The Pew Center on the States surveyed state administered pension plans, retiree healthcare and other post-employment benefits in all 50 states, and found that in many cases, immediate action was needed to avoid even more debilitating costs.
Nationwide, the shortfall is said to be $1 trillion.
In California, the recommendations include raising the retirement age and eliminating automatic cost-of-living expenses. Without that, the state may have to boost taxes, which may be a bitter pill for taxpayers to swallow since many of them would not be receiving similar benefits when they retire.
The report says the state's main pension plan, California Public Employees' Retirement System (CalPERS), is in relatively good shape.
According to the study, the state of Illinois faces the biggest challenge as it has the worst situation in the nation when it comes to state-funded pension plans.