By William Melhado
The Sacramento Bee
SACRAMENTO, Calif. — The pendulum of pension reform could be swinging toward more generous benefits over a decade after California overhauled its retirement system if lawmakers grant public safety unions’ wish to lower the age when police officers and firefighters can retire.
Earlier this session, the Assembly passed a bill that would enable unions to negotiate more generous retirement benefits for newly hired police officers and firefighters, and lower the retirement age from 57 to 55, which labor groups say will help California and local governments hire and retrain critical public safety employees.
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“What it does is it right-sizes PEPRA,” said Brian Rice, the president of California Professional Firefighters, referring to the Public Employees’ Pension Reform Act, which increased retirement ages and decreased how much retirees can receive for those hired after 2013.
The fiscal impact of the legislation, authored by Assemblymember Tina McKinnor, D- Inglewood, would be felt acutely by California cities and counties, which are responsible for contributing to their employees’ pensions. Associations representing local governments have opposed the legislation from a fiscal perspective since it was first introduced last year.
McKinnor’s bill is the “most significant piece of pension legislation for California since PEPRA was signed into law,” said Eric Stern, the CEO of the Sacramento County Employees’ Retirement System.
“The changes that AB 1383 would put into place would easily result in tens of millions of dollars in annual costs to a local retirement system,” Stern said.
Legislative analysis of the bill, conducted after it was amended in January to reduce how much it would cost, found that the new retirement benefits would increase contribution costs by more than $370 million in the first year, if employers and unions agree to the new formulas.
In addition to allowing unions to push for lower retirement ages and better retirement benefits, Assembly Bill 1383 would also increase the compensation cap that retirees are eligible to make.
Under PEPRA, members of the California Public Employees’ Retirement System who participate in Social Security are eligible to receive up to $155,081 per year in retirement benefits. The new compensation cap would increase to $280,000, which is in line with the Internal Revenue Service cap.
Improved retirement benefits will attract top talent, supporters say
In a letter, signed by more than 75 unions, asking for a lawmaker’s support of the bill, Rice wrote that the longer firefighters are on the front lines, the more likely they will develop job-related illnesses, such as cancer, which could result in additional costs due to disability retirement or workers’ compensation.
“It’s a health and safety issue,” Rice said. He said reducing the retirement age to 55 will “cut down on some years of exposure” to toxic chemicals that firefighters encounter in the field.
The proposition would additionally help local police departments grow their ranks, said Brian Marvel, the president of the Peace Officers Research Association of California. The law enforcement group issued a brief last year that found California counties, on average, had less than two officers for every 1,000 people, which is lower than the national average.
“Law enforcement isn’t as attractive as it once used to be for a variety of reasons,” Marvel said. He pointed to how the national dialog around police has changed in the last 10–15 years and that has contributed to fewer people seeking jobs in law enforcement.
The proposal is designed to help ensure public safety careers remain competitive, McKinnor said.
The lawmaker acknowledged that the issue with hiring isn’t that there aren’t enough people applying to these positions, but rather that local police departments and fire agencies need to attract better candidates.
“If we want the best people to protect us in our communities, we need to make sure that the professions remain sustainable over the long term,” McKinnor said.
Cities and counties have cost concerns with PEPRA changes
After CalPERS’ fund’s assets decreased by over $70 billion in value due to the financial crisis of 2008, California struggled to keep up with the generous retirement benefits previously promised to public employees.
In response, former Gov. Jerry Brown spearheaded California’s pension reform in 2012 to help CalPERS achieve long-term stability. Last year, Brown said he was opposed to these changes to PEPRA.
Between 2012 and 2023, the first 11 years of PEPRA’s existence, the state, schools and public agencies saved $5.8 billion in savings due to PEPRA, CalPERS estimated in 2024. Over the subsequent 10 years, CalPERS expects to save $26.5 billion from the pension reform effort as the share of PEPRA members grows.
CalPERS is still not fully funded, the retirement system most recently reported that it has over 83% of the funds to cover its financial obligations.
The week before McKinnor’s bill passed through the Assembly Appropriations Committee this January, a coalition including the League of California Cities and the California State Association of Counties sent a plea to committee chair Assemblymember Buffy Wicks, D- Oakland, to oppose the legislation.
The groups noted that cities and counties have been approving salaries based on the assumption that benefit cost would remain consistent with PEPRA law. Opening the door to higher retirement benefit costs for employers would create financial strain on local agencies.
“By increasing the cost of these benefits, AB 1383 would result in less money for salary increases, which could therefore harm future recruitment efforts. Additionally, the changes in this bill could result in labor unrest by furthering the equity issues between safety and non-safety employees,” the coalition wrote in January.
In response to those concerns, McKinnor noted that her legislation does not retroactively change existing benefits — it would only apply to future hires.
Additionally, she said that the bill does not mandate employers offer these benefits to police officers and firefighters, rather it allows for local decision-making through negotiations
“Cities and counties can decide whether to adopt these formulas through collective bargaining, based on their fiscal situation,” she said.
The legislation comes at a time when county leaders are grappling with higher than expected costs.
A recent analysis by CSAC found that President Donald Trump’s One Big Beautiful Bill Act is expected to increase counties’ costs by $9.5 billion a year due to federal funding losses related to health care.
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