RCRC has joined with public agency partners to oppose Assembly Bill 1383, authored by Assemblymember Tina McKinnor (D-Los Angeles). This measure would make several significant changes to public employees’ retirement benefits, ultimately leading to increased pension liability for state and local agencies.
Specifically, AB 1383 would make significant changes to longstanding agreements negotiated in the Public Employees’ Pension Reform Act (PEPRA) in 2012. Among the provisions are an increase to the pensionable compensation cap for all highest paid employees; for public safety a reduction in the retirement age from 57 to 55 prospectively; the addition of a 4th safety tier that is 3% @ 55, prospective and subject to bargaining; and, allowing local agencies to adjust their local formula in a prospective manner.
PEPRA has been in place since 2013, and there has been opportunity to see its impact on pension funds and local agencies. According to a 2024 estimate, for the state, schools, and public agencies in CalPERS, PEPRA has already led to $5.8 billion in savings. As years go by, and the public sector force skews towards more new members, those savings will increase dramatically. Over the next ten years, PEPRA is expected to result in $26.5 billion in cost savings for CalPERS members. This data does not include the public agencies that maintain their own pension system, including twenty counties. The critical savings from PEPRA help support budgetary stability, which supports operational and workforce stability.
According to CalPERS, given the current discount rate of 6.8%, AB 1383 is expected to increase the required contributions of employers and PEPRA members and increase the present value of future benefits (PVB) by billions of dollars across State, Schools, and Local Agency plans. In addition to the change in PVB, CalPERS estimates that the change to the accrued liability to be $233 million across State, Schools, and Local Agency plans.
RCRC opposes AB 1383 because it would significantly add to existing budget instability. AB 1383 is pending a vote on the Senate Floor, where lawmakers have until August 31 to act on it. Recent amendments to this bill did not address public agencies’ concerns, and the price tag remains in the billions.
Read our full floor alert with our public agency partners HERE.
Please call your legislators and ask them to oppose AB 1383.
For additional information, contact RCRC Senior Policy Advocate Sarah Dukett.