Jerry brown, the veteran governor of California, is basking in glory. The golden state, once described as America's Greece because of its fiscal woes, is reporting a $1.2 billion budget surplus (see page 34). But the euphoria is premature. California still has a mammoth long-term pension gap. If it used the same pension accounting standards as private companies must, its total debts would be a terrifying $1 trillion.California is far from alone. Few fiscal problems are as grave, or as little understood, as underfunded state and municipal pensions. The funding gap for all state schemes is estimated at $4 trillion-25% of gdp.
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