In coalition with local government and public agency partners, RCRC opposes Assembly Bill 1383, authored by Assembly Member Tina McKinnor (D-Inglewood). This measure would make several significant changes to the public employees’ retirement benefits, increasing pension liability for public agencies. These changes would endanger the fiscal sustainability of local governments and public agencies.
The Public Employees’ Pension Reform Act (PEPRA) was passed in 2012, at a time when the Legislature recognized that local governments and public agencies were struggling to meet pension obligations, and the California Public Employees Retirement System (CalPERS) was in danger of sliding into insolvency if drastic action was not taken. In this time of fiscal uncertainty, while local agencies (much like the State) are facing budget challenges and considering significant budget cuts, AB 1383 would upend many of the reforms put in place by PEPRA.
Specifically, AB 1383 would:
- Increase the pensionable compensation cap;
- Reduce the retirement age for public safety from 57 to 55 prospectively;
- Add a 4th safety tier that is 3% @ 55, prospective and subject to bargaining;
- Allow local agencies to adjust their local formula in a prospective manner; and
- Permit authorized employee representatives to bargain with the employer over the employee share of payment for the normal cost.
While the bill intends to support recruitment and retention of essential public safety professionals, the additional financial strain on counties will not solve the problem of retention and recruitment. This measure undermines the reforms of PEPRA and introduces new unfunded mandates for enhanced retirement benefits for public safety employees. These increased benefits could jeopardize the fiscal solvency of local governments and CalPERS. By raising the cost of these benefits, AB 1383 would reduce funds for salary increases, potentially harming future recruitment efforts and exacerbating existing inequalities between employee bargaining units.
Rural counties across the state are facing challenges in fully funding existing post-employment benefit obligations while maintaining county services with limited resources. Therefore, it is crucial that any changes to the system be sustainable, fair to taxpayers and employees, and provide long-term financial stability to ensure the retirement security of public employees.
This measure passed the Assembly Committee on Public Employment and Retirement on April 23rd and is now waiting to be heard in the Assembly Appropriations Committee.
RCRC’s coalition letter of opposition is available here. For additional information, contact RCRC Policy Advocate Sarah Dukett.