Using the force of government to take a person's property, and then attempting to justify the taking with an empty slogan is immoral.
In a recent article, Peter Marcus, a journalist for the weekly political periodical, The Colorado Statesman, propagates the enduring delusions of Colorado PERA Executive Director Greg Smith concerning "shared sacrifice" and the ability of Colorado PERA to escape its contractual obligations.
For the last five years, as Colorado PERA and the Colorado Legislature have waged their political and legal battle to "clawback" accrued public pension benefits, Greg Smith has routinely employed the shibboleth "shared sacrifice" in Colorado PERA propaganda.
The author: "Peter Marcus, 32, and a New York City transplant of nine years, follows the twists and turns of Colorado politics for the Denver-based Statesman (circulation about 4,000) . . ."
The Colorado Statesman article is titled: "Shared sacrifice and managing expectations, Colorado’s pension fund still has a long way to go," May 23, 2014, by Peter Marcus.
In my opinion, the Colorado Statesman typically conducts thorough investigative journalism, but in this article covering Colorado PERA pension "reform," Peter Marcus disappoints. In this most recent Statesman article on PERA, Peter Marcus credulously parrots Greg Smith's scare tactics used to frighten Colorado PERA pensioners, Greg Smith's self-serving rationalization of pension contract breach, and Greg Smith's propaganda concerning the 2009 Colorado PERA campaign to break public pension contacts. Peter Marcus goes so far as to place Greg Smith's disingenuous mantra "shared sacrifice" in the title of the article.
Peter Marcus' words: "But economists agree that in the end the issue still comes back to shared sacrifice."
(My comment: Peter, some economists equate this idea of public pension "shared sacrifice" resulting in breach of contract with "unabashed theft.")
However, I'm willing to cut Peter Marcus some slack. Public pension administration and public pension jurisprudence are extremely complex policy areas. Journalism is not supported financially in the United States, and journalists cannot be expected to master all public policy areas they cover.
Peter is unaware that tens of millions of corporate dollars are currently spent annually in the United States to promote the false narrative that public pension systems are in a "crisis," in spite of the fact that funding ratios for these pension systems were much lower in the 1970s and no "crisis" was observed at the time. This critical information is suppressed or ignored in the modern discussion of public pension funding.
Silver and Gold Record October 26, 2006: “One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”
Peter Marcus may be unaware that state and local governments voluntarily forgo the receipt of tens of billions of taxpayer dollars each year in corporate subsidies, and exemptions, but a few are pleading "poverty" before the courts. For balance Peter, let's have a Colorado Statesman article addressing Colorado's corporate welfare "crisis"! (Hint: Take a look at our $2.7 Billion in annual "tax expenditures.")
Peter, for your edification, I will describe Colorado PERA's idea of "shared sacrifice." According to the provisions of SB10-001, (the bill that broke Colorado PERA pension contracts) those who ACTUALLY OWE the accrued PERA pension debt (Colorado state and local governments) "sacrifice" a fraction of a percent of future revenue streams; while those who DO NOT OWE the PERA pension debt (Colorado PERA retirees) "sacrifice" one-third or more of their contracted, earned deferred pension compensation. Colorado PERA pension officials consider this arrangement to be a "shared sacrifice." In what universe is such outrageous deception considered to be "reasonable"?
Obviously, the "shared sacrifice" that was the object of SB10-001 is not achievable without retroactive application of the bill's COLA provisions to existing PERA COLA contractual rights.
I also find that the "2/2/2" descriptor that was used in Colorado PERA's original contract breach propaganda nicely illustrates the deception that is the foundation of SB10-001. Colorado PERA's idea of "shared sacrifice" under their "2/2/2" plan was that pension plan contributions be increased by two percent, while PERA retiree contracted COLA benefits be diminished by one-third or more. Pension contributions raised by two percent, contracted pension COLA benefits slashed by a third. Greg Smith, PERA retirees are old, but they are not stupid.
Further Greg Smith, you are an attorney . . . you know quite well that a sophomoric argument for "shared sacrifice" will not support a breach of contract. Should all existing U.S. contracts be scrapped when one party expresses a desire to retroactively change contractual terms for a "shared sacrifice." Again, it's a crock. If I walked into a bank and asked for a shared sacrifice from the vaults, they would lock me up.
