On August 11, 2009, Colorado PERA trustees and administrators conducted the first of several meetings around the state at which PERA administrators presented a prepared list of PERA pension reform options. This list of reform options (almost exclusively) placed the burden of the Colorado General Assembly’s historical underfunding of the pension onto the backs of PERA members and retirees. Members and retirees present at the hearing were given an opportunity to comment on the prepared list of PERA-identified pension reform options. Video of PERA’s Denver hearing is available on PERA’s website. The video recording of the meeting includes testimony from PERA member David Holme in which Mr. Holme powerfully asserts his contractual PERA pension rights before the PERA Board of Trustees (he is the third speaker . . . a few minutes into this videotape):
This first meeting of the Colorado PERA “Listening Tour,” held in Denver, was chaired by PERA Board Trustee James Casebolt. Five videotaped segments, as well as slides presented at the hearing, are available at this link:
Eight members of the Colorado General Assembly were present at the meeting and heard PERA members and retirees inform the PERA Board that a number of their proposals would breach the contracts that the State of Colorado and other PERA-affiliated employers have entered with PERA members and retirees. Legislators present included: Representative Peniston, Senator Sandoval, Senator Steadman, Representative Ferrandino (now Speaker of the Colorado House), Senator Hudak, Representative Todd, Representative Lois Court, Senator Betty Boyd, and finally, Representative Joel Judd, (who told us the following year, as he chaired the House Finance Committee hearing on SB 10-001 (near the end of the hearing) that SB 10-001 must be supported “because that’s where the money is.”
In briefs submitted to the Colorado courts, Colorado PERA has claimed “vast” retiree support for the breach of PERA employer contractual pension COLA obligations.
Note Colorado PERA’s assertion on page 33 of its May 6, 2011, PERA Defendant’s Reply in Support of Summary Judgment:
“Though Plaintiffs choose to ignore the economic realities after the 2008 crisis, the vast majority of retirees and all union and retiree organizations vocally supported Senate Bill 10-001, including the COLA change.”
Link to PERA Brief:
However; after listening to the comments made by PERA retirees at this Denver meeting of the PERA “Listening Tour” I’m beginning to suspect that this claim of “vast” retiree support for the breach of retiree pension contracts is yet another Colorado PERA fabrication.
Of course, even in the event that 99 percent of Colorado PERA retirees supported the breach of their pension contracts, that support would render the COLA-theft provisions of SB 10-001 no less unconstitutional. The constitutionality of legislative acts in the United States does not rest on the popularity of the acts.
Listen to the testimony of PERA retirees at this Denver hearing and see if you do not also question PERA’s claims of “vast” retiree support. In my view, the most forceful testimony received by the PERA Board of Trustees at this hearing was testimony pointing out that the Colorado General Assembly had failed to make its “actuarially required” public pension contributions over the last nine years, and that PERA members and retirees were well aware of their vested public pension contractual rights.
In listening to the recording of this meeting, I heard condemnation of the Colorado PERA Board of Trustees for limiting their consideration of pension reform options to (primarily) options that place the burden of pension reforms on PERA members and retirees, rather than PERA employers.
I heard PERA retirees state that their contracted PERA benefits were an inducement to them to enter the employment exchange transaction with PERA-affiliated employers, that PERA members relied on this expectation of earned PERA retirement benefits throughout their careers with PERA-affiliated employers, and that PERA members rejected more lucrative employment offers during their careers based on this reliance on their statutory PERA pension contracts.
I heard commentary emphasizing the fact that PERA retirees are not eligible for Social Security benefits, and are accordingly . . . entirely dependent on their contracted PERA benefits. Finally, I heard testimony that PERA retirees rely on their contractual PERA COLA benefit to meet rising health care costs.
Below, I provide a few examples of the testimony presented to the Colorado PERA Board of Trustees and members of the Colorado General Assembly during the initial public policy discussions that resulted in SB 10-001:
“My decision to join the state was based on the PERA program.”
“Any sort of a reduction in benefits today would be a violation of that contract, and bait and switch advertising . . . and so fraud.”
“State employees have never failed to provide their contributions . . . and in fact we’ve paid more into the system than the employers have over the total of the years, according to PERA reports.”
“The employers, starting in 2002, the last year of 100 percent funding, began providing less than the annual contribution requirement, setting contribution rates for the state of less than required.”
“Today, the State of Colorado PERA employer is past due to the tune of $6.5 billion into the trust fund contributions, not counting any interest – if you do it at the three percent PERA interest, it would be another $1.1 billion past due over the last 9 years.”
“PERA’s overall funds at the end of last year were about $30 billion, this bad debt constitutes about 25 percent of the PERA assets. If they were paid with interest to the PERA investment fund it would be at 94 percent funded on the actuarial basis or 76 percent on the market basis. Most experts believe that a fund at 80 percent is a healthy fund. We’d be above that.”
“The survey today, that we just talked about, is a good example of this. If you look at that, 28 of the options on there cost the employees money, and only two cost the employers money.”
“As a state employee, I’m ready to sit down and work on whatever fixes are needed once the deadbeat employer has made arrangements to fully fund its share.”
“I just want you to know that our COLA benefit is the only thing that’s been between us and the increased cost of health care and numerous other issues during the last six or eight years.”
“We shouldn’t be weighing things out on the future costs on the backs of those people who have already gone through the program, funded what was required of them, and now they’re in a position that they can’t recover.”
Sue Ellen Quam:
“I was a legislative liaison for many, many years. I sat in the Joint Budget Committee for many, many years, and I remember legislators saying ‘You know, you don’t get very good salary increases and your benefits really stink, but you’re gonna get a really good retirement and so just hang in there.”
“So, I find it to be discouraging that the Legislature may be considering saying, ‘We got you on your salary, we got you on your benefits, and now we’re going to get you on your retirement.”
“I’ve heard rumors that the 3.5 percent increase may be reduced or eliminated and that it’s OK with PERA members. It’s not OK with this PERA member.”
Is it possible that any “reasonable” person in the United States might endorse such mismanagement of a public retirement system, breach of contractual pension obligations, and outright, unabashed theft of public pension benefits?