Author Archives: Algernon Moncrief

The average age of a Colorado PERA retiree has now passed 70 years.  In 2010, a majority of the members of the Colorado General Assembly determined that these Colorado residents were no longer full "citizens" of Colorado.  They no longer deserved protections afforded by the Colorado Constitution.

Agreeing with lobbyists in 2010, a majority of Colorado legislators decided that this group of elderly Coloradans should have no voice.  They were a burden on Colorado.  Lifetimes that had been spent serving Coloradans deserved no recognition.  Thousands of these PERA retirees were in hospitals or nursing homes.  Under no circumstances would these PERA retirees ever show up at the Colorado Capitol's lobbies to defend their constitutional rights.  The State of Colorado's contracts with these "residents" were inferior to the state's contracts with corporations.  Colorado PERA retiree contracts could be casually discarded.

"You've got a duty to die and get out of the way," said former Colorado Governor Dick Lamm decades ago.  The former Colorado Governor was speaking in support of physician-assisted suicide; nevertheless, his words came to mind in 2010 when the Colorado General Assembly voted to break Colorado's contracts with elderly Colorado PERA pensioners.

http://en.wikipedia.org/wiki/Richard_Lamm

The State of Colorado, the 15th wealthiest state in the nation, a state with an unexpected billion dollar tax bonus in next year's budget, a state that pumps $700 million into pensions that are not its responsibility while ignoring its own pension contracts, a state that recently granted $105 million in discretionary property tax relief . . . that state is burdened by its elderly and therefore must illegally seize their property.

As Colorado PERA officials have informed us, Colorado legislators have skipped out on their pension obligations for a decade . . . they haven't paid their pension bills (ARC).  In 2010, a majority of Colorado legislators decided to try and use recent market volatility as an excuse to take money from this group of PERA retirees (who, by the way, bear no "market risk" in their "defined" benefit pension plan.)  Colorado legislators decided to inflict a compulsory "shared sacrifice" on PERA retirees. This "shared sacrifice" was put into Colorado law, to help keep taxes low in the state with the lowest per capita state tax receipts in the country.  Each new year finds thousands of criminals convicted in the United States for misappropriating the assets of the elderly . . . tapping an old man's bank account for a "compulsory shared sacrifice."

IS THE STATE OF COLORADO OBLIGATED UNDER COLORADO LAW TO REPORT ITSELF FOR "ELDER FINANCIAL ABUSE"?

I find tremendous irony in the fact that the Colorado General Assembly has recently enacted legislation that requires reports of financial abuse of Colorado residents over 70 years of age.

"SB 13-111: Requiring Certain Mandatory Reporters to Report Suspected Abuse of Persons 70 Years of Age or Older."

(My comment: The taking of one-third of an at-risk elder's contracted, accrued, earned, "fully-vested" pension benefits to maintain Colorado's position as a "tax haven" is undeniably abusive.)

"Under the bill, on and after July 1, 2014, certain professionals (mandatory reporters) who observe the abuse or exploitation of a person who is 70 years of age or older (at-risk elder) or who have reasonable cause to believe that an at-risk elder has been abused or has been exploited and is at imminent risk of abuse or exploitation are required to report such fact to a law enforcement agency within 24 hours after making the observation or discovery. A mandatory reporter who fails to report commits a class 3 misdemeanor."

(My comment: Under this legislation, a person who steals a paltry $1,000 from an at-risk elder must be reported.  Why should an organization that illegally takes one-third of an at-risk PERA retiree's pension not also be reported?)

"A person who exercises undue influence to convert or take possession of an at-risk elder’s money, assets, or other property commits statutory theft."

"Within 24 hours after receiving a report of abuse or exploitation of an at-risk elder, a law enforcement agency shall notify the at-risk elder’s county department and district attorney’s office of the report. The law enforcement agency shall complete a criminal investigation when appropriate. Upon completion of an investigation, the law enforcement agency shall provide a report of the investigation to the at-risk elder’s county department and a district attorney’s office.

"On or before January 1, 2014, the peace officers standards and training board (P.O.S.T. board) shall create and implement a training curriculum to prepare peace officers to recognize and address incidents of abuse and exploitation of at-risk elders."

http://cbaclelegalconnection.com/tag/elder-law/

From the SB13-111:

"(e) The general assembly should study and implement specific recommendations for combating financial exploitation of elder adults . . ."

(10) "EXPLOITATION" MEANS AN ACT OR OMISSION COMMITTED BY A PERSON WHO: (a) USES DECEPTION, HARASSMENT, INTIMIDATION, OR UNDUE INFLUENCE TO PERMANENTLY OR TEMPORARILY DEPRIVE AN AT-RISK ELDER OF THE USE, BENEFIT, OR POSSESSION OF HIS OR HER MONEY, ASSETS, OR PROPERTY;

(My comment: "Deception . . . undue influence to permanently . . . deprive an at-risk elder . . . of her money."  This phrase perfectly encapsulates the Colorado PERA legal, lobbying, and political campaigns to break Colorado PERA retiree pension contracts in 2009/2010.)

(12) "Position of trust" means assuming a responsibility, duty, or FIDUCIARY relationship toward an at-risk adult . . .

(My comment, Colorado PERA statutes: “As FIDUCIARIES, such [PERA Board] trustees shall carry out their functions solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law.”)

"THEFT FROM THE PERSON OF AN AT-RISK ELDER BY MEANS OTHER THAN THE USE OF FORCE, THREAT, OR INTIMIDATION IS A CLASS 4 FELONY WITHOUT REGARD TO THE VALUE OF THE THING TAKEN.

(7.5) ANY PERSON WHO EXERCISES UNDUE INFLUENCE TO CONVERT OR TAKE POSSESSION OF AN AT-RISK ELDER'S MONEY, ASSETS, OR OTHER PROPERTY COMMITS THEFT . . ."

(My comment: Colorado Court of Appeals on PERA pensioner property rights: “See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim.”

http://saveperacola.files.wordpress.com/2010/01/2012-10-11-judgment-reversed-and-case.pdf

For the complete bill, SB13-111, visit this link:

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/3006FD57CDD34B8287257AEE00570CDC?open&file=111_rer.pdf

In an eleven-page letter, dated August 2, 2010, from the Ritter Administration (Office of the Colorado State Controller) to the Governmental Accounting Standards Board, GASB, (the national regulator for public pension plans) officials of the Ritter Administration note that SB10-001 will cost every Colorado PERA retiree $165,000 over the next 20 years.  Ritter Administration officials in 2010:

“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.” You can read the entirety of the letter on the GASB site here:

http://www.gasb.org/cs/ContentServer?site=GASB&c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176157387791

Colorado Coalition for Elder Rights and Abuse Prevention:

"Our mission: to promote state-wide understanding of elder/at-risk adult abuse and the rights and protections available to elder and at-risk adults."

"What is financial exploitation?  The improper use of an elder’s funds, property or assets constitutes financial exploitation or abuse."

"By far, the greatest number of elder abuse cases involves some type of financial exploitation."

http://ccerap.org/

Not even the retiree organization, Colorado AARP, will defend the constitutional rights of Colorado PERA retirees.  In 2009/2010, the Colorado AARP decided to do nothing to defend PERA retiree constitutional rights.  Here is a statement from an AARP representative: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.”  How does the "monitoring" of a breach of contract protect the interests of retirees?

"AARP ElderWatch is designed to operate as a clearinghouse for complaints, educational information, and training materials dealing with the financial exploitation of elderly Coloradoans."

http://hotline.aarpelderwatch.org/public/home.html

Colorado PERA active members, is this the future you desire?  A future in which contractual rights to your accrued benefits can be casually ignored by your employer?

Colorado PERA retirees, when state legislators ignore the Colorado Constitution they have sworn to uphold, courts must necessarily intervene to defend that constitution.  Support the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: Do Colorado PERA Retirees Have a “Duty to Die”?

STATE LAWYERS ARGUE THAT COLORADO CANNOT MEET ITS OWN CONTRACTUAL PENSION OBLIGATIONS.  IF THIS IS TRUE, HOW HAS THE STATE MANAGED TO PAY $700 MILLION FOR PENSIONS THAT ARE NOT ITS CONTRACTUAL OBLIGATION?

Three years ago, a mob of statehouse lobbyists (paid by self-interested parties) set their sights on breaking Colorado state and local government pension contracts.  These 27 lobbyists successfully persuaded a majority of Colorado state legislators to attempt to break the contracts of Colorado PERA pensioners.  In effect, the lobbyists intend to use the force of government to take money from older Coloradans to subsidize state and local government budgets.

The pensioners whose property was seized immediately filed a lawsuit, Justus v. State.  A defendant in the case, the Colorado PERA pension system, notes (in its May, 2010 Motion to Dismiss, page 12) that even the prime sponsor of the legislation they are attempting to defend considers Colorado PERA's pension debt to be a "financial liability" of the State of Colorado.

From the PERA Defendant's Motion to Dismiss:

"Senate Minority Leader Penry, another co-sponsor of the bill, called PERA’s unfunded pension liability the 'single largest financial liability facing the State of Colorado.' Id. at 9-10 (statement of Sen. Joshua Penry, Senate Minority Leader)."

The PERA Defendants also note, on page 27 of their Motion to Dismiss, that " . . . PERA is . . . an instrumentality of the state . . ."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

The PERA Defendants highlight the fact that Colorado PERA pension debt is a financial liability of the State of Colorado in legal briefs, so why have they bothered appealing a recent Colorado Court of Appeals decision making this same finding?

The PERA Defendants would have us believe that meeting contractual public pension obligations is a financial burden on the State of Colorado.  The defendants would have us believe that the State of Colorado has insufficient financial resources to perform under the Colorado PERA pension contract.

If meeting contractual Colorado PERA pension obligations is such a burden on the State of Colorado, why has the Colorado General Assembly recently and voluntarily agreed to finish paying off $700 million of public pension liabilities that ARE NOT its contractual obligation?

The State of Colorado, the 15th wealthiest state in the nation, is fortunate to find itself with an extra $1 billion in next fiscal year's budget.  Yet, the defendants in the case, Justus v. State, would have us believe that the State of Colorado faces such a severe financial "crisis" that it cannot afford to meet its contractual pension obligations.

Further, if the State of Colorado is indeed confronted by a "financial crisis," how has the Colorado General Assembly managed to give away $105 million in discretionary property tax relief in next year's state budget?  The PERA Defendant's arguments continue to defy logic.

When a person hires a lawyer to file a civil case, isn't it generally safe to assume that the person will try to help their lawyer win the case?  That the person will avoid, to the extent possible, actions that are contrary to his legal interests?  If an organization is sued and hires a law firm to defend its interests, is it not generally expected that the organization will act in its own defense, and assist the law firm in building a defense?

The State of Colorado is an organization that is currently being sued by its retired workers.  The State of Colorado and its pension-administering arm, Colorado PERA, have in-house attorneys, state attorneys general, and an outside, hired law firm defending their breach of Colorado PERA pension contracts.  You might expect that the Colorado General Assembly, as a branch of Colorado state government, would assist this host of lawyers in building a case.

You would be wrong.

When the Colorado General Assembly broke the state's pension contracts in 2010, politics was in the driver's seat.  Is it really a surprise that short-term political considerations predominate in the minds of politicians?  Nevertheless, one might expect that Colorado state legislators would at least temporarily attempt to set political considerations aside in order to help Colorado PERA's in-house and outside hired attorneys build a defense in the case, Justus v. State, i.e., establish "actuarial necessity."

One would be disappointed.

In 2010, when a majority of state legislators violated Colorado PERA pension contracts, politics controlled.  Political calculations and ambitions continue to control in 2013.  At the recently concluded legislative session, Colorado legislators could not (even temporarily) resist the impulse to provide political favors to constituents and lobbyists in order to avoid harming the state's case in the PERA COLA lawsuit.  Thus, while their lawyers are trying to establish an atmosphere of "financial crisis," state legislators are using this year's billion dollar tax bonus to provide a gift to local governments, paying off local government legacy pension liabilities.  With an extra billion dollars in their pockets, we did not see a single Colorado legislator propose that the General Assembly meet ITS OWN contractual pension obligations.  At the recently concluded 2013 legislative session, not a single state legislator suggested that a good faith effort be made to catch up with a decade of underfunded PERA pension contributions.  Instead, we see a $105 million purchase of votes in the form of a discretionary grant of property tax relief.  We see local government lobbyists persuade state legislators to use state government resources to meet local government legacy pension debt.

I have no objection to discretionary expenditures that are deemed appropriate by the Colorado General Assembly.  However, I do object to arguments by attorneys representing the State of Colorado that the state cannot meet its own contractual pension obligations while it is giving away revenues to pay off local government pension obligations.  Having made such appropriations, representatives of the Colorado General Assembly cannot legitimately argue in court that financial need has forced the Legislature to break Colorado PERA pension contracts.

Business Week:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

http://www.businessweek.com/ap/2013-04-29/hickenlooper-signs-next-years-budget-for-colo-dot

Note again, that this $140 million is not "state debt," in spite of the effort of politicians to portray these local government pension liabilities as "state debt."  This deception serves their political purposes.

September 19, 2012, FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans" to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

"So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link:

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage)

The fact that FPPA Old Hire Pension Plan unfunded liabilities are not a contractual obligation of the State of Colorado is also made clear in Colorado statutes and in the language of Referendum C.

The discretionary nature of state grants to fund Colorado local government pensions is stated clearly in the “Legislative Declaration” (preceding Section 31-31-101, C.R.S. ) in Colorado law.  Section 31-31-101, C.R.S. Legislative Declaration:

“The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits, except for state funding of death and disability benefits as specified in this article, but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=SB234_r1.pdf

A few years ago, a Colorado Department of Treasury JBC Budget Briefing document provided an accounting of the Colorado General Assembly’s historical discretionary grants to meet local government public pension obligations:

http://www.state.co.us/gov_dir/leg_dir/jbc/2011-12/trebrf.pdf

Here are a few excerpts:

“State Contributions for Local Fire and Police Pension Plans: Since 1980, the State has contributed almost $540 million to the FPPA to eliminate the unfunded liability of the ‘old-hire’ pension plans.”

From page 29 of the JBC document:

“To put this figure in perspective, the total state General Fund operating budget in the FY 1978-79 Long Bill was just over $1.0 billion. Thus the $500 million shortfall in local plans represented nearly half of the annual state General Fund budget. If the magnitude of this shortfall were adjusted for inflation, it would exceed $1.8 billion.”

From page 31 of the JBC document:

“During the ensuing years, the State's contribution to the old hire plans equaled about 41 percent of the total combined contributions of the state, local governments and employees.”

From Senate Bill13-234  – $132.4 million to pay off local government pension obligations (this appropriation, coupled with funding in next year's Long Bill brings total state appropriations to pay off local government pension obligations to approximately $700 million):

SB13-234, CONCERNING THE STATE'S AUTHORITY TO PREPAY ITS OBLIGATION FOR THE UNFUNDED ACCRUED LIABILITY OF OLD HIRE PENSION PLANS THAT ARE AFFILIATED WITH THE FIRE AND POLICE PENSION ASSOCIATION.

(My comment: Note the deception present even in the title of the bill.  As with SB10-001, the rank and file membership did not bother to root out deception.)

Page 2:

"(b) ON MAY 31, 2013, THE STATE TREASURER SHALL TRANSFER ONE HUNDRED THIRTY-TWO MILLION FOUR HUNDRED NINE THOUSAND THREE HUNDRED THIRTY-NINE DOLLARS FROM THE GENERAL FUND TO THE OLD HIRE PLAN MEMBERS' BENEFIT TRUST FUND CREATED IN SECTION 31-31-701 (6)."

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=234_enr.pdf

Next year's property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, "Homestead" property tax relief grant: $105,200,000

http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

Denver Post:

"But Joint Budget Committee vice-chairwoman Rep. Claire Levy, D-Boulder, lauded her colleagues on the committee and noted that with Colorado's economic recovery, the state is no longer in a position that requires it to cut programs."

http://www.denverpost.com/breakingnews/ci_23131374/hickenlooper-sign-next-years-20-5-billion-colorado

HICK'S LETTER TO THE GENERAL ASSEMBLY ON THE 2013/14 STATE BUDGET.

April 29, 2013:

"With thanks to the members of the sixty-ninth General Assembly, this budget is the result of a bipartisan dedication to Colorado’s values.  We are enacting this budget at a unique time in our
history.  After enduring a significant economic downturn, Colorado’s economy is outperforming the nation’s.  The resulting recovery is allowing us the opportunity to allocate resources for the common good."

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22A+letter+to+the+general+assembly+from+Hickenlooper.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251854377268&ssbinary=true

Denver Business Journal:

" . . . Hickenlooper on Monday signed into law the $20.5 billion state budget for the 2013-14 fiscal year . . . "

"The new eco-devo money — a priority for Hickenlooper since he introduced his proposed budget in November — includes:

• $2.9 million more for incentives for relocating and expanding companies.
• $1 million for increased film incentives.
• $2 million for increased tourism marketing and development of a state branding campaign to attract tourists and entrepreneurs.

http://www.bizjournals.com/denver/news/2013/04/29/hickenlooper-signs-state-budget-with.html

Boulder Daily Camera:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

"We're in the happy position of no longer having to cut programs," said Rep. Claire Levy, D-Boulder, one of six budget writers.

http://www.dailycamera.com/nation-world-news/ci_23135284/hickenlooper-signs-next-years-state-budget

KDVR:

"Republicans support those pieces of the budget, as well as a measure House Republicans fought for to pay off a long-standing debt to the Fire and Police Protection Association."

http://kdvr.com/2013/04/29/hickenlooper-signs-next-years-20-5-billion-budget-into-law/

(My comment: Can you believe the voracity with which Colorado media will gobble up the propaganda?)

 

COLORADO COURTS: MEMBERS OF BOTH MAJOR PARTIES HAVE BEEN LOBBIED HARD AND PERSUADED TO TAKE MONEY FROM PENSIONERS, SO PLEASE GIVE IT YOUR BLESSING.

Much has been made in the press (and in legal briefs) of the fact that both Democrats and some Republicans voted for SB10-001 in 2010.

From the Colorado PERA Defendant's Motion to Dismiss:

"In a BIPARTISAN effort to address this critical funding shortfall, the General Assembly enacted Senate Bill 10-001 to make changes to the state pension system."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

Of course, the term "shortfall" implies that PERA-affiliated employers need the ability to "pay off the mortgage" today, which is untrue.  If a Colorado PERA "critical shortfall" existed in 2010, as we have seen, the General Assembly is itself the author of that "critical shortfall."

This PERA Defendant argument distills to: "Colorado courts we both want to take money from old people, so please give it your blessing."  The fact that both a Republican and a Democrat support a bill does not necessarily place the stamp of morality or constitutionality on the legislation.

If a lobbyist persuades one Democrat and one Republican to mug an old lady, is the mugging thereby rendered "moral" because it was a "bipartisan" mugging?  If a lobbyist persuades both a Republican and a Democrat to raid an old lady's bank account, will the theft conform with statutory or constitutional law in the United States?  After all, it was a "bipartisan" theft.

Occasionally, members of both political parties find collusion in their interest.  Many Colorado conservatives would like to see the Colorado PERA defined benefit plan eliminated entirely.  A fraction of these conservatives will look the other way if constitutional rights are trampled in the process (as we know, not all conservatives will look the other way.)  Many Colorado Democrats naturally want to serve the interests of organized labor.  In 2009, Colorado's public sector unions decided that the breach of Colorado PERA retiree pension contracts would help to minimize future pension contributions from their dues-paying membership.  So, the unions supported SB10-001, and convinced some of their legislative friends to ignore their oaths of office.  As always, follow the money.

In 2010, it happened that "bi-partisan" Colorado political interests intersected on immoral and unconstitutional ground.  Collusion benefited some Democrats and some Republicans.  In this environment, a collective push from 27 lobbyists was sufficient to enact SB10-001.

Colorado PERA active and retired members, politics can be a filthy business.  Don't let dirty politics rob you of your constitutional rights.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: Hick Signs Next Year’s State Budget; Provides More Evidence that the State Faces No Financial “Crisis” Warranting Breach of its Pension Contracts.

