Public employees’ retirement.
The bill directly addresses the financial stability of public retirement systems by shifting liability for increased actuarial costs onto the agency that increases a member's compensation. It aims to prevent a scenario where one agency's decision to raise employee compensation negatively impacts another agency's financial obligations. The requirement for a 2.7 percent cap on fractional percentages multiplying years of service in pension calculations furthers attempts to streamline and standardize how pensions are calculated across various public entities.
SB1297, introduced by Senator Moorlach, is legislation aimed at revising the provisions surrounding public employee retirement systems in California. This bill introduces significant changes to how pensions are calculated for state and local public employees, establishing clear guidelines for how actuarial liabilities are managed when compensation is increased for public employees. Specifically, it mandates that the final annual compensation, which is used to determine pension benefits, be calculated based on the average of the highest three earning years of the employee's career. Additionally, it eliminates any caps that would prevent pensions from exceeding a certain percentage of the final compensation.
Notably, SB1297 prohibits local entities from establishing deferred retirement option programs, which has been a point of debate. Critics of this aspect argue that removing local control over such programs could limit the benefits to local governmental employees that are tailored to specific regional needs. The bill includes a finding that these changes address a matter of statewide concern, reinforcing the notion that it applies uniformly across California, including charter cities, and thereby minimizes regional disparities in public employee benefits.