California Assembly Bill 569 would undermine important pension reforms

A version of the following public comment was submitted to the California Assembly Committee on Appropriations on May 21, 2025.

Assembly Bill 569 undermines a meaningful reform established by the General Assembly in the Public Employees’ Pension Reform Act (PEPRA), designed to limit unexpected and unnecessary taxpayer costs and eliminate over $200 billion in pension debt. It would remove restrictions on government employers, allowing them to increase pension promises through supplemental defined benefit plans, even though the state’s pension promises are still underfunded. AB569 would allow local governments to sidestep the currently agreed-upon contributions for what is already considered an adequate pension benefit. Opening the possibility for more pension promises would ratchet up the risk and costs imposed on California’s strained taxpayer base.

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 has 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 bills like AB569 and uphold the shared PEPRA commitments.

AB569 essentially repeals one of the most essential parts of PEPRA and would add more unfunded mandates to the state’s already underfunded pensions. Offering government employers the option to provide and pay for supplemental pension benefits may seem innocuous at first glance; however, cost estimates for pension benefits have frequently proven to understate their ultimate long-term costs, forcing future policymakers and taxpayers to deal with burdensome unfunded liabilities of past promises. Ill-advised pension enhancements with underestimated costs were a major contributor to the explosion in the state’s pension debts in the early 2000s, and this bill would again open the possibility for runaway debt.

Support of AB569 is also 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 workforce is in crisis or lacking retirement security under its current retirement systems.

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 crucial reforms at this time would come at a significant cost and thrust the state back into perpetually growing pension debt that governments faced over a decade ago.

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