Undoing public pension reforms would cost California taxpayers

Several bills introduced in California’s 2025 legislative session aim to roll back key provisions of the Public Employees’ Pension Reform Act (PEPRA). These bills would reverse many of the cost-containment and risk-management measures that have contributed to stabilizing California’s pension systems and improving the state’s fiscal outlook. 

Proponents of these bills argue that pension enhancements are needed to address recruitment and retention challenges, particularly in public safety roles. However, these assertions are not substantiated by workforce data. California’s state and local government turnover rates remain well below both national public sector averages and far below the overall workforce turnover rates in California and the U.S. broadly. 

Before lawmakers set the Golden State back on its ongoing path of eliminating pension debt, they should know that these proposals are unlikely to address their stated purpose. In fact, data shows that the recruitment and retention problem may be overstated altogether for California’s public workers.

In 2012, Gov. Jerry Brown led an effort to reform California’s ailing public pensions. The resulting reform, PEPRA, set limits on increasing benefits, which had been a major contributor to the state’s pension debt in the past. Over the last decade, PEPRA reforms have generated substantial savings. CalPERS estimates that the law has already saved the state $5.8 billion, with an additional $26.5 billion in savings projected over the next decade. Undoing these reforms risks reintroducing the same structural imbalances that drove California’s pension liabilities to crisis levels in the early 2000s. Assembly Bills 1383 and 569, as well as Senate Bill 443, would allow for enhanced pension benefit formulas, the return of supplemental defined benefit plans, and expand flexibility for Joint Powers Authorities to offer legacy-style benefits. Each of these proposals would circumvent the critical limits agreed upon in PEPRA.

These bills would have a large impact on the future of pensions for public workers in the state. As they deliberate on these proposals, policymakers should have a clear understanding of the recruitment and retention challenges government employers are actually facing. This analysis examines available data on the subject to determine if the stated objective of these proposals necessitates such drastic measures.

California’s state and local turnover 

The following section is based on the best available data, which covers a large variety—but not all—sectors of California’s state and local public workforce. 

Anecdotal evidence of increasing public sector quits and hardships in filling these vacancies has popped up all over the country. This is not different in California, but the data paint a different story. According to the California Total Compensation Survey, turnover among state and local employees has remained remarkably stable over the past decade. The same is true for the rest of the country. Between 2016 and 2023, the years reported, California’s public employee turnover averaged just 7.1%, fluctuating within a narrow range and showing no indication of a systemic crisis. By contrast, the national average turnover rate for non-education state and local government workers during the same period was nearly three times higher, averaging 20%.

California’s public employees are far more stable than other segments of the workforce. In 2023, only 7.4% separated from their jobs—less than half the 18.4% turnover rate for all U.S. public employees (excluding education). This advantage does not appear to be a reflection of the state’s private sector. California’s state turnover was higher than national levels across the broader workforce: 37.7% for all U.S. workers and 43.6% for all California workers.

Breaking down California’s public employee turnover reveals that less than half of separations—just 40.5%—are due to voluntary resignations. Nearly half (48.6%) are retirements, and only 10.8% are involuntary separations such as layoffs or dismissals.

The voluntary quit rate—which is perhaps the best measure of workforce retention—has remained low and steady. From 2016 to 2023, California’s public employee voluntary quit rate averaged about 3%, compared to a national public sector quit rate of roughly 10.5%.

The calls to enhance pension benefits in response to perceived staffing problems are not supported by California’s own workforce metrics. The available data shows no evidence that would indicate a recruitment and retention crisis in California’s public sector. 

Public safety turnover and vacancy 

Concerns about law enforcement recruitment and retention have also been a major focal point in the effort to roll back PEPRA reforms. To evaluate these claims, the best statewide data is available for Bargaining Unit 7 (BU7), which represents state law enforcement personnel responsible for public safety functions, including emergency response, patrol, criminal investigations, and regulatory enforcement. This includes California Highway Patrol officers, park rangers, detectives, forensic science technicians, and similar roles.

According to the 2023 Total Compensation Survey, BU7’s turnover rate was 7.5%—effectively identical to the 7.4% rate observed across California’s broader public workforce. Both remain well below the national turnover rate of 18.5% for non-education state and local government workers, as reported by the Bureau of Labor Statistics.

Like the rest of California’s public sector, nearly half (48%) of the separations in 2023 were due to retirements. The share of separations attributed to voluntary quits has remained relatively stable over time, accounting for 38.3% in 2017 and 42.9% in 2023.

Another measure often cited in discussions of retention is the vacancy rate. In 2023, according to California’s Total Compensation Survey,  the vacancy rate for police and patrol officers was 27%, which is much higher than the 20% average across all occupational groups that year—but not unusual. For context, the vacancy rate for patrol officers in 2021 was 15.4%, indicating a notable increase over the past few years. Still, the 2023 rate remains smaller than that of psychiatrists (46%), epidemiologists (34%), dieticians and nutritionists (30%), highway maintenance workers (31%), electricians (31%), and other categories of state workers in California. 

Lawmakers should also know that, on the subject of compensation, evidence suggests that retirement benefits aren’t nearly as important to the decision-making of employees as salary. BU7 members received an average of $155,300 in total annual compensation, nearly half of which ($71,805) is already allocated to retirement benefits. If California’s goal is to attract and keep law enforcement staffing, research overwhelmingly suggests that higher salaries are more effective than pension enhancements. Direct pay increases have been shown to be more attractive to employees, offer greater financial transparency, avoid long-term risks, and yield better returns on taxpayer dollars.

Pension benefit expansions may seem easier to implement to policymakers since they defer fiscal impact, but they expose future budgets to risk. As Reason Foundation noted in legislative testimony on Assembly Bill 569:

Cost estimates for pension benefits have frequently proven to understate their ultimate long-term costs, forcing future policymakers and taxpayers to deal with burdensome unfunded liabilities of past promises. Ill-advised pension enhancements with underestimated costs were a major contributor to the explosion in the state’s pension debts in the early 2000s, and this bill would again open the possibility for runaway debt.

Pension reform serves the workforce

According to publicly available workforce data, turnover, vacancies, and voluntary quits among California state employees remain low by national standards, even in public safety roles. While it’s important to acknowledge employee concerns, expanding pension benefits is a blunt and risky response. 

The proposals to undo PEPRA reforms being considered would reintroduce long-term fiscal risks and obligations to future generations. Before undoing reforms that have delivered billions in savings and improved the stability of the state’s retirement systems, lawmakers should consider whether more targeted solutions—like salary adjustments—might better address any eventual workforce concerns.

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Source: https://reason.org/commentary/undoing-public-pension-reforms-would-cost-california-taxpayers/