The governor of California, Arnold Schwarzenegger, who had proposed a partial privatization of the state's public pension funds, set up a commission on Thursday to study how to meet pension and health care obligations, the New York Times reports.

The 12-member commission will have one year to study the problem, determine the extent of unfunded liabilities and devise a plan.

"They are obligations that must , and will , be paid by government," Mr. Schwarzenegger said in a statement.

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