AB 1054 — Would expand costly DROP-style pension double-dipping at taxpayers’ expense

Summary

OPPOSE

Deferred Retirement Option Programs (DROP) are, at their core, a form of double-dipping, allowing retirement-eligible employees to collect a pension in a separate account while continuing to draw a full salary for the same work. This is far outside private-sector norms and unfair to taxpayers who foot the bill. Rather than encouraging employees to retire at the appropriate time, DROP programs reward them for staying on while collecting two streams of public compensation and increasing pension liabilities.

That risk is especially serious in California’s already underfunded pension systems, where costs can rise quickly when optimistic actuarial assumptions fall short. Adding a DROP benefit to CalPERS, as AB 1054 proposes, creates new cost exposure when the state should be reducing taxpayer risk. A required cost-neutral actuarial analysis offers little reassurance given California’s history of understating long-term pension costs. Sustainable reform should reduce liabilities, not create new ways for retirement-eligible employees to maximize compensation at public expense.

Full Bill Text 

Read CPC’s Letter of Opposition

Last Action

Vetoed by Governor.