California will cut its pension contribution to state workers under a budget approved by the Legislature and awaiting Gov. Arnold Schwarzenegger's signature.
The governor could sign the budget as early as Friday night.
The budget was passed by both houses after Mr. Schwarzenegger announced an agreement Thursday with the Service Employees International Union, which represents 95,000 state workers, that saves California $383 million in labor costs this year, partly by transferring some pension obligations to workers.
Under the accord, California's obligation to make a pension contribution declines by three percentage points, to 17% of a member's gross wages, and the employee contribution rises by the same amount, said Lynelle Jolley, a state personnel department spokeswoman.
That increases employee contributions to 8%, or 9% for those in public-safety jobs. The contract also rolls back to 1999 levels increases in pension benefits for new hires, including moving the retirement age to 60 from 55.
Similar agreements were reached previously with six other state employee unions.
The budget includes a new calculation for pension benefits using three-year average pay, instead of the single highest year.
California will pay $6.5 billion toward state pension benefits this year, Mr. Schwarzenegger said, quadruple the amount it paid 10 years earlier.
Reporter Randy Diamond contributed to this story.