In 2008, the Argentine Legislature passed a bill taking $25 billion in pension assets in which millions of Argentines held a property interest.  This taking bolstered Argentina's financial condition.

In 2010, the Colorado Legislature passed a bill abrogating the contractual obligation of Colorado PERA employers to pay approximately one-third of a PERA member's accrued PERA pension benefits.  Thousands of Colorado pensioners hold a property interest in this PERA contracted annuity.  This taking bolstered Colorado's financial condition.

Which government has the greater respect for property rights?  How is Colorado's taking of pension property rights not the moral equivalent of Argentina's taking of pension property rights?

From the organization "Friends of PERA":

“There is a misconception that the ‘taxpayers’ are owners of the (PERA pension) fund; the trust fund is owned by the beneficiaries of the fund . . .”

http://www.friendsofpera.com/facts/index.html

These two instances, in which pension contracts were breached by a legislative body (the Argentine National Congress and the Colorado General Assembly), are not factually identical, but they are quite similar.  In both cases pension contracts were violated to make additional funds available to a government for that government's discretionary expenditures, and to curry political favor.

If contracts are meaningless in the United States, if U.S. state and local governments are permitted to take accrued pension benefits with impunity, the moral standing of our nation is diminished.  We will find ourselves on the same moral plane with governments that brush aside the rule of law.  How exceptional will we find a United States that takes, by force, property earned by its citizens over decades?  Does the theft of contracted pension benefits not somewhat diminish the luster of that "shining city upon a hill"?

The Wall Street Journal on the Argentine pension taking:

"'With the [latest, Argentine] announcement, the custom of violating the rules of the game has been repeated, which deepens the lack of confidence,' political analyst Rosendo Fraga wrote in the Buenos Aires daily La Nacion."

http://online.wsj.com/article/SB122460155879054331.html

Professor Secunda of Marquette University on U.S. state government takings of accrued pension benefits:

"What the states are trying to do is change the rules in the middle of the game."

http://truth-out.org/news/item/13498-pensions-a-promise-is-a-promise-unless-its-inconvenient

Colorado Supreme Court in Bills:

“Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.”

Wall Street Journal:

"Buenos Aires economist Aldo Abram, among many other economists, wasn't buying that argument. 'They were in a tight situation and this was an accessible source of funds,' he said."

"Opposition leader Elisa Carrió vowed to contest it, saying, 'The government measures aren't designed to better the retirement system but rather to plunder the funds of the retirees.'"

Washington Post:

"The proposal by (Argentine) President Cristina Fernández de Kirchner last month to nationalize about $25 billion in private pension funds provoked an outburst of criticism that the government was seizing retirement savings for cash to shore up its finances."

"'The announced nationalization-expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country's recent history,' wrote Claudio Loser, senior fellow at the Inter-American Dialogue, in the Latin American Advisor newsletter."

"Sen. Ernesto Sanz of Mendoza, who opposed the nationalization, said: 'We don't have any doubt that this is violating the right to private property.  Not just for us, but for all society and the world. This is clearly confiscation.'"

http://articles.washingtonpost.com/2008-11-21/world/36794754_1_pension-system-pension-funds-private-pension

Colorado Court of Appeals on PERA pensioner property rights:

"See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim."

http://saveperacola.files.wordpress.com/2010/01/2012-10-11-judgment-reversed-and-case.pdf

New York Times:

"The (Argentine) measure . . . was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009 . . ."

"The announcement . . . led analysts to question whether the nationalization, which is subject to approval by the Argentine Legislature, puts property rights at risk and threatens the rule of law in the country."

"It may be the first time a Latin American government has expropriated cash."

Argentina's President, Mrs. Kirchner: " . . . we are protecting our retirees and our workers."

"She dismissed criticism that the move was simply a grab for cash . . ."

"The opposition leader Elisa Carrio . . . told radio Mitre on Tuesday that the government was trying to 'loot the funds of retirees.'"

"By taking over the pension funds the government can continue to spend on programs that help it retain political support."

"If the move is approved, her government may have secured an important electoral asset, which could help guarantee Mrs. Kirchner's political survival."

http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html

Lebanon, Pennsylvania Daily News Editorial:

"The reasons for the pirating of deposits or the nationalization of pensions don't matter nearly as much as the demonstrated willingness of government to treat money – privately held money, money earned by individuals – as a state resource, as needed."

"And we have to wonder, again, who might be paying attention in this country (the USA); how good are our protections against such a thing.  Forget lip service and what anyone may claim 'could never happen.'"

(My comment: As we have seen, it not only can happen, it is happening . . . in Colorado.)

"How good are our protections? How strong are the underpinnings of our individual rights against such demonstrable government-first thinking?"

http://www.ldnews.com/editorial/ci_22872828/argentina-private-pension-holders-well-just-take-that

The Colorado Legislator’s Oath of Office: “I do solemnly swear by the everliving God, that I will support the Constitution of the United States and of the State of Colorado . . ."

The Colorado Constitution: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation . . . shall be passed by the general assembly.”

Support contractual public pension rights and the rule of law in the United States.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook.

Full story: Argentine and Colorado Pension Piracy . . . Morally Equivalent?

GOVERNOR CHAFEE: "WE WERE TOO AGGRESSIVE," IN OUR 2011 PENSION REFORM.  I WAS AFRAID THEY WOULD OVERRIDE MY VETO.

BLOOMBERG COLUMNIST BARRO: IF RHODE ISLAND CAN'T HONOR ITS PENSION COLA DEBT TO PUBLIC PENSIONERS, WHY IS IT HONORING ITS PRIVATE SECTOR MORAL OBLIGATION BONDS ISSUED FOR A BANKRUPT PRIVATE COMPANY?

RHODE ISLAND'S TAKING OF CONTRACTED PENSION COLA BENEFITS COST THE STATE'S PENSIONERS ONE-THIRD OF THEIR ACCRUED PENSION BENEFITS.

 

Josh Barro of Bloomberg writes on May 1, 2013:

"Under Chafee, Rhode Island has drawn national attention for two major fiscal events.  First, the state legislature passed (and Chafee signed) the country’s most sweeping public employee pension reform.  The measure included a provision discharging about $1 billion in existing pension liabilities by freezing retirees’ cost of living adjustments (COLAs) for 15 years. This wasn’t a small cut; by the time the freeze is over, many retirees’ payments will be one-third smaller than initially promised."

http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

http://www.bloomberg.com/view/bios/josh-barro/

"Second was the implosion of 38 Studios, former Red Sox pitcher Curt Schilling’s video game enterprise.  Rhode Island offered the company a loan guarantee to relocate from Massachusetts. Now, the venture is bankrupt, and the state is on the hook to bondholders for $112 million."

Columnist Josh Barro:

"That raises a question that many state residents — especially retired employees — would like to see answered: If Rhode Island can’t afford to keep its promises to retirees, how can it afford to keep its promise to the 38 Studios bondholders? Chafee isn’t prepared to answer."

How is it that RI can afford to honor its obligations to a bankrupt video game company, but cannot afford to honor its contractual obligations to its retired public workers?  How can the State of Colorado afford to pay $700 million for local government pension obligations that ARE NOT the state's contractual obligation (Old Hire Fire and Police pensions,) and (this session) provide $104 million in discretionary property tax relief, but the State of Colorado cannot afford to honor its contractual obligations to its retired public workers?

How is it that Colorado, the 15th wealthiest state in the nation, a state with an extra billion dollars for the next fiscal year, can't afford to honor its pension contracts?  Why does the State of Colorado propose to break public pension contracts, but honors its other bonded moral obligations?

Governor Chaffee dismisses the idea of defaulting on the 38 studios moral obligation bonds.

Chaffee: “The words moral obligation speak for themselves.”

Columnist Josh Barro:

"But aren’t the pensions a moral obligation, too? After all, people spent their careers working for state and local governments in exchange for specific pension benefits.  I asked Chafee, why it was acceptable to freeze the COLAs and unacceptable to break the moral obligation on the bonds."

"He responded: 'Good question. A lot of discussion about that and, in fact, we’re in court on that issue with the unions.'  But he never got around to explaining why his position is right and the unions’ is wrong."  "Instead, he sought to disclaim ownership of the COLA freeze, which was part of the 2011 pension reform law and the key issue the unions are suing over."

Chaffee: I took the COLA because the Legislature would have overridden my veto:

"Asked why he signed, he responded that he had to weigh costs and benefits, and that a key concern was that a veto would have been overridden by the large legislative majority that had passed the bill."

Yet, in 2011, Governor Chaffee supported the proposed pension COLA taking:

"Chafee urged the legislature to pass pension reform, and helped build the veto-proof majorities that got the bill to his desk. I witnessed this: In October 2011, I spoke on a panel after a joint presentation by Chafee and state Treasurer Gina Raimondo in which they advocated the pension reform plan that eventually became law.  At the time, Chafee also called for additional reforms that would have drawn more litigation by cutting benefits in locally run pension plans that were left untouched by his joint reform with Raimondo."

Columnist Josh Barro:

"Now, Chafee says he was the voice of caution: 'We got a little too aggressive. The treasurer was very aggressive, I was more, ‘we need buy-in, avoid litigation.’”

"This would repeat a pattern that we’ve often seen in state level pension reforms — a law that looks like it will produce big cost savings gets unwound years later for political or legal reasons."

"As the interview ended, Chafee remarked, 'I’ll have to think a little more about Josh’s question' — the one about why you can freeze COLAs but can’t default on 38 Studios."

http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

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Full story: Rhode Island Gov. Chafee: “I’ll Have to Think About” Why a State Government Can Take a Contracted Pension COLA Benefit, but Can’t Default on its Moral Obligation Bonds.

MONTANA PUBLIC SECTOR UNIONS: WE SUPPORT THE LEGISLATURE'S TAKING OF THE CONTRACTED PENSION COLA BENEFIT, AND WE SUPPORT A RETIREE LAWSUIT OVER THE LEGISLATURE'S TAKING OF THE CONTRACTED COLA BENEFIT.

MONTANA GOVERNOR: I'M SIGNING THE BILL TO TAKE THE CONTRACTED COLA; HOWEVER, IT'S ILLEGAL, AND I SUPPORT THE COMING RETIREE LAWSUIT OVER THE COLA TAKING.

MONTANA LEGISLATIVE ATTORNEYS: TAKING THE COLA IS ILLEGAL.

In 2010, Colorado public sector unions, 27 lobbyists, and a majority of "low information" Colorado legislators (on public sector pensions anyway) conspired to erase Colorado state and local government debt by taking accrued pension benefits from Colorado PERA retirees.

Montana public sector unions are now in the pension theft game; however, they should have taken the time to get their story straight up front.

From helenair.com:

"Bullock signs pension fixes, school funding bill."

"The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees."

"The state's largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes."

http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

Eric Feaver, President, MEA-MFT:

"There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)"

"Guaranteed annual benefit adjustments (GABA), as necessary as they are for retirees, are not themselves the pension."

(My comment: This is deceit.  Public pension COLAs are simply a method of delivering a defined, determinable, accrued public pension benefit.  Should your mortgage company be able to retroactively hike your mortgage rate, breaking your contract, because the mortgage rate "is not itself the mortgage"?  As in Colorado, Montana public sector unions are embracing a ludicrous [but convenient] contrivance.)

From helenair.com:

"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality."

"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

Montana pensioners:

"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

"Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees."

http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

Colorado PERA active and retired members, I am speechless.  Thankfully, I am still able to type. Support public pension contractual rights in the USA.  Contribute at saveperacola.com, and "Friend"  Save Pera Cola on Facebook!

Full story: All Manner of Contradictory Public Policy Positions Fit Under a Big Sky.

MONTANA'S GOVERNOR SAYS TAKING THE PUBLIC PENSION COLA BENEFIT IS ILLEGAL, BUT HE'S SIGNING THE BILL ANYWAY.

COME AGAIN?

MONTANA GOV. BULLOCK: STATE PENSIONERS WILL WIN THEIR LAWSUIT OVER THE COLA TAKING.

If Colorado's former Governor Ritter (an attorney) had such views, he wasn't sharing them in 2010.  Many states just want to roll the public pension dice. If they lose their pension contract breach case, they have the status quo, and the courts become the "bad guys."  I guess we can at least admire Governor Bullock's honesty.

From mtprnews.wordpress.com:

"'We believe that ultimately when current and retired employees bring challenge to them that they will be successful,' (Gov. Bulllock’s Budget Director Dan) Villa said, adding the bill fixes the retirement system with or without the reduction in yearly raises which he said just make the fix more aggressive."

"(Association of Montana Retired Public Employees President Russell) Wrigg said he wants the pension fix bills to pass without the raise reductions (COLA taking) – he would prefer that to them (pension reform bills) dying through a veto.  He says the group will consider legal actions against the bills if the governor signs them, which is expected.  But, he doesn’t approve of the tactic."

"'Legislation through litigation is really not the way to solve our problems in this state,' he said."'

http://mtprnews.wordpress.com/2013/05/03/fix-to-state-retirement-systems-opposed-by-retirees/

My comment: "Legislation through litigation" is the strategy employed by the proponents of our Colorado COLA-theft bill, SB10-001. Recall Colorado Deputy Attorney General for Legal Policy and Government Affairs Geoff Blue's comments [he's now in private practice.]  Geoff Blue notes that since Colorado’s education establishment has failed to win new revenues at the polls lately, they are now seeking to “legislate through the courts.”  "They’ve been losing so they’re trying to legislate through the courts.”  Breaking PERA pension contracts frees up funds for Colorado's education establishment.

http://www.youtube.com/watch?v=k0ZdUF0L8cU

This Montana situation is a first for me . . . I can't recall another instance, in which a Governor believes that a bill is unconstitutional, but signs it anyway.  When the Montana pensioner's case is filed it will be interesting to see how Montana's Attorney General goes about defending it.  The plaintiffs will certainly bring the Governor's position on the constitutionality of the pension COLA taking to the attention of the court.  The State of Montana as a defendant will have to argue in defense of statutory provisions that the Chief Executive of the State of Montana deems a breach of state contracts.

In the Colorado case, Justus v. State, there is a parallel in that officials from Governor Ritter's administration wrote a letter to federal regulators (GASB) after the 2010 COLA-taking contravening legal arguments made by the defendants.

You can read the entirety of the letter on the GASB site here:

http://www.gasb.org/cs/ContentServer?site=GASB&c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176157387791

Colorado PERA active and retired members, are you as appalled as I am about the irrationality of the public pension debate in the United States?  Support public pension contractual rights at saveperacola.com.  Friend Save Pera Cola on Facebook.

Full story: Montana to Attempt a Colorado-style Breach of Public Pension Contracts. Montana Governor: It’s Illegal, but What the Hell.

MONTANA DECIDES TO ATTEMPT A PENSION COLA-THEFT.  GOVERNOR BULLOCK "QUESTIONS THE CONSTITUTIONALITY" OF TAKING THE COLA.

BULLOCK, INCREDIBLY, SUPPORTS A PENSIONER LAWSUIT AGAINST THE STATE, BUT WILL LIKELY SIGN THE BILL ANYWAY.

Theatre of the absurd in Montana.

The Montana Legislature has enacted a bill to retroactively take public pension COLA benefits from the state's public pensioners.  Like the Colorado education establishment in 2010, education lobbyists in Montana have their fingerprints all over the Montana Legislature's attempt to break public pension COLA contracts.  (If employers affiliated with the public pension system can break pensioner contracts, that minimizes future pension contributions for dues-paying union members and local government employers.  If the bill gets struck down in court, the judges become "the bad guys.")

Governor Bullock didn't support the COLA-theft amendment to the bill.  Although Bullock thinks the COLA-theft provision in the bill is illegal, it appears he'll sign the bill into law.  (Odd that his primary concern is the taxpayers, but he doesn't seem to mind squandering millions of taxpayer dollars on litigation.)

Here's Montana Governor Steve Bullock in his State of the State address:

“We must also meet our responsibility to fix a long-term problem created by our predecessors.  I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes.  I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants.  A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”

Link to Governor Bullock’s State of the State speech:

http://watch.montanapbs.org/video/2331212142?starttime=1200000

From helenair.com:

"Feeling betrayed, retiree group asks governor to veto pension bill."

"Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees."

“We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”

"About 2,000 retirees in the Public Employees’ Retirement System belong to the association."

"At issue was an amendment to the Guaranteed Annual Benefit Adjustment (GABA), to reduce the current 3 percent annual cost of living pension raises."

"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality."

"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

"'Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,' Wrigg said."

(My comment: Employers affiliated with a public pension system collude with public sector unions to reduce their future pension contributions by taking money from pensioners.  Been there.)

http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

Montana pensioners:

"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

Meanwhile, in Pennsylvania, Governor Tom Corbett's proposal for legal, prospective changes in the state's pension system is moving along:

From lvb.com:

"The governor also wants to change the formula for future benefits in current employees' plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent."

(Recall that the Colorado Legislature adopted a bill last year, SB12-149, providing such prospective, legal public pension reform for certain Colorado county governments.  This bill honored the accrued public pension benefits of thousands of Colorado government workers and retirees, while two years earlier, the Colorado Legislature passed a bill to seize up to one-third of the accrued pension benefits of Colorado PERA retirees.)

http://www.lvb.com/article/20130501/LVB01/130509987

I believe that this solution of prospective pension reform, reducing the rate of accrual of future pension benefits will ultimately prevail in the United States.  It is emerging as a logical and legal pension reform alternative increasingly embraced by public pension legal scholars.  Many politicians will not act responsibly unless forced to do so by the courts.

Colorado PERA active and retired members.  Contribute at saveperacola.com, and Friend Save Pera Cola on Facebook!

Full story: Montana Governor Likely to Sign a Pension Reform Bill He Believes is Unconstitutional.

THE COLORADO PERA COLA IS SIMPLY A METHOD OF DELIVERING A DEFINED PERA PENSION BENEFIT.

USE OF THIS METHOD DOES NOT JUSTIFY BREACH OF PENSION CONTRACTS.

Three years ago, a majority of Colorado legislators decided to attempt to break state contracts to cut the debt of Colorado state and local governments.  In 2010, Colorado legislators passed a bill, SB10-001, that attempts to discard the obligation of Colorado governments and the state's pension system, Colorado PERA, to pay cost-of-living (COLA) increases due retirees under their state pension contracts.  Retirees in the Colorado PERA pension system, unwilling to allow the State of Colorado to take one-third of their contracted PERA pension benefits, immediately filed a lawsuit (Justus v. State.)  Last year, the Colorado Court of Appeals agreed with the retirees that Colorado state and local governments have a contractual obligation to pay the annual cost-of-living adjustments due under the retiree's contracts.  The Court of Appeals also decided that (since the matter has not yet been heard by a jury) the retiree's lawsuit should be sent back to the trial court (Denver District Court.)  The trial court was ordered to determine if the Colorado General Assembly's breach of Colorado PERA contracts in 2010 was "reasonable," or "necessary."  Immediately after the Court of Appeal's ruling last year, both the PERA retirees and the State of Colorado appealed the Court of Appeal's decision to the Colorado Supreme Court.  Both the plaintiffs and the defendants in the case are currently waiting to see if the Colorado Supreme Court will take the case, or send it back to the Denver District Court to make a determination as to "reasonableness" and "necessity."

http://saveperacola.com/

In 2010, a majority of Colorado legislators decided to attempt to break Colorado PERA pension contracts to free up money for "discretionary" state and local public programs.  Although the constituents of these state legislators want public services (good roads, education, police and fire protection) they do not want to pay for these services.  Incredibly, many of the constituents of Colorado legislators do not want to pay for public services that they have already consumed.  Therefore, they encouraged Colorado legislators to break Colorado PERA pension contracts.

For some reason, in 2010, a majority of Colorado state legislators arrived at the conclusion that Colorado's public pension contracts are inferior to the state's corporate contracts.  If there is a threat to the financial well-being of the State of Colorado (i.e., the state with an extra billion dollars to spend next year) all Colorado contracts should be on the table, not just one set of contracts.

Like salary, Colorado PERA pension COLA benefits are compensation for work performed; specifically "deferred compensation," presently earned.  When a Colorado PERA member has completed the job, and finished earning her salary, her employer cannot retroactively take that salary from her.  Her right to receive her earned salary is plainly a contractual obligation of her employer.  The pension benefits that this PERA member earns each day are, similarly, a contractual obligation of her employer.

