CalPERS Board Mulls Changes to State Worker Pension Calculations
CalPERS staff has proposed including nearly 100 additional types of special payments when calculating public workers' pension benefits, Capital Public Radio's "KXJZ News" reports.
The CalPERS board of directors could vote on the proposal as early as Tuesday (Orr, "KXJZ News," Capital Public Radio, 8/18).
In September 2012, Gov. Jerry Brown (D) signed a bill (AB 340) that:
- Requires all current and future public workers at every level of government to pay at least 50% of their pension costs;
- Increases the retirement age by at least two years for future public workers; and
- Caps the amount of future public workers' salaries that can go toward their pensions at $110,000 for those participating in Social Security and $130,000 for those not participating in the program.
The law applies to most public workers and the changes to the pension system took effect Jan. 1, 2013 (California Healthline, 1/29/13).
Details of Proposed Changes
CalPERS staff has recommended that the pension fund's board authorize 99 types of special payments to count toward pension calculations for state employees hired after Brown's pension legislation took effect in 2013, the Sacramento Bee reports.
The proposal calls for including in pension calculations:
- Cement finisher pay;
- Holiday pay;
- Longevity pay;
- Notary pay;
- Physical fitness pay;
- Police marksmanship certification pay;
- Smog inspector license pay;
- Temporary pay increases, such as from short-term promotions; and
- Other special payments.
In response to the proposals, Brown last week sent a letter to CalPERS President Rob Feckner opposing the inclusion of temporary-promotion income in pension fund calculations.
Brown wrote that doing so "disregards the rule that pensions will be based on normal monthly pay and not on short-term, ad hoc pay increases."
The letter did not mention the other 98 proposals on CalPERS' list.
According to the Bee, the pension fund has interpreted Brown's letter to mean that he does not object to the other proposals.
CalPERS spokesperson Brad Pacheco said, "We appreciate that Gov. Brown recognized that CalPERS' proposed regulations are essentially consistent with the purposes of the Pension Reform Act."
Opposition to Proposals
Meanwhile, pension reform advocates and other stakeholders have expressed concerns about the proposed changes.
San Jose Mayor Chuck Reed (D) said the changes show that the pension fund's board "is doing what they can to resist reforms ... They're in favor of anything that expands benefits."
Elk Grove City Manager Laura Gill said the provision that would include temporary pay increases in pension calculations would "invite spiking" and "would put us backward from all the work we've done to have a sustainable and sound pension system" (Ortiz, Sacramento Bee, 8/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.