Colorado State Senators Jump for Angry Colorado PERA Attorneys.

This article addresses ten of the most fascinating minutes of legislative debate in the history of the Colorado General Assembly.  These ten minutes dramatically illustrate the control that lobbyists have over the members of the Colorado Legislature.  Video of the ten minutes is available on the website of “The Colorado Channel.”  Link:

http://www.coloradochannel.net/colorado-senate-2010-legislative-day-20

(Click on “SB10-001” on the right of the screen.)

BUT FIRST, SOME CONTEXT.

Before I address the significance of these ten minutes, I will provide a bit of background for readers new to the topic of Colorado’s attempted public pension contract breach.  (Well-informed readers should feel free to skip ahead.)

Colorado has 73 cities, 196 towns, 64 counties, 179 school districts, a huge number of special districts and one “state” government.  The state government and many of the smaller governmental entities are members of a state pension plan, Colorado PERA.  Employees of the governmental entities that have affiliated with Colorado PERA are required to participate in the Colorado PERA pension plan.  Money is taken from employee salaries every month to pay for a contracted benefit that they will ultimately receive at retirement.  The Colorado Legislature is responsible for managing this public pension system, Colorado PERA.  Over the decades, the Colorado Legislature has underfunded and mismanaged the pension plan . . . racking up the state’s debt.

As Colorado entered the twenty-first century, the Colorado General Assembly and a string of Colorado Governors continued the mismanagement of the Colorado PERA pension plan.  In 2001, Governor Bill Owens, armed with a myopic strategy to shrink Colorado’s public sector regardless of the consequences, decided to rid Colorado’s state and local governments of their older, more experienced, MORE EXPENSIVE public employees.  Toward this end, he put incentives into Colorado law for these workers to retire early, saving taxpayer dollars in the near term, but increasing the taxpayers’ debt significantly in the coming decades.

Well, a dozen years have passed since the Colorado Legislature and Governor Owens enacted Colorado PERA “early retirement incentives.”  At the end of each of these dozen years Colorado PERA’s actuaries have presented the bill for the enacted pension policies to the Colorado Legislature.  The Legislature has routinely ignored these bills, and has essentially put the pension bills on the state’s “credit card.”  In just the last decade, the Colorado Legislature has placed $4.5 billion on this credit card.  With interest, the credit card balance now exceeds $6 billion.  Apparently, as a politician, it is much more enticing to spend public moneys for discretionary pet political purposes, than it is to meet the state’s contractual obligations.

In 2010, the Colorado Legislature decided to attempt to rectify its past mismanagement, and avoid its debt obligations, by breaching the state’s contracts for this pension debt.  A majority of the 2010 state legislators determined that the solution to their mess was the shortcut of breaking Colorado PERA pension contracts.  These legislators breached the state’s pension contracts, and then had the effrontery to congratulate themselves for violation of the U.S. Constitution’s Contract Clause.  They suggested that their contract breach serve as a “model” for all states.  Of course, the politician’s votes also violated the Contract Clause of the Colorado Constitution and necessarily, their oaths of office.  This is reality.

A significant driver of the Colorado Legislature’s self-inflicted pension management fiasco has been its relinquishment of control in this policy area to lobbyists and lawyers who have their own agendas.  Personal agendas blossom at the foot of every multi-billion dollar stack of money.  Also, the state’s pension-administering arm, Colorado PERA, has its own agenda, and supports this agenda with a $400,000 annual statehouse lobbying budget.  Colorado PERA’s hired-gun lobbyists were part of the 17-member lobbyist juggernaut that managed to force the 2010 PERA pension contract breach (SB10-001) through the legislative process.

Well, that should be sufficient background for readers new to the subject of Colorado’s attempt to avoid its debts.  Now, to the meat of the article.

The “Colorado Channel” video segment mentioned above is a record of the Senate “Third Reading” debate on SB10-001.  This video segment demonstrates the degree to which outside lobbyists and lawyers control the Colorado Legislature’s pension policy-making responsibility, and oversight of Colorado PERA.  Below, I summarize the Colorado Senate’s debate on SB10-001, and then provide transcriptions of the most interesting statements made during the Senate’s “Third Reading” debate.

SYNOPSIS OF SB10-001 SENATE FLOOR ACTION.