For each day that a Colorado PERA member works she is entitled to know precisely what she is earning that day.  She deserves to know both the salary and the pension benefit that she earned in exchange for her day of labor.  When her day of work is complete, her employer cannot retroactively change the agreement.  Her compensation for the day of work is defined, just as her deferred pension compensation is defined in Colorado law.  As we have seen, deferred compensation due Colorado PERA members must stand "immutable for work already performed."

A public pension COLA is simply a method by which a defined pension benefit is provided.  There is nothing inherent in this "method" (provision of a pension COLA) that negates its essence as a contractual obligation of Colorado PERA-affiliated employers.

The Colorado Legislature has placed into Colorado law an agreement to provide an "automatic," fixed, pension COLA "escalator" to PERA members upon retirement.  When the Colorado Legislature created the Colorado PERA contract in statute, the Legislature could just as well have offered PERA members a higher total pension benefit and no COLA escalator.  Instead, Colorado legislators chose to deliver accrued Colorado PERA pension benefits by means of a pension COLA "escalator."

If I buy an annuity from a private insurance company, and I opt to have my purchased income stream delivered via a cost-of-living escalator, does the insurance company that sold the annuity to me have the right to eliminate that purchased COLA benefit after the fact?  Does the insurance company have the right to retroactively diminish the total value of my purchased, contracted income stream simply because I selected an escalator as a method of receiving the income stream?  Perhaps the insurance company wants to use the money made available by breaking the COLA contractual provision to make desired discretionary expenditures.  Perhaps the insurance company wants to construct a new headquarters building or increase the compensation of its executives.  What court would permit this private sector insurance company to ignore its contractual COLA obligations?  Why do we not see insurance companies in the United States attempting to escape their contractual COLA obligations?  We do not see this happening because attorneys working for these insurance companies recognize such arguments as ridiculous, self-serving contrivances.  Why should the State of Colorado be permitted to retroactively take a COLA benefit that has been paid for (through paycheck deductions and labor) by Colorado PERA members for decades?

Purchased annuity COLA benefits in the private sector:

"One way to address this problem is by purchasing a cost-of-living adjustment (COLA) option with the immediate annuity. The COLA option increases the dollar amount of future payments to keep up with inflation, with the goal of preserving the buying power of the immediate annuity payments."

http://www.myretirementpaycheck.org/savings-investments/immediate-annuities.aspx

The contractual obligation of an accrued pension benefit does not disappear simply because state legislators have agreed to use a particular method of delivering the benefit.  If the Colorado Legislature had, historically, placed into statute a Colorado PERA pension contract setting the initial Colorado PERA pension benefit at a maximum 20 percent of highest average salary (HAS), with a 10 percent annual COLA escalator, could the Colorado Legislature retroactively take 90 percent of the total contracted benefit by simply striking the COLA provision from Colorado law?  The contractual obligation of Colorado PERA-affiliated employers to honor statutory COLA provisions does not disappear due to the fact that Colorado statutes mandate payment of a PERA member's accrued pension benefit by means of a COLA escalator.  This contrivance was embraced by the proponents of SB10-001in 2010 in the hope that Colorado PERA-affiliated employers could somehow escape their pension debt.

For fifty-two years, (since the Bills and McPhail cases) the Colorado Legislature has known that public pension COLA benefits are contractual obligations in our state.  They cannot claim ignorance of this fact, they are obligated to read case law and know the implications of legislation they enact.  For fifty-two consecutive legislative sessions, Colorado legislators have had opportunities to adopt any legal, prospective public pension reform they feel is appropriate.  They have had many decades of opportunity to reform the Colorado PERA pension without breaking PERA contracts.  While U.S. equity markets have endured extreme volatility over these decades (1987 and 2001) Colorado PERA contracts were honored.  As Colorado PERA officials have noted many times, pension administrators expect market volatility.  The State of Colorado cannot legitimately argue in court that the "unanticipated severity of an anticipated event" justifies the breach of Colorado PERA pension contracts.

Note that critics of public pensions focus on a single aspect of future state and local government expenditures (public pension obligations) when they argue that these governments are in "crisis." The critics argue that public pensions are in "crisis," because states and cities have not banked the three or four percent of future state revenues that will be needed to meet these pension obligations.  The critics call this a public pension "shortfall."  State and local governments have not banked sufficient funds to cover the other 95 percent of expected future expenditures and yet, somehow, this lack of accumulated resources is not a "crisis."  As we know, public pension obligations to current workers will come due over the next 70 years, like a mortgage, they are not due tomorrow.

What entity on high has decreed that a government's lack of current resources to immediately cover all of its accumulated pension obligations is a "crisis," while a government's failure to set aside resources sufficient to meet all other future expenditures is just standard operating procedure?  Is the State of Colorado in "crisis" because it has bonds outstanding?  Why are accumulated state financial obligations in the form of bonded debt not a "crisis," but accumulated state financial obligations in the form of public pension debt are a "crisis"?  Who decided that one of these state debt obligations has inferior legal status?

Colorado PERA active and retired members.  Help restore some degree of rationality to discussion of Colorado PERA public pensions.  Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!

Full story: Colorado Legislature . . . Pay Your Debts!

PROFESSOR AMY MONAHAN: THE U.S. SUPREME COURT TELLS US THAT PUBLIC PENSION PLAN REFORMS MUST BE THE "LEAST DRASTIC" ALTERNATIVE TO MEET CONSTITUTIONAL MUSTER.

TAKING PUBLIC PENSION RETIREE BENEFITS CARRIES THE GREATEST LEGAL RISK OF ALL PUBLIC PENSION REFORMS.

MOST PUBLIC PENSION ADMINISTRATORS THINK OF PUBLIC PENSION COLAS AS AN ACCRUED PUBLIC PENSION BENEFIT.

On February 22, 2013, the Ohio State University Moritz College of Law hosted a "Roundtable on Public Pension Reform."

The first panel of the Roundtable was entitled: "Recent Pension Reform Efforts."  Panelists were; Professor Amy Monahan of the University of Minnesota School of Law, Karen Carraher of the Ohio Public Employees Retirement System (OPERS), and Luke Martel of the National Conference on State Legislatures.

http://moritzlaw.osu.edu/programs/capital-markets/roundtable-on-public-pension-reform-video-archive/

(My comment: For Professor Monahan's paper, "Public Pension Reform: The Legal Framework," visit the link below.  In her paper, Monahan concludes:

“This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

Link to Monahan law article:

http://www.law.umn.edu/facultyprofiles/monahana.html)

Video of the Moritz College of Law Roundtable is available on the Moritz Law website in two parts.  (Note that Professor Monahan's presentation consumes the last five minutes of Part 1, and concludes in Part 2.)

Below, I provide quotations from the panel presentation of interest to Colorado PERA retirees:

Karen Carraher, OPERS (19 minutes into Part 1): "The minute any individual in our system retires, we actually transfer dollars equal to their lifetime payoff at that point into a fund.  So, they are 100 percent funded, every person who has retired.  Who we're working on funding are the folks who are still working."

(Note that combined employee and employer pension contributions in the OPERS pension system currently total 24 percent of salary.)

Professor Amy Monahan:

"I'm not aware of any case, where a court has said that once a participant has retired, and completed all of the necessary ingredients to receive a pension that that pension is not contractual."

"Even in some liberal states, once you've retired, you have a vested, contractual right to the benefit."

Amy Monahan on the relative legal risk of legislative enactment of various reforms to public pension systems:

"I think it's fair to generalize that there is a sort of risk hierarchy here."

"So, I'm going to start with the most risky and go down to the least."

Pension Changes Impacting:

Public Pension Retiree Accrued Benefits

" . . . benefits being paid to retirees are the riskiest thing to touch." "The idea is that they have completed their side of the bargain, and so any changes to those individuals usually get the highest level of scrutiny."

Active Pension Member Accrued Benefits

"Next, is touching accrued benefits for people who haven't retired.  So, they're still working, but you're reducing what they've already earned to date.  That's also pretty risky.  Basically, the analogy here is to salary.  You can't retroactively reduce someone's salary.  The court's going to easily imply a contract here, for the same reasons reducing accrued benefits are risky."

Future Benefit Accruals

"Future benefit accruals in most states, should be less risky."

(My comment: Note that the Colorado General Assembly adopted prospective changes to future benefit accruals of certain Colorado county government pension systems in 2012 [SB12-149]. The Colorado Legislature adopted these prospective pension reforms, honoring the accrued pension benefits of thousands of Colorado county government retirees two years after having retroactively seized accrued contracted public pension benefits of Colorado PERA retirees.  In 2010, most members of the Colorado Legislature were unaware of Monahan's "hierarchy of legal risk" of various public pension reform options.  This lack of knowledge is attributable to the fact that, in 2009 and 2010, the Colorado Legislature permitted self-interested outside parties to develop public pension policy for the State of Colorado [through lobbyists].)

New Hires

"New hires are easy."

Professor Monahan on public pension COLAs:

"I think that most people in the pension world, when they think of COLAs, think of it as part of the participant's accrued benefit."

("Automatic" public pension COLAs, like the Colorado PERA COLA are fixed, contracted pension benefits.  "Ad hoc" public pension COLAs can be adjusted by the pension plan sponsor as needed.)

Professor Monahan on the "Reasonable and Necessary" standard to break public pension contracts:

"That sounds like an easy test."  "It's not."  "The U.S. Supreme Court tells us that it has to be the least drastic way of achieving the policy goal."

(My comment: In February 2011, Colorado PERA's General Counsel wrote in the periodical "Government Finance Review," that, in order for a PERA pension reform to be found "reasonable," changes to the Colorado PERA pension must be "the minimum changes necessary."  [The next year, June 26, 2012, Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, wrote in the 2011 Colorado PERA CAFR: that the 100 percent funding threshold put into Colorado law by SB10-001 is much stronger than is necessary [i.e., not the minimum change necessary] to meet public pension regulatory (GASB) standards.  Alteration of the statutory Colorado PERA pension contract in 2010 [SB10-001] through incorporation of this 100 percent PERA pension funding threshold placed unnecessary financial pressure on the PERA pension's trust funds, helping to create the Legislature's desired rationale for breaking pension contracts, and does not represent the "least drastic" reform option available to the Colorado General Assembly.

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

Professor Amy Monahan:

"Colorado is a closely watched case that's been going on for awhile now.  Colorado reduced COLAs.  Most recent ruling there is the Appellate Court which just ruled that there is a contractual right to COLAs."

Colorado PERA active and retired members.  It is clear that the Colorado General Assembly willfully  ignored on-point Colorado public pension contract case law when adopting SB10-001 in 2010.  Support public pension contractual rights and the rule of law in Colorado.

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Full story: 2013 Moritz College of Law Public Pension Roundtable: Taking Accrued Retiree Benefits has Greatest Legal Risk.

In this article I have compiled an extensive (but, incomplete) chronology of events and statements surrounding the Colorado General Assembly's breach of Colorado PERA pension COLA contracts in 2010.  Colorado PERA retirees have filed a lawsuit, Justus v. State, asking that Colorado courts protect the retiree's accrued, earned, contracted Colorado PERA public pension benefits.  (More complete information germane to this lawsuit may be obtained only through formal discovery.)

Readers of the article should note the abrupt transition of the organization, Colorado PERA, in 2009, from an organization that had historically defended the contractual rights of PERA members, to an organization influenced by self-interested parties . . . parties that successfully induced the Colorado PERA Board of Trustees to attempt a breach of the pension plan's contractual obligations in 2010.

Many Colorado politicians are primarily engaged in seeking votes, and bestowing political favors . . . compliance with constitutional provisions for these politicians is an afterthought. The prevailing legislative sentiment at the Colorado General Assembly in 2010 was that, since the idea of breaking Colorado PERA pension contracts was popular with influential self-interested groups and many constituents . . . those contracts should be scrapped.  Colorado Constitution be damned!  In 2010, political considerations trumped respect for the State of Colorado's contractual obligations.

Colorado PERA retirees (the target of the SB10-001 contract breach) have many unanswered questions regarding the 2010 breach of their pension contracts by the State of Colorado:

Was the Colorado PERA Board of Trustees "opinion shopping" for a legal rationale to break PERA pension contracts in 2009?  How was Jean Dubofsky's firm selected to create this legal opinion?  On her resume, Jean Dubofsky writes that Colorado PERA "requested" that she provide an opinion to PERA arguing that the Colorado General Assembly could "repeal" the PERA COLA benefit "without violating the vested rights" of PERA members. When exactly, in early 2009, did the Colorado PERA board decide to seek a legal opinion that would justify taking contracted PERA COLA benefits?

Colorado PERA retirees should grasp the full implications of this statement Jean Dubofsky makes on her resume.  This statement on Jean Dubofsky's resume proves that the Colorado PERA Board intended to attempt a taking of PERA COLA benefits prior to the 2009 PERA "Listening Tour," prior to the placement into Colorado statute of the "requirement" for the Colorado PERA Board to recommend pension reforms to the General Assembly, and prior to any sort of objective contemplation of pension reform options.

In 2009, we do not see the Colorado PERA Board of Trustees seeking a legal opinion regarding changes in the rate of accrual of PERA pension benefits to be earned in the future.  We don't see the PERA board searching for a legal rationale to increase the retirement age of active PERA members, or increase the number of years over which active PERA member base pension benefits are calculated (increasing years in the HAS calculation).

We DO see the PERA board ignoring "less drastic" impairment of PERA pension contracts, and targeting "fully-vested" PERA pension COLA benefits.  We DO see the PERA board seeking a legal opinion regarding their FIRST CHOICE for PERA pension reform, breach of "fully-vested" pension COLA contracts. (Or, perhaps this option was the first choice of PERA employer lobbyists.)

Given the numerous previous statements of Colorado PERA officials (that have been reported in the press and in Colorado PERA publications) supporting the contractual pension rights of PERA members, why would the Colorado PERA Board of Trustees actively seek a legal opinion contravening this legal advice?

What was the initial reaction of Colorado PERA's in-house attorneys to the PERA board's objective to break PERA pension contracts?  Were these in-house attorneys charged with the task of finding an attorney who might create the board's desired legal opinion?  Or, was Jean Dubofsky recommended to the PERA board by outside lobbyists (perhaps education lobbyists, or other representatives of PERA-affiliated employers?)

If the Colorado PERA board sought a legal opinion regarding PERA COLA contractual rights in early 2009, it follows that the PERA board anticipated litigation in early 2009, and thus the organization, Colorado PERA, should have had a "litigation hold" in place at that point in time on all materials relevant to the COLA taking.  Why bother seeking a legal opinion if you are on solid legal footing?

Why would a board, that has a fiduciary duty to act only in the interests of the beneficiaries of the pension trust, actively seek a legal opinion that would rationalize contemplated harm to the rights of those beneficiaries?

Who made the original proposal to attempt to break PERA COLA contracts?  A member of the PERA Board of Trustees?  Education lobbyists?  Colorado PERA staff?  When was this suggestion first proposed to the PERA Board?

Did Executive Director Meredith Williams leave PERA due to a disagreement with the PERA Board over the COLA-taking?  As we have seen, he was a finalist for a public pension job in Texas in November 2010 . . . nine months after SB10-001 was signed. Were Meredith Williams and General Counsel Greg Smith forced to defend a PERA Board decision to attempt a contract breach against their will? Or, did they personally support the contract breach attempt?

Apparently, Colorado PERA officials wanted the Colorado General Assembly to submit an interrogatory to the Colorado Supreme Court seeking clarification regarding PERA contractual public pension rights.  Was this idea quashed by legislative leadership?  Why was this responsible step ignored in 2009?

How did the Colorado General Assembly reach the conclusion in 2010 that the state's public pension contracts are inferior to the state's contracts with corporations?

By what means did the Colorado General Assembly conclude that it is free to pump $700 million of state revenue into local government pensions that ARE NOT the contractual obligation of the State of Colorado, while ignoring the funding of the state's own contractual PERA public pension obligations?

Did lobbyists for PERA-affiliated employers pressure the PERA board to attempt a taking of fully-vested pension benefits from retirees in order to prevent changes to the partially-vested pension benefits of their union dues-paying members?

As late as December of 2009, Colorado PERA officials provided written testimony to the Colorado General Assembly stating that PERA members have a contractual right to their PERA pension COLA benefits.  In light of this, why is Colorado PERA currently appealing a Colorado Court of Appeals decision with this same finding?

Did the Colorado PERA Board (through PERA lobbyists) actually "ask itself" to make pension reform recommendations to the General Assembly? Did PERA lobbyists initiate the amendment (request drafting of this 2009 bill amendment through a legislator)?  Did PERA lobbyists seek the amendment to the bill, SB09-282, at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board?  Was this amendment adopted in anticipation of the coming litigation over the PERA COLA, to potentially benefit the defendants?  The PERA defendants have emphasized in their pleadings that PERA Board recommendations were made in conformance with this "legislative mandate."

Many aspects of the Colorado General Assembly's breach of Colorado PERA pension contracts in 2010 are revealed in the chronological compilation of events and statements provided in this article.

"The Preordained Colorado PERA COLA Contract Breach."

We see the co-prime sponsor of SB10-001 and Colorado PERA's attorneys stating that the COLA is a Colorado PERA contractual obligation. We see members of the Legislature stating that SB10-001 breaks PERA contracts.

We see officials of Governor Bill Ritter's administration describing the Colorado PERA COLA benefit as a "present obligation" arising from the "employment exchange transaction," which will result in an average loss of $165,000 for PERA retirees over the next twenty years (a substantial loss.)

We see numerous statements by Colorado PERA officials that PERA pension benefits are "guaranteed."

We see a former Colorado Assistant Attorney General, and numerous Colorado PERA retirees, warn the Colorado PERA board and the General Assembly against an attempted PERA COLA contract breach.

We see state legislators using market volatility to justify the breach of Colorado PERA pension contracts, retroactively take accrued pension benefits, slash the pension debt of PERA employers, and seize what they believe is a "window of opportunity" to break pension contracts.

We see Colorado PERA attempting to deceive Colorado courts by conflating constitutionally permissible improvements to the contracted PERA COLA benefit, with retrospective legislative takings of accrued PERA COLA benefits in 2010.

We see Colorado PERA attempting to confuse Colorado courts regarding the distinction between "ad hoc" public pension COLA benefits and "automatic" pension COLA benefits.

We see Colorado PERA attempting to exaggerate the financial condition of the Colorado PERA trust funds by employing "market-based" public pension funding ratios in legal briefs, while Colorado PERA has used "actuarial funded ratios" historically (as is common practice in public pension administration.)

We see documentation of legal research conducted by Colorado PERA attorneys supporting the contractual pension rights of PERA members. (I doubt that PERA's General Counsel originated the idea to attempt the COLA contract breach given his numerous previous statements and his legal briefs [cited in the press] that militate against such an attempt.)

We see Colorado PERA officials emphasize the fact that PERA members are not eligible to receive Social Security benefits, and are accordingly particularly vulnerable to state breach of pension contracts.

We see the Colorado General Assembly enact "prospective" pension reform for thousands of Colorado county government retirees, honoring their accrued pension benefits, after having retroactively seized the accrued pension benefits of Colorado PERA retirees in 2010.

We see the adoption of legislation in the past by the Colorado General Assembly in which PERA  employee pension contributions are "technically being paid by employers, from their salary-raise pools" in order to AVOID the breach of PERA member pension contracts.

"The Colorado PERA SB10-001 Lobbying Juggernaut."

We see a member of the Colorado Legislature stating that SB10-001 was "a deal cut before this body met," (that is, prior to legislative deliberation of PERA pension reform alternatives.)  We see PERA lobbyists orchestrating debate on SB10-001.

We see the co-prime sponsor of SB10-001 stating that the Colorado PERA Board of Trustees "needs to make it toxic" (through lobbyists) for anyone to challenge Colorado PERA in the legislative arena.

We see a Deputy Colorado Attorney General stating that the Colorado education establishment is attempting to raise education funding by "legislating through the courts."

We see PERA officials (in 2009) blaming the Colorado General Assembly for the decline in the actuarial funded ratio of the PERA trust funds.