Here are a few perspectives on "Shared Sacrifice" and public pension contracts:
SB10-001 Co-prime Sponsor Senator Shaffer, Denver Post, April 17, 2011:
“I sponsored last year's legislation, known as Senate Bill 1, to protect PERA. The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”
Hank Kim, NCPERS:
"Hank Kim, executive director of the National Conference on Public Employee Retirement Systems, said he's tired of pension reform advocates claiming that state and local municipalities can only overcome their fiscal problems on the backs of public workers."
"'If it's really about 'shared sacrifice,' which is the terminology folks have been using since the Great Recession, it occurs to us that the groups that aren't sharing the sacrifice are the wealthy and the corporations because they're still getting the tax breaks,' he said. 'You can't be crying poverty when you are still giving away the shop to corporations.'"
Dean Baker, American macroeconomist and co-founder of the Center for Economic and Policy Research:
"Even more striking than this push to impose even more sacrifice on a middle class that has already paid an enormous cost for the economic policies of the last three decades is the fact that Wall Street is not expecting to share in these future sacrifices. This is peculiar since reckless Wall Street greed played a central role in inflating the housing bubble whose collapse gave us the current economic crisis."
"Mr. Corbett’s definition of shared sacrifice involved some people sacrificing a whole lot, and others, not sacrificing at all, and in fact, gaining, which is to sacrificing what…say…”NOT flying” is to “flying” . . ."
"The Gov of Michigan has pulled this same type of BS with a speech about 'shared sacrifice' that made retirees, teachers, and public employees sacrifice while businesses got money funneled to them."
"Shared sacrifice, it sounds like the sound-bite of the season." "It's a word-picture 'meme', designed to evoke individual patriotism, and a sense of Teamwork — while those who can afford it least, will end up forking over the most . . ." "It's enough to make one ask … where's Wall Street's share?" "Why is it that those who can afford it least have to sacrifice the most?"
Glen Brown of Illinois:
"These onslaughts are also related to the oppressive stripping of collective bargaining and due process rights, the despotic destruction of public employees’ unions, the propagandized demonization of teachers, and the disparate distribution of wealth through so-called 'shared sacrifice.'”
For the record, it should be noted that Colorado PERA's lawyers have no aversion to the use of the "shared sacrifice" ruse (in legal briefs) to persuade Colorado courts to bless breach of contracts.
From the May 16, 2012, PERA Defendant's Answer Brief:
"Faced with a multibillion dollar shortfall in PERA’s pension funds, the General Assembly passed a bipartisan bill that required shared sacrifice . . ."
"The facts of those cases also are materially different from the unprecedented 2008 economic crisis here that resulted in the shared sacrifice . . ."
From the PERA Defendant's Opening Answer Brief, December 20, 2013:
"SB 10-1 required shared sacrifices by all PERA stakeholders to ensure the pension fund’s long-term viability."
PERA and State Defendant's Reply Brief, February 21, 2014:
"Giving due deference to the General Assembly’s legislative judgments, the balanced reforms—requiring shared sacrifices by state employers, current employees, and retirees . . ."
I have noticed that we can count on Colorado journalists to aggressively defend corporate contracts, but they tend to be a bit squishier when it comes to public worker contracts.
Denver Post Editorial Board, March 18, 2009: "Let AIG execs keep bonuses. While it was immoral to accept the money, breaking contracts would be wrong."
Denver Post Editorial Board, July 19, 2009: "Shared sacrifice needed for PERA."
Excerpts from the Denver Post editorial "Let AIG execs keep bonuses."
"Who isn't angry about the $165 million in bonuses paid to executives at insurance giant American International Group?" "The company, on its fourth round of government bailout money, recently paid millions to executives who created the risky derivatives at the epicenter of the financial meltdown." "We agree the bonuses are morally indefensible. But the payments should stand for several reasons." "The bonus contracts were in place long before the insurance giant took the first federal bailout money in September."