The bill to breach Colorado PERA member pension contracts (SB10-001) cleared its first committee hearing and arrived at the full Colorado Senate.  The Senate took up the bill on two occasions; “Second Reading” on January 29, 2010, and “Third Reading” on February 1, 2010.  On “Second Reading,” a member of the Senate, Senator King, tried to amend the bill to provide that Colorado law would permit the breach of its public pension contracts if a financial condition called “actuarial necessity” could be established.  The King amendment also stated that the Colorado Legislature could not break the contracts of Colorado PERA members who had already fulfilled all of the conditions of their pension contract and retired.  This amendment proposed by Senator King was voted down.

Next up, Senator Renfroe proposed an amendment to SB10-001 on “Second Reading,” stating that if the Legislature intends to break its public pension contracts it must provide notice of the breach to the parties to the contract, i.e., PERA members.  The Renfroe amendment also precluded the Colorado Legislature from breaking the contracts of Colorado PERA members who had already fulfilled all of the conditions of their PERA pension contracts and retired.  This Renfroe amendment was passed by the full Senate on “Second Reading” and became part of SB10-001.

A few days went by before Colorado PERA officials realized that Senator Renfroe’s “Second Reading” amendment to SB10-001 would prevent their taking of PERA retiree’s contracted pension COLA benefits (which represented 90 percent of the cost-shift in the bill, according to the bill’s prime sponsors, Senator Penry and Senator Shaffer, as well as Colorado PERA.)  Apparently, the fact that some Colorado Senators had failed to march in lock-step with Colorado PERA orders resulted in raised tempers . . . and a decision to fix the Renfroe “Second Reading” amendment on the Senate floor on February 1, 2010 when the bill was to be heard by the Senate on “Third Reading.”

This effort to “fix” Senator Renfroe’s amendment makes for some of the most interesting action from the Colorado General Assembly’s debate of SB 10-001.  Again, you can watch the Senate’s “Third Reading” debate on SB10-001 on the Colorado Channel here:

http://www.coloradochannel.net/colorado-senate-2010-legislative-day-20

(Click on “SB10-001” on the right of the screen.)

TRANSCRIBED HIGHLIGHTS OF SB10-001 SENATE “THIRD READING” ACTION.

On “Third Reading,” the members of the Colorado Senate disagreed about whether or not Colorado PERA members should be told of their contractual rights to their pension benefits.  Colorado PERA’s attorneys in the lobby grew angry.  The members realized that the presence of the Renfroe amendment in SB10-001was a tacit admission by the Legislature that it could not impair fully-vested, accrued, contracted PERA pension COLA benefits.

Watching the debate that occurred in the Colorado Senate on February 1, 2010, it is clear that the members of the Colorado Senate were unaware of the fact that, even in the event of “actuarial necessity,” the retirement benefits of PERA members who had already retired could not legally be modified by the General Assembly.  Listening to the floor debate of SB10-001 it’s also clear to me, that PERA’s attorneys were running the show.

Here are transcribed highlights from the February 1, 2010 Senate “Third Reading” floor debate on Senator Renfroe’s amendment (that was placed in the bill two days earlier on “Second Reading”):

Senator John Morse stated:

“I ask permission for a Third Reading amendment.”

“Members, we put an amendment on the tail end of Second Reading and it turns out that that amendment had the effect of undoing the bill.”

Senator Renfroe stated:

“I think it’s an amendment we still need to keep in there, but modify the language to make the attorneys happy as opposed to just deleting it out.”

“I’m standing before you to tell you that I did not have ulterior motives, with this as has been suggested and that angers me to no end that I would receive phone calls from members and from the press about that.”

“Now, if the attorneys outside don’t like what we did, well then let’s fix it and let’s include it and go down the road.”

“I have another Third Reading amendment that would put my language back in without striking out the language that made the attorney or attorneys, or whoever it is, angry with what it was.”

Senator Harvey stated:

“The only thing we did compromise was on this amendment . . . that we would say that we would notify the (PERA) members of what their rights are.”

“Now we’re coming back two days later and saying ‘no’ we can’t even offer that amendment to tell the (PERA) members what their rights are.”

“If we can’t fix that technical issue and compromise in telling the (PERA) members just what their rights are, then we’ve got a more serious problem in this body than simple technical amendments on Third Reading.”

