California lawmakers have moved to reverse parts of former Governor Jerry Brown’s pension reforms by passing two bills that would expand retirement benefits for public employees, potentially increasing the state’s pension liabilities. The measures, approved by the state Assembly with near-unanimous support, aim to enhance retirement perks for public safety personnel and other state workers, raising concerns about long-term fiscal impacts on taxpayers.

One bill reduces the retirement age for public safety employees hired after the 2012 reforms from 57 to 55 and increases the earnings cap used to calculate pension benefits. The cap for public safety officers would rise from $191,679 to $249,075, while the cap for other workers would increase from $159,733 to $184,500. These changes are expected to primarily benefit higher-earning employees, enabling more to retire with annual pensions exceeding $200,000.

The California Actuarial Advisory Panel has cautioned that the enhanced benefits could substantially increase pension costs, particularly during economic downturns, which could necessitate cuts to public services, including law enforcement. Historical precedent from the 2008-09 financial crisis showed how pension underfunding strained state budgets following generous benefit increases made during the dot-com boom of the late 1990s. At that time, California expanded benefits retroactively, allowing some public safety officers to retire at age 50 with pension payments equal to 90% of their final salaries. The subsequent market crash left pension funds severely underfunded, prompting Brown to implement reforms to curb future liabilities.

The second bill addresses a practice allowing eligible highway patrol officers and firefighters to continue working while collecting pension payments. Under this proposal, these employees could accumulate pension contributions and accrued sick leave in an interest-bearing account administered by the California Public Employees’ Retirement System. Upon retirement, they would receive the lump sum from this account in addition to their regular pension payments. Similar programs in local jurisdictions, such as Los Angeles, have faced criticism for encouraging abuses, including participants receiving salary and pension while on disability leave and not actively working.

Proponents, including government employee unions, argue that the 2012 reforms have made it difficult to recruit and retain public workers, asserting that restoring and enhancing benefits is necessary. However, state data shows that the California Highway Patrol received roughly 33,000 applications last year despite starting pay of $122,500, and state employment has grown by 34% on a per capita basis since 2012, calling into question the recruitment argument.

While former Governor Brown championed the pension reforms to address underfunding, his successor, Governor Gavin Newsom, faces pressure from unions supporting these new benefit expansions. Observers note that Newsom may be reluctant to oppose the measure amid speculation about a possible presidential bid. The long-term fiscal effects of these pension changes may lead to increased taxpayer burdens, especially if the stock market declines or the state experiences another economic downturn.