Newsom Vetoes a Bill to Raise Public-Safety Pensions. For California’s Public Workers, the Current Rules Stand

For a California firefighter or police officer hired after Jerry Brown’s pension reforms, Sunday’s news from Sacramento came down to two numbers: 55 and 57. A bill the Legislature passed this summer, with a large bipartisan majority, would’ve cut those public-safety employees’ retirement age to 55 from 57. Gov. Gavin Newsom vetoed it. The Journal’s editorial board, which admits it doesn’t often praise him, called it his finest hour.

His veto message spells out the rest. The bill would also have lifted the cap on pensionable pay — from $191,679 to $221,400 for public-safety officers, and from $159,733 to $184,500 for other workers — and let safety employees and local governments bargain for a new, richer formula. Newsom’s objection was structural: a wider gap between safety and non-safety benefits invites the next round of changes, and more risk to the retirement system. He described the Brown changes as a reform the state needed after a crisis that past decisions had worsened, and wrote that “this is an era of California history I do not want to repeat.”

The rest is the editorial board’s argument, and it’s about cost. A strong stock market has shrunk state and local unfunded pension liabilities, the board writes, but governments are still paying for retroactive sweeteners handed out in the dot-com years; last year the state put 71 cents toward a highway officer’s pension for each dollar he earned. Local governments, which would have carried much of the bill’s cost, opposed it. The board’s warning: the result would’ve been higher taxes and service cuts, as after the 2008–09 panic, and worse if markets tumble.

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Set the politics aside and the message for California’s public employees is plain (M10, retirement): the rules you have are the rules. The bill would have added benefits, not cut them, so the veto doesn’t take away anything anyone has earned; the safety retirement age, the formula and the pay caps simply stay where they were. The editorial doesn’t say which retirement systems or members the cap change would have covered, so check the cap that applies to you with your own system rather than borrowing these figures. Build the plan on the formula in force, not on one that might pass in some future session. And if your pay runs above your cap, the pension won’t count the excess, so a 457 or 403(b) has to carry that slice of your retirement.

The editorial’s cost argument matters to members in a quieter way, too. That 71-cent figure shows how heavily a public-safety pension can already lean on the state budget, which is a reason to treat any future benefit increase as a bonus rather than a plan. Bring your latest pension statement to your next review: the useful number isn’t what might pass in Sacramento, it’s what your formula pays on the date you actually intend to leave.