Senator Mitchell, (admits that Senator Renfroe’s language in the bill precludes the General Assembly from modifying fully-vested PERA retiree pension benefits):

“My understanding then is that Senator Renfroe offered an amendment that provided for notice to all PERA-covered employees of their rights under the changing programs, and that amendment was adopted by this body.”

“A unanimous vote by this body to give notice to PERA members of their rights . . . that sounds like a worthwhile and good government policy.”

“Now, we learn this morning that there were some unintended consequences, and mistaken overreach in the amendment that would have the effect of gutting the bill.  Well, some of us might think that is a good thing.”

Senator Renfroe, (makes it clear that Senator Morse’s amendment to replace the Renfroe language currently in the bill is actually being offered by PERA’s attorneys in the lobby):

“Or, if you want it to go out of here with the PERA-approved document and nothing else then let’s just approve this one and vote mine down.”

Senator Penry, co-prime sponsor of SB10-001, (makes it clear that the Renfroe amendment currently in SB10-001 would preclude the General Assembly’s retroactive taking of PERA COLA benefits):

“And to be clear what we’re talking about it’s the COLA, the COLA reduction which represents $15 billion of the $30 billion shortfall in this proposal is what was stripped out as part of that (Renfroe) amendment.”

The Senate then broke for a “Senatorial Five” in order that continued discussion of the contractual rights of Colorado PERA members not become part of the official Senate record.

The Colorado Channel plays music during this “Senatorial Five” that makes you think you’re watching a soap opera . . . perhaps?

After the powwow, Senator Morse has abruptly changed his mind.  He now supports the Renfroe amendment.
Senator Morse withdraws his own (PERA-sponsored) amendment and asks for the Senate’s support for the Renfroe amendment that puts into Colorado law the language about “actuarial necessity” that is in the final version of SB 10-001, (Amendment 41).

Senator Renfroe’s amendment was adopted.

This Senate “Third Reading” debate on SB10-001 makes it clear that the members of the Senate know they are breaking fully-vested Colorado public pension contracts.  The “Third Reading” debate on SB10-001 also makes it clear that the members of the Senate have abdicated their public policy-making authority regarding Colorado public pensions to attorneys in the lobby.

The Senate’s “Second Reading” debate on SB10-001 on January 29, 2010 is also quite interesting.  During this SB10-001 “Second Reading” debate we hear members of the Colorado Senate declare that the Colorado General Assembly’s proposed taking of the PERA COLA contracted benefit is unconstitutional.  Now, for some reason, the Senate’s “Second Reading” debate on SB10-001 has disappeared from the Colorado Channel archives.  (If you click on “SB10-001” for Legislative Day 17 [January 29, 2010] in the Colorado Channel archives you get this error message: “Video not found.”)  Does someone not want public access to the SB10-001 “Second Reading” debate on SB 10-001?

Fortunately, I have preserved pertinent comments from the January 29, 2010, Senate “Second Reading” debate on SB10-001.  Here are a few I like:

Senator Harvey, “We have made a commitment.  We have a contract with current retirees.  That is already in place.”  “Reforms should be made for new hires.”  “We do not have that commitment to new hires.”

Senator Spence, “The bill places an unfair burden on retirees.”

Senator Scheffel, “We are breaching our promises to existing retirees.”

Senator Lundberg, “This bill is a deal that was cut before this body met.”

In my opinion, all of the guarded speech on the floor of the Senate during the debate on SB 10-001, and all of the tiptoeing around the subject of Colorado PERA retiree vested pension rights, was ridiculous.  I find it absurd since Colorado courts have already held that fully-vested public pension benefits in Colorado cannot be retroactively taken by the Colorado General Assembly.  Many members of the 2010 Colorado Senate apparently did not read the case law.  Colorado case law has deemed fully-vested public pension contracts inviolate.  (The Colorado Supreme Court concluded in McPhail: “ . . .we believe that in a case, such as that before us, involving a contributory system it is the only reasonable conclusion that can be reached (the contract principle.)”  “It would be unjust and contrary to our basic notions concerning the validity of contracts to hold that this provision could be changed by the lawmakers.”