(My comment to the Denver Post Editorial Board: Colorado PERA pension contracts have been in place for many decades. The Colorado General Assembly has known for more than 60 years [since Bills/McPhail] that the payment of fully-vested Colorado PERA pension benefits is a contractual obligation of PERA-affiliated employers. If the members of the Colorado Legislature held the belief (during these six decades) that meeting PERA contractual obligations is a burden on governments in Colorado, they had ample opportunity to adopt PROSPECTIVE, LEGAL pension reforms for the PERA pension system. Colorado legislators have had six decades to enact PERA pension reforms that lessen any burden on Colorado governments without abrogating existing public pension contracts. Having enacted policies that reduced Colorado PERA's funded ratio [cutting PERA pension contributions, selling service credit for less than its full actuarial cost in order to reduce state labor costs, failing to pay the full PERA pension bill, funding pensions that are not the State's responsibility, slashing state revenues beyond that required by TABOR] these politicians now seek to push their problem off onto old people. That is sick.)
"If the government begins unilaterally ignoring contracts, it will create more turmoil in an economic atmosphere that can't sustain any more uncertainty."
(My comment: Denver Post Editorial Board, please tell us why the breach of the contracts of AIG executives in March, 2009 would create unsustainable "uncertainty," yet the breach of the contracts of Colorado PERA pensioners ten months later does not result in such damaging "uncertainty." Do corporations have greater rights under the U.S. Constitution than public sector workers? Denver Post Editorial Board, if the truth is that those with power and money have greater rights under the United States Constitution, then tell us so. Let's get it out in the open.)
Excerpts from the Denver Post editorial: "Shared sacrifice needed for PERA."
"Colorado has an obligation, both legal and moral, to some 434,000 office workers, law enforcement officers and school teachers."
"Any changes will have to take place within the parameters of complicated legal and fiscal constraints. Already there are legal questions surrounding exactly what can be done to reduce such benefits, and those questions need to be fully explored. That may include asking Colorado's Supreme Court, via what's called an interrogatory from the legislature, about what changes can be done legally. It will complicate the situation, but given how disruptive such a change could be — imagine the accounting nightmare of changing benefits only to see the court strike it down some years later — it would be helpful if the court could answer such a question in advance of legislation."
(My comment: As we have seen, Colorado PERA trustees asked Colorado Legislative Leadership to seek an opinion on the proposed PERA pension contract breach through an interrogatory in 2009 and Legislative Leadership ignored the PERA Board request. Governor Ritter was asked, in writing, to submit an interrogatory to the Colorado Supreme Court and ignored the request.)
Back to Peter Marcus' article in the Colorado Statesman:
"The state faces at least $23 billion in unfunded pension responsibilities, much of which was exacerbated by an economic downturn that began in 2008, sinking investments and causing pension managers to scramble for a solution."
(My comment: Peter, "unfunded pension responsibilities" are benefits due to individuals under their contracts for labor that has already been provided to employers, and from which Colorado taxpayers have already benefited.
Peter, the members of the Colorado Legislature have had an opportunity to "scramble for a solution" for the last 60 years. There would be no need for any "scrambling" at all if the Colorado General Assembly had actually paid its public pension bills for the last 12 years.)
Peter, some background information for you:
"According to the Census Bureau, pension expenditures account for just 3 percent of all state and local government spending. If you want to find wasteful spending, look at corporate welfare. According to The New York Times, 'states, counties and cities are giving up more than $80 billion each year to companies in the form of subsidies and tax expenditures.'”
Colorado Statesman's Peter Marcus quoting Greg Smith:
“'I can tell you that our peers around the country were horrified because we went around the state and said, We’re going to run out of money, you’d better join with us in coming up with a solution because otherwise you’re going to wind up with nothing, said Smith."
(My comment: In this statement, Colorado PERA Executive Director Greg Smith makes clear his intent to deceive active and retired members of the Colorado PERA pension system and the public.
Greg Smith states "otherwise you're going to end up with nothing." As an attorney who has worked for a public pension system for many years, Greg Smith is fully aware that state governments cannot petition a court for bankruptcy under federal law. Colorado PERA is a state agency. Is it the job of Colorado state employees such as Greg Smith to make such outrageous political statements, to use scare tactics, or to run state agency campaigns to break state contracts?
