JBC debates Proposition 130 financing plan: $500 million warrant to PERA to fund $35 million annual distribution, $1M death benefit

The Joint Budget Committee spent an extended portion of its meeting reviewing a draft bill to implement Proposition 130's two principal elements: a $1 million death benefit for qualifying first responders and $350 million in funding for recruitment, retention and training for law-enforcement and other first-responder agencies.

Pierce Lively of the Office of Legislative Legal Services described how the draft finances the multi-year obligation. "This is the fund out of which the money goes to law enforcement agencies. This is the vast majority of the money that'll be going out under this bill. ... the way that this is being paid for is an annual $35,000,000 transfer from the general fund," he said. He explained the draft would instead provide a $500 million warrant to the Public Employees' Retirement Association (PERA). PERA could invest those funds and, assuming a projected rate of return, generate roughly $35 million a year in investment income; the draft then reduces the state's direct distributions to PERA by that same annual amount.

Lively summarized the arithmetic: the 10-year total obligation of $350 million is expected to be covered by a $500 million warrant to PERA…