Key Takeaways
- • CalPERS reported a 14.8% investment gain for fiscal 2025-26, which unions are using to argue that boosting police and firefighter pensions can be afforded with little or no taxpayer impact, according to CalMatters columnist Dan Walters.
- • Assembly Bill 1383 would increase public safety pension benefits and passed the Assembly with an overwhelming bipartisan vote before the summer recess; it could gain Senate approval before the Legislature adjourns in a few weeks.
- • A CalPERS actuarial analysis estimates the bill would raise costs for state and local governments by $4.8 billion, with employer contributions rising by $233 million per year.
- • Critics warn that breaching pension limits for police and firefighters hired after 2012 would prompt unions representing other public workers to demand parity, potentially driving much higher costs.
- • The debate echoes the Gray Davis-era pension increases of about 27 years ago, which contributed to budget strain and was followed by the 2012 pension reforms that AB 1383 would partially reverse.
Summary
CalPERS' report of a 14.8% gain for the 2025-26 fiscal year, released last month, gave unions a strong argument for expanding retirement benefits for police and firefighters. Unions contend the strong returns show California can afford the increase with little or no impact on taxpayers. Local governments that oppose the measure argue it would open the door to higher pensions for other categories of public workers and worsen budget shortfalls.
Assembly Bill 1383 would increase pension benefits for public safety employees. It passed the Assembly with an overwhelming bipartisan vote before the summer recess and could win Senate approval before adjournment in a few weeks. According to a CalPERS actuarial analysis cited in the column, the change would increase costs for state and local governments by $4.8 billion, with employer contributions rising by $233 million annually. The column argues the true impact could be much higher, because once pension limits for police and firefighters hired since 2012 are breached, unions representing other workers are likely to demand parity, and a Legislature dominated by union-friendly Democrats would find such demands difficult to refuse.
The column draws a parallel to 1999, after Gray Davis took office as governor. Davis, who had received major union donations during his campaign, sponsored benefit increases in unemployment and pensions, arguing the pension boost could be covered without new taxes because CalPERS said so. Investment earnings later collapsed during the Great Recession, forcing local governments to make higher mandatory contributions. Cities such as Lodi cited pension costs as a path toward insolvency, and Vallejo, Stockton and San Bernardino declared bankruptcy with rising pension costs as a major factor. Although a federal judge in Stockton's bankruptcy said the city could reduce pension benefits, none of the three cities acted on that advice.
The 2012 reforms reduced pensions for future hires but did not affect current retirees or employees. AB 1383 would partially undo those changes. Dan Walters, the column's author, frames the bill as a fiscal risk for local budgets and the state, given the history of pension-driven strain.
Assembly Bill 1383 would increase pension benefits for public safety employees. It passed the Assembly with an overwhelming bipartisan vote before the summer recess and could win Senate approval before adjournment in a few weeks. According to a CalPERS actuarial analysis cited in the column, the change would increase costs for state and local governments by $4.8 billion, with employer contributions rising by $233 million annually. The column argues the true impact could be much higher, because once pension limits for police and firefighters hired since 2012 are breached, unions representing other workers are likely to demand parity, and a Legislature dominated by union-friendly Democrats would find such demands difficult to refuse.
The column draws a parallel to 1999, after Gray Davis took office as governor. Davis, who had received major union donations during his campaign, sponsored benefit increases in unemployment and pensions, arguing the pension boost could be covered without new taxes because CalPERS said so. Investment earnings later collapsed during the Great Recession, forcing local governments to make higher mandatory contributions. Cities such as Lodi cited pension costs as a path toward insolvency, and Vallejo, Stockton and San Bernardino declared bankruptcy with rising pension costs as a major factor. Although a federal judge in Stockton's bankruptcy said the city could reduce pension benefits, none of the three cities acted on that advice.
The 2012 reforms reduced pensions for future hires but did not affect current retirees or employees. AB 1383 would partially undo those changes. Dan Walters, the column's author, frames the bill as a fiscal risk for local budgets and the state, given the history of pension-driven strain.
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