Walker Stapleton, Gamblin’ Man

A fascinating exchange picked up Friday by the Colorado Independent, we didn’t want to miss:

Over the course of his first year in office, Colorado Treasurer Walker Stapleton has targeted the state’s public-employee pension plan, known as PERA, underlining its billions of dollars in liabilities and arguing that it should be reworked to reduce the state’s obligations in part by giving over money to contributors to invest themselves. He brought his case to the state’s House Finance Committee on Thursday and predictably ran up against deep Democratic skepticism…

Rep. Daniel Kagan (D-Englewood) lead the opposition to the bill and went back and forth with Stapleton during the hearing.

“Would you like to see us offer a choice even if we knew that it would increase the unfunded liabilities of PERA?” asked Kagan.

“Sure,” Stapleton said, adding that having to reduce PERA’s solvency is “not a happy consequence” of the proposed policy change but worth it if it meant more members of the retirement plan would win the choice to “determine their own retirement futures.” [Pols emphasis]

Kagan suggested Stapleton was putting economic ideology over the obligation of his office.

“I am shocked that you as the treasurer of the state of Colorado would say, as you just said, that to you the concept of giving the consumer choice is more important than making sure that PERA is fully funded.”

This statement from Treasurer Walker Stapleton came during a debate in the House Finance Committee over House Bill 12-1142, which would have opened up the choice to PERA beneficiaries to invest in a “defined contribution” plan, more like the private sector’s 401(k) plans than the “defined benefit” pension plan many public employees (and in many cases, your parents and grandparents in the private sector) enjoyed. While there is possible benefit to taking control of one’s own retirement investments, the recent recession’s wiping out of market equity, including the 401(k) savings of millions of Americans, vividly illustrates the risk.

Since most retirement plans offered by the private sector have ditched defined benefits in favor of 401(k) plans, in a way PERA reminds private sector employees what they’ve lost. The real worry, of course, is that the “choice” is a slippery slope to no choice. The move from defined benefit to defined contribution plans means, by nature, the shifting of risk from guarantors of benefits to individual investment choices. Some will thrive, others will eat cat food.

No matter though, risk is not a problem for Colorado’s chief financial officer! Stapleton would rather see risk, to individual retirees or even increased liability for the state as a whole, than protect the current system. Because providing choice to employees to “determine their own futures” matters more than anything–including either retirees’ or the state’s solvency!

We honestly didn’t realize Stapleton was such an ideologue about this stuff.

18 Community Comments, Facebook Comments

  1. rathmone says:

    …when your own “defined benefit” is also known by another name: trust fund.

  2. ArapaGOPArapaGOP says:

    This is a clever post, Pols, but no one forced the changes to pensions we’ve seen in the last few decades. The move to defined contribution plans is the result of competition from around the world, and the reality of keeping labor costs down in a global labor marketplace.

    Rather than mourning an unsustainable past that is not coming back, it’s time to set PERA’s house in order so it can meet its obligations for the long term. A move to defined contributions might increase PERA’s unfunded liabilities in the short term, but would end them in the long term. That long term sustainability is Treasurer Stapleton’s only goal, and it’s the workers he is fighting for.

    • Craig says:

      See my comment below.  It begs the question of why you think it is these plans that are the problem.  They’re not a problem for Kaiser?  So why are they a problem for Colorado.  Well, that couldn’t be because your cabal refused for years when it was in power to fully fund the thing could it?  Oh, no.  You and your trust fund friends had to have tax cuts.  No matter if we screw the public employees. We’ll just take it out on them years later when we don’t have the money. Beautifully executed “Republicans.”  But there are still some of us around who remember what happened and who is responsible and who are going to keep telling the public the truth.

      • ArapaGOPArapaGOP says:

        I manage my own 401k, and I am not at all worried about eating cat food in retirement! We are all part of this economy, and we should all be direct stakeholders in America’s success. Defined benefit plans insulate people from the culture and the economy. IMO, that’s how you create liberal dependent class Democrats.

        If every American knew their votes for politicians who attack the American system could directly hurt their retirement, if every American was a stakeholder in our markets, we’d have a lot fewer problems.

        And fewer Democrats…

        • AristotleAristotle says:

          Moves to privatize this stuff – PERA, Social Security, what have you – are simply the way big business is trying to get its hands on public money. Win, lose, they don’t give a shit – see the past decade for proof.

          Manage your 401(k) however you want – that’s your right. But keep your grubby mitts off the safety net.

