100 Gregory Lane, Pleasant Hill, CA 94523-3323 – (925) 671-5270 www.pleasanthillca.org
July 13, 2026
The Honorable Tina McKinnor
Chair, Assembly Committee on Public Employment and Retirement 1020 N Street, Room 153
Sacramento, CA 95814
RE: AB 1383 (McKinnor) - Public employees’ retirement benefits OPPOSE (As Amended May 13, 2026)
Dear Assembly Member McKinnor:
The City of Pleasant Hill must respectfully oppose AB 1383, which would make several significant changes to the Public Employees’ Pension Reform Act of 2013 (PEPRA) and lead to increased pension liability and pension related costs for public agencies, including the City of Pleasant Hill.
PEPRA was designed to address systemic issues in public pension sustainability and has been instrumental in helping local agencies stabilize long-term pension costs and protect the California Public Employees’ Retirement System (CalPERS) from insolvency. AB 1383 would upend essential reforms established in 2013.
While we recognize and appreciate the Legislature’s intent to support recruitment and retention of essential public safety professionals and dedicated public servants, AB 1383 would increase mandated costs without any identified funding. The bill’s cost exposure arrives amid fiscal volatility and market uncertainty; compounding increased benefit costs with investment risk will translate into serious and immediate pressure on local government budgets.
The City of Pleasant Hill’s pension obligations are already under significant strain. According to the most recent actuarial analysis of the City’s Pension Plans as of June 30, 2024, the City’s Safety Plan is 69% funded, with an Unfunded Accrued Liability (UAL) of $32.5 million and Miscellaneous Plan is 68.3% funded, with an UAL of $26.1 million. The City’s required FY 2026-27 pension contributions total approximately $7.6 million, equivalent to nearly 21% of the General Fund Budget, and contributions are projected to continue rising through FY 2028-29 under current law, even assuming CalPERS meets its 6.8% investment return target each year - which is never a certainty.
The plan is also deeply mature: 98 retirees are drawing benefits supported by only 15 active officers (a 15% support ratio). Of every UAL dollar, approximately 70 cents goes to interest rather than principal reduction, meaning the City is barely keeping pace with pension debt accumulation under current law.
CalPERS’ actuarial cost analysis indicates AB 1383’s mandatory provisions, including shifting the safety retirement formula for PEPRA members from 2.7% @ 57 to 2.7% @ 55 and increasing the pensionable compensation cap, would increase statewide annual normal cost contributions by $233 million in year one and raise the present value of future benefits by $4.8 billion. The analysis further estimates an immediate $370 million increase to accrued liabilities across all CalPERS plans, creating new UAL amortization bases from the moment the law takes effect.
For City of Pleasant Hill specifically, AB 1383 would drive three compounding cost pressures:
• Mandatory formula change (2.7% @ 57 → 2.7% @ 55): Applies automatically to existing PEPRA safety members, increasing normal costs and creating new UAL without collective bargaining. City of Pleasant Hill has approximately 26 PEPRA officers (63% of Public Safety Members are currently PEPRA) whose future service accruals would be recalculated under the age-55 framework. There is a clear cost associated with this change, but CalPERS has yet to estimate it for any individual city. • Pensionable compensation cap increase: Raises the cap for City of Pleasant Hill’s PEPRA members (safety and miscellaneous personnel) from $155,081 to $290,000. The higher ceiling creates significant long-term exposure, as PEPRA members advance in rank and seniority. CalPERS projects an increase of 1.6% of payroll to total normal costs for pooled 2.7% @ 57 safety plans and 0.3% of payroll to total normal costs for pooled 2% @ 62 miscellaneous plans from this provision alone. This translates to a significant new cost.
• Optional 3% @ 55 formula: Although adoption of a 3% formula would require collective bargaining, once codified it will exert immediate pressure at the bargaining table, especially if neighboring agencies adopt it. CalPERS estimates an increase of approximately 3.71% to total normal costs for pooled 2.7% plans should the 3% @ 55 formula be negotiated, potentially adding millions of dollars annually for City of Pleasant Hill.
AB 1383 arrives during CalPERS’ Asset Liability Management (ALM) review. If the CalPERS Board reduces the discount rate, City of Pleasant Hill’s accrued liabilities would rise substantially. The City’s actuarial valuation shows that a 1% discount rate reduction would increase the UAL from $58.6 million (safety and miscellaneous) to approximately $64.8 million and reduce the funded ratio from 68% to 66%, on top of any new obligations introduced by AB 1383.
Simultaneously, local agencies face flattening to declining revenues and rising service costs. City of Pleasant Hill does not have the revenue to absorb the mandated pension cost increases AB 1383 would impose. City of Pleasant Hill is currently projected to spend more this year than it is bringing in, and this situation is projected to continue into the next budget cycle, forcing the City either to reduce services and spending or to spend its reserves down further decreasing the City’s long-term fiscal stability. Should this new law be passed, this financial struggle for the City of Pleasant Hill will worsen.
AB 1383 includes no funding to offset mandated cost increases. These costs will be absorbed by the City’s General Fund, the same fund that pays for public services and safety that residents rely on every day. When mandatory pension costs increase without new revenue, the City faces unavoidable choices: reduce services, defer critical infrastructure maintenance, deplete reserves, or pursue new taxes/fees requiring voter approval.
The League of California Cities has raised concerns that AB 1383 expands benefits exclusively for safety members, widening an already significant compensation gap with non-safety city workers who serve with equal dedication and may reasonably expect comparable treatment in future bargaining.
PEPRA reforms are working, as they have already generated $5.8 billion in savings for CalPERS agencies since 2013, with an additional $26.5 billion in savings projected across the next decade.
For Pleasant Hill, the gradual transition to a workforce that is composed of PEPRA members as the majority will see the City’s normal cost rate decline. AB 1383 would arrest and reverse that trajectory, eliminating a decade of anticipated cost relief just as it begins to materialize.
The City shares the Legislature’s concern about public safety staffing and retirement benefits and is actively addressing it through competitive compensation, improved working conditions, and targeted recruitment. However, increasing pension benefits is not a cost-free recruiting tool and can diminish the City’s ability to offer salary increases that are often more effective for retention and recruitment.
For all of the reasons above, the City of Pleasant Hill respectfully opposes AB 1383. We urge the Legislature to consider targeted alternatives that address public safety recruitment and retention of public service employees without dismantling the fiscal guardrails that PEPRA provides.
Sincerely,
Zac Shess
City of Pleasant Hill Mayor
cc: Senator Timothy S. Grayson
Assemblymember Ávila Farías
Pleasant Hill City Council
City Manager Ethan Bindernagel
League of CA Cities, East Bay Division Sam Brightman
Meg Desmond, League of California Cities, [email protected]