2023-24 State Employer and Employee Contribution Rates
April 19, 2023
Circular Letter: 200-020-23
Distribution: IV, V, X
To: State Employers, Agricultural Districts, and State Colleges and Universities
The purpose of this Circular Letter is to inform you of the following employer and employee pension contribution rates approved by the California Public Employees' Retirement System (CalPERS) Board of Administration on April 18, 2023.
The employer contribution rates are effective with the first payroll period that ends in July 2023 and are in effect for fiscal year (FY) 2023-24. Employer contribution rates for FY 2023-24 are shown in the table below:
|Member Category||Actuarially Required Employer Contribution as a Percentage of Compensation for FY 2023-24|
|State Peace Officers & Firefighters||46.26%|
|California Highway Patrol||67.69%|
Actuarially determined employer contribution rates will continue to vary annually. The California State Legislature may adopt higher contribution rates in the annual Budget Act than those shown in the table above to redirect savings resulting from increases in member contribution rates for various state members that became effective July 1, 2013, and July 1, 2014, as well as to manage savings from supplemental pension payments pursuant to Proposition 2. The additional contribution rates shown here were selected by the State Department of Finance, with assistance from the Actuarial Office, and are intended to achieve long-term savings, shorten the time until the plans achieve a 100% funded ratio, and achieve a more stable and predictable contribution rate. For California Highway Patrol, the additional contributions include the additional contribution rate pursuant to Government (Gov.) Code section 20683.2(d) and an adjustment to delay savings from recent supplemental pension payments until FY 2024-25 as required by the Bargaining Unit 5 Agreement. The Legislature has approved rates greater than the actuarially determined rate every year since FY 2013-14 and it is anticipated that the Legislature will continue to do so while an unfunded liability remains.
Rates that include the additional contributions are shown in the table below:
|Member Category||Actuarially Determined Employer Contribution for FY 2023-24||Additional Employer Contribution Rate||Budget Act Total Contribution Rate for FY 2023-24|
|State Peace Officers/Firefighters||46.26%||3.74%||50.00%|
|California Highway Patrol||67.69%||4.09%||71.78%|
PEPRA Employee (Member) Contributions
Public Employees’ Pension Reform Act (PEPRA) members are required to contribute at least 50% of the total annual normal cost of their pension benefit. As per Gov. Code section 7522.30, state employees are excluded from this requirement except for employees of the Legislature, California State University (CSU), and the judicial branch. PEPRA contains a provision that states when the total normal cost changes by more than 1% of payroll, the member contribution rate must be adjusted to half of the new normal cost rate.
Member Contribution Rates for State Bargaining Units
State bargaining units are exempt from the PEPRA member contribution rate calculation in Gov. Code section 7522.30. Contracts specify the member contribution rates for all members, classic and PEPRA, either as a fixed rate or as a share of the total normal cost. State member contribution rates for FY 2023-24 are based on the agreements in place at this time and are included in the attachment.
Member Contribution Rates for State Bargaining Units 2, 5, 16, and 18
Pursuant to Gov. Code section 20683 pertaining to each of the above-mentioned Bargaining Units, members of state Bargaining Units 2, 5, 16, and 18 are required to contribute at least 50% of the total annual normal cost of their pension benefit. The total normal cost is remeasured annually as part of the actuarial valuation. If the total normal cost of the category changes by more than 1% from the total normal cost determined as of the basis valuation date, the new member rate shall be recalculated. Provisions vary by bargaining units.
More information can be found on the CalPERS website in agenda item 5c (PDF) from the Finance & Administration Committee meeting, on April 17, 2023. The complete actuarial valuation report is expected to be available on the CalPERS website later this year.
If you have questions, call our CalPERS Customer Contact Center at 888 CalPERS (or 888-225-7377888-225-7377).
Scott Terando, Chief Actuary
Attachment: State Member Contribution Rates (PDF)