        • Republican 36 says:

          then you would agree we need some third party overseeing how the stewards of our money handle it? You would agree the government should oversee “Wall Street” if they have all of our money? Don’t reply by using the old saw that free markets are inevitably moral and above board with individual investors. Wall Street is not immune from moral and ethical lapses, let alone criminal activity, any more than other segments of society. If Wall Street gets all the money then we need our own cop watching them and the only one with enough clout to do that is the United States government.

          The free market is not moral or immoral. It is amoral. Its only function is to create wealth and at times it does that, not for the good of all, but for a few select individuals or groups at the expense of the many. Because  of that, the average citizen needs the help of our government to make sure, as much as possible, that Wall Street acts for the good of the many.

  3. harrydobyharrydoby says:

    I just wonder how he’s been doing during the bull market of the last two years.  Has he done better or worse than the overall market?  

    And no, comparing the absolute returns of the last two years (when anyone with a pulse can make money, even me) vs. Cary Kennedy’s safeguard returns during the latter part of the Bush administration’s market crash isn’t apples-to-apples.

    Is he highly liquid as a hedge against the impending hyperinflation he was expecting two years ago?

  4. Craig says:

    There are still companies with defined benefit pension plans.  Usually where unions intercede.  My wife is  Local 7 employee of Kaiser Permanente (nurse practitioner).  She has not only a defined benefit pension plan (1.5% times the number of years worked times the five highest years average salary per year for life, fully funded by the employer – which all new employees have as well) there is also a matched 403 (b) program with voluntary contributions that are matched up to a certain level.

    Now, let’s see.  Kaiser, non-profit corproation.  One of the top ten ranked by customers HMO’s in the country.  Union closed shop.  Fully funded pension plan.  Required to return certain premiums charged in 2010 because otherwise it was going to make a profit which it is not allowed to do.  Largest insurance plan in Colorado.  Most innovative plan in Colorado.  Easiest plan for consumers – pay your monthly premium or your employer does, pay your co-pay, see your doctor, many times the same day, schedule appointments with specialists without having to be referred, mental health protection. No pre-approvals.

    You know,Stapleton, you idiot, from a Republican point of view, what’s not to like?  Oh, I know, it’s socialized medicine.  Well, that canard may have been popular in the 1950′s and 1960′s when my father the physicial was spouting the AMA’s talking points, but my father at age 81 is now a very happy member of Kaiser, because it’s cheaper, it’s better and it’s no hassle.  So Walker, get in your time machine and go back to the 1920′s where you’ll be happy as a robber baron with your ancestors and die of small pox.  I for will be happy to give you a push.

  5. BlueCat says:

    that Republicans don’t care about anything but ideology and that their ideology is based on nothing fact or proof driven.  They love to paint Dems as lefty dreamers with no clue how to run anything but it’s no coincidence that by every objective measure, general prosperity goes up with the real practical party, the Democratic Party, in charge and retreats the second you let dreamy, unrealistic GOP ideologues get their hands on the steering wheel.

    This is the problem with letting Republicans control Treasury or State.  You get nothing but partisan warfare in place of responsibility to the general public good. SOS just wants to find ways for Rs to have the advantage in every election and Treasurer couldn’t care less about husbanding resources and meeting obligations in a responsible way.

    The sad thing is, so many in the middle are so low info on anything but the top places on the ballot, they simply decided that if they were going to vote for Bennet and Hick because the R alternatives were so awful, they should show their independence by splitting their votes so why not just pick R for other state offices?  This is why not. Nothing like this was going on under the previous Dems at SOS and Treasury, that’s for sure.

  6. Tom says:

    is retirement planning. Pretty much everyone I know that works in government is there because of the retirement and benefits. It’s certainly not their love for bureaucracy and office politics. Definitely not for being first against the wall when legislators decide to wield the budget axes. Generally, they could do similar work in the private sector for a higher base pay but they want the guarantee of a retirement.

  7. Ralphie says:

    That Arapahole doesn’t understand the problem of having been offered a defined-benefit plan and then having the legislature play “bait and switch” and offering a defined-contribution plan instead.

    To make a long story short, a “defined-contribution” plan means you can flush all the money you want down the toilet, you have no guarantee of what might bubble back up.

    But we already knew Arapahole was clueless, didn’t we?

    Having nothing else to offer to this discussion, I’ll offer music instead:

  8. gaf says:

    We honestly didn’t realize Stapleton was such an ideologue about this stuff.

    Really? You didn’t realize that before?

  9. Fidel's dirt nap says:

    to invest in a 401K, and I took it.

    I took it because you never know when assholes like Stapleton come around and want to de-fund or raid your retirement plan.  That 401K has done very well, but I did it because I don’t trust the people who are supposed to be looking after former state employees, state employees, and pensioners.

