The shortfall has been considered one of the state's most difficult financial problems. The new plan will pour more money into the pension fund, with the goal of returning the retirement system to full funding in three decades.
"This bill will ensure a decent retirement for hundreds of thousands of teachers, both now and for decades to come," Brown said in a statement.
Under the measure, the state, schools and employees will start paying more for pensions on July 1. Contributions will be gradually increased over the next several years, with schools picking up the biggest share of the tab.
The California State Teachers' Retirement System will also gain some new powers to slightly adjust contribution rates for the state and schools.
"This historic legislation allows CalSTRS to embrace its future with confidence and optimism knowing that a sound funding plan is firmly in place," Harry Keiley, chair of the Teachers' Retirement Board, said in a statement.
It's possible, however, the legislation won't be enough. The bill's calculations assume the pension fund meets its investment goals over the next three decades, which Brown admitted is "highly unlikely."