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By: @Aaron Avery

As the second year of the 2025-2026 Legislative Session kicks into high gear, the State Legislature is dispensing with “two-year” bills left over from 2025. January 31 is the last day for bills still in their “house of origin” (i.e., the State Assembly for Assembly Bills), to pass to their second house. 

Two important public pension bills subject to January 31 deadline include AB 1383 [McKinnor] Public employees’ retirement benefits, and AB 1439 [Garcia] Public retirement systems: development projects: labor standards.

AB 1383 seeks to make several significant changes to public pension plans, which would undermine the landmark pension reform law known as the California Public Employees’ Pension Reform Act of 2013 (PEPRA). Specifically, this bill would: 

• Increase the pensionable compensation cap;
• Reduce the retirement age for public safety from 57 to 55 prospectively;
• Add a fourth tier to the “safety” classification that would be three percent @ 55, prospectively and subject to bargaining;
• Allow local agencies to adjust their local formula in a prospective manner; and
• Permit authorized employee representatives to bargain with the employer over the employee share of payment for the normal cost.

According to CalPERS, given the current discount rate of 6.8 percent, AB 1383 is expected to increase the required contributions of employers and PEPRA members and increase the present value of future benefits (PVB) by $5.3 billion for all State, School, and Local Agency plans. In addition to the change in PVB, CalPERS estimates that the change to the accrued liability would be $370 million for all State, School, and Local Agency plans.

Because the bill would undermine the fiscal integrity of pension plans, while increasing costs for employers and employees, CSDA is opposed to the measure with its coalition partners.

AB 1439 would prohibit all public pension systems from making any new or additional investment in a development project that does not include specified “labor standards protections,” defined by law, or to provide financing for those projects. 

This de facto divestment measure could potentially impact a variety of investments, with potential consequences for the ability of public pension systems to achieve necessary investment returns, as well as consequences for contribution rates. Due to these potential impacts on special districts, CSDA is opposed to the measure with its coalition partners.

Both measures are currently with the Assembly Committee on Appropriations. By January 22, the committee will dispense with all “two-year” bills including this pension legislation, which will either fail or advance from the committee in some form.

Stay tuned to Advocacy News and CSDA eNews for future updates.