What is CalPERS? We explain in one minute
California Highway Patrol officers would temporarily forgo part of a raise to help pay down pension debt under a proposed contract agreement between the officers’ union and the state.
The proposed contract also increases how much patrol officers contribute to their retirement benefits, bringing their contribution closer to a 50-50 split with the state, while boosting state contributions toward the officers’ retirements from other sources.
“We want to send a message, both to our employer and to our members, that both will live up to the commitments and the promises that have been made to them,” Jon Hamm, the California Association of Highway Patrolmen’s former CEO, said of the changes in the contract. Hamm worked with current CEO Carrie Lane to negotiate the contract.
CalHR posted the tentative agreement with the union to its website last week. The four-year agreement with Gov. Gavin Newsom’s administration, which requires approval from union members and the Legislature, is projected to cost the state roughly $800 million.
Because California Highway Patrol pensions are historically underfunded, the state is making especially large contributions to pay down liabilities for former officers. This year, California is kicking in 59 cents to CalPERS for every dollar it spends in wages for CHP officers, according to state records.
The union’s last contract expired in 2018 and officers have been working under an expired agreement.
State law designates a unique pay structure for CHP’s roughly 6,700 uniformed officers. Unlike other state bargaining units, whose unions negotiate raises under each new contract, highway patrol officers receive automatic salary adjustments each year.
The law gives them an average of the raises local peace officers receive at departments in five of the highest cost-of-living areas in the state — the Los Angeles Police Department, Los Angeles County Sheriff’s Office, San Diego Police Department, Oakland Police Department and the San Francisco Police Department.
Last year, CHP officers received a 6.2 percent general wage increase through the formula.
The raise CHP officers will receive for the fiscal year starting July 1, 2019 is still being finalized based on survey results. Lane said she expects it to be 3.4 or 3.5 percent.
The proposed contract would give officers a 3 percent raise and set aside the remainder. For each of the four contract years, the remainder will go toward officers’ retirements as employer contributions. The diverted raises amount to about $25 million over four years, according to state cost estimates.
After four years, the officers would receive the half-percent raise. Hamm said the contract allows for the union and the state to revisit what would happen to the half-percent at the end of four years.
“We’ve really trained our members to think about investing in their own retirements, so it’s not a negative to them that we’ve diverted the salary,” Hamm said.
The raise would not be retroactive, he said.
Other more complicated provisions incrementally increase CHP officers’ contributions toward the cost of their pensions and other retirement benefits.
Officers now pay about 11.5 percent of their salaries toward their retirement benefits. The new contract notches up officers’ contributions by 1 percent per year, provided certain conditions are met, putting them on track to be paying about 14.5 percent in three years.
Officers’ increased contributions would amount to around $44 million over three years, according to state estimates.
The changes accord with former Gov. Jerry Brown’s 2013 pension overhaul, which set targets for the state to split pension contributions with employees.
The contract calls for the state to pitch in an additional $25 million per contract year from its Motor Vehicle Account to the Patrol Member Retirement Plan and sets aside $243 million more in state funds for the plan next year.
Lane said that since patrol officers don’t pay for or receive Social Security benefits, it’s especially important for them to be able to depend on the state’s retirement system.
“The retirement benefits are hugely and tremendously important for our members,” she said.
The state’s $800 million cost estimate for the contract includes rough estimates of the future salary increases based on the local surveys. The contract includes additional changes to leave cash-outs, increases lodging reimbursement rates and makes a variety of other changes.