SACRAMENTO – Governor Gavin Newsom this week signed Senate Bill 1038 by Senator John Laird, legislation to give public employees and their unions earlier notice when a CalPERS audit could affect their retirement benefits.

“CalPERS audits can have a direct impact on public employees and their retirement benefits,” said Laird. “SB 1038 makes sure unions know when these audits are happening so they can keep their members informed and advocate for them throughout the process. I’m pleased the Governor signed this commonsense transparency measure into law.”

CalPERS conducts 100 employer audits each year to make sure public agencies are accurately reporting employee compensation. These audits can have real financial consequences for public employees and retirees. If an audit finds a reporting error, an employee or retiree could see their monthly pension reduced or be required to repay benefits they already received.

Currently, unions are not notified when CalPERS begins an audit of an employer, even though employees and retirees often turn to their union for help when an audit affects their pension benefits. By contrast, CalSTRS requires bargaining representatives to be notified when it audits a local educational agency. SB 1038 allows unions to be similarly notified when CalPERS will conduct an audit of their members’ employers by requiring earlier and more consistent notice throughout the process.

SB 1038 will require CalPERS to publicly post notice of an intended audit, as well as its purpose and scope, and employers must then forward this notice to the appropriate bargaining unit. Unions will also receive a list of affected members and a copy of the final audit report.

SB 1038 is sponsored by the California School Employees Association.

“Classified school employees deserve transparency about audits that could affect their promised retirement benefits,” said Adam Weinberger, president of the California School Employees Association. “SB 1038 ensures that our members stay informed from the beginning when CalPERS audits a public employer, and that our union has the information it needs to advocate effectively for members and retirees. We are grateful to Governor Newsom and Senator Laird for supporting this important notice and transparency legislation.”

The law takes effect January 1, 2027.