FROM: Debby Cherney, Chief Executive Officer
Barbara Hannah, Chief Counsel
Amy McInerny, Chief Financial Officer
SUBJECT: Pending Legislation: AB 1383 Summary & Cost Implications
RECOMMENDATION:
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Review Summary & Cost Implications of California Assembly Bill 1383 (pending legislation).
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BACKGROUND:
California Assembly Bill 1383 (2025-2026 session) proposes significant changes to retirement benefits for public safety members by potentially rolling back aspects of the 2013 PEPRA reforms, as well as increasing the compensation limits for all Tier 2 members. The bill was introduced in 2025, but placed on suspense last year. In 2026, the bill was amended in January, and the bill quickly passed out of the Assembly. It awaits Committee assignment in the Senate. A copy of the redlined, amended current version of the bill is attached as Exhibit A.
To understand the impacts of the bill on SBCERA’s unfunded liability as well as on contribution rates for both employers and employees, staff requested that SBCERA’s actuaries from Segal prepare an analysis. That analysis is attached as Exhibit B. In summary, subject to the footnoted assumptions in the analysis, the cost impacts are estimated to be as follows:
|
Cost Impact of Proposed AB 1383 based on June 30, 2025 Actuarial Valuation |
|
Valuation Result |
Total Estimated Impact |
|
Actuarial accrued liability |
Increase of $41.6 million |
|
Funded ratio |
Decrease of 0.21% |
|
Average employer contribution rate |
Increase of 0.28% of payroll |
|
Total employer contribution amount |
Increase of $8.5 million |
|
Average member contribution rate |
Increase of 0.17% of payroll |
|
Total member contribution amount |
Increase of $4.8 million |
Notably, we also expect additional impacts to SBCERA’s operating budget for the costs associated with changes that would be needed in Pension Gold as well as education and training expenses for employers.
The SACRS Legislative Committee recommended to the SACRS Board of Directors that they take a Neutral position on the bill.
BUDGET IMPACT:
Costs for implementation would need to be included in a future administrative budget.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
Effective Communications
STAFF CONTACT:
Debby Cherney
Barbara Hannah
Amy McInerny
ATTACHMENTS:
Exhibit A: Current proposed bill language for AB 1383
Exhibit B: Letter from Segal regarding cost impact estimates