In early January 2021, the California Governor proposed a state budget (PDF) to address the continued COVID-19 pandemic and help spur economic recovery. While the budget makes various investments in the state’s growth, it also specifically identifies measures to strengthen the retirement system and create long-term stability.
In addition to paying the regular required annual state contribution, the budget includes an additional payment of $1.5 billion to CalPERS for fiscal year (FY) 2021-22 to reduce the state’s unfunded liability obligations. This will result in up to $3.5 billion additional estimated savings for the state over the next three decades.
With an eye on financial recovery and a state surplus of $15 billion, the proposed budget also outlines that the state employee pay reductions known as the Personal Leave Program 2020 for FY 2021-22 may not be necessary. Since July 1, 2020, most state employees have had compensation reductions through collective bargaining agreements.
The proposed budget is just the first step in the budget process. The next step is for the Legislature to hold budget hearings in the Spring to consider the Governor’s proposals. Then in May, the Governor will release the May Revise that may change the proposed budget based on economic forecasts.
The revision may or may not contain the proposals the Governor outlined in January.
In mid-June, the legislature passes the budget and the Governor will then sign it. The new budget for FY 2021-22 will begin on July 1, 2021.
Whether the pay reductions remain in place or not, for active members we will not factor the compensation reductions into your service credit or final compensation retirement calculations. For retirees, the reductions never impacted your pension you are already receiving.
The pay reductions will not impact your pension.
We are fully committed to protecting the fund and the retirement security of California’s public employees.
Stay Up to Date on CalPERS and COVID-19
We want to reassure you that your benefits are safe and that we’re fully operational. Despite the circumstances, we’re here for you. To get the latest updates on how we’re addressing the COVID-19 pandemic, visit: