Cal Cities warns that costly changes to California’s pension reform law could undermine government services
By Johnnie Piña, legislative advocate (labor relations)
Cal Cities and other local government associations are pushing back on a two-year bill that would drive up costs for cities and roll back key pension reforms passed into law over a decade ago.
Lawmakers last year pressed pause on AB 1383 (McKinnor) after opposition from Cal Cities and others. However, Asm. Tina McKinnor was able to move the bill out of Assembly Appropriations in January after adopting several changes that would reduce the bill’s cost. The measure passed off the Assembly Floor on a 70–2 vote and is now awaiting a Senate hearing.
Proponents of the bill, which includes police and firefighting unions, say AB 1383 would help increase retention and recruitment. While Cal Cities appreciates the intent of the bill, AB 1383’s higher state and local pension obligations and pension reform rollbacks could force cities to make difficult tradeoffs between staffing and services.
How it would work
Beginning next year, AB 1383 would require retirement systems to increase the pensionable compensation cap to align with federal limits. The measure would also reduce the benefit age factor for public safety employees from 57 to 55 for future service. CalPERS estimates these changes could increase annual contributions for both cities and employees and have an impact on long-term liabilities.
AB 1383 would establish new retirement formulas for services performed by public safety members on or after Jan. 1, 2027. Cities would then need to adjust the formulas for safety members hired on or after Jan. 1, 2013 (when PEPRA went into effect) to match these formulas. The bill would add a new safety tier that is prospective and subject to bargaining.
CalPERS is evaluating the bill’s exact cost increases based on the changes made to the bill in January. CalPERS and CalSTRS prior analysis, based on the last version of this bill, is attached to Cal Cities’ January opposition letter.
Why it matters
Lawmakers enacted the Public Employees’ Pension Reform Act of 2013 (PEPRA) to contain long‑term pension liabilities. According to CalPERS, those reforms have generated $5.8 billion in savings to date, with potentially larger savings in the future. AB 1383 would reverse PEPRA’s cost‑containment framework, creating higher long‑term liabilities and placing greater pressure on local government budgets.
Increased pension obligations would crowd out funding for core services such as police and fire, parks and recreation, libraries, road maintenance, and housing and homelessness.
“It’s a big complicated system, and what’s being proposed here is to make it less secure,” former Gov. Jerry Brown told CalMatters in 2025. Brown, who signed PEPRA, later noted that government must live within its means.
“The great danger of pensions is that risk comes later when the current lawmakers and advocates are no longer around, so the current leadership has to act as stewards for future beneficiaries, and that is very difficult because the future is not here, but the present is now.”
What’s next?
The bill is now in the Senate Rule Committee, awaiting referral. Legislators will likely refer AB 1383 to the Senate Committee on Labor, Public Employment and Retirement. Cities can voice their opposition by submitting a letter of opposition.