We see a member of the PERA Board state that the PERA trust funds are in no immediate danger, and that benefits can be paid for decades. 

We see a 27-member team of lobbyists assembled to push the pension contract breach through the legislative process.  We see the Colorado PERA Board of Trustees spending the resources of PERA trust fund beneficiaries in an attempt to take the contracted benefits of those same beneficiaries.

"Chronic Legislative Mismanagement of the Colorado PERA Pension Plan."

We see historical and ongoing mismanagement of the Colorado PERA pension plan by the Colorado General Assembly, a preference to shortchange the pension in order to lower PERA employer pension contributions, regular cuts to employer contribution rates, enactment of "early retirement incentives" to shift labor costs from Colorado governments to the PERA pension, enactment of pension benefit enhancements without paying for the enhancements, and a lack of respect for the state's contractual obligations.

We see the 15th wealthiest state in the nation, a state with $1 billion in new revenue, a state that has pumped $700 million into local government public pensions that ARE NOT its contractual obligation, a state that makes $100 million grants in discretionary property tax relief, a state with (nearly) the lowest per capita state tax revenue in the country, attempting to escape its contractual obligations.

We see PERA officials and the prime sponsors of SB10-001 stating that 90 percent of the "cost" savings in SB10-001 derive from those who do not "owe" the debt, i.e., PERA members, rather than from the Colorado governments that are bound contractually to pay the debt. We see Colorado PERA officials and legislative sponsors of SB10-001 boasting that their PERA reform plan pushes 90 percent of the costs onto parties who do not legally owe the debt.

We see the Speaker of the House state that he has no intention of allowing increased Colorado PERA employer pension contributions to be a significant part of the planned pension reform.

We see the Colorado General Assembly cutting its revenue stream beyond the requirements of the 1992 TABOR amendment, and later claiming that limited state revenues constitute a "crisis" justifying the breach of Colorado PERA pension contracts.

We see officials from Colorado PERA and the National Council on Teacher Retirement (former Colorado PERA Executive Director Meredith Williams' current employer) stating that public pension systems consume under three percent of all state and local government spending.

We see a 2002 veto of  a bill that would have improved Colorado PERA's funded ratio by Governor Bill Owens.

We find that the Colorado PERA Board has considered the use of pension obligation bonds (POB) in the past, that a PERA official considers POBs a "useful tool" for addressing unfunded pension liabilities, and we find this "less drastic" means of bolstering the PERA trust funds (re-amortization of the pension debt) off the table in 2010.

"Jean Dubofsky: Author of the 1999 'Requested' Colorado PERA COLA-taking Legal Opinion."

We see the author of the Colorado PERA COLA-taking legal opinion write a letter of recommendation for attorney Monica Marquez to serve on the Colorado Supreme Court.  The letter states that the author of the COLA-taking legal opinion "worked on the case," Justus v. State, with attorney Monica Marquez.  The letter further states that attorney Monica Marquez will "bring sophistication" to the Colorado Supreme Court on "public pensions."

We see attorney Monica Marquez advising Colorado PERA, prior to her appointment to the Colorado Supreme Court.

(In my view, the State of Colorado is fortunate that a talented jurist, Monica Marquez, has recently joined the Colorado Supreme Court. However [although I have complete confidence in Justice Marquez's objectivity and dedication to the rule of law] it appears unlikely that our new Supreme Court justice will be able to participate in the coming decision in the case, Justus v. State, since she has worked on the case.)

"Actuarial Funded Ratios" vs. "Market-based" Funded Ratios."

Note that, historically, Colorado PERA has used "actuarial funded ratios" (almost) exclusively in its written communications to gauge the financial soundness of the PERA divisions. In 2010, we see Colorado PERA begin to use "market-based" funded ratios (in an attempt to exaggerate the financial condition of the pension plan) only after the commencement of the legal, political and lobbying campaign to break Colorado PERA pension contracts.

We see PERA officials in the past stating that an 80 percent PERA actuarial funded ratio is "sound."

We see numerous statements by Colorado PERA officials indicating that the Colorado PERA Board of Trustees finds an 80 percent actuarial funded ratio (AFR) for the pension plan acceptable, as well as documentation that the PERA Board seeks to cap the AFR at a 90 percent level.

We see PERA officials condemning employer contribution cuts by the Colorado General Assembly.  We see PERA officials stating that a PERA AFR under 60 percent is not a "crisis."

We see the Colorado General Assembly modify the Colorado PERA pension statutory contract in SB10-001 through the introduction of an absurd "100 percent" pension funding threshold.

We learn that, in the past, Colorado legislators argued that an 87 percent PERA actuarial funded ratio is "too well-funded," and yet current legislators intend in SB10-001 to retroactively take contracted PERA COLA benefits until a 100 percent AFR is achieved.

We see the firm, Fitch Ratings, state that a 80 percent actuarial funded ratio (AFR) for public defined benefit pensions is considered "well-funded," and that an AFR of 70 percent or above is an  "adequate" actuarial funded ratio.

We learn that, for the entire decade of the 1970s, the Colorado PERA actuarial funded ratio remained lower than its level at the time of the breach of PERA COLA contracts in 2010 (a low of 54.5 percent.)  There was no concern about a PERA financial "crisis" that decade.

We see public pensions in the United States with actuarial funded ratios as low as the 30s (in the 1970s) and yet public pension contracts were honored.

We see Colorado PERA's General Counsel stating that in order for a pension reform to be found "reasonable" under the Colorado Constitution, such changes to the Colorado PERA pension must be "the minimum changes necessary." We see Colorado PERA's actuaries stating that the 100 percent funding threshold in SB10-001 is much stronger than is necessary (not "the minimum changes necessary") to meet public pension regulatory (GASB) standards.

"Maximum Amortization Period."

We see Colorado PERA officials stating that the pension's investment time horizon extends to 70 years.

We see the Colorado General Assembly arbitrarily cut Colorado PERA's "maximum amortization period" in half (from 60 years to 30 years) putting pressure on PERA's funded ratio. There is no federal statutory mandate for this change, it is merely a "recommendation."

We find the Chairman of the Joint Budget Committee asking his colleagues: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”

"Service Credit Purchase Contracts."

We see Colorado PERA officials encouraging PERA members to send in checks for the purchase of "service credit" in 2002, only to later renege on those pension contracts. Much of this money was taken from the PERA member's separate retirement accounts (401Ks, 457 plans.)  The value of these "service credit purchases" was dramatically reduced by SB10-001, after Colorado PERA had their member's money. The purchase of a defined pension benefit, "service credit," by Colorado PERA members is a separate Colorado PERA pension contract that was broken by SB10-001.

The entries in this article (below) summarize material that is posted at saveperacola.com on the internet, "Save Pera Cola" on Facebook, and also on Coloradopols.com.  Additional information on the subject of each entry is generally available through a search of these sites.  Many Coloradans know the answers to the questions posed in this article, I encourage such persons to post their answers to the questions (even anonymously) on these three sites.

I believe that complete revelation of the truth regarding the political machinations that resulted in the breach of Colorado PERA pension contracts in 2010 would benefit the Colorado state legislative process in the future.

I don't believe that accrued Colorado PERA COLA benefits can be successfully taken by Colorado PERA lobbyists, PERA employer lobbyists, or members of the Colorado General Assembly. I don't believe that such a taking is possible under Colorado case law, McPhail, Bills or even DeWitt . . . (if that case is applicable.)

The chronology:

August 1, 1876

The Colorado Constitution takes effect upon statehood: Colorado: Art. II, § 11: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges, franchises or immunities, shall be passed by the general assembly.”

http://www.colorado.gov/dpa/doit/archives/constitution/1876.pdf

May 26, 1905

Franklin MacVeagh, U.S. Secretary of Treasury: “There is no moral exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private respect for a contract breaker. A contract breaker is an utter misfit as a citizen or a business man.”

http://www.senatedem.ilga.gov/phocadownload/PDF/PensionDocs/madiarrevisedpensionclausearticle.pdf

June 28, 1954

Hickey v. Pittsburgh Pension Board: "But when Thomas Hickey started contributing to the city pension fund in 1915, there appeared on the horizon not the slightest suggestion of a cloud to imperil the pension toward which he was faithfully to plod for 31 years. It is not reasonable or logical to suppose that, given the liberal attitude that the General Assembly has assumed in this field of legislation, that it would impose restrictions so fundamentally contrary not only to its policy but to the elemental rules of fairness ‘Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.’"

http://scholar.google.com/scholar_case?case=13490833546797588256&q=Hickey+v.+Pittsburgh+Pension+Board&hl=en&as_sdt=2,6

May 4, 1959

Colorado Supreme Court, Police Pension and Relief Board of Denver v. 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.”

“We conclude that the (Colorado constitutional Contract Clause) applies to the status of the plaintiffs here and prevents the enforcement of the (Denver Charter Amendment) against them.”

http://scholar.google.com/scholar_case?case=14051800929013625867&q=McPhail+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

December 11, 1961

Colorado Supreme Court, Police Pension and Relief Board of Denver v. Bills: “We now hold that not only prior to their actual retirement, but also prior even to their eligibility to retire, there was a limited vesting in these plaintiffs of their pension rights to the end that although prior to their eligibility to retire the pension plan could be changed, it could not be abolished nor could there be a substantial change of an adverse nature, without a corresponding change of a beneficial nature."  "Hence, prior to eligibility for retirement, changes may properly be made in a pension plan if these changes strengthen or better it, or if they are actuarially necessary."

"The charter amendment with which we are here concerned constituted an adverse change in the overall pension plan which deprived plaintiffs of a very substantial right, was unaccompanied by a corresponding change of a beneficial nature, was not shown to be actuarially necessary, nor that it in anywise strengthened or bettered the pension plan.”

http://scholar.google.com/scholar_case?case=3470001684402878070&q=Bills+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

1969

SB 69-144, SB 69-311, HB 69-1230, and HB 69-1247 (Colorado PERA notes that the PERA COLA benefit in 1969 was an "ad hoc" COLA in its publication "History of Colorado PERA Legislation," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in this same PERA publication.)

- New annual post-retirement increase (COLA) adopted provided maximum 1.5% per year, in addition to AD HOC COLA increases that were based on the year in which the retirement benefit had begun.

- Legislature declared its intent to establish employer contribution rates to provide adequate funding of PERA’s accrued retirement benefits. (In later years [2010], the Legislature finds it more convenient to break PERA pension contracts to erase its public pension debt.)

- Amortization of PERA’s actuarial liabilities over a 60 year period was deemed adequate to maintain the retirement fund’s actuarial stability. (In later years, this "maximum amortization period" is arbitrarily cut in half.  There is no federal statutory mandate for this change, it is merely a "recommendation.")

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

December 31, 1973

The Colorado PERA actuarial funded ratio reaches its nadir of 54.5 percent.  There are no concerns at the Colorado General Assembly regarding a Colorado PERA financial "crisis."  For the balance of the decade of the 1970s, the Colorado PERA actuarial funded ratio remains lower than its level at the time of the breach of PERA COLA contracts in 2010.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

1975

HB 75-1364 (Colorado PERA notes that the PERA COLA benefit in 1975 was "ad hoc," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in its publication "History of Colorado PERA Legislation.")

- Improved AD HOC post-retirement benefit increases.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

November 17, 1975

Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”

http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

August 14, 1984

Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee"

http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

1987

SB 87-239 (Cuts to PERA employer pension contributions.)

- Legislature reduced FY88 PERA employer payroll contribution rates to:

- 10.2% from 12.2% for the State Division;

- 11.2% from 13.2% for State Troopers (also in the State Division);

- 11.5% from 12.5% for the School Division;

- 13.0% from 15.0% for the Judicial Division.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1992

HB 92-1335 (Cuts to PERA State and School Division pension contributions.)

- Reduced the School Division employer contribution rate by 0.6% to 11.6% of payroll.

- Temporarily reduced the State Division employer contribution rate by 1.0% of payroll in FY92.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1993

HB 93-1324 ("Automatic" PERA COLA benefit enacted.  The auto COLA was later improved by the Legislature to a fixed 3.5 percent.  Legislative improvements in the contracted COLA are permissible as there is no impairment of existing contracts.  Colorado PERA members began paying for this automatic COLA benefit out of each paycheck, and earning this PERA benefit for each day worked.)

- Changed annual COLA to 3.5% maximum, compounded annually, based on the CPI, and folded the PERA CLSF into the PERA pension trust funds.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

March 24, 1993 (1:32 PM – 2:28 PM)

Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature's House Finance Committee in regard to the "automatic" PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.”  “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.”  Rob Gray states that the proposed COLA "adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”.  Rob Gray characterizes the "automatic" PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.”  (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

1997

HB 97-1082 (PERA employer pension contribution cuts, benefit enhancements.)

- Increased retirement formula from 1.5% to 2.5% per year of HAS on 20-40 years service, with 100% HAS maximum benefit. Benefits were recalculated for current benefit recipients on a prospective basis.

- One year HAS adopted for Judicial Division’s future retiring judges.

- Combined the State Division’s and the School Division’s trust funds, and reduced the State and School Division employer contribution rate by 0.1% to 11.5% of payroll.

HB 97-1114 (Statutory timeframe for meeting PERA obligations cut by one-third, in later years, the Legislature continues to arbitrarily cut this timeframe to half of the 1997 standard.)

- Reduced PERA’s maximum amortization period to 40 years from 60 years.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1998

HB 98-1242 (Cuts to PERA employer pension contributions in State and School Divisions.)

- State and School Division employer payroll contribution rate was reduced from 11.5% to 11.4%.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1999

SB 99-90 (Cuts to PERA employer and trooper pension contributions.)

- Permanent 1% employer payroll contribution rate cut for state, school, and judicial employers authorized when PERA is fully funded in the State and School Division, and in the Judicial Division.

- Municipal employer payroll contribution rate cut authorized when Municipal Division is fully funded.

- Reduced State Trooper member contribution rate from 11.5% to 10.0% of salary, effective 7/1/99.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1999

George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?”  (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved?  As PERA officials have noted, the pension debt comes due over up to 70 years, it is not "due tomorrow.")

2000

December 31, 2000

The Colorado PERA actuarial funded ratio reaches a peak of 105.2 percent.  The General Assembly determines that PERA is overfunded, and the effort to bring down the PERA actuarial funded ratio accelerates. (The General Assembly enacts legislation shifting labor costs to the pension through "early retirement incentives," and employer contribution cuts and benefit enhancements continue.)

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

2000

HB 00-1458 (Cuts to PERA employer pension contributions, PERA COLA set at automatic 3.5%.)

- Moved date of 1% reduction in employer payroll contribution rate forward from 1/1/01 to 7/1/00 since PERA was now fully funded, to 10.4% for the State and School Division, and to 14.0% of payroll for the Judicial Division.

- Established an additional minimum 0.25% employer payroll contribution rate cut.

- 20% of any PERA overfunding amortized over 10 years, would be allocated for further employer payroll contribution rate cuts.

- 30% of PERA overfunding amortized over 10 years, would be allocated to the HCTF for retiree health care premium subsidy increases.

- Established 3.5% compounded annual automatic COLA effective March 2001.

- Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

2001

November 20, 2001

Buck Consultants study presented to the Colorado General Assembly's Legislative Audit Committee.  (The report provided the results of a retirement plan study for Colorado PERA, conducted pursuant to SB 01-149.)  Six of the seven members of the Audit Committee sitting at the table had sponsored [the prior year] the bill enacting the 3.5 percent fixed, automatic PERA COLA, HB 00-1458 the prior year.)  The Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” the “fixed” COLA, that is “compounded annually for each year of retirement,” and contrasts the PERA COLA with an “ad hoc” COLA “as approved by Legislature.”  If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented in 2001?

http://www.nctr.org/pdf/coloradodcdbstudy.pdf

December 31, 2001

Colorado PERA Executive Director Meredith Williams:

“Be assured that your PERA account is safe, and that the benefit you receive when you retire is not affected by PERA’s short-term return on investments.”

http://www.copera.org/pdf/5/5-21-01.pdf

2002

February 25, 2002

From Colorado PERA News Release: "Colorado PERA’s monthly retirement benefits are guaranteed for life and purchasing time makes good sense for many of our members.”

https://www.copera.org/pdf/NewsReleases/2002/Purchasing.pdf

February 15, 2002

Kim Natale, Chairman, Colorado PERA Board of Trustees: “As a comprehensive retirement plan, PERA benefits are guaranteed for life.”  “However, the loss  . . . does not affect our ability to pay guaranteed lifetime benefits to you.”

http://www.copera.org/pdf/Newsletters/MemberUpdate3-02.pdf

July 18, 2002

"PERA’s Funding Status": "Because Colorado PERA is a defined benefit plan, members and retirees will receive a guaranteed benefit.  Those members who are planning on retiring should not be alarmed by the underfunded status of PERA.  Retirement benefits will be calculated and paid, in the same manner, regardless of PERA’s funded status.”

http://www.copera.org/pera/about/newsarchives2002.htm

2003

Colorado PERA:  “In any event, members and retirees with fully vested rights and entitlements provided by the PERA statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”

https://www.copera.org/pera/about/newsarchives2003.htm

June 3, 2003

Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”

http://www.copera.org/pdf/5/5-21-02.pdf

October 9, 2003

“Colorado PERA Fund Secure, Board of Trustees Seeks to Improve Funded Status.”

"It is our opinion that PERA continues to have a relatively good funded ratio of 88 percent (based on the actuarial value of assets)."

“PERA believes that state constitutional provisions that prohibit the reduction of benefits to existing retirees and restrict the changes which can be imposed on vested members of PERA further limit alternatives.”

“The funding reductions enacted as a result of the up markets of the 1990s must end.  The State must return to fully funding future obligations to PERA members and retirees.”

“PERA Benefits being paid are guaranteed . . .”

“PERA staff is in the process of fully researching and analyzing the issue of changing benefits and has not recommended anything to the Board regarding such changes.  PERA has not made the decision to propose legislation that would change the current benefit levels of vested members.”

“In any event, members and retirees with fully vested rights and entitlements provided by the PERA Statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”

"With PERA, Las Animas employees have a guaranteed benefit for life.”

http://www.copera.org/pera/about/newsarchives2003.htm

October 10, 2003

“In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”

http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf

“Adding to the problem is the fact that the legislature voted to reduce the amount of the state's contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)

December 4, 2003

"Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

https://www.cu.edu/sg/messages/2718.html

December 4, 2003

“JBC members questioned why PERA is asking for an increase in the employer contribution but not asking employees to contribute more. Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

https://www.cu.edu/sg/messages/2718.html

2004

February 21, 2004

“PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that's not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.” – Rocky Mountain News, David Milstead.

July 2004

"PERA Benefits at a Glance": “Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”  (PERA Document 5/58 (REV 7-04)

July 7, 2004

PERA response to July 5, 2004, Rocky Mountain News Editorial:

“PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”

“The fact is that benefits guaranteed to PERA members are of a contractual nature, and that means that unless benefits are increased, contribution rates for members cannot be increased.”

“The PERA Board agrees with the Treasurer that a 40-year period should be used as a standard for amortizing the unfunded liability.”

“PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”

http://www.copera.org/pera/about/newsarchives2004.htm

October 28, 2004

PERA official: Legislators say PERA is "too well-funded" at 87 percent actuarial funded ratio. Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 81-year] history, in 1999 and 2000.” Silver and Gold Record:

https://www.cu.edu/sg/messages/3851.html

November 18, 2004

Colorado Attorney General Ken Salazar Opinion (post-DeWitt): "Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly."

http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf

2005

May 12, 2005

“Befort also noted that several years ago, the Legislature and Gov. Bill Owens decided to encourage higher-paid employees to retire early. Payroll expenses went down for the state, but PERA’s costs increased, he explained.”

https://www.cu.edu/sg/messages/4405.html

July 14, 2005

Colorado PERA would rather break pension contracts than issue pension obligation bonds at historically low interest rates: “Rob Gray, PERA government relations director, told S&GR this week that the PERA board has looked at pension obligation bonds and will meet later this week with its regular actuary and an outside actuarial company that did its own review of PERA’s unfunded liability, and which may make recommendations on additional steps PERA could take to cover the liability.”  “PERA has been approached by investment firms about POBs during the past several years, Gray said this week. He agreed with Doherty’s assessment that POBs could be a useful tool to cover the liability and improve PERA’s funding situation, and Gray noted that the independent actuarial firm also is reviewing POBs as a solution.”

https://www.cu.edu/sg/messages/4467.html

August 13, 2005

Colorado PERA Executive Director Meredith Williams,. "The liabilities of the system, frankly, will be paid out over multiple decades, and we're talking 70 or 80 years. We're kind of designed for the long haul and we know we're going to experience ups and downs in the marketplace."

http://www.chieftain.com/metro/slow-stock-market-retiree-boom-hurts-pension-system/article_da58863b-1799-50b4-8ff3-0548d16be68c.html

August 17, 2005

Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): "'Everyone agrees you certainly can make changes for people you haven’t even hired yet,' said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. 'On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.'"

