A small but ardent group of voices in government and business have been warning for years that California was facing a severe and growing shortfall in funding the state's generous public pensions.

Among the more prominent examples: Last October, Gov. Arnold Schwarzenegger's top economic adviser David Crane, saying the state faced a pension shortfall of $250 billion, called generous benefits awarded employees at the peak of the tech boom a historic "theft" committed against the taxpayers.

We wrote at the time that California, its counties and cities were heading rapidly toward the day when they would be required to spend so much on retirees they would be unable to pay a police officer to patrol the neighborhood of his former retired colleague.

That day may not have arrived just yet, but it may be here sooner than even Mr. Crane thought.

Last week, a study conducted by Stanford University graduate students commission by the governor reported that the state's three major pension plans face a combined "current shortfall of more than a half-trillion dollars."

The shortfall includes $109.7 billion in fund losses due to the recession and investment losses, an amount that will have to be made up from public budgets.

As the governor's office quickly pointed out, the more than $500 billion shortfall is six times the annual state budget – and completely unsustainable.

"The consequences are clear: Increasingly large portions of state funding for programs Californians hold dear such as schools, parks and health care will be diverted to pay for this debt. That is bad enough, but without reform, pension debt will only grow," the governor's office said.

The study, which relied on more conservative investment growth estimates than have been typically used, was immediately labeled as an attack on all state workers. But it is only recognition of reality that overly generous benefit promises are not financially sustainable.

What's been promised is promised.

But its completely reasonable for the state to begin to shift toward 401K-style self-defined benefits commonly used in the private sector for new employees and new union contracts.

The shortfall – and ultimately the bill to California taxpayers – will only grow with every day the state delays making changes.