Senate Bill 32

California Public Employees’ Pension Reform Act of 2018

SB 32 establishes the California Public Employees’ Pension Reform Act of 2017 (PEPRA II) which continues substantial reform to California’s broken public employee pension system began in 2012.

Issue Background

SB 32 will specifically establish a Citizens’ Pension Oversight Committee to review pensions year by year, and report to the public on actual pension costs and obligations; base final compensation for all public employees on an average of five years of highest years’ salary; prohibit or “freeze” the ability for cost-of-living adjustments until CalPERS and CalSTRS are 100% funded; require pension boards to create a defined benefit/defined contribution hybrid pension plan for new employees who opt-into the system; require that any employee who separates from the state pension system for a different job and returns after more than one year be re-classified in that pension system as a “new employee”; require CalPERS to limit special compensation categories by significantly narrowing their list of special compensation; define pensionable pay as “the normal monthly rate of pay or base pay” for all public employees; require pension boards to narrow the “safety employees” classification to include only employees who regularly perform their duties at great risk and who are in harm’s way; require CalSTRS and CalPERS to build/increase funding levels by 10% each year until the systems are 100% funded; require CalPERS to reduce its unfunded liabilities to 1980 levels; to be achieved by 2030.

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