"Smith said in his opinion that 'other (non-Colorado) courts have set a high burden to meet the necessity threshold.'"

“His (Colorado PERA General Counsel Greg Smith) briefing paper said 'there has never been a finding in Colorado that the state has reserved its power to make changes' in PERA's benefit structure.”

"The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member. That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan."

"Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem."

http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/

September 14, 2005

Colorado Treasurer’s "Commission to Strengthen and Secure PERA,” co-chaired by former Colorado Senator Hank Brown (who later supported a retroactive taking of PERA COLA benefits):

“For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The  commission may not make any recommendations that materially affect current retirees.”

https://www.copera.org/pdf/Misc/CommissionReport.pdf

November 4, 2005

PERA Shareholders Meeting Presentation, Fall, 2005:

"Note that PERA’s funded status was lower 30 years ago than it is now.  You may recall that there was no perceived 'crisis' in PERA’s funded status in 1975.”  “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent.  Why?   Because not all benefits are due and payable today or tomorrow . . .  PERA can weather the ups and downs in the markets.”  “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”

http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf

2006

SB 06-235

- Reduced PERA’s statutorily prescribed maximum amortization period (MAP) from 40 years to 30 years. (In 1997, the PERA MAP was set in law at 60 years.)

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

2006

Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:

“From a long-term perspective, however, one can't really pin too much of the pension problem on the recent stock market pullback . . .".  "During the 1970s, funding ratios generally hovered between 50 and 60 percent.”  (Yet, public pension contracts in the United States were honored.)

January 2006

Colorado PERA Member Report: “As I said above, no changes are proposed for ‘legally protected’ benefits.” “The package addresses PERA’s funded status without impairing earned pension benefits for existing and retired members.”

http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf

January 12, 2006

Governor Bill Owens 2006 State of the State:

“We need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer.  This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.

"We also need to take the politically tough step of examining benefit levels for our current employees.  We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the ‘out’ years for those furthest from retirement.  These changes should not affect those closest to retirement, but could be phased in for those who have years to go.”

http://www.pewstates.org/projects/stateline/headlines/colorado-state-of-the-state-address-2006-85899394414

January 13, 2006

Rocky Mountain News: “(Colorado PERA Executive Director Meredith) Williams claims that any compromises in promised benefits to current employees could be deemed unconstitutional.”

http://m.rockymountainnews.com/news/2006/jan/13/brosenb-slay-the-pera-dinosaur/

February 2006

From PERA Legislative Update:

“Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

February 10, 2006

Colorado PERA Board meeting summary on DocStoc: “A motion was made by Scott Noller and seconded by Carole Wright that 'as it is in the best interest of the members and beneficiaries of PERA, and in compliance with the fiduciary obligation of the Board of Trustees, that any laws affecting PERA be legally adopted, that staff take appropriate action, including incurring reasonable expenses, to ensure that any laws affecting PERA be legally adopted.'”:

http://www.docstoc.com/docs/61834277/Colorado-Public-Employees-Retirement-Association

February 11, 2006

“It defines ‘actuarial necessity’ in state law, opening the door for benefit reductions for current PERA members who have not retired.”

http://m.rockymountainnews.com/news/2006/feb/11/governor-demands-pera-solution/

February 16, 2006

“Joint Budget Committee member Rep. Bernie Buescher (D-Grand Junction) told S&GR this week that he hopes in the next week to meet with representatives of CAPE, CEA, the Colorado Federation of Public Employees, the Colorado Association of School Executives, PERA and Gov. Bill Owens to work out a PERA solution.”

"Deputy Colorado Attorney General Bernie Buescher, 'who spent 20 years as a pension attorney,' has said that he believes Colorado PERA needs changes, but not drastic ones, pointing out that the ‘beauty’ of pension plans is that small changes compound interest over time.  ‘When you're talking about something as complex as retirement plans, the planning horizon is 30 to 50 years — even 20 years is too short.’”

"'Some folks feel urgency' to solve PERA's problems, Buescher added. 'I feel much more strongly that we need to do it right,' he said. 'We don't have to do it this year, but the sooner we deal with it, the less painful the solution would be. It would be better to not do anything than to do something that is not productive.'"  (Note that Buescher later served as Colorado Secretary of State and now works at the Colorado Attorney General's office in the position formerly occupied by our new Colorado Supreme Court Justice, Monica Marquez.)

https://www.cu.edu/sg/messages/4829.html

February 24, 2006

“In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”

http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/

March 5, 2006

Colorado PERA's "Five Minute Rule."  Denver Post article by Bob Ewegen (who retired from the Denver Post in 2008 after 36 years at the paper.) The title of the article is: “A 3 Percent Solution for PERA: Rescue Plan for Retirement Groups Finances Might be Simple”:

"In excluding any cuts for current retirees and slashing benefits for new hires, PERA and its critics agree on what might be called the ‘five minute rule.’ PERA members who are already retired – even if they left just five minutes ago – are considered ‘fully vested’ and thus legally immune from any changes that would reduce their current or future benefits."

"Current or retired employees are guaranteed a 3.5 percent increase in benefits each year." "PERA itself argues that the law bans any adverse change affecting even future earned benefits for existing employees."

http://www.denverpost.com/opinion/ci_3566250

March 9, 2006

Silver and Gold Record: “Williams noted that most people don't have enough money to pay off their mortgages, and that PERA's assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’"  (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)

https://www.cu.edu/sg/messages/4871.html

April 2006

Colorado Association of School Executives (an organization that supported SB10-001) in an issue brief, "Politics and PERA, Separating Fact from Fiction":

“What is PERA’s financial condition?  Is PERA stable?  Yes.  PERA is quite stable.  As of this writing, PERA's market value is in excess of $35 billion.  If there were flat investment returns in the future, PERA would have enough cash to pay benefits or over 40 years.  By almost every standard, PERA is solvent.”

“How did PERA get into this predicament?  Several factors have contributed to PERA's current funded status.  In 1999 and 2000 when PERA had more assets than liabilities, there was a major political movement to increase benefits, to lower the age of retirement, and to lower employer contribution rates for PERA.”

“Now, some of the same politicians who voted for increased benefits and lower contribution rates are the ones pointing fingers and talking about a ‘crisis.’”

“One result of these changes is that PERA's employer contribution rate has declined by 25 percent since the late 1990s.  Current contribution rates and estimated return on investments aren't enough to pay off the debt over time.”

“In short, employer contributions were lowered during the boom years — now employers need to step up to fill some of the gap.”

“Different groups have proposed numerous ‘fixes’ that range from adjusting how Highest

Average Salary is figured, to reconfiguring the benefit package, to privatizing the system.”

(My comment: Here CASE, an SB10-001 proponent, notes in its 2006 Issue Brief the existence of several “less drastic” alternatives to the breach of fully-vested PERA retiree pension contracts.)

“The negative publicity about PERA over the past year is largely the work of organized ideologically motivated activists and profit-minded special interest groups.”

“In reality, PERA has one of the lowest employer contribution rates in comparison with other public pension plans in Colorado and other states. The 2006 employer contribution to PERA is 10.65 percent. By comparison, public pension plans for neighboring states show an average employer contribution rate of 17.2 percent. Even with the scheduled gradual increase of the employer rate up to 13.15 percent by 2012, Colorado will still compare favorably with other public pension plans.”

“By Phil Fox, deputy executive director, and Jana Caldwell, director of communications, CASE.”

http://www.friendsofpera.com/facts/PERAIssuebrief.pdf

June 5, 2006

PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)

http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf

Fall 2006

“Shareholders Meeting Fall 2006” document: “Note that PERA was over 100% funded in only two years of our 75 year history.”

http://www.copera.org/pdf/Shareholder/ShareholderPresentation06.pdf

October 26, 2006

Silver and Gold Record: “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.”  “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools.  Williams said this ‘employer contribution’ will not affect retirees . . .”

https://www.cu.edu/sg/messages/5245.html

2007

“Representative Bernie Buescher, a pension attorney from Grand Junction, began a month-long effort (in 2006) to educate the PERA Board and include them in discussions with others, including Senator Owen, in order to forge a compromise.”

http://cppa.utah.edu/_documents/westernstatesbudgets/wpsa-06/colorado-06.pdf

2008

Friends of PERA (an organization that supported SB10-001) in "PERA Quick Facts":

“The employer contribution rate for the PERA pension plan is below the average rate contributed by public & private employers into retirement plans for their employees.  Many employers contribute between 6% and 10% of pay in addition to 6.2% of pay for Social Security, for a total of 16.2% of pay.”

“In 1984, the contribution rate to PERA's pension fund for the School and School Divisions was 12.5% and 12.2%, respectively.  Over the years, the rate dropped to less than 10%.  The rate in 2009 is 11.9%, still lower than it was 25 years ago.”

“Compare PERA’s rate with other non-PERA Colorado public plans: Denver = 13.7%, Adams & Pueblo counties = 13.7%, Douglas County = 14.2%, University of Colorado = 16.2%, City of Fort Collins = 13.7%, Jefferson County = 13.2%, Durango = 11.2%, Westminster = 10.3%, Lakewood = 11.7%.”

“Compare PERA’s rate with the average rate of the seven neighboring state pension plans: 11.9% vs. average of 18.3%, NM State = 22.8%, NM School = 17.8%, Utah RS = 21.9%, Wyoming = 17.5%, NE School = 13.5%, OK RS = 20.7%, KS PERS = 14.2%.”

“Compare PERA’s rate with the average of 32 public DB plans: 11.9% vs. 14.3%.”

“Average pension cost for all Private Employers according to the 2006 Chamber of Commerce Employee Benefits Study is 14.25%.  PERA is 16 percent below this.”

“Rate cuts to PERA between 2000 and 2005 equaled some $325 million.”

“The State (taxpayers) is not the major provider of funds to the pension plan; only 17% of PERA’s revenue of $45 billion in the last 20 years came from the taxpayer; members contributed about 18% of the revenue.  Investments brought in 65% of the revenue.”

“PERA’s funded level at the end of 2007 was an overall 75% of assets – about the same as it was in 1984.”

“Equating PERA’s amortization period (number of years when it will have the unfunded portion paid off) to an actuarial emergency or necessity is erroneous.  PERA continues to have a positive cash flow without selling off assets.”

"PERA has been fully funded only two years in its 75-year history – in 1999 and 2000.  When it was fully funded, Governor Owens immediately pursued cutting the employer contribution rate and unwisely pushed the Board of Trustees very strongly to reduce the cost to purchase service credit.  This action resulted in a very large unfunded liability increase to the fund.  When PERA tried to pursue legislative changes to remedy the situation, Governor Owens vetoed the legislation because it did not include a ‘defined contribution option’ for state employees.”

“PERA benefits are actually lower than private industry and other public plans that have Social Security plus a pension.”

"Laws passed in 1999 and 2000 to reduce the cost to purchase years of service and to provide for earlier retirement were initiated by Governor Owens' office and legislators who wanted to encourage long-term state employees to retire.  At the same time that the benefit rules were made better, the employer contribution rates were reduced and the rate employees paid remained the same.  These changes were made by the Executive and Legislative branches, not by the PERA board.”

“There is a misconception that the ‘taxpayers’ are owners of the fund; the trust fund is owned by the beneficiaries of the fund . . .”

“PERA reacted promptly to the market downturn in 2001.  In 2002, it developed a proposal that would have saved PERA millions of dollars in payments and brought in millions of dollars in additional revenue.  This plan was passed unanimously by the General Assembly in 2003 but was vetoed by Governor Bill Owens (R).  He vetoed this bill because of a political desire to include defined contribution plans as an alternative option to PERA, even though no other organization in the state offers a ‘choice’ in retirement plans.”

http://www.friendsofpera.com/facts/index.html

Support public pension contractual rights at saveperacola.com.  "Friend Save Pera Cola on Facebook!

Full story: Anatomy of a Colorado PERA Pension Contract Breach. (Part 1 of 2.)

January 2008

U.S. Government Accountability Office, “State and Local Government Retiree Benefits: Current Funded Status of Pension and Health Benefits,” (GAO-08-223.)  The GAO report notes on p. 15, “Many experts and officials to whom we spoke consider a funded ratio of 80 percent to be sufficient for public plans for a couple of reasons. First, it is unlikely that public entities will go bankrupt as can happen with private sector employers, and state and local governments can spread the costs of unfunded liabilities over up to 30 years under current GASB (my comment, "recommended") standards. In addition, several commented that it can be politically unwise for a plan to be overfunded; that is, to have a funded ratio over 100 percent. The contributions made to funds with ‘excess’ assets can become a target for lawmakers with other priorities or for those wishing to increase retiree benefits.”  (My comment, GASB does not have the power to compel states and municipalities to follow its recommendations.  If an 80 percent AFR is a "sufficient" funding level, why does the Colorado PERA Board of Trustees seek to break Colorado PERA pension contracts until a 100 percent funded ratio is achieved?)

http://www.cbpp.org/cms/index.cfm?fa=view&id=3372

February 2008

The Auraria Campus Human Resources Department posted a Colorado PERA document on the AHEC website in 2008 (still in place) clearly stating that retirees will receive the contracted annual increase of 3.5 percent in retirement.  This Colorado PERA publication predates PERA's decision to attempt a pension contract breach.  Since this document is on AHEC's website, it is beyond PERA's reach.

"Colorado PERA Retirement Process”: "The amount of increase you receive is dependent on when you were hired by a PERA employer: If you began PERA membership on or before June 30, 2005, you will receive an annual increase of 3.5 percent."

http://www.ahec.edu/hr/peraretirement.pdf

April 17, 2008

Colorado has an opportunity for significant federal mineral lease revenue: “Co-sponsor Sen. Josh Penry (R-Grand Junction) said the bill will create an opportunity for the state to invest in strategic needs. He explained that at the time the original tax structure was set up, the state was receiving about $30 million to $40 million per year from federal mineral lease revenues. However, according to Penry, the state is now expected to see $300 million to $400 million per year, reaching a total of $2.7 billion over the next decade.”  (Note that the State of Colorado also foregoes the collection of significant sales tax revenue.)

https://www.cu.edu/sg/messages/6125.html

August 1, 2008

Colorado PERA website, "Ask Meredith": "Keep in mind that PERA is a long-term investor with a time horizon that is much longer than individuals have.  PERA does not 'time the market' nor do we actively move assets to less risky investments when the market is falling.  Because PERA is a long-term investor, we know that at times we'll have losses, but those losses will be offset by gains over the long run in PERA's diversified investment portfolio. The bottom line is that the PERA portfolio is well diversified and able to withstand the ups and downs of the market over time.
– Meredith"

https://www.copera.org/pera/about/askm.htm

October 10, 2008

Colorado PERA Executive Director Meredith Williams: “The value of your PERA benefit is based on highest average salary and years of service (a 'defined' formula) and does not fluctuate based on market performance.”

http://www.copera.org/pera/about/askm.htm

November 30, 2008

Colorado PERA General Counsel Greg Smith: “The attorney general's opinion seems clear that fully vested employees — those retired or with enough years of service to retire — cannot see any benefits reduced, including cost-of-living adjustments.” 

http://www.denverpost.com/news/ci_11105271#ixzz0eEZGoxly)

December 2008

Colorado PERA Executive Director Meredith Williams commenting on Colorado Attorney General Ken Salazar’s 2004 Formal Opinion on PERA benefits (PERA Retiree Update, page 1):

“The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”.

https://www.copera.org/pdf/5/5-40-08.pdf

December 4, 2008

Silver and Gold Record: “‘We've got a much larger segment of people making contributions and employers making contributions,’ and with its current assets PERA will be able to pay benefits for decades to come, he (Colorado PERA Executive Director Williams) said.”  “Williams said that gives PERA time to examine its options.” "We generally can ride out market cycles," he said. "We're built to do that."

https://www.cu.edu/sg/messages/6546.html

December 8, 2008

"Ask Meredith" column on Colorado PERA website: “That leaves the benefits being earned by members (active and inactive) as the only area to examine for savings. The Attorney General’s opinion contains the following language: 'Once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member’s fully vested pension right cannot be reduced by the General Assembly.'”

https://www.copera.org/pera/about/askm.htm

December 19, 2008

Colorado PERA Executive Director Meredith Williams assures PERA retirees that market volatility has no impact on their contracted pension benefits:

"Since PERA is a defined benefit plan, your benefit is not based on the fluctuations in the financial markets, but on your contributions, age, and years of service."

https://www.copera.org/pera/about/askm.htm

2009

Sometime in 2009

Attorney Jean Dubofsky, at the request of Colorado PERA, provides PERA with a legal opinion arguing that the Colorado Legislature could legally take Colorado PERA retiree pension COLA benefits: “at request of PERA (Public Employees Retirement Association) in 2009, provided legal opinion that general assembly could repeal automatic 3% cost-of-living adjustment for retirees without violating their vested rights;"

http://lawweb.colorado.edu/files/vitae/dubofsky%20.pdf

2009

Senator Josh Penry, in a videotaped discussion with Representative Mike May, (videocenter. denverpost.com) said ‘we can’t, can’t miss this window.’ And, . . . we have an opportunity to pass something that Republicans have long advocated, a significant increase in retirement age, which the PERA Board embraced, reigning in the cost of living increases . . .

“Penry went on to say, ‘I think it is important to pass something because if you lose actuarial necessity, as you know, it becomes extremely difficult to increase retirement age. You cannot change course and this year, when PERA’s investment numbers come out, their investment returns . . . numbers are going to be significant, like double, 15-16% investment return. So that could change the specter of actuarial necessity. We gotta’ do it this year or else these other structural changes won’t be possible.”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

January 2009

Colorado PERA Executive Director Meredith Williams: “The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”

https://www.copera.org/pdf/Topics/2009/Topics1-09.pdf

January 5, 2009

Colorado PERA officials discuss "what constitutes an actuarial emergency" with the Colorado Legislature's Joint Budget Committee.

January 8, 2009

Silver and Gold Record: “The committee also met with representatives from the Public Employees' Retirement Association on Monday.  PERA Executive Director Meredith Williams pointed out that despite an estimated $11 billion market loss in 2008, the association has enough funds to pay benefits for decades, although perhaps not as many decades as it could have funded in the past.”

https://www.cu.edu/sg/messages/6594.htm

January 24, 2009

“Define an 'actuarial necessity' that automatically triggers a legislative response. PERA’s board has long argued that the state constitution may require any benefit cuts to be paired with equal reductions in contributions, unless the changes are ‘actuarially necessary.’”

http://m.rockymountainnews.com/news/2009/jan/24/lawmakers-must-act-now-on-pensions/

January 26, 2009

Former Colorado Treasurer and PERA Board member Mark Hillman: “PERA lawyers assert that benefits can be retroactively increased (as they have been), but that once increased, those benefits can never be reduced, even for someone who has worked just one day for a PERA employer.”

