The PERS problem is largely artificial and exaggerated. The recent jump in the liability is due entirely to a reduction in the assumed rate of return on PERS investments over the next 20 years. Nothing has changed in the actual PERS investment fund, except it has gone up sharply with the actual, real world stock market boom. Only a fool would  claim to really know what the markets will do over the next 20 years. 

I am somewhat optimistic myself. But if need be, paying off the PERS legacy costs can be stretched out. There are ways to reduce management costs, see my post below. There is no need to savage public services or raid reserve funds, or do dumb things like combine the small state colleges.