California firefighters and police officers could soon be eligible to retire earlier and collect larger pensions under legislation now awaiting Gov. Gavin Newsom’s signature — a measure that has already prompted some local unions to renegotiate contracts in anticipation of its passage.
Assembly Bill 1383 would lower the retirement age for full benefits from 57 to 55 for public safety workers and would let unions negotiate pension formulas with an accrual rate as high as 3% per year of service, up from the current 2.7%. The bill also raises a cap on pensionable income for higher-paid public employees across the board, not just those in law enforcement and fire service.
The measure cleared the Legislature with broad bipartisan support, passing 33-0 in the Senate and 70-2 in the Assembly. Sen. Suzette Martinez Valladares, a Lancaster Republican, said she backed the bill because public safety workers “run toward fire, violent crime and life threatening emergencies” and deserve retirement benefits that reflect the toll of that work.
Should Newsom sign it, the bill would represent the first expansion of public employee pension benefits since 2013, when then-Gov. Jerry Brown pushed through reforms requiring newer employees to work longer and contribute more toward their retirements. That earlier overhaul came in response to the dot-com crash and the Great Recession, which drained tens of billions of dollars from California’s pension systems and raised alarms about their long-term solvency.
Those wounds haven’t fully healed. The California Public Employees’ Retirement System, the state’s largest pension fund, held about $637 billion in assets as of July 1 — roughly 85% of what it ultimately owes its 2 million members. To close that gap, CalPERS has steadily raised the rates it charges cities, counties and the state over the past decade, both to pay down unfunded liabilities faster and to reflect more conservative investment return expectations. Combined employer and employee contributions to the fund rose from $14.9 billion in 2017 to $30.2 billion last year.
The pension expansion is expected to add $282 million in near-term costs to CalPERS, covering the earlier retirement age and higher income cap. That figure could climb by hundreds of millions more if public safety agencies statewide opt into the maximum benefit levels, according to estimates from the state Department of Finance, which has urged Newsom to reject the bill.
Local governments across California have lined up against the measure, hoping the governor will veto it. Napa Mayor Scott Sedgley, a retired firefighter himself, said cities want to reward public safety workers but need the numbers to work. “We want to pay our police and fire and all our employees all we can, but it has to pencil out at the end,” he said.
Despite the uncertainty, some police and firefighter unions moved ahead as if the bill’s passage were assured. In Napa, for example, the city’s firefighter union secured a five-year contract that includes a clause reopening pension negotiations if Newsom signs AB 1383. Attorney Michael Youril of the law firm Liebert Cassidy Whitmore, which represents public agencies, said unions are eager not to get locked into contracts that don’t reflect the new benefit levels. “I would say there’s going to be immense pressure” on local governments to adopt the maximum allowable pension formulas, he said.
The legislation would benefit two labor groups that have been steady political allies to Newsom: California Professional Firefighters and the California Correctional Peace Officers Association. Firefighter union leaders pushed hard for the lowered retirement age, citing the toxic exposures and physical toll that can cut short both careers and lives in the profession.
Union representatives note the bill doesn’t fully reverse the 2013 reforms — before that law, police and firefighters could retire at 50 with even richer pension formulas. They describe the current proposal as a more modest update rather than a full rollback.
For the Peace Officers Research Association of California, which represents law enforcement unions statewide, the bill has been the top legislative priority this session. Association president Brian Marvel said he’s concerned about the possibility of a veto.
“We’re really hoping that the governor doesn’t want to go down that path because we really feel that this is a great opportunity for him to leave office addressing a huge issue within public safety,” Marvel said, pointing to ongoing struggles with police recruitment and retention. “We want to make sure that we have the necessary resources to be able to address what the community’s needs are.”
Marvel added that if Newsom vetoes the bill, law enforcement groups would have to “have serious conversations” about the decision — particularly if the governor pursues a future run for president.
Original source: CalMatters