 “. . . PERA’s party line is that the responsibility to make up for any shortfall rests with taxpayers, represented by state and local governments who contribute to PERA’s pension funds on behalf of their employees.”

http://www.markhillman.com/2009/01/26/get-taxpayers-off-the-pera-go-round/

February 4, 2009

Colorado PERA publication: “Employer contribution rates were lowered when PERA reached fully funded status, saving public employers in Colorado millions of dollars.”

http://www.copera.org/pera/about/newsarchives2009.htm#LAC

March 11, 2009

Colorado PERA officials place blame on the Colorado General Assembly for creating the latest PERA financial downturn: “Other notable factors (for the downturn in PERA’s fiscal position) include employers not contributing the actuarially determined contribution rates, the sale of purchased service credit at rates below actuarial costs, and the raising of benefits in the late 1990’s coupled with decreasing employer contributions.”

http://www.kentlambert.com/Files/PERA_Response_Pt_1.pdf

April 14, 2009

Colorado PERA Executive Director Meredith Williams testifies to the Senate Finance Committee hearing on SB09-282 (03:28 PM) stating that "the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA.”  Mr. Williams made this  statement one week BEFORE the requirement for the PERA Board to provide recommendations to the Legislature regarding PERA reform was placed into SB09-282  (on April 21, 2009.)  In court documents, Colorado PERA emphasizes that, in 2009, the PERA Board was simply responding to the General Assembly’s “legislative mandate” to make PERA pension reform recommendations.  Response Brief submitted to the Denver District Court:

http://www.ednewscolorado.org/wp-content/uploads/2010/05/PERASuitResponse5-10-10.pdf

I suspect that (through PERA lobbyists) the PERA Board actually "asked itself" to make these recommendations, that this amendment was placed in SB09-282 at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board to PERA's benefit in anticipated litigation.  It would be rather disingenuous of Colorado PERA to argue in court documents that it was responding to a "legislative mandate" to provide pension reform recommendations, when in fact Colorado PERA was responding to a Colorado PERA "mandate" to provide pension reform recommendations.

July 14, 2009

Speaker Frank McNulty: "I don't think at this point we can expect employer contributions to be part of the solution . . ."

http://www.9news.com/rss/story.aspx?storyid=119465

August 11, 2009

Colorado PERA Board Trustee Casebolt assures PERA retirees present at Colorado PERA Denver meeting of the PERA “Listening Tour”: “PERA faces no immediate danger of being unable to pay benefits, in fact, PERA can pay benefits for many years to come, based on our current funding and our benefit structure coupled with over $30 billion in assets, at present market value.”

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.”

Colorado PERA’s General Counsel Greg Smith blames the Colorado General Assembly for PERA’s fiscal downturn: “We have not been paid what’s called the actuarially required contribution.” “We’ve not been receiving that full contribution in any of our divisions for many years . . . seven years to be specific.”

http://www.copera.org/pera/about/listeningtour.htm

October 2009

Gabriel Roeder Smith paper: “Most public plans provide a COLA in order to protect retirees’ purchasing power from inflation. In many cases, the COLA is automatic and set at some fixed rate (e.g., 3% annually) or based on the Consumer Price Index (e.g., 80% of the annual CPI increase). In other cases, the COLAs are ad hoc and granted by a decision of the plan’s board of trustees. Because ad hoc COLAs are not part of the guaranteed benefit, they may be reduced or eliminated as circumstances warrant.”

http://www.vermonttreasurer.gov/sites/treasurer/files/pdf/retirement-all/GRS_Pesnio__Insight2009_10.pdf

October 22, 2009

"PERA is obviously gearing up for some heavy-duty lobbying, one observer noted. The agency has hired two lobbyists from the firm Colorado Communiqué, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO. The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler."

http://www.ednewscolorado.org/news/capitol-news/pera-woes-loom-large-for-education/comment-page-1

November 15, 2009

Denver Post Editorial Board: "First, let court rule on PERA.  Before legislators take on reforms, they should first ask the state Supreme Court to determine how much leeway they have."

"As Colorado lawmakers prepare to consider the financial rescue of the state employees' retirement fund, they ought to first figure out just how much legal leeway they have to overhaul it."  "Legislators need to understand how much power a designation of 'actuarially necessary' gives them to modify benefits paid to members." "We think lawmakers should ask the state Supreme Court for a ruling so they know exactly what they can do." "Administrators of the Colorado Public Employees' Retirement Association, or PERA, recently asserted that the fund's foundering finances give the state the legal footing to cut future cost-of-living increases for people who already are retired. But what if that were challenged in court and found to be illegal?"  "On the other hand, if annual hikes for retirees can be adjusted, why can't a case be made to increase the retirement age for many of those who are still working and contributing to PERA — a reform that is missing from the PERA board's plan?"  "It's in Colorado's best interest to get out in front of the PERA problem, file an interrogatory with the state Supreme Court, and get a clear fix on what legislators can and cannot do. We're confident that PERA solutions will be far more clear after that."

http://www.denverpost.com/opinion/ci_13776995

December 16, 2009

Colorado PERA officials in written testimony to the Joint Budget Committee: “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

December 17, 2009

Education News Colorado: "The most controversial part of the plan, at least based on the volume of e-mail flowing into legislators’ in-boxes, is a proposal to reduce most retirees’ annual cost-of-living increases from 3.5 percent to 2 percent. It’s estimated that the current COLA would provide a third of the pension benefits over the retirement of a worker who retired in 2008."

http://www.ednewscolorado.org/news/capitol-news/pera-plan-work-longer-pay-more-receive-less

December 17, 2009

The Colorado General Assembly's Joint Budget Committee (JBC) meets with representatives of Colorado PERA.  At the meeting, Colorado PERA’s General Counsel Greg Smith informed the JBC that Colorado PERA had hired an outside law firm to provide a legal opinion relating to Colorado PERA contractual pension obligations:

Colorado PERA General Counsel Greg Smith – “We have obtained outside counsel’s opinion on this issue.”

Greg Smith, before the Joint Budget Committee: “The statutes are in fact binding, and they are constitutionally protected from reduction.”

Rep. Jack Pommer, Joint Budget Committee Chairman to JBC: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”

http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

December 31, 2009

The Colorado PERA actuarial funded ratio (AFR) reaches 68.9 percent.  This funding level is 9.1 percent below the 40-year average of the PERA actuarial funded ratio, 11.1 percent  below an 80 percent AFR level considered “well-funded” by Fitch Ratings, 1.1 percent below a 70 percent AFR level considered “adequately-funded” by Fitch Ratings, 3.1 percent below the Wilshire Associates average U.S. public pension actuarial funded ratio that year.  The General Assembly determines that Colorado PERA pension plan is in a funding "crisis," and that PERA pension contracts must be broken.  Should all U.S. public pension contracts be abrogated at that funding level?

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

2010

January 5, 2010

SB10-001 co-prime sponsor Josh Penry: "Republicans and Democrats created this mess . . .".

http://www.9news.com/rss/story.aspx?storyid=130197

January 10, 2010

Senator Josh Penry, co-prime sponsor, SB10-001 appearing on Your Show, Channel 20 with Channel 9 News (KUSA-TV) host Adam Schrager on at 10:30 a.m.:

“What the courts have said with the case law and opinions have said is that you can’t, it is a contract unless there is actuarial necessity.”

January 15, 2010

“PERA also is hoping the Legislature will ask the Colorado Supreme Court to review the matter through interrogatories before the end of the session.”

http://www.coloradostatesman.com/content/991527-state-retirees-ready-pounce-pera-fix

January 22, 2010

SB10-001 co-prime sponsor Senator Josh Penry and bill sponsor Senator Greg Brophy: “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.”

http://www.denverpost.com/search/ci_14242354

January 26, 2010

"With SB1, Shaffer and Penry have said the state can realize solvency in the PERA fund within 30 years.  Previously, the Legislature had targeted a 60-year fix."

"The difference between the past approach and SB1, Penry said, is that the new plan boldly tackles benefit reductions, which he said will constitute 90 percent of the PERA fund's recovery and generate plenty of opposition along the way."

http://www.chieftain.com/news/local/legislators-pera-changes-will-be-painful/article_b82cee28-328f-59ba-91c0-a480e5f719c8.html

January 27, 2010

Assistant Colorado Attorney General Steve Smith (retired) warns the Colorado Legislature’s Senate Finance Committee during testimony on Colorado PERA’s bill, SB10-001, against breaking state contracts: “Others, including a former assistant attorney general, said the 3.5 percent annual increase in benefits was a contractual right, and that changing it would be illegal.”  “Many witnesses asked the senators to seek legal counsel before final passage of the bill rather than face a court battle afterward.”

https://www.cusys.edu/newsletter/2010/01-27/pera.html

January 29, 2010

Colorado PERA General Counsel Greg Smith to Senate Finance Committee: “There are few case laws that address the issue, Smith said, but one, regarding a fire and police pension plan, was litigated when the plan ran out of money and benefits were being paid for with current revenues.”

http://www.coloradostatesman.com/content/991568-pera-reform-bill-passes-first-test-capitol

January 29, 2010

2010 Senate floor debate on SB 10-001:

Rep. Lambert: “I have heard from my constituents, as many of you have, that this proposal will breach retiree’s contracts.”

Rep. Swalm: “We’re breaking new territory in this state by trying to reduce the COLA. We’re probably going to get a lawsuit out of that. If we cut the 3.5 percent COLA there will be a lawsuit.”

Rep. Gerou: in committee, said that it is a disservice to the state to rush a bill through when her committee knew that it will go to litigation, and said what we are doing to the retirees is wrong.

Rep. DelGrosso: said that it is “tough” for him to tell people that he is going to break their contract.

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.”

February 1, 2010

Senate “Third Reading” debate on SB10-001 (watch on the Colorado Channel):

Senator Ted Harvey: “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 Renfroe: “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.”

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

February 10, 2010

Joel Judd, Chairman, House Finance Committee, during the hearing on Senate Bill 10-001 Chairman Judd stated (near the end of the hearing) that SB 10-001 (the “COLA theft bill”) must be supported "because that's where the money is."

February 10, 2010

Jim Alexander’s paper provided to the House Finance Committee during testimony on SB10-001 (quoting the October 2002, PERA Retiree Report:

“In 2002, PERA Executive Director, Meredith Williams was asked, because of a downturn in the stock market, if retirement benefits were safe.  He replied, ‘First, the ‘loss’ is due to a decline in the stock market.  PERA still owns the same stocks that it did before the decline and this ‘loss’ is a result of the value of the stock decreasing. It is not ‘lost’ since we haven’t sold the stocks, and because PERA is a long-term investor, we can ride out the bad times the market experiences.  When the market recovers, the value of these stocks will also increase, offsetting this ‘loss.’”

“Mr. Williams was quoted in the same report as saying ‘Most pension funds are considered sound at 80 percent funding levels.’”

“Meredith Williams ‘said at the Senate Finance Committee hearing in January that PERA needed to be funded at 100 percent.  When the PERA representatives  were asked by a member of the committee why in view of the fact that PERA had  only been funded at 100 percent for about seven of the past thirty years (my  comment, actually two of the last eighty-one years), it was necessary now.  The answer was ‘it just makes things easier.’”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

February 10, 2010

Assistant Colorado Attorney General Steve Smith (retired) warns the Colorado Legislature’s House Finance Committee during testimony on Colorado PERA’s bill, SB10-001, against breaking state contracts: “Former Assistant Attorney General Stephen Smith said he believed everything in SB 1 is legal except for the COLA change.  ‘They’re setting themselves and you up for failure,’ he told the committee.”

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

February 12, 2010

“Rep. Cheri Gerou, R-Evergreen, questioned why Williams and Smith still have their jobs, suggesting that if they worked in the private sector they might have been fired.  ‘A lot of people would like to see you lose your jobs over this,’ she told them.”

“Gerou, in explaining her ‘no’ vote, said that the hours of testimony from retirees showed that the bill did not have ‘buy-in.’  ‘People who have already retired deserve better than this.’”

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

February 23, 2010

Governor Bill Ritter signs SB10-001 into law, breaking Colorado PERA pension contracts.

http://statebillnews.com/2010/02/sb10-001-ritter-signs-bill-cutting-benefits-for-state-retirees/

February 26, 2010

Colorado PERA retirees sue Colorado PERA and the State of Colorado for breach of Colorado PERA pension contracts.

Education News Colorado:  "Despite support for the bill by organized employee groups, there’s widespread anger about the cut among individual retirees, and the lawsuit doesn’t come as a surprise."  "The named plaintiffs are Gary Justus, a retired Denver Public Schools math teacher who had more than 29 years of service, and retired Department of Labor employee Kathleen Hancock, who worked for about 15 years."  "'This lawsuit is about the state complying with its own constitution,' Justus said in a statement.  'The General Assembly is trying to correct its past mistakes on the backs of the retirees. We can’t go back and restart our careers.'”

"Some observers believe that past legislative actions, including benefit increases, contribution cuts and programs that allowed workers to buy extra years of eligibility, also weakened the pension system."

"A PERA spokeswoman said Friday the agency hadn’t been served with any papers and doesn’t comment on litigation." (As we have seen, Colorado PERA official have been regularly commenting on litigation over SB10-001 for three years.)

http://www.ednewscolorado.org/news/capitol-news/lawsuit-challenges-pera-retiree-cuts

March 17, 2010

Professor Amy Monahan, University of Minnesota School of Law, "Public Pension Plan Reform, the Legal Framework": "This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

http://www.ncsl.org/documents/fiscal/AMonahan_Handout.pdf

March 19, 2010

Attorney Monica Marquez (soon to be a Colorado Supreme Court Justice) advises Colorado PERA on March 19, 2010:

https://www.copera.org/pdf/Board/Minutes/2010/Minutes3-19-10.pdf

May 10, 2010

Attorney Monica Marquez's name appears on the PERA Defendant's Motion to Dismiss submitted to the Denver District Court on May 10, 2010:

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

June 3, 2010

Colorado Supreme Court Chief Justice Mary Mullarkey announces retirement.

http://www.denverpost.com/ci_15221861

June 23, 2010

Nicholas Joseph Marcucci, Emeritus Board Member at the National Association of Public Pension Attorneys, “Constitutional Issues When Altering Public Pension Benefits”:

“In most states there is a fairly clear demarcation between the gratuity theory and the contract theory and a seminal case or two where the courts make the change. Police Pension and Relief Board of the City and County of Denver, et al. v. McPhail, 39 Colo. 330, 338 P.2d 694 (1959); and, Police Pension and Relief Board of City and County of Denver, et al., v. Bills, et al.”

"United States Trust Co. emphasizes that the impairment must be both reasonable and necessary. A State cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money on other public policy goals.”

“In many states, enforceable pension terms attach at the start of employment.” City Of Aurora v. Ackman, 738 P.2d 796 (Colo.App. 1987).

(To access this Word document, paste "Constitutional Issues When Altering Public Pension Benefits Marccuci" into Google.)

July 26, 2010

Colorado Secretary of State Bernie Buescher writes letter recommending Monica Marquez to serve on the Colorado Supreme Court.

http://www.lawweekonline.com/2010/08/letters-of-reference-for-monica-marquez-colo-supreme-court-finalist/

August 2, 2010

Ritter Administration Letter to GASB on contractual public pension obligations:

“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.”

“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.”

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits (such as COLAs), or an increase in required employee contributions both serve to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

“The criteria suggested as the basis for differentiating these COLAs (automatic) versus ad-hoc COLAs is the statutes that exist as of the date of the employer’s financial statements.”

“The essential difference between an automatic COLA and an ad hoc COLA is the legal requirement; with this core difference there is no way for the two not to be substantively different. The legal difference in this instance is critical to the determination of whether the government is unable to avoid the surrender of resources to meet the obligation.”

http://www.gasb.org/cs/ContentServer?site=GASB&c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176157387791

August 10, 2010

"The Legislature was cutting off funds and starving the pension system," says Stephen Pincus, a Pittsburgh attorney . . .". "They shouldn't now be able to cry there's no money in the pension system. They had a large hand in creating the crisis."

http://www.pewstates.org/projects/stateline/headlines/states-test-whether-public-pension-benefits-given-can-be-taken-away-85899374772

August 16, 2010

“Asked why states are taking the risky strategy of aiming at current retirees, Robert Klausner, a Florida attorney who specializes in public pension law, says many state officials believe they have less to lose in the courtroom by challenging pension protections than taking no action at all. ‘The belief is that if the employer [the state] prevails, it will have been worth the political risk,’ Klausner says.  ‘And if they lose, they will be no worse off than before.’  Klausner adds that legislatures are taking the politically-difficult step and letting the courts be the ‘bad guy’ if they overturn the law.”

http://www.governing.com/news/state/States-Test-Whether-Public-Pension-Benefits-Given-Can-Be-Taken-Away.html

August 22, 2010

Stephen Pincus: "And the key word is necessary – and we're talking about on the verge of bankruptcy. And that's what the case laws really hold that you have to honor your contracts. You can't go around and say, well, we're not going to be paying the contractor who built the bridge this month because we don't have the funds. No, that's an obligation that you have."

http://www.npr.org/templates/story/story.php?storyId=12935726

August 30, 2010

Attorney Jean Dubofsky, author of the Colorado PERA "COLA-taking" legal opinion: "I worked on" the case, Justus v. State, with Colorado Supreme Court Justice Monica Marquez.  The author of Colorado PERA "COLA-taking" legal opinion wrote a letter of recommendation for Monica Marquez to serve on Colorado Supreme Court: “In particular, I’ve worked on several cases where she provided superb briefing, argument and/or advice for the Attorney General’s office, including congressional redistricting, the challenges to voter-approved Amendments 41 and 54 to the Colorado Constitution, and the current challenge to the amendments to PERA (Justus v. State), the government’s pension system.”

“ . . . and Ms. Marquez would bring to the court sophistication about the numerous cases that involve, for example, TABOR, ballot titles, election issues, voter-initiated constitutional amendments, property tax, public pensions, labor law, and regulations issued by a wide variety of state agencies.”

“Sincerely, Jean E. Dubofsky.”

(Personally, I believe that Justice Marquez has such strength of character, and commitment to the rule of law, that she could hear the case, Justus v. State, objectively, in spite of her prior work on the case; however, I expect that she will recuse herself as she did in Lobato.)

http://www.scrib.com/doc/36638245/Letter-for-Monica-Marquez-by-Jean-Dubofsky

September 8, 2010

Governor Ritter appoints Monica Marquez to Colorado Supreme Court: "Marquez leads the State Services Section of the Attorney General’s Office, which represents nine of the 16 executive branch agencies in Colorado. She specializes in appellate litigation and has represented the state, in both state and federal appellate courts, in cases involving fiscal policy, education, healthcare, elections, redistricting and campaign finance."

http://www.colorado.gov/cs/Satellite%3Fc%3DPage%26cid%3D1251580511104%26p%3D1251580511104%26pagename%3DGovRitter%252FGOVRLayout

September 28, 2010

Professor Jonathan Barry Forman, Alfred P. Murrah Professor of Law at the University of Oklahoma, “Funding of Public Pension Plans”: “Because governments tolerate an 80% funding level and use actuarial valuations instead of market valuations, public pensions are almost guaranteed to be underfunded.” “The second disadvantage to fully funded or overfunded public pension plans is that governors and legislatures call for contribution cuts and holidays. Politicians would rather spend money on projects that will bring them more immediate campaign contributions and votes.” “Of course, the best way to ensure that public pension plans are fully funded would be to require them to pay the actuarial required contributions (‘ARC’) in full each year.”

http://jay.law.ou.edu/faculty/jforman/Articles/2010Funding.pdf

October 18, 2010

Jean Dubofsky deposition submitted to Colorado PUC that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit:

“My most recent legislative experience (within the past two years) is  . . . a legal opinion addressing the constitutionality of reducing the cost-of-living increase for PERA recipients.”

(To access this document, paste “Colorado PUC E-filing system PERA legal opinion Jean Dubofsky” into Google.)

November 22, 2010

Colorado PERA General Counsel Greg Smith at 2010 PERA Shareholder meeting (10 minutes into this YouTube video): “We need to know the answer of whether this action was constitutional.” (Would it not have been simpler to send an interrogatory to the Colorado Supreme Court in 2009?)

http://www.youtube.com/watch?v=w94THpAjGs0&list=PL4601A03B224436D2&index=3&feature=plpp_video

2011

January 7, 2011

Stephen Pincus, a Pittsburgh attorney: “They're just saying, ‘Let's go after the public workers,’” Pincus says. “If there is a real general threat to the financial well-being of a state or local government, then everything should be on the table, not just one set of contracts.”

http://www.pewstates.org/projects/stateline/headlines/activists-seek-new-tactics-to-break-old-pension-deals-85899376866

January 18, 2011

Bernie Buescher (a former pension attorney) replaces Monica Marquez at Colorado Attorney General's Office as Deputy Attorney General overseeing the Colorado Department of Law’s State Services Section.

