With a strong fiscal outlook from just over a year ago, the state enacted the budget for FY 2021-2022 in late June. Higher-than-anticipated tax revenue and funding from multiple stimulus bills (PDF) contributed to the surplus.
The budget identifies measures to strengthen the CalPERS fund, which in turn means stronger financial security for your retirement.
Strengthening the CalPERS Fund
The enacted budget includes a $1.9 billion payment to pay down the state’s unfunded liabilities (PDF) that is in addition to the regular required annual state contribution.
The supplemental payment made toward paying down the unfunded liability is estimated to have a long-term gross savings ratio of 2:1 (PDF). This payment only applies to the state’s fund and doesn’t impact the public agency funds or the schools pool for classified school members.
State Employee Pay Restored
The improved financial outlook also eliminates pay reductions for State of California employees, also known as the Personal Leave Program 2020 (PDF), for FY 2021-22. State employees experienced a 9.23% pay reduction for FY 2020-21 due to the COVID-19 pandemic and a projected recession.
As a result, employees’ pay reductions ended as of June 30, 2021, while the California Department of Human Resources (CalHR) continues to discuss revising the collective bargaining agreements with the remaining two bargaining units (PDF).
Pay restoration will begin in the July 2021 payroll period.
Pay Reductions Did Not Impact Your Pension
For active members we will not factor the compensation reductions into your service credit or final compensation retirement calculations. Learn how your pension is calculated using the three retirement factors and watch our video on Retirement Calculation Factors to understand how to maximize your pension amount.
For retirees, the reductions never impacted your pension you are already receiving.
The new FY 2021-22 budget began on July 1, 2021.