In summary
California police and fire unions are backing bills that would create new retirement benefits or raise pay. Lawmakers approved them overwhelmingly.
The Legislature wants to make putting on a California police or firefighter uniform more lucrative.
Three bills are moving forward that would either raise pay for state firefighters or boost retirement benefits for public safety personnel.
Their supporters say the measures are meant to compensate people who risk their lives for others and who by the nature of their jobs are exposed to career-shortening hazards. The proposals are sailing through the Legislature with bipartisan support and overwhelming majorities of lawmakers voting for them.
“Every day has a cost, and it’s one that we pay with our lives,” Darrell Roberts, president of the union California Professional Firefighters said at a recent hearing where he spoke in favor of a bill that would let public safety employees retire at 55, two years earlier than currently allowed. “This job is physically and mentally demanding in the extreme and asking us to work until 57 is pushing us not just to our limit but beyond it.”
The proposals carry significant price tags and could potentially drive up annual spending by hundreds of millions of dollars. They could also swell the state’s long-term liabilities by billions of dollars. That could make them a tough sell to Gov. Gavin Newsom given that the state anticipates deficits in the near future.
The two retirement bills in particular are rekindling memories of California’s pension crisis in the Great Recession, when major funds lost tens of billions of dollars. At the time, taxpayer advocates drew attention to sweetened benefits that former Gov. Gray Davis signed into law just a few years before the crash, when the stock market was booming.
Marcia Fritz, an accountant and longtime Californmia pension watchdog, said the current push to expand public safety retirement benefits is similar to the law Davis signed. During Davis’ tenure, California’s pension funds were flush from a soaring stock market fueled by tech companies, and lawmakers believed the good run would continue.
Today, the two largest pension funds — CalPERS and CalSTRS — have not fully recovered from their recession losses. But they have been beating their earnings targets, thanks in part to a stock market again propelled by the tech sector.
To Fritz, the lawmakers advancing the bill are “drinking the Kool Aid that the markets are never going to go down,” she said. “We’re the ones paying for it with reduced services.”
California scaled back benefits for workers hired after 2012 when former Gov. Jerry Brown signed a law that compelled employees to work longer before earning a full pension and required them to kick in more money to fund their own pensions.
CalPERS has estimated that Brown’s pension reform saved government agencies $4 billion in its first 10 years and projected it would reduce their expenses by another $24 billion over the next decade.
To taxpayer advocates like Fritz, that’s a sign tthe law is working and should continue as is. To the public safety unions, that means the government agencies have capacity to increase benefits without fully unwinding Brown’s law.
The bills moving forward would:
- Allow public safety employees to retire at age 55 rather than 57. Assembly Bill 1383 also would allow unions to negotiate more generous retirement formulas that would give public safety employees up to 3% of their income for each year in uniform. And it would boost the cap on annual pensionable earnings by almost $60,000 to $249,000 a year.
- Create a new deferred retirement program for California Highway Patrol officers and Cal Fire firefighters. AB 1054 is meant to give officers and firefighters an incentive to keep working later in their careers by allowing them to accumulate money that they could cash out in a single lump sum check when they retire.
- Increase Cal Fire firefighters’ pay by recommending a new formula for their raises. AB 2129 would encourage the governor’s office to bring their compensation closer to — but not necessarily equal to — the average of what 20 local fire departments pay.
How much do they cost?
The bill that would allow police and firefighters to retire earlier carries the biggest potential cost, requiring an additional $282 million in annual contributions to the California Public Employees’ Retirement system and increasing its long-term liabilities by $4.8 billion.
Its price tag would increase if cities, counties and other local government agencies agree to offer more generous pension formulas to police and firefighters, as the bill would allow. If that happens, CalPERS estimates it would cost an additional $353 million in annual contributions and further swell the fund’s long-term debt.
Those estimates do not account for the 20 county-run pension systems that are separate from CalPERS.
The potential costs are one reason California cities and counties oppose the measure. “We do definitely support strong retirement benefits, but those benefits must remain sustainable and fiscally responsible for our local agencies,” Johnnie Pina, a lobbyist for the League of California Cities, said at a recent Senate hearing.
It’s less clear what the other two measures will cost.
Supporters of the bill that would give CHP officers and Cal Fire firefighters access to an alternate retirement investment program during their last five years of service say it is intended to be cost neutral, although similar plans offered by cities and counties have driven up expenses. The bill requires CalPERS to assess the program every five years, which union representatives say would allow lawmakers to make adjustments if they see unintended drawbacks.
The measure that would nudge Newsom to raise pay for Cal Fire firefighters has an uncertain cost because it’s written in a way that would allow flexibility for the governor’s office.
It encourages the governor to bargain “in good faith” toward bringing Cal Fire compensation closer to what local governments pay, but does not mandate it. A 2023 state compensation survey found that local fire departments pay firefighters between 11% and 29% more than Cal Fire.
“Instead of being the lowest paid, we will inevitably be somewhere in the middle” if the bill becomes law, firefighter union lobbyist Terry McHale told lawmakers at a hearing earlier this year.
Last year, Newsom rejected a similar measure that was more explicit in demanding an increase in Cal Fire pay. Newsom wrote in a veto message that it would “create significant cost pressures for the state and circumvent the collective bargaining process.” Officials estimate it would have cost between $373 million and $609 million in its first year.
Cal Fire’s firefighter union essentially wants what only one other group of state workers has: Raises based on what other government agencies pay. CHP officers receive annual raises based on what several other large California police departments pay; every other state worker union has to negotiate compensation with the governor.
What will Newsom do?
All three measures face a major obstacle later this month in the Senate Appropriations Committee, which has the power to sideline bills over cost concerns. If they clear that committee, the bills have a good chance of reaching Newsom’s desk.
At the most recent hearing, lawmakers said increasing incentives to recruit and retain first responders was so important that they’d cut other programs to make room for the additional spending. They commended emergency personnel who rushed to a chemical spill in Orange County in May not knowing if the danger would harm them.
“I still get goosebumps for these firefighters and their families that had to know that they’re that they’re they were putting their lives online to save that explosion from happening, which they actually end up doing,” Sen. Tony Strickland, a Republican representing Huntington Beach, said at the hearing.
“You can’t put a price tag on that,” he said.
The unions have also been a steady presence in the Capitol throughout Newsom’s tenure. Firefighter unions have contributed $6.2 million to lawmakers and legislative campaigns since 2019 and the law enforcement organization known as PORAC has spent $4.5 million over that time, according to CalMatters Digital Democracy database.
They’ve also been reliable allies to Newsom. California Professional Firefighters and the California Correctional Peace Officers Association were two of the largest donors in helping the governor defeat a 2021 recall campaign.
But the unions’ support for Newsom and other lawmakers doesn’t guarantee that he’ll sign the bills. Newsom was mayor of San Francisco during the Great Recession, and he backed a successful ballot measure that required city employees to put more of their own money toward their pensions.
