Separate Question

Headlines about California’s budget deficit are about something different. A deficit is a projected gap between revenue and spending in a single fiscal year, not an accumulated obligation to creditors or retirees. Governor Newsom’s January 2026 budget proposal put the 2026-27 shortfall at roughly $2.9 billion and closed it through budget adjustments.⁹ The Legislative Analyst’s Office put the same year’s problem closer to $18 billion, with structural deficits growing to about $35 billion annually starting in 2027-28.¹⁰

Those numbers are important for how the state manages its next year or two of spending, but they’re not the same as long-term debt. Adding a single-year deficit directly to the $350 billion figure would double-count and overstate the picture, particularly since the deficit projection changes with each new forecast.

Reserves

Against these obligations, California holds several reserve funds. For 2026-27, the Budget Stabilization Account (the rainy day fund) is projected at about $14.4 billion, with another $4.5 billion in the Special Fund for Economic Uncertainties and $4.1 billion in the Public School System Stabilization Account. Together they total roughly $23 billion.⁹

That’s real money against a bad budget year. Against $250 billion in unfunded retirement promises, it’s a cushion, not a solution.

1
California State Treasurer’s Office. Debt Affordability Report October 2025
2
California Legislative Information. California Government Code 16720
3
California Department of General Services. Lease-Revenue Bonds – 6844
4
CalPERS. Celebrating 10th Anniversary, CalPERS CEO Cites Improved Funded Status as Top Achievement
5
CalPERS. A New Year’s Message From CalPERS CEO Marcie Frost
6
CalSTRS. DB Actuarial Valuation Report
7
California Legislative Information. California Constitution Article XVI Section 17
8
U.S. Census Bureau. Population Growth Slows Due to Decline in Net International Migration
9
CA.gov. Governor’s Budget Summary 2026-27
10
Legislative Analyst’s Office. The 2026-27 Budget: California’s Fiscal Outlook