"The single biggest threat to the fiscal health and California's future, obviously, is our public pension system," Schwarzenegger said at a news conference.
Reforms proposed in California include raising the retirement age for some workers to 65 from 55.
Some experts worry that these reforms may not be enough to plug shortfalls quickly enough.
Douglas Elliott, a pensions expert at Brookings Institution, argues that fund deficits are even higher than official numbers indicate, because government accountants use accounting methods that are far too generous.
"Municipalities and states are not acting as if their pension plans are as high of an obligation as they are," he said. "They don't seem to have an urgency to fill the gaps.
He pointed out that the shortfalls will be more difficult to make up in the wake of the financial crisis, because fund managers now have to be more conservative in their investment choices -– which means they are unlikely to earn the 8 percent returns that many are counting on.
"Maintaining such a target level serves to mask the true extent of pension deficits," he said. "Bad as those deficits look now, they would be significantly worse if the expected returns average 7 percent or 6 percent."
The problem, however, is that reforms are not easy to enact.
For one thing, pension systems are usually technically complicated, and lawmakers must be very careful that any changes don't destabilize the whole formula, NCSL's Snell said.
On the other hand, it takes a lot of campaigning to get enough support from unions and voters.
"It's not easy politically because there are a lot of interests at stake," Snell said.