"A native of Grand Junction, Buescher replaces Monica M. Marquez, whom Gov. Bill Ritter recently appointed to the Colorado Supreme Court."

http://www.coloradoattorneygeneral.gov/press/news/2011/01/18/attorney_general_announces_bernie_buescher_new_deputy_attorney_general_state_s

February 2011

Colorado PERA General Counsel Greg Smith writes in Government Finance Review: "Adjusting public pension benefits in Colorado: a fiduciary process": "Necessity is judged on two levels: 1) whether a less drastic modification could have been implemented; and 2) whether, even with modification, the state could have achieved its stated goals. To determine whether the changes were reasonable, the changes MUST BE THE MINIMUM CHANGES NECESSARY to solve the economic problems of the plan. (See United States Trust Co. v. New Jersey, 431 U.S. 1, 1977.)"

(The next year, [June 26, 2012] Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, reports in the 2011 Colorado PERA CAFR: “It should be noted that the changes made to the PERA structure as a result of SB10-001 have as a goal 100% funding of the  accrued liability within 30 years for all divisions.  The results of the December 31, 2011, valuations combined with financial projections of all divisions, indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division.”

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

http://www.thefreelibrary.com/Adjusting+public+pension+benefits+in+Colorado%3a+a+fiduciary+process.-a0290520595

February 2011

Government Finance Review article by Leigh Snell, National Council on Teacher Retirement: “In fact, for the last 15 years, plan sponsors’ pension contributions have accounted for less than three percent of all state and local government spending.”  NCTR article “Setting the Record Straight”:

http://www.gfoa.org/downloads/GFOA_GFRfeb11_SettingtheRecordStraight.pdf

February 2011

In the "Origins and Severity of the Public Pension Crisis," Dean Baker states that the shortfalls facing state and local pension plans have been misrepresented. Further, his study notes that, “when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.” For example, unfunded liability as a percent of future state income for the Colorado PERA State Plan is approximately one-tenth of one percent of future state income, 0.09 % (See page 11 of the report.)

http://www.cepr.net/documents/publications/pensions-2011-02.pdf

February 14, 2011

Keith Brainard, Research Director, National Association of State Retirement Administrators testifies before the a subcommittee of the U.S. House of Representatives:

“Only 30-40 years ago, most public plans were financed primarily on a pay-as-you-go basis.” “Even after the most recent and unprecedented financial downturn, most state and local government pension trusts have plenty of assets to continue to pay promised benefits for years, and values already have rebounded sharply since the market low.” “The percentage of all state and local government spending on pensions has hovered around three percent during the last decade.” “While the impact of the financial crisis on state and local pensions will likely require spending to increase, the most recent studies find that the share of state and local budgets dedicated to pension contributions would likely need to rise to about five percent on average, and to about eight to 10 percent for those with the most seriously underfunded plans. (Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, “The Impact of Public Pensions on State and Local Budgets,” Center for Retirement Research, October 2010).” “Assuming a rate of asset growth consistent with historic market norms, most funds will never run out of money.  The Center on Retirement Research at Boston College said last October, “even after the worst market crash in decades, state and local plans do not face an immediate liquidity crisis . . ." (Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, “Public Pension Funding in Practice,” NBER Working Paper 16442, October 2010).” “Although some states have accumulated significant unfunded liabilities, pension benefits are paid out over many years, not all at once. These are long-term funding issues, and most thorough analyses by those familiar with governments and public finance find patient and measured responses are required: In a 2008 report, the GAO said, “[U]nfunded liabilities are generally not paid off in a single year, so it can be misleading to review total unfunded liabilities without knowing the length of the period over which the government plans to pay them off.” (U.S. Government Accountability Office, “State and Local Government Pension Plans; Current Structure and Funding Status,” July 2008 GAO-08-983T).”

http://judiciary.house.gov/hearings/pdf/Brainard02142011.pdf

February 17, 2011

Fitch Ratings notes that  a 70% actuarial funded ratio for public defined benefit pensions is considered an “adequate” actuarial funded ratio. "Fitch generally considers a funded ratio of 70% or above to be adequate and less than 60% to be weak."

http://www.ncpers.org/Files/2011_enhancing_the_analysis_of_state_local_government_pension_obligations.pdf

February 17, 2011

“In 2009, Williams persuaded the legislature to roll back the annual COLA to 2 percent.'

http://www.cnbc.com/id/41642979/page/1

February 18, 2011

Colorado PERA in “States and Bankruptcy”: “We acknowledge that the State of Colorado and PERA’s other public employers are facing difficult budget decisions, but pension obligations are not bankrupting the state and other public employers in Colorado. Indeed, the National Association of State Retirement Administrators issued a recent study that showed that, on average, pension costs represent only about 3 percent of total state and local government expenditures. In Colorado, state and local government expenditures to fund retirement benefits totaled only 2.16 percent.” (Note that states cannot declare bankruptcy under federal law.)http://www.copera.org/pera/about/issues.htm#42611

March 5, 2011

Eric Madiar: "Is Welching on Public Pension Promises an Option for Illinois?"  “In sum, welching is not a legal option available to the State.”  “Courts, though, “sit to determine questions on stormy as well as calm days,” and the Constitution was upheld during the Great Depression.”

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1774163

March 31, 2011

Jennifer Staman, Legislative Attorney, Congressional Research Service in “State and Local Pension Plans and Fiscal Distress: A Legal Overview”: “. . . a State is not completely free to consider impairing the obligations of its own contracts on a par with other policy alternatives. Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well.”  “Despite the variation in when a contractual right to a public plan pension benefit begins, as noted above, state courts generally find that the benefits of individuals who have already retired may not be diminished or impaired.”

http://www.nasra.org/resources/CRS%20state%20and%20local%20legal%20framework%201104.pdf

April 12, 2011

Colorado PERA in “Setting the Record Straight”: “But what’s not mentioned is that this liability is not due and cannot be made payable today, just like a mortgage. This is the aggregate amount owed by PERA to current retirees and to all existing workers who have begun work for a public employer in Colorado and may not begin receiving a benefit for three or more decades.”

“PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years.”

https://www.copera.org/pera/about/issues.htm

April 17, 2011

Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post: “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.”

http://www.denverpost.com/opinion/ci_17858107

May 22, 2011

Jennifer Paquette, PERA Chief Investment Officer, in the Denver Post:

“In fact, employer contributions to pensions account for just 2.16 percent of all Colorado state and local government spending, according to 2008 U.S. Census Bureau data.”

http://www.denverpost.com/search/ci_18100068

May 29, 2011

Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

“Retired public servants who live on fixed incomes no longer get the same cost-of-living-increases upon which many had come to depend.”

“In fact, about 90 percent of the changes enacted by Senate Bill 1 are falling on the shoulders of current and future PERA members and retirees — not other taxpayers.”

“Most PERA beneficiaries don’t qualify for Social Security so their modest PERA benefit may be the only steady retirement payment they’ll ever receive. After careers in public service, this is a reasonable reward. They have earned it.”

http://www.chieftain.com/opinion/ideas/legislative-changes-have-put-pera-fund-on-a-solid-footing/article_3080a01c-88cd-11e0-ad01-001cc4c03286.html

June 2011

National Institute on Retirement Security on “automatic” and “ad hoc” public pension COLAs: “One key design feature of a COLA is whether it is automatic or ad hoc in nature. An automatic COLA means the retiree’s benefit increases automatically every year by a certain percentage. An ad hoc COLA is granted at the discretion of the plan sponsor, usually when the fund is in a well-funded position and investment gains have exceeded expectation.

http://www.nirsonline.org/storage/nirs/documents/Lessons%20Learned/final_june_29_report_lessonsfromwellfundedpublicpensions1.pdf

June 24, 2011

Geoff Blue, Deputy Attorney General for Legal Policy and Government Affairs (now in private practice) argues in an interview on the program "The Devil’s Advocate" that since Colorado’s education establishment has failed at the polls lately, they are now seeking to “legislate through the courts.”  “It would, and as a matter of fact Senator Rollie Heath has proposed such an initiative this year, to raise taxes specifically to fund education and higher education.”   “Cleary there is a path to do it.  They’ve been losing so they’re trying to legislate through the courts.”

http://www.youtube.com/watch?v=k0ZdUF0L8cU

September 13, 2011

Virginia Attorney General Kenneth T. Cuccinelli in "Judicial Compulsion and the Public Fisc." “It is widely thought that a funded ratio of about 80 percent or better [is] sound for state and local  government pensions.” “One factor militating in favor of challengers is that the state is entitled to less deference in the question of reasonableness and necessity, the third prong, when it exercises its sovereign power in a manner that benefits itself.” “Attempts to change the benefits of the retired, those qualified to retire, and voluntary participants in contributory programs probably would not be worth the effort."

http://www.harvard-jlpp.com/wp-content/uploads/2012/03/CuccinelliFinal.pdf

October 26, 2011

Colorado PERA Executive Director Greg Smith, at the “Fall 2011 PERA Shareholder’s Meeting,” (thirty-six minutes into the video):"‘Only ten percent of the fix” of the [SB10-001] reforms in 2010 came from additional employer contributions."

http://www.youtube.com/watch?v=F8LB7t5HMBo

2012

Colorado PERA Board Member, Treasurer Walker Stapleton: “If the board votes to oppose legislative reform, then PERA, at the direction of the board, uses their almost $400,000 annual lobbying budget to ensure the legislation does not pass.”

http://www.colorado.gov/cs/Satellite/Treasury_v2/CBON/1251590160967

January 2012

SB10-001 co-prime sponsor Senator Brandon Shaffer: "They need to make it toxic for any politician to go up against PERA. As individuals, you need to sit down with PERA and tell them you’ve spoken to President Shaffer, and he says you have bad lobbyists.”

http://www.bouldervalleyea.org/images/AdvocateJanuary2012.pdf

February 4, 2012

"In 2010, the General Assembly temporarily suspended cost-of-living adjustments for PERA retirees, increased employee contributions to the plan short-term and limited the benefits guaranteed to new hires, among other tweaks."  “I personally think that we probably should go further,” Hickenlooper said.

http://www.chieftain.com/hickenlooper-talks-energy-water-pensions/article_25f92ef8-4ef1-11e1-a99f-001871e3ce6c.html

February 21, 2012

The Cato Institute publishes a paper addressing public pension plan funding in the United States, "Funding Status, Asset Management, and a Look Ahead: State and Local Pension Plans": “Plans with actuarial asset values less than 60 percent of liabilities are considered poorly funded; plans with assets between 60 and 80 percent of plan liabilities are considered inadequately funded; and plans with assets above 80 percent of plan liabilities are considered adequately funded.”

http://www.cato.org/pubs/wtpapers/Gokhale-WP-State-and-Local-Pension-Plans.pdf

February 27, 2012

Representative DelGrosso: “I voted against SB 1, not because I didn’t think we needed to fix PERA, I agreed with that part of it, but I voted against Senate Bill 1 because it did adjust some of the COLAs, and it did adjust that for folks that were already retired and people that were about ready to retire,” said DelGrosso. “And to me, I felt like that was violating the contract that those people got into.”

http://www.coloradostatesman.com/content/993329-legislator-spikes-his-own-bill

March 6, 2012

Florida Circuit Court: “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.”  “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.”  “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.”

http://judicial.clerk.leon.fl.us/image_orders.asp?caseid=49809133&jiscaseid=&defseq=&chargeseq=&dktid=87117441&dktsource=CRTV

March 6, 2012

“The employees have a contractual right to their pensions and this court recognized that even if the governor and the Legislature choose not to. This is important. We are a society of laws. This court has said even the powerful have to follow the laws. This was a gamble that the governor and Legislature made last year. They gambled taxpayers’ money that they could balance the budget on the backs of the hard-working public employees of the state. They lost that bet today.”

http://www.firstcoastnews.com/news/article/245606/4/Momentous-ruling-on-Floridas-pension-contribution-law

March 7, 2012

Article: "(Florida) Legislature Overreaches, Public Pays the Bill." "Yet Gov. Rick Scott and the Florida Legislature are at it again, embracing (public pension) legislation that ignores constitutional limits on their authority, forcing costly taxpayer-financed litigation and resorting to name-calling and threats to the judiciary when the courts rule against them. Tuesday's ruling that cutting public employee salaries to help pay for pensions is unconstitutional is not the result of an activist judge as some Republicans complain. It reflects the failure of the executive and legislative branches to recognize their limits and the role of an independent judicial branch."  "Every time elected leaders make bad law, taxpayers pay the legal bills."

http://www.tampabay.com/opinion/editorials/article1218839.ece

March 13, 2012

Denver attorney Cindy Birley (a champion of prospective public pension reform in Colorado) testifying before the Colorado Legislature’s Senate Finance Committee hearing on the bill SB12-149, on March 13, 2012: “Generally, you would not change people who have already retired . . .”.  “There may be an issue with what we would call ‘definitely determinable benefits,’ and this is a tax code concept.”  “The . . . Internal Revenue Code requires for a defined benefit plan that your benefit be . . .  ‘definitely determinable’.”  “So a benefit that fluctuated based on your funding, it may be difficult to change that unless it’s somehow a cost-of-living adjustment that’s done more on an ad hoc basis.” “Because, it may not qualify as a defined benefit plan." “We could adjust benefits for future retirees as long as it still meets Internal Revenue Code requirements.”  “It still has to pass muster as a DB plan.”

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

March 28, 2012

Fitch Ratings (one of the three large rating agencies in the United States):  “Fitch generally considers pensions with funded ratios 80% and above to be well-funded.”

http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp

March 28, 2012

Article in the periodical "Bond Buyer" addresses attempts by politicians to exaggerate pension funding status: “Some state and local officials, eager to garner public support for cuts in pension benefits, increases in contributions or other reforms, have been exaggerating their pension problems, according to several lawyers.”  “’We are seeing announcements of doom and gloom as a justification for cutting employee benefits,’ he said. ‘And at the same time, the people who say, It’s disastrous, go to bond raters and say, Everything is great. We are paying our debts.’”

http://www.bondbuyer.com/issues/121_61/issuers-accused-exaggerating-pension-fund-woes-1037961-1.html

April 6, 2012

"My Opinion: Colorado PERA's Meredith Cuts and Runs."

http://coloradopols.com/diary/17567/my-opinion-colorado-peras-meredith-cuts-and-runs

May 16, 2012

The Colorado General Assembly enacts the bill SB12-149, reforming certain Colorado public pension systems and honoring the accrued public pension benefits of public workers who are members of those pension systems, after having retroactively taken accrued benefits from Colorado PERA retirees in 2010. 

June 26, 2012

(Governor Scott) Walker, Beloit Daily News: "One thing he did stress was that he would not attempt to touch the pensions of current retirees, which he noted would be illegal.”

http://www.beloitdailynews.com/news/walker-open-to-pension-reform/article_e53d0492-bfad-11e1-9faf-0019bb2963f4.html

August 8, 2012

Douglas Greenfield: “The theory behind that is that a pension that has a COLA is the equivalent of a fixed pension . . . that you could just have a higher fixed pension and no COLA . . . and is just a method by which you are providing the benefit.”  Greenfield participated in a panel discussion on hosted by the National Conference of State Legislatures. The panel discussion was titled: “How Much Can States Change Existing Retirement Policy?” 

http://www.ncsl.org/issues-research/labor/how-much-can-states-change-existing-retirement.aspx

Douglas Greenfield presented a paper outlining his arguments and analysis . . . “In Defense of State Judicial Decisions Protecting Public Employees’Pensions.” 

“There is no sound public policy reason to conclude that these promises – based on the reasonable expectations of the contracting parties – should not be fully protected by the laws prohibiting or limiting the impairment of contracts.”

http://www.ncsl.org/documents/fiscal/DGreenfield_Presentation.pdf

October 11, 2012

Colorado Court of Appeals 2012 decision in Justus v. State:

“We consider McPhail and Bills dispositive (indisputably bringing to a conclusion a legal controversy) of whether plaintiffs here have a contractual right to a particular COLA.”

http://saveperacola.files.wordpress.com/2010/01/2012-10-11-judgment-reversed-and-case.pdf

December 23, 2012

Public pension legal scholars on contractual public pension obligations, in the periodical Truth-out: “The state is just trying to find any argument that allows them to get out of their obligations and that will stick in court.”  "‘The entire public pension system is built on the understanding that pensions are legally protected promises,’ said Richard Kaplan, a professor at the University of Illinois College of Law. ‘That idea has been foundational for at least the last half-century.’”  “Since the middle of the century, however, courts have generally acknowledged that states cannot promise pension benefits to their employees as an inducement to get them to work for the state and then renege on those promises. The large majority of states have protected pensions under the theory that the promise of a pension represents a form of contract . . .”.  “The legal understanding has been, ‘That is your money, and the state can’t take it away.’”  “The vast majority of states — 41 — apply a contract theory to their employees’ pension rights. All of these states have constitution provisions that — mirroring the contract clause of the federal Constitution — prohibit the passage of any law that impairs the obligation of contracts.”  “‘It cuts against decades of precedent,’ Kaplan said, ‘not to mention basic, commonsense notions of what pensions are and what’s fair.’”  “According to Secunda of Marquette University, a shift back towards a gratuity model would be ‘disastrous.’ ‘What the states are trying to do is change the rules in the middle of the game,’ he said.”  “According to Richard Kaplan, a professor of law at the University of Illinois, proving that reneging on their pension obligations is necessary to achieve an important public purpose is a high bar to reach, because that argument implies that the state’s ability to raise taxes to keep its promises have been exhausted.”

http://truth-out.org/news/item/13498-pensions-a-promise-is-a-promise-unless-its-inconvenient

2013

February 15, 2013

“After being about 30 percent funded during the 1970s, CalSTRS funding slowly improved with an increase in state funding in 1990 and then large investment fund earnings during a high-tech boom later that decade."

"As funding peaked at about 110 percent around 2000, the ‘surplus’ was not regarded as a cushion to offset future investment earnings shortfalls. As often happens with public pensions, the surplus was viewed as a windfall that should be spent."

"Legislation began divvying up the windfall in 1998 when the surplus was still a projection. A cut began in the state contribution, 4.3 percent of pay, that would reduce the rate by half, a drop in pension funding of 2 percent of pay similar to the teacher diversion.”

http://calpensions.com/2013/02/15/how-much-calstrs-debt-due-to-mismanagement/

March 7, 2013

Colorado Supreme Court Justice Marquez recuses herself in Lobato case deliberations, since she had worked on the case at the Colorado Attorney General's office: “The seventh, Justice Monica Marquez, recused herself because she had worked on the Lobato case while an attorney with the attorney general’s office.”

http://www.coloradostatesman.com/content/994052-lobato-lawsuit-could-have-major-ramifications-k-12-school-finance

March 8, 2013

Former Colorado Senator Hank Brown, co-chair of the Colorado Treasurer’s "Commission to Strengthen and Secure PERA" writes: "The Legislature took the difficult and unpopular step of reducing cost-of-living adjustments for all employees, including current retirees."  "Through a little 'Colorado Courage,' (my comment, aka, 'breach of contract') policy makers ensured that PERA is on track to be fully funded . . .".  Hank Brown holds this position in support of breaking "fully-vested" PERA retiree pension contracts in spite of the fact that the Commission he co-chaired found that: “For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The  commission may not make any recommendations that materially affect current retirees.”

http://www.bizjournals.com/denver/print-edition/2013/03/08/congress-could-use-some-colorado.html?page=all

March 18, 2013

State financial crisis?  Denver Business Journal: “. . . next year’s money — $924.3 million above the amount the state will spend this year, according to Legislative Council — is up for grabs.”

http://www.bizjournals.com/denver/news/2013/03/18/colorado-state-revenue-picture.html?page=all

April 2, 2013

Colorado Legislature pays off local government pension debt that is not the contractual obligations of the State of Colorado.  (This $142 million appropriation brings the total to $700 million for this purpose.) “House Republican leaders are floating a proposal to repay a longstanding debt (My comment, this is not a state 'debt,' sloppy reporting) to the state’s Fire and Police Pension Association in full as a way to get some GOP lawmakers to vote in favor of the $20 billion state budget for next year, which will be up for debate in the House on Thursday.”  “‘It’s (House Minority Leader) Waller’s effort to buy some Republican votes,’ one GOP lawmaker told FOX31 Denver Tuesday." "Waller, who is almost certain to run for Attorney General (next) year, would like to be able to demonstrate that he leads a group of lawmakers who are pragmatic and responsible; and helping forge a bipartisan budget compromise would help him make that case.”

http://kdvr.com/2013/04/02/republicans-considering-pension-deal-hoping-for-bipartisan-budget-vote/

Support public pension contractual rights and the rule of law in the United States at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: Anatomy of a Colorado PERA Pension Contract Breach. (Part 2 of 2.)

