A California bill that would grant pension increases to police officers and firefighters could have added $12 billion to $14 billion in new costs over 30 years, according to an analysis published June 24, 2026, by Reason Foundation. Assembly Bill 1383, which has passed the state assembly and is now under senate consideration, was amended in May to reduce its estimated costs, but the commentary warns it would still impose high costs on California's already-stressed state, city, and county governments while eroding key safeguards established by the 2012 Public Employees' Pension Reform Act (PEPRA).
The amended bill would still allow police and firefighters to retire at age 55, down from the current 57. Caps on the income used to calculate pension benefits would also rise, granting richer benefits to the highest earners. The bill would erode crucial cost-sharing requirements established by PEPRA and reclassify pension contributions as a collective bargaining issue, reversing over a decade of efforts to curb rising public pension costs. A 2018 report from the League of California Cities found that the share of local general funds dedicated to California Public Employees' Retirement System (CalPERS) benefits had risen from 8.3% in 2006 to over 11.2% in 2018 and was expected to reach over 15.8% by 2024. More than 150 city and county governments with local public safety members participating in CalPERS had at least one major pension cost or funding warning sign, such as a funded ratio below 70%, employer pension contributions above 80% of payroll, or unfunded liability payments above 60% of payroll.
The commentary, written by Zachary Christensen and Jordan Campbell of Reason Foundation's Pension Integrity Project, points to specific examples of cities struggling under pension burdens. San Bernardino, which filed for bankruptcy in 2012 primarily due to soaring pension costs, now has to pay an amount equal to 110% of public safety payroll to cover CalPERS costs, with most of that (90%) going to pay for unfunded pension liabilities. According to the analysis, San Bernardino is on the hook for public pension liabilities totaling $2,340 per resident. Stockton, also forced into bankruptcy in 2012, must dedicate an additional 93 cents to CalPERS for every dollar spent on paying police and firefighters, with most of that (71%) used to pay the pension system's massive debt.
The commentary explains that California's current pension crisis stems from a 1999 decision, Senate Bill 400, which significantly enhanced state worker benefits with the assumption that soaring market returns could cover the additional costs. That decision led to an explosion in public pension debt due to market losses in the 2000s, with cities and counties bearing the brunt of the fallout. The authors argue that AB 1383 would be "a significant setback to California's long-term project (established by PEPRA) to fully fund existing pension benefits for public workers." Despite recent amendments to reduce estimated costs, the bill would add to the burden on local governments and taxpayers who are already stretched paying for growing pension costs. The state faces over $300 billion in government pension debt, and adding new costs while current benefits remain underfunded would repeat a disastrous mistake that forced multiple California cities into bankruptcy.