Of course Colorado PERA's peer public pension systems were "horrified." Officials at these peer public pension systems likely found Greg Smith's comments callous, and unprofessional. Like me, I'm sure they found Colorado PERA's 2009 political campaign to break public pension contracts completely inappropriate for a public agency.)
Colorado Statesman's Peter Marcus quoting Greg Smith:
"Smith believes PERA is a model to other states because in 2009, leaders traveled the state to have an open and honest conversation about the crisis facing the state’s pension system, including acknowledging the gap in funding."
(My comment: Here is what Colorado PERA heard from a PERA member during this 2009 political campaign to break PERA contracts, David Holme at the Denver PERA "Listening Tour" meeting:
“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.”
The Colorado Statesman's Peter Marcus quoting Greg Smith:
"The compromise that was reached included workers taking a hit on their annual cost of living adjustment, while employers increased contributions."
(My comment: The "compromise" that Greg Smith refers to was, according to a Colorado State Senator participating in the floor debate on SB10-001, "a deal that was cut before this body met."
Under this "deal," the taking of contracted COLA benefits represents 90 percent of the "savings," i.e., reduction of employer debts contained in the bill, SB10-001. Under this "deal," the State of Colorado takes a third or more of the contracted benefits of Colorado PERA pensioners. The dollar amount of the state's taking varies by individual contract.
Governor Ritter signed SB10-001 into law, taking the contracted PERA COLA benefit. It was the belief of the Ritter Administration that the taking of the COLA benefit in SB10-001 cost the average PERA retiree with fully-vested PERA benefits $165,000. This amount is “substantial” for nearly every resident of the planet. The letter from the Ritter Administration to the federal public pension regulatory agency GASB in 2010 clearly addresses Colorado PERA’s pension obligations.
You can read the entirety of the letter on the GASB site here:
A few excerpts from the Ritter Administration's GASB letter:
“COSC agrees that an obligation exists since the government entity has entered into a duty, contract, or promise to provide compensation in the form of benefit payments during retirement; and furthermore, we agree that this obligation is a present obligation to the extent that the benefits owed have already been earned through past services, and are legally enforceable once vesting provisions have been met.”
(My comment: It was the belief of the Ritter Administration that PERA pension obligations are contractual, that PERA benefits owed by the pension plan have been earned, and are legally enforceable for vested PERA members.)
“In Colorado, a class action lawsuit has been filed challenging recently passed statutory reductions in annual COLA increases which for an average member would result in $165,000 of reduced benefit over a 20 year period.”
The Colorado Statesman's Peter Marcus quoting Greg Smith:
"Greg Smith, executive director of the Colorado Public Employees’ Retirement Association, said Colorado coined the term 'shared sacrifice' when it began its push for PERA reform in 2009."
(My comment: February 25, 2009:
"'Shared sacrifice' should be the catch phrase, Mr. Obama told the National Governors Association in late February."
I am quite confident that constitutional law professor Barak Obama does not consider breach of contract an appropriate "shared sacrifice."
1993: Shared sacrifice: the Right Message for America, D Davidson – Is President Clinton naive to ask Americans to buy into" shared sacrifice"? Actually, shared sacrifice seems the right message for America in the 1990s, writes Dick Davidson, president of the AHA.
1994: United States Health Care System Reform: An Era of Shared Sacrifice and Responsibility Begins, George D. Lundberg, MD,
2003: Shared Sacrifice: A Vital Part of the War on Terrorism, Charles B. Rangel, Mediterranean Quarterly, Volume 14, Number 3, Summer 2003,
2008: Shared Sacrifice: Don't Ask Don't Tell & the Global War on Terror, G. Barkely,
I suggest that Greg Smith demonstrate his commitment to "shared sacrifice" by contributing one-third of his 401K account to the Colorado General Fund. This would approximate the "shared sacrifice" that he is requesting of Colorado PERA pensioners.
A phrase that I coined this morning comes to mind: "What's good for the goose is good for the gander."
Support public pension contractual rights at saveperacola.com.