A public pension reform proposal favored by Gov. Jerry Brown would save struggling state and local governments between $40 billion and $60 billion over 30 years, according to a hasty analysis by CalPERS.
The pension fund's top actuary, Alan Milligan, revealed the numbers during a special Board of Administration meeting on Wednesday.
"We've had limited time in which to review the provisions," Milligan said, "so this estimate will change as we continue to delve into the language of the bill."
California's state and local pension systems figure their long-term pension obligations are $135.8 billion more than their assets, although critics claim that estimate is far too low.
Lawmakers didn't issue the measure's 38 pages until Tuesday evening. California Public Employees' Retirement System staff worked through the night to analyze it in time for Wednesday afternoon's special meeting.
CalPERS analysts will keep refining their estimates, Milligan said, aiming for an official accounting in time for Friday's Assembly and Senate floor votes on the bill.
"We would encourage anyone interested in the bill to look at the formal estimate when it becomes available rather than relying on the estimate that we are providing to you today," Milligan said.
Fund staff concluded the biggest employer savings won't be realized for several years if the bill is enacted. Most of the benefit downgrades the bill mandates apply to new state and local government hires, including reduced retirement benefit formulas and a cap on wages that can be considered for pension purposes. The CalPERS analysis didn't break down how much the state or local governments would individually save, but it's clear municipalities stand to save more.
The state has already adopted many of the reforms in the pension bill through collective bargaining, such as using the average of an employee's three highest salary years to calculate pension payments.
Some local governments, however, still use an employee's single-highest year of earnings, which makes it easier to manipulate the formula to spike a pension.
"To go from where (the state is) to as far as this legislation goes, that's a shorter distance and there are less savings," Milligan said.
CalPERS' estimate didn't consider savings from higher contributions from current employees, which fund staff interpreted to be an option for local governments, not a requirement. Fund analysts also didn't estimate the impact of policies that might offset savings, such as higher wages offered to employees to offset lost benefits.
CalPERS board listened to the analysis, asked questions and heard public comments but didn't take an official position on the pension legislation.