The tide of uncertainty that’s roiled financial markets is raising new concerns about California’s underfunded retirement systems for millions of teachers, firefighters, police officers and other public sector employees.

Former civil servants aren’t in any immediate danger of losing their retirement checks. But if the stock market volatility triggered by President Donald Trump’s on-again, off-again tariffs continues, already cash-strapped cities and public agencies worry they may need to pony up even more money to help cover employee pension costs, which have soared in recent years with increases in worker salaries and more baby boomers reaching retirement.

“With this whiplash policy approach, cities are just sort of holding on for dear life,” said Dane Hutchings, a Sacramento lobbyist representing local governments.

As stocks plummeted after Trump announced his latest tariff plan to tax nearly all imports, the California Public Employees’ Retirement System, the nation’s largest pension fund for state and local employees, lost around $20 billion from its investment portfolio in a matter of days.

CalPERS has recouped some of those losses as the market has partially rebounded since Trump said he would pause most of the highest tariffs, except those on China, for at least 90 days. As of late last week, CalPERS held roughly $514 billion in investments, according to the latest available reporting.

Still, a sustained downturn could put the fund in danger of missing its annual 6.8% target for investment returns. And the California State Teachers’ Retirement System, a roughly $350 billion pension fund for public school educators, could fail to meet its 7% goal. The deadline to realize those gains is June 30.

If that happens, thousands of cities, counties, school districts, fire departments, utilities and other state and local agencies that rely on the two funds could be forced to increase their already steep contributions for employee pensions. Unlike most private retirement plans, public pension payments are guaranteed and amounts do not change generally with market fluctuations.

“California cities are already facing rising pension costs and increased pressure on their budgets,” Johnnie Piña, a legislative advocate with the League of California Cities, said in an email. “When CalPERS misses its investment targets, cities must fill the gaps, making it that much more difficult for cities to maintain core services to residents.”

Oakland, for instance, is staring down a $140 million budget shortfall — largely due to a slowdown in real estate tax revenue and ballooning police overtime costs — even after moving to temporarily close four fire stations and lay off dozens of employees. Retirement benefits have climbed over the years to make up about 14% of the city’s current $1.1 billion general fund budget, which includes spending that isn’t automatically designated for a specific purpose.

Oakland officials did not return a request for comment about its pension payments.

San Jose, which has its own retirement system separate from CalPERS, is facing a $60 million deficit. More than 15% of its $2.1 billion general fund goes to employee pensions.

In a statement, Mayor Matt Mahan’s office said San Jose tracks its investment returns every five years instead of setting an annual target, allowing the city to “not overreact to up or down swings in the market.”

At the state level, Gov. Gavin Newsom has said his $322 billion budget proposal should yield a $363 million surplus. However, that projection could be complicated if Californians’ personal stock market earnings — which the state relies on heavily for tax revenue — take a hit.

Next year, the state expects to pay around $9.1 billion in retirement benefits, or about 3% of its total budget. State finance department officials declined to comment on whether smaller-than-expected returns for the two pension funds could raise that amount.

It’s still unclear exactly how much cities and local agencies would need to contribute if the funds come up short of their investment targets. But Hutchings, the lobbyist, said that if the funds miss their goals by about a percentage point, some agencies with many retirees could see their required contributions rise by 15% to 20%, with the increase spread out over the next two decades.

One fear is that if costs soar, public employers that can’t afford to pay would be booted from the funds, with potentially devastating consequences for retirees.

“The doomsday scenario is that these cost pressures go up so high that an agency is terminated from the plan and a retiree gets a notice from CalPERS saying your payments have been reduced by 70%,” Hutchings said.

Such extreme outcomes, however, appear unlikely in the near term, said Alan Auerbach, director of UC Berkeley’s Robert D. Burch Center for Tax Policy and Public Finance. That’s partly because, unlike with past financial meltdowns such as the Great Recession or the dot-com crash, the current market volatility, for now at least, is tied to the president’s decisions, which can be quickly reversed, rather than any sustained economic challenges.

“It’s a largely self-inflicted wound,” Auerbach said.

While investors may have been spooked by his tariff plans, Trump contends the policies will bring manufacturing jobs back to the United States and level the playing field for trade with other countries.

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For their part, officials at CalPERS and the teachers’ fund say they carefully balance the risk in their investment portfolios to withstand sudden downturns. Each pension system holds around 40% of its total assets in stock. Other investments include fixed-rate bonds, real estate and private equity funds.

Even so, underlying concerns remain about the pension systems’ sustainability.

For example, CalPERS’ total assets are currently worth only about 75% of its future obligations to retirees, and its chronic underfunding has long worried officials. And despite a 2013 pension reform law to ease costs in the wake of the Great Recession, the fund’s liabilities have continued rising.

Auerbach with UC Berkeley said the recent market turmoil may ultimately have little impact compared to those entrenched issues. But if Trump’s paused sweeping tariffs eventually take effect, potentially triggering a recession that some economists and financial analysts warn may be on the horizon regardless, the situation could become much more dire.

“If we were to have a series of bad years,” Auerbach said, “that would really change the picture.”