Agenda Item Wording:
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Letter of opposition to Assembly Bill 1383 (McKinnor) - Approve a letter of opposition to Assembly Bill 1383 (McKinnor) as amended January 22, 2026, which makes several significant changes to public employees’ retirement benefits and would lead to increased pension liability for public agencies.
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Agenda Date: 4/6/2026
Prepared by:
John Lollis, Assistant City Manager, John.Lollis@visalia.gov, (559)713-4323
Department Recommendation:
Staff recommends that the City Council authorize the Mayor to sign a Letter of Opposition to Assembly Bill 1383 (McKinnor) as amended January 22, 2026.
Summary:
Authorize the Mayor to sign a letter of opposition to Assembly Bill (AB) 1383 (McKinnor) as amended January 22, 2026, which makes several significant changes to public employees’ retirement benefits and would lead to increased pension liability for public agencies.
Background Discussion:
The Public Employees’ Pension Reform Act (PEPRA) was passed in 2012, and most of its provisions went into effect January 1, 2013. PEPRA was designed to address a wide range of issues involving public employee pensions and was a major step in helping public agencies better manage future pension costs and prevent the California Public Employees’ Retirement System (CalPERS) from not meeting its pension obligations to retirees or becoming insolvent. AB 1383 would undo many of the reforms established by PEPRA in 2013, including:
1. Require on or after January 1, 2027, retirement systems subject to PEPRA adjust the pensionable compensation limit to be consistent with federal law;
2. Authorize a public employer and a recognized employee organization to negotiate a prospective increase to the Defined Benefit (DB) retirement formulas for existing and new safety plan members by:
a. Lowering the benefit factor from age 57 to 55 for three (3) existing safety DB formulas; and
b. Creating a fourth PEPRA safety DB retirement formula of three percent (3%) at age 55.
3. Authorize an employer and recognized employee organization to agree via a memorandum of understanding to be placed in a lower or higher safety DB retirement formula.
Prior to PEPRA, the pensionable compensation limit was consistent with federal law. PEPRA established a lesser pensionable compensation limit for public employees hired after January 1, 2013. For 2026 the pre-PEPRA (“Classic”) pensionable compensation limit is consistent with federal law at $360,000, and the PEPRA limit is $191,679 (no Social Security) and $159,733 (with Social Security AB 1383 would increase the PEPRA pensionable compensation limits to be consistent with federal law currently at $360,000, thereby increasing pension liability for public agencies. An actuarial cost prepared by CalPERS determined that this provision would increase the annual normal cost contributions of employers and current PEPRA members in the low hundreds of millions, and the present value of future benefits in the low billions of dollars.
Prior to PEPRA, there were three (3) “Classic” retirement formulas for public safety members, including 3% at age 50, 2.5% at age 55, and 2.7% at age 57. PEPRA established a standard retirement formula of 2.7% at age 57. AB 1383 would make each of the “Classic” retirement formulas again eligible subject to negotiation between the public agency and the recognized employee organization, as well as create a fourth formula of 3% at age 55. Each of the new retirement formulas and reduced age would increase pension liability for public agencies, with the actuarial performed by CalPERS determining these provisions would increase the present value of future benefits by approximately $4 billion.
The City of Visalia’s State Legislative Platform adopted in 2022 states that the City will “Support legislation that would stabilize funding for the State’s pension programs,” but does not establish a position on legislation that does the opposite. The Platform also states that the City will “Support reforms in State-local fiscal relationship that will improve the City’s ability to finance and efficiently administer both mandated and discretionary services while opposing legislation that creates mandates without State funding sources to carry them out.”
AB 1383 passed through the Assembly during the 2025 Legislative Session, and is now being considered by the State Senate, to be first considered by the Senate Rules Committee during the April timeframe.
Fiscal Impact:
As determined by the actuarial study performed by CalPERS, AB 1383 would increase the annual normal cost contributions of the City and its current PEPRA public safety members, as well as increase the present value of future benefits, thereby increasing the City’s pension liability.
Prior Council Action:
None
Alternatives: Not authorize a Letter of Opposition to AB 1383
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the Mayor to sign a letter of opposition to Assembly Bill 1383 (McKinnor) as amended January 22, 2026.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 4/6/2026
Attachments:
1. Draft Letter of Opposition
2. AB 1383 Draft Legislation
3. AB 1383 Assembly Floor Analysis
4. League of California Cities Joint Letter of Opposition (January 16, 2026)
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
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