Swapping Out Some CalPERS Pensions for Alternative Plans? New Law Prevents It.

Cities and counties can no longer exclude certain employees from CalPERS pensions under a new law signed by Governor Gavin Newsom.

Assembly Bill 2967 was sponsored by Assemblyman Patrick O’Donnell (D-Long Beach). It came in response to actions by the City of Placentia, which offered firefighters a new 401 k-style plan after it created its own fire department.

By prohibiting the exclusion of certain employees from a public agency’s contract with CalPERS, O’Donnell said his bill “ensures that no class of workers can be excluded and deprived of retirement security when other classes of workers in that local agency enjoy the security of a defined benefit retirement plan.”

Groups representing cities and counties have said it will prevent much needed pension flexibility. The bill was opposed by the League of California Cities.

The League wrote:

At a time when governments at all levels are struggling with the dual challenges of lowered revenues and demands with consistent or higher levels of critical services, now is not the time to reduce one of the “tools in the toolbox” for local governments to manage their operations. This bill would prohibit cities, special districts, and counties contracted with CalPERS from exploring novel and innovative operational structures in the future.