On the final day of California's legislative session, lawmakers approved several changes to the state's pension system. They include reduced benefits and an older retirement age for new workers and increased pension contributions for everyone.
Republicans and many pension experts argue the changes wouldn't save enough money. But Moody's says the legislation would help the state's credit outlook. It also says local governments that participate in state plans would save the most. That's because employees would have to start paying half their retirement costs - though that requirement could take several years to kick in.
The state's two largest pension funds, CalPERS and CalSTRS, are estimating a combined savings of more than $60 billion over 30 years.
Moody's currently assigns California an A1 rating. That's the second lowest of any state in the nation - ahead of Illinois.