The State Worker

Chronicling civil-service life for California state workers

February 21, 2012
Bill puts $250,000 limit on compensation to calculate CA pensions

Democratic Assemblyman Jerry Hill of San Mateo reintroduced a measure last week that caps the amount of state and local government employees' compensation used for pension calculations.

Assembly Bill 1639 would bring the state and local pensions in line with IRS rules that limit pensionable compensation. This year the limit is $250,000, up from $245,000 in 2011.

The law allows exemptions from the limit for public institutions. A few years ago the University of California's pension system was granted just such an exemption, although it wasn't implemented.

Then three dozen highly-paid UC employees demanded their pensions calculated on their full annual pay and not just the federal limit. That prompted Hill to introduce a measure similar to AB 1639 last year. The bill won unanimous approval in the Assembly.

Then Gov. Jerry Brown asked lawmakers to hold off on piecemeal public pension bills while he crafted a comprehensive reform package. Hill amended his measure to address some local pension issues in San Mateo County and struck the all-encompassing compensation-limit provision. Brown signed the more narrow measure.

Given its popularity last time around and it's restricted scope -- most public employees are nowhere near the compensation limit -- we expect Hill's new bill won't get much resistance. It might continue as a separate piece of legislation, although we think it could be absorbed into a larger pension reform package crafted by the Conference Committee on Public Employee Pensions in a month or so.

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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