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AB 194 is part of a six-bill package of legislation in response to the salary scandal at the City of Bell. AB 194 would cap compensation that could be considered in calculating a public employee’s pension at 125% of the Governor’s current salary, which is $173,987.  (The Governor’s salary was $212,179 but the Citizen’s Compensation Commission voted on May 20, 2010 to reduce that salary by 18%, to $173,987, effective December 7, 2009.)  So the cap would be $217,483.75.  The cap would only apply to individuals joining a pension system on or after January 1, 2011 and the cap would be subject to an annual cost-of-living increase. 

This bill isn’t all that radical as there is already a federal IRS rule that limits the amount of compensation that can be considered in calculating a public employee retirement benefit to $245,000.  (IRC section 401(a) (17).)  (There is apparently a special provision that allows some governmental plans to consider up to $360,000 of compensation provided certain requirement were met in 1993 – but I don’t think that applies to any governmental plan in California).  But the federal rule doesn’t apply to individuals who were part of the pension system prior to 1996.

This entry was posted in California PERB Blog.

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