California Assembly Bill 1383 would undo prudent pension reforms

A version of the following public comment was submitted to the California Assembly Committee on Appropriations on May 14, 2025.

Assembly Bill 1383 reverses course on several prudent reforms established by the General Assembly in the Public Employees’ Pension Reform Act (PEPRA), designed to limit exploding taxpayer costs and eliminate the state’s over $200 billion pension debt. It would expand the definition of pensionable compensation for all PEPRA members, remove critical cost-sharing requirements, and again subject what are currently agreed-upon contributions to collective bargaining. Additionally, it would create a new, higher-cost benefit for public safety employees and reduce retirement age requirements back to where they were before the 2014 PEPRA reform.  

All these changes thwart the prudent and necessary reforms lawmakers adopted and built coalitions around in 2013. Passing PEPRA required sacrifice from government employees and employers alike, but the result of this landmark piece of legislation was that California’s pensions would remain secure and eventually be fully funded.  

CalPERS estimates that PEPRA saved the state more than $5 billion since its inception. Another $25 billion in savings is estimated over the next 10 years, but only if members reject AB1383 and guard the shared PEPRA commitments. 

AB1383 essentially repeals the most important parts of PEPRA and would add more unfunded mandates to the state’s already underfunded pensions. According to CalPERS, AB1383 would immediately increase the annual cost to public employers (and therefore taxpayers) by $343 million and cost nearly $9 billion over the next 20 years. The ultimate cost to taxpayers could extend well beyond $9 billion if market results resemble those of the last 20 years, or CalPERS continues its prudent lowering of its expected rate of return on investments. 

Support of AB1383 is based on questionable logic and is unlikely to achieve the proponents’ stated goal of improving the recruitment and retention of public workers. According to California’s 2023 Total Compensation Survey, the turnover rate for police and patrol officers was 7.5%, nearly identical to the state’s overall public employee turnover rate of 7.4%—and far below the 2023 national average of 18.5% for non-education state and local government workers, as reported by the Bureau of Labor Statistics. There is no empirical basis to support the claim that California’s public safety workforce is in crisis or undercompensated under its current retirement structure. 

It is up to lawmakers to protect and defend the 2013 PEPRA reform to its intended end—with CalPERS fully funded within the next 15 to 20 years and secured going into the future. Reversing several crucial reforms at this time would come at a significant cost, have the counterproductive effect of making it more costly and difficult to recruit new hires, and thrust the state back into perpetually growing pension debt that governments faced over a decade ago.