CalPERS - the CA Pension fund for state, city and county employees - returned an anemic 1.1% for all of 2011. This makes their 10-year average 5.5%. CalPERS assumes a 7.75% annual return on investment in order to fully fund the pensions of cities like Sunnyvale, County, and CA state employees.
The pension obligations are fixed, so CalPERS' failure to meet those projections means the difference has to be made from the general fund of the various levels of government.
CA spent an additional $1.8B this year on additional funding for CalPERS and is slated to spend an additional $3.15B next year to make up for CalPERS' deficit.
Sunnyvale will likely spend more next year to make up the unfunded liability assigned to the city by CalPERS. I believe Sunnyvale spent $15M out of a General Fund budget of $129M (about 12%) on contributions to CalPERS based on the City budget slide show here:
For more info, see also