SAN FRANCISCO (CBS 5) \xe2\x80\x95 California's pension system is broke -- with a capital "b.". If you look at all the money the state owes its retirees in the future, the system is underfunded by a whopping $500-billion dollars. How is that? In California, there are nearly 12,000 retirees who collect over $100,000 dollars per year.

It's a system that's more generous than any other state. The Bay Area is home to thousands of those so-called "100-thousand dollar pension club" retirees. Contra Costa County has the most: 535, up from 432 just a year ago.

"People know it's like winning the lottery. Marcia Fritz isn't talking about a lucky scratcher ticket. She's talking about the pension plans of the state's top paid public employees. "The game is really stepping up," she says.

Her watchdog group "California Pension Reform" has identified some 12,000 public retirees in California making more than a hundred grand a year, and she says most city and county officials are not keeping track. "There's no control. They don't even know what is hitting them until it hits them."

Our analysis of the group's data found 3078 Bay Area public retirees are in the so-called "100-thousand dollar pension club." Four of the top ten all worked at the same agency: The San Ramon Valley Fire Protection District: Their 4 pensions alone total more than a million dollars a year.

"It's a huge number, don't get me wrong," says Fire Chief Richard Price. He says firefighters work hard and risk their lives every day. Retirement is their reward. The huge pensions are mostly because the employees spent decades with the agency. "It's not that San Ramon is paying the highest salary by any means. But every single one of those employees started at 20 years old."

But Price admits loopholes in the fire district's pension system allowed excesses. Former chief Craig Bowen for instance was able to pad his final year's salary of $222,500 by $61,000 thousand dollars. Adding in yearly cost of living increases makes him the highest paid public pensioner in the bay area at $291,000.

It's called spiking. By selling back several years of unused vacation and adding in extras like car allowance, sick days and bonuses, public employees can inflate their final year's salary, which is what their pension is based on.

It's a practice Assemblywoman Fiona Ma wants to see stopped. "This current retirement system is not sustainable," she says. That's why she is sponsoring a bill that she says will close loopholes in the state's retirement laws. "My bill is going to empower retirement systems to be able to do their due diligence, audit a person's salary history, salary record, and determine whether a person is eligible for the amount they are claiming," she says. "This bill would directly affect folks like the San Ramon Fire District.

But Chief Price says the elected board that oversees the San Ramon Valley Fire District has already made changes. "They did eliminate everything that they could from a spiking standpoint," he says.

And Chief Price says it's all transparent now: A third party audits all retirement contracts, and everything is posted on the agency's website. So what about all those former perks? "They hired me and gave them all to me, then they took them all away," he says. "They reduced my salary by $38,000 after they hired me."

Something he says he's happy about. "I certainly don't want to be the poster child for retirement abuse or anything like that. I want to be part of the solution."

If Assemblywoman Ma's pension reform bill passes it will affect retirees currently in the $100,000 pension club, as well as any new retirees. There are several other pension reform bills working their way through the legislature. And several Bay Area counties are also looking at ways to trim those enormous retirement paychecks.