  10. Algernon MoncriefAlgernon Moncrief says:

    Further, the situation is exacerbated by the situation of the fully-vested PERA retirees.  They do not receive Social Security benefits.  Even if they qualify for SS benefits, these will be offset by their PERA benefit.  

    COLORADO IS IN BREACH OF CONTRACT – IT IS PATHETIC THAT WE REQUIRE A COURT TO RESTORE HONOR TO OUR STATE.

    In 2010, the Colorado Legislature enacted a bill that was retroactive, unconstitutional, and an outright, unabashed theft of retirement benefits from PERA retirees.  As a Colorado native, I still cannot accept that my home state has allowed this outrage.  To ask a person to work for you for 30 years and contract with them for a fixed amount of compensation (including retirement benefits) and then to abandon your contractual obligations . . . that is the essence of depravity.

    Many members of the Legislature supported Senate Bill 1 in 2010 which took contracted, accrued, fully-vested retirement benefits that were earned over 30 years from PERA retirees.  To date, a District Court judge has countenanced this theft in a ridiculously flawed ruling that is under appeal.  As the state Legislature was told in debate on SB1, the theft of the retiree’s contracted COLA is immoral, and will ultimately be overturned.  Any other outcome will degrade the rule of law in our nation.

    As it stands now, in Colorado we lock up our citizens for petty theft, but celebrate the theft of billions by elected officials.

    • Ralphie says:

      Learn it and use it.

      I never got past your headline.

      • Algernon MoncriefAlgernon Moncrief says:

        Too bad though, because the headline has an error in it.  It should read:  

        LET’S BE CLEAR: A SWITCH TO A DC PLAN WOULD IMPACT PARTIALLY-VESTED PENSION CONTRACTUAL OBLIGATIONS, COLORADO HAS ALREADY CROSSED THE LINE INTO THE THEFT OF FULLY-VESTED PENSION BENEFITS.

        Sorry about the typo.

        • Algernon MoncriefAlgernon Moncrief says:

          Check this out.  Today Florida became the third state in the last month where hikes in employee pension contributions has been ruled unconstitutional.  The other two are Arizona and New Hampshire (in February).  The possibility of getting a lawsuit in Colorado over the contribution increase was discussed at the Joint Budget Committee, but they decided to go for it anyway.  So far, WINS has decided not to make constitutionality an issue in regard to Colorado PERA active members.

          Here’s the link to the article:

          http://www.firstcoastnews.com/

  11. Algernon MoncriefAlgernon Moncrief says:

    COLA LAWSUIT VICTORY IN FLORIDA! – FLORIDA JUDGE: IT’S ILLEGAL TO TAKE EVEN FUTURE COLA ACCRUALS FROM EMPLOYEES, LET ALONE COLA BENEFITS THAT HAVE ALREADY BEEN EARNED AND ACCRUED (SEE COLORADO GENERAL ASSEMBLY, SB1.)

    The Florida Legislature attempted pension reforms that were not nearly as aggressive, in terms of risk of unconstitutionality, as those adopted by the Colorado General Assembly.  Nevertheless, the Florida Legislature has been smacked down by the courts.  If you don’t benefit from the terms of a contract, do not become a party to that contract.  Once a party to a contract, you are bound to perform under its terms.

    Here are some noteworthy portions of the Florida ruling:

    “This court cannot set aside its constitutional obligations because a budget crisis exists in the state of Florida.  To do so would be in direct contravention of this court’s oath to follow the law.”

    “To find otherwise would mean that a contract with our state government has no meaning.”

    “There was certainly a lawful means by which they could have achieved the same result.”

    “Florida law is clear that a legislature can, as part of its power to contract, authorize a contract that grants vested rights which a future legislature cannot impair.”

    “The elimination of the future COLA adjustment alone will result in a 4 to 24% reduction in the plaintiffs total retirement income.  These costs are substantial as a matter of law.”

    “Where the state violates its own contract, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the state’s self-interest is at stake.”

    “All indications are that the Florida Legislature chose to effectuate the challenged provisions of SB 2100 in order to make funds available for other purposes.”

    “If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”

    “The Takings Clause is intended to prevent the government from forcing some people alone to bear public burdens, which in all fairness and justice should be borne by the public as a whole.”

    “Defendants are further ordered to reimburse with interest the funds deducted or withheld . . . from the compensation or cost-of-living adjustments of employees who were members of the FRS prior to July 1, 2011.”

    Here’s a link to the decision in Florida:

    http://judicial.clerk.leon.fl….

    Here’s hoping that one day Justus will prevail in Colorado.

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