California Public Employees’ Pension Reform Act of 2018.
If enacted, SB 32 would fundamentally alter the structure and financial obligations of PERS, aiming for a significant reduction in unfunded liabilities which have been a concern for state finances. The proposed measures would require a thorough examination of pensionable compensation, disallowing various forms of pay deemed non-pensionable, and thus ensuring that pension benefits are aligned with actual earnings and contributions. By enhancing oversight through the new committee, the bill seeks to enhance transparency and accountability in the management of public pension funds.
Senate Bill 32, introduced by Senator Moorlach, aims to amend existing public employee retirement laws in California. The primary objective of the bill is to reduce the unfunded liability of the Public Employees Retirement System (PERS) to a level determined in 1980 by 2030. To achieve this, the bill mandates an increase in employer contribution rates by 10% in years when the unfunded liability exceeds zero. This initiative reflects an ongoing effort to implement pension reforms initiated by the California Public Employees Pension Reform Act of 2013 (PEPRA). Additionally, the bill stipulates the creation of the Citizens Pension Oversight Committee to oversee PERS and the State Teachers Retirement System (STRS) and provides for annual reviews of the pension obligations and costs.
The sentiment surrounding SB 32 is purposefully cautious, aiming for fiscal prudence in public retirement systems while addressing the pressing concerns of public sector pensions. Supporters argue that the bill is necessary for long-term sustainability of employee benefits and state solvency, while opponents might view the measures as restrictive, potentially leading to dissatisfaction among current and future public employees regarding retirement benefits. The sentiment appears to resonate with broader concerns about the financial health of the state's public retirement systems.
The primary contention centers around the balance of ensuring adequate retirement benefits for public employees while addressing the fiscal realities of pension funding. Critics of SB 32 may express concerns that the increased employer contributions could strain state and local budgets, affecting other critical services. Furthermore, the prohibition of certain forms of compensation from being considered pensionable could be contested by employees and unions concerned about their retirement security. The bill has ignited a debate about the necessity and methodology of pension reform versus maintaining attractive public service positions.