SENATOR BRANDON SHAFFER, SPONSOR OF THE COLORADO PERA "COLA-THEFT" BILL: PERA HAS "BAD LOBBYISTS."

COME AGAIN SHAFFER?

Rather than enacting legislation to reform public pensions prospectively and legally, (like state legislatures across the country), a handful of state legislatures (including the Colorado General Assembly and the Rhode Island Legislature) are attempting to retroactively take accrued, earned benefits from public pensioners.  Colorado state legislators (setting a moral example for their children) are trying to break state contracts to maintain Colorado's status as a state "tax haven."  (So far, Colorado legislators have opted against an attempt to break the state's corporate contracts.)

Edward Siedle, a contributor at Forbes addresses state legislative "COLA-theft" in his most recent column.

Siedle:

"The Rhode Island Retirement Security Act of 2011, enacted November 18, 2011 (which is being challenged as unconstitutional), suspends the COLA for all state employees, teachers, state police and judges until the plans’ funding level exceeds an 80 percent funding level."

(My comment: The Colorado Legislature's SB10-001 sets a more ambitious COLA-theft goal than does the Rhode Island legislation . . . Colorado's bill takes pension COLA benefits until a "100 percent" pension funded level is achieved.  Perhaps, the Colorado Legislature should finish the job it started, and simply pass a bill stating that ALL of the state's public and corporate contracts will be scrapped until Colorado taxpayers contribute nothing for state services.)

Siedle:

"Why is it that laws screwing workers always have the words 'retirement security' in their titles?"

(My comment: Colorado PERA, proponent of Colorado's 2010 public pension contract breach, tells us: “In Colorado, Senate Bill 1 [the bill that broke Colorado PERA pension COLA contracts] passed with the support of the Colorado Coalition for RETIREMENT SECURITY . . .".

http://www.copera.org/pera/about/ask.htm

In a recent editorial, former Colorado Senator Hank Brown tells Colorado PERA pensioners that Colorado PERA's 2010 breach of their COLA contracts will help provide them with "RETIREMENT SECURITY."  Hank Brown:

“Through a little ‘Colorado Courage,’ [a euphemism for breach of contracts] policy makers ensured that PERA is on track to be fully funded and provide RETIREMENT SECURITY . . .".

It follows that Hank Brown could enhance his own RETIREMENT SECURITY by relinquishing part of his own "$2.6 million" federal pension.  The Duke Chronicle on Senator Hank Brown’s personal “$2.6 million” federal pension benefit:

“Members of Congress rant and rave about government spending, but when it comes to their golden retirement pensions — somehow that doesn't count.”  “On the Senate side, the Midas awards go to next year retirees: Sens. Sam Nunn, D-Ga., Bill Bradley, D-N.J., and Hank Brown, R-Colo., who will each collect estimated lifetime benefits in excess of $2.6 million.”

http://www.dukechronicle.com/articles/1996/01/11/congressional-pensions-out-touch-reality

I do not understand how taking money by force, seizing accrued, earned pension benefits, breaking the state's public pension contracts while the state's corporate contracts are unscathed . . . how this enhances a Colorado PERA pensioner's "retirement security."

As we have seen, Rhode Island's "COLA-theft" legislation was championed by current Rhode Island Treasurer Gina Raimondo, who hopes to ride this "COLA-theft" horse to the Rhode Island Governor's office.  (Breaking public pension contracts is rather popular among voters at present.)

Siedle:

"Retired, largely elderly state workers had to have their benefits shaved by 3% annually to 'save' the pension, they were told.  With an average pension benefit of $33,000, the Treasurer (Gina Raimondo) apparently figured these retirees could learn to live a bit more frugally in their golden years."

"The measly 3% COLAs promised to working stiffs are chump-change compared to the over 4% fees she’s (Rhode Island Treasurer Gina Raimondo) paying hedge fund desperados."

"It seems the Treasurer believes it’s a lot easier for retired state workers to adjust their cost of living than it is for hedge fund high rollers.  Or maybe workers are simply less deserving of the monies that have been set-aside for, and by, them."

Our own Governor John Hickenlooper (R-Colorado) is also doing his part to nudge a few public pension dollars toward the captains of industry:

"Gov. John Hickenlooper said in a statement that Colorado business owners have long said they need easier access to capital to grow.  'The creation of the Colorado Mile High Fund will improve the access to capital and we are pleased that Colorado PERA’s partnership will benefit and help grow companies here in Colorado,' Hickenlooper said."

http://csbj.com/2012/10/18/pera-establishes-capital-fund-for-colorado-businesses/

According to Hick, Colorado business owners need "easier access to capital."  The current, historically-low interest rates on Colorado bank loans just aren't cutting the mustard.  So, Hick recently decreed that Colorado PERA pensioners will assume risk with their Colorado PERA trust funds that smart bankers apparently won't touch.  I think this Hickenlooper corporate welfare decree ($50 million in corporate loans backed by pensioners) proves his "Colorado Courage."

"The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado."

"The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group."

http://coloradomilehighfund.com/

Back to Siedle:

"I can tell you where that COLA savings is going—into the already-stuffed pockets of Wall Street’s most highly-compensated gamblers—almost dollar-for-dollar.  By my estimate, $2.1 billion in fees (out of the $2.3 billion in COLA savings) will be paid by the pension to hedge, private equity and venture capital tycoons. That’s some 'reform.'  No wonder Wall Street is so eager to support this shameless public pension money grab."

"This should come as no surprise because Wall Street solutions to retirement problems, even in the corporate and 401(k) marketplace, have always involved greater fees to Wall Street."

"If $87.4 million in fees were paid every year for the next 20 years, that would amount to $1.75 billion or with compounding to $3.8 billion, which equates to $2.1 billion in 2013 dollars. In summary, the savings related to suspension of the 3% COLA ($2.3 billion) miraculously appear to be just enough to pay Wall Street’s elevated fees of 2% and 20% of profits ($2.1 billion). Imagine that!"

"Rhode Island pensioners have been told that they have to sacrifice to 'save'” the state pension. If that is true and the pension can’t afford to pay retirees 3%, then how can it afford to pay Wall Street 2% and 20%– over 4%?  Rhode Islanders, in my opinion, you don’t have to be a Rhodes scholar to see you’ve been hood-winked."

Full article at Forbes:

http://www.forbes.com/sites/edwardsiedle/2013/04/16/rhode-island-pensioners-3-colas-will-help-pay-wall-street-high-rollers-4-fees/2/

 

BRANDON SHAFFER ON THOSE "BAD COLORADO PERA LOBBYISTS."

In my mind, the 27 members of Colorado PERA's SB10-001 lobbying troop were quite effective during the 2010 legislative session.  They succeeded in ramming SB10-001 through the legislative process. To me, it looks like they got the job done for Colorado PERA.

Colorado PERA spends $400,000 out of PERA member trust funds each year for lobbying, and they get their money's worth!  It's no simple matter to persuade an elected official who has sworn to uphold the U.S. Constitution to ignore the constitution's Contract Clause.  The 27 SB10-001 lobbyists succeeded in dramatically (and temporarily) diminishing the contractual obligations of Colorado PERA-affiliated employers.

So, I find it odd that the prime sponsor of the "COLA-theft" bill, former Senator Brandon Shaffer considers some PERA lobbyists to be "bad lobbyists."

The wisdom of SB10-001 co-prime sponsor Brandon Shaffer:

“PERA is very good at crunching numbers, but they’re terrible at getting their message out. They need to make it toxic for any politician to go up against PERA. As individuals, you need to sit down with PERA and tell them you’ve spoken to President Shaffer, and he says you have bad lobbyists.”

http://www.bouldervalleyea.org/images/AdvocateJanuary2012.pdf

(My comment: Some of the lobbyists supporting Colorado PERA's "COLA-theft" bill, SB 10-001, represented the Colorado Education Association.)

“His wife (Senator Brandon Shaffer) is a teacher, active in the CEA . . .”

http://www.davidthielen.info/politics/2010/05/senate-president-brandon-shaffer-interview.html

According to the website of the Colorado Secretary of State, six lobbyists (of the 27 SB10-001 lobbyists) were paid by Colorado PERA to ram the COLA-theft bill (SB10-001) through the legislative process:

1.  Michael Beasley – Colorado PERA – supporting
5280 Strategies (Beasley) – Colorado PERA – supporting
2.  Beth C. Minahan – Colorado PERA – supporting
3.  Collon Kennedy – Colorado PERA – supporting
4.  Steve Adams – Colorado PERA – supporting
Colorado Communique, Inc. (Minahan, Kennedy, Adams) –  Colorado PERA –  supporting
5.  Mary Alice Mandarich – Colorado PERA – supporting
6.  Roberta Robinette – Colorado PERA – supporting

When SB10-001 co-prime sponsor Senator Brandon Shaffer refers to "PERA's bad lobbyists" who, exactly, is he referring to?  Does he consider any of these six lobbyists to be "bad lobbyists"?  Come clean Shaffer!

Rather than strengthening Colorado PERA's influence at the Colorado General Assembly as Senator Shaffer suggests ("making it toxic for any politician to go up against PERA") I argue that the Colorado General Assembly should begin making its own public pension policy.

I suggest that the Colorado General Assembly create an ongoing oversight commission for all Colorado public pensions.  I suggest that the Colorado Legislature study public pension administration, and prospective pension reform options (i.e., follow the example of other states.)  I suggest that Colorado PERA's influence over the legislative process be curtailed rather than magnified.

In 2010, Colorado PERA's leaders marched uninformed Colorado legislators right off the contract breach cliff.  In light of this, why should Colorado PERA's legislative influence be increased?

 

"LESS DRASTIC" PENSION REFORM OPTIONS THAT PACK MORE PENSION LIABILITY REDUCTION "PUNCH" THAN DOES THE BREACH OF "FULLY-VESTED" COLA CONTRACTS.

According to Colorado PERA officials, breaking "fully-vested" pension COLA contracts was the only choice in 2010:

"The only solution that works involves impacting the COLA," he (Colorado PERA General Counsel Greg Smith) said.

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

But, it turns out that certain modifications to "partially-vested" public pension contractual rights pack more pension reform "punch" than does the breach of pension COLA contracts.  Such alternatives to taking "fully-vested" public pension benefits offer a "less drastic" impairment of public pension contracts.

This fact was reported during a 2011 public pension funding presentation at Harvard.  According to the presenters, two public pension reform options impacting "partially-vested" pension contractual rights: (1) the use of average pay over the course of a career to calculate base pension benefits and (2) raising retirement age to 65 offer a greater reduction of public pension liabilities than does the elimination of pension COLA benefits.  Both of these pension reform options impact only "partially-vested" public pension contractual rights.

It follows that incremental changes in these "partially-vested" parameters, for example, calculating a PERA pension base benefit using a 10 or 15 year salary average, or raising the PERA retirement age to 60 for active pension members would generate a greater pension liability reduction than a 1.5 percent taking of "fully-vested" COLA benefits.  The point is that public pension reform options are available, that offer significant cost savings, that do not impact “fully-vested” public pension contractual rights. Why were the “less drastic” pension reform options of raising the PERA retirement age, or averaging pay over the course of a public sector career not considered in 2010?

Further, the rate at which future pension benefits accrue may be set prospectively by a legislative body at a level generating a greater reduction in pension system liabilities than does the breach of "fully-vested" public pension COLA contracts.  Such options were not on the table in 2010 because these pension reform options were not supported by the 27 lobbyists pushing SB10-001 through the legislative process.

October 13, 2011 Thomas J. Healey & Carl Hess presentation at Harvard:

“Underfunded State Pensions: The Size of the Problem, the Obstacles to Reforms, and Potential Paths Forward.”

"Change to practice of averaging pay over the course of a career:
• Lowers the cost by 7.4% of payroll
• Overall cost reduction of 33%

Raise retirement age to 65:
• Lowers the cost by 5.7% of payroll
• Overall cost reduction of 25%

Cost savings from elimination of public pension COLAs:
• Lowers the cost by 5.3% of payroll
• Overall cost reduction of 24%"

http://www.hks.harvard.edu/m-rcbg/Events/Underfunded_State_Pensions_29%20October.pdf

Colorado PERA active and retired members, many legal, prospective "less drastic" pension reform options were ignored by the Colorado Legislature in 2010.  Support the rule of law and public pension contractual rights in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: Forbes Columnist: How does “Screwing Workers” Out of a Pension COLA Benefit Enhance their “Retirement Security”?

(IN DECADES TO COME, WHEN THE COLA IS ALL PAID OFF . . . WILL THE STATE LEGISLATURE JUST TAKE IT?)

In 2014, more than 6,000 police officers and firefighters in Colorado will have a chance to vote on the question of raising their pension contributions (by a gradual increase of an additional four percent) to pay for a new pension benefit . . . an enhanced annual cost-of-living increase after they retire.

These Colorado police officers and firefighters are members of a pension system called the Fire and Police Pension Association of Colorado (FPPA.)  In Colorado, we have a number of public pension systems . . . including Colorado PERA, the FPPA, the Denver Employees' Retirement Plan and many county-run pension systems.  These public pension systems are governed by Colorado statutes, which set forth a variety of standards for the contractual pension rights of the members of these pension systems.  Under the 2012 bill, SB12-149, accrued public pension benefits of certain Colorado county-run pension plans are honored, while the 2010 bill, SB10-001, seizes accrued public pension benefits.  Current Colorado law also provides disparate treatment of Colorado pension systems in regard to "amortization of plan liabilities" (the amount of time pension plans have to pay off their debt.)  Colorado law allows some pension plans to amortize plan liabilities over a 40-year period, while other plans (like Colorado PERA) are permitted only a 30-year "maximum amortization period."

Colorado's police officers and firefighters should take heed.  Pensioners in the Colorado PERA pension system paid for their DEFINED, pension COLA benefit (out of every paycheck) for decades, only to see the Colorado Legislature renege on this contract.  Why would a Colorado police officer or firefighter trust that the Colorado Legislature, or a local government, would not simply pass legislation in the future to take their money as well?  As we have seen, Colorado politicians are primarily concerned about maintaining Colorado's status as a "tax haven."  They are not above breaking contracts to win votes from constituents who want governmental services, but don't want to pay for those governmental services.

I ask, in a state that casually breaks public pension COLA contracts, and that has recently demonstrated a willingness to seize accrued public pension COLA benefits, why would any public employee vote to tax themselves for a public pension COLA benefit?

Police officers and firefighters would be better off placing this money in their own savings accounts and managing their own "retirement inflation protection," instead of putting the money in the hands of a governmental plan sponsor that may use it to reduce future taxpayer obligations.

Colorado PERA pension benefits are governed by Colorado state law, the Colorado Revised Statutes.  Colorado fire and police pension benefits are also governed by the Colorado Revised Statutes.  In 2010, the Colorado General Assembly enacted a bill that amended the Colorado Revised Statutes to break Colorado PERA contracts and seize accrued PERA pension COLA benefits.  What is to prevent the Colorado Legislature, or a local government, from simply enacting legislation in decades to come to shore up local government pension plans through the elimination of the proposed, new FPPA COLA?  Nothing.  The reality is that a majority of the members of the Colorado Legislature do not respect public pension contracts.  They will take accrued, earned, contracted pension benefits to the extent permitted by courts.  Moral constraints on such takings of property are not a factor.  Remember that taking accrued, earned, contracted pension COLA benefits was the first choice of Colorado legislators in 2010.

If accrued pension COLA benefits may be freely seized in Colorado state legislation, or in municipal ordinance, if pension contracts are freely abrogated under the Colorado Constitution, why would a Colorado police officer or firefighter vote to increase their monthly contributions to pay for a new COLA benefit?  If police officer or firefighter pension contributions can simply be redirected under Colorado law to fund other municipal programs, why would they support this contribution increase?

What legal protections for police officers and firefighters does the FPPA propose that would prevent FPPA-affiliated employers (local governments) from passing ordinances to unilaterally take the new COLA benefit in the future?  None.  What is to prevent an FPPA-affiliated local government from following the example of the Colorado General Assembly?  Underfund the pension to lower its funded ratio, claim that the low funded ratio represents a "fiscal crisis" justifying seizure of accrued pension benefits, break pension contracts to lower taxpayer obligations, repeat . . .

The assets of public pension plans are trust funds that belong to the beneficiaries of the pension plan.  In spite of this fact, for decades, Colorado legislators have tried to get their hands on public pension trust funds.  In the minds of many Colorado legislators, access to these pension trust funds allows them to keep state taxation low in the state with the nation's lowest state tax revenue per capita.  Colorado legislators have tried to get at public pension assets through the "front door" and through the "back door."

At the turn of the century, former Governor Bill Owens sought and signed legislation creating "early retirement incentives" for Colorado PERA members.  His goal was to persuade the older, more "expensive" public workers to retire under Colorado PERA, in order to shift Colorado public sector labor costs from Colorado governments to the Colorado PERA pension system.  Governor Bill Owens pension scheme was a "back door" raid on Colorado PERA public pension assets.  Having prompted these retirements, the Colorado Legislature now seeks to renege on the deal.

In 2010, Colorado legislators passed a bill that brazenly seized accrued, earned, contracted Colorado PERA pension benefits (SB10-001) to minimize future taxpayer contributions to the pension system.  This bill, SB10-001, represents the legislators' desired "front-door" raid on the Colorado PERA pension trust funds.  Even Governor Hickenlooper is getting into the public pension raid game with his recent decree that Colorado PERA pension trust funds will be used to provide corporate welfare ($50 million in loans) to businesses that the private sector apparently won't touch.

"AD HOC" PENSION COLAS VS. "AUTOMATIC" PENSION COLAS.

The FPPA currently provides a small "ad hoc" pension COLA benefit, that is, a COLA benefit that is discretionary.  The Colorado PERA pension system provides an "automatic" COLA benefit under Colorado law, that is a COLA benefit that is contracted, guaranteed, mandatory on the part of the pension plan sponsor.

FPPA:

"Benefit adjustments are not guaranteed and are determined annually by the FPPA Board of Directors based on the most recent actuarial study. The amount of the benefit adjustment can be 0% to 3%, or the greater of the Consumer Price Index (CPI) per year."

http://www.fppaco.org/pdfs/pubs_handouts/SWDBP_3.5.13.pdf

The Colorado PERA pension system has "automatic" pension COLA benefits (i.e., pension COLA benefits that are a contractual obligation of PERA-affiliated employers):

“PERA Benefits at a Glance,” 2004:

“Receive an annual AUTOMATIC increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”

PERA Legislative Update, February 2006:

 “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) AUTOMATIC increase of 3.5% per year after retirement.”

“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

Buck Consultants (independent actuary) 2001 actuarial report to the Legislative Audit Committee of the Colorado General Assembly: the Colorado PERA 3.5 percent COLA is “AUTOMATIC,” a “fixed” COLA, that is “compounded annually for each year of retirement,” part of PERA's “guaranteed benefits at retirement."

Colorado PERA publication “History of Colorado PERA Legislation”:

“HB 00-1458.  Established 3.5% compounded annual AUTOMATIC COLA effective March 2001.”

 

NEXT YEAR'S FIRE AND POLICE PENSION COLA ELECTION.

Here are a few excerpts from FPPA materials for next year's police and fire COLA election . . . the "FPPA Fire and Police Pension COLA Election White Paper":

"A benefit adjustment for retirees, often commonly known as a 'COLA' or cost of living adjustment, is not guaranteed in the SWDB (FPPA Statewide Defined Benefit) Plan. The board of directors of FPPA determines on an annual basis what, if any, benefit adjustment to provide to current retirees."

"In addition, an election requires a mandate from the active members of the plan, since 65% of the members must