Summary
SB-300 would explicitly state that any bill introduced to the Senate Labor, Public Employment and Retirement Committee, as it relates to California’s Public Employee Retirement System (CalPERS), will include a fiscal impact analysis from the Legislative Analyst Office (LAO) that describes the fiscal impact of the bill on CalPERS and what the outcome of the bill would be if implemented as a requirement for consideration.
Background
California’s two largest pension systems, The Public Employee’s Retirement System (CalPERS) and the State Teacher Retirement System (CalSTRS), lost billions of dollars more than was previously reported in the volatile markets of 2022. CalPERS reported a -6.1% return for the fiscal year, but with the additional return information and other factors included, the system’s net performance for the year was -7.5%. This annual loss has been the first since the Great Recession for the fund that provides benefits to employees of the state and nearly 2,900 counties, cities, special districts and other public employers. As a result, California’s state and local governments can expect to face continuing budgetary pressure from public employee pension benefit costs for the next several years.
During this time of economic uncertainty, many CalPERS stakeholders recognize the lack of certainty, oversite, and planning. Recognizing that long-term investment forecasts are warning of lower annual returns in the coming decade, the Governor is following through on reforms for an overhaul of the state’s benefits program following the global recession under Democratic Governor Jerry Brown. However 2022’s dismal financial returns, ongoing worries about a possible recession, the economic slowdown hitting California’s technology sector especially hard, and the bipartisan LAO assert the state’s deficit will hit $24 billion dollars in 2023-24, all send strong signals that further action is needed. Consequently, the problems have kept many public systems underfunded for the last few decades, leaving public pension plans – and thus tax payers – highly vulnerable to financial shocks.
In both the California Senate and Assembly, committees have already implemented rules for legislation submitted to the committee in order for it to be taken up for consideration – from impact of timetable analysis in the Senate Health Committee to data analysis of past and purported tax revenue in the Assembly Revenue and Tax Committee. Still, committees with important jurisdictions overseeing billions of dollars need clear, non-partisan guidance for how bills are weighed and where priorities of the committee reside to protect tax-payers.
Proposal
SB-300 will provide clear guidelines for bills to be heard in the Senate Labor, Public Employment and Retirement Committee, as it directly relates to California’s Public Employee Retirement System (CalPERS), by providing clear, objective, non-partisan analysis for committee members.