The final language of the Renfroe “Third Reading” amendment to SB10-001 (that is now part of Colorado law) requires that written notice be provided to Colorado PERA members and inactive members that in the event of "actuarial necessity," the Colorado General Assembly is free to break its public pension contracts.  Since this attempt to break Colorado PERA pension contracts is underway, I’ve wondered lately . . . where is my “notice” of “actuarial necessity”?  I haven’t seen such a notice from Colorado PERA.

Further, what’s the point of stating that notice of breach of PERA pension contracts must be given prior to breaking PERA pension contracts in the very bill that is currently breaking those PERA contracts when no such notice of the PERA contract breach has been given?  Is that clear?

I believe that the failure to provide this notice of “actuarial necessity” must be an oversight.

THE SB10-001 “ACTUARIAL NECESSITY” AMENDMENTS.

For those who are interested, I provide below the text of the King amendment that lost, and the Renfroe amendment to SB10-001 that passed, on January 29, 2010 on Senate “Second Reading.”

From the Friday, January 29, 2010 Colorado Senate Journal, Amendments to the Committee of the Whole Report (beginning on page 121 of that day’s Journal.)

Senator King offered an amendment that lost:

Senator King moved to amend the Report of the Committee of the Whole to show that the following King floor amendment, (L.028) to SB10-001, did pass.  Amend printed bill, page 10, after line 14 insert:

"SECTION 4. Part 2 of article 51 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

24-51-211.5. Actuarial necessity. AN ACTUARIAL NECESSITY SHALL EXIST FOR THE ASSOCIATION WHEN THE DEFINED BENEFIT PLAN IS NOT ACTUARIALLY SOUND PURSUANT TO SECTION 24-51-211.  IN THE EVENT OF AN ACTUARIAL NECESSITY, THE GENERAL ASSEMBLY MAY MODIFY BY BILL THE BENEFITS ALLOWED TO MEMBERS OF THE DEFINED BENEFIT PLAN, SO LONG AS THE BENEFITS OF MEMBERS WHO ARE ELIGIBLE FOR A SERVICE RETIREMENT BENEFIT OR A REDUCED SERVICE RETIREMENT BENEFIT PURSUANT TO SECTIONS 24-51-602 AND 24-51-604, RESPECTIVELY, ARE NOT MODIFIED.".

Renumber succeeding sections accordingly.

Less than a majority of all members elected to the Senate having voted in the affirmative, the amendment to the report of the Committee of the Whole was lost . . .

Senator Renfroe then offered a floor amendment that passed.

Senator Renfroe’s amendment in effect precluded the taking of the contracted COLA benefit from PERA retirees.  (This amendment was later replaced by the Senate with a new Renfroe amendment on “Third Reading” on February 1, 2010).

Senator Renfroe moved to amend the Report of the Committee of the Whole to show that the following Renfroe floor amendment, (L.037) to SB10-001, did pass.

Amend printed bill, page 10, after line 14 insert:

"SECTION 4. Part 2 of article 51 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

24-51-211.5. Notice of possible change in benefits – actuarial necessity.

THE ASSOCIATION SHALL PROVIDE WRITTEN NOTICE TO EACH MEMBER, DPS MEMBER, AND INACTIVE MEMBER OF THE ASSOCIATION THAT IN THE EVENT OF AN ACTUARIAL NECESSITY, THE GENERAL ASSEMBLY MAY MODIFY BY BILL THE BENEFITS ALLOWED TO MEMBERS OF THE DEFINED BENEFIT PLAN, SO LONG AS THE BENEFITS OF MEMBERS WHO ARE ELIGIBLE FOR A SERVICE RETIREMENT BENEFIT OR A REDUCED SERVICE RETIREMENT BENEFIT PURSUANT TO SECTIONS 24-51-602 AND 24-51-604, RESPECTIVELY, ARE NOT MODIFIED.".

Renumber succeeding sections accordingly.

A majority of all members elected to the Senate having voted in the affirmative, the amendment to the report of the Committee of the Whole was passed . . .”

Make a point to support public pension contractual rights and the rule of law in the United States.  Friend Save Pera Cola on Facebook!  Make whatever contribution you can afford (to help defend your contractual public pension rights) to saveperacola.com.  The website, saveperacola.com, explains how to do this.

Algernon Moncrief

About Algernon Moncrief

Independent Nationwide Public Pension Rights Blogger.

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