Note how the stock market saved them. It's not a coincidence that there is an organized effort to inflate markets. It's the only way that the average american state, city, municipality, or anything with a pension can stay solvent.
I wouldn't make the blanket argument that you get what you pay for, in government or anywhere else, but you very rarely get what you don't pay for.
You are definitely correct that California has a massive economy.
I'm not really commenting on California's economy or anyone else's though. I'm simply saying California and things like CalPERS are reliant on high equities valuations to maintain their solvency.
Thank you for asking a question instead of resorting to a flame war. I'll try to come up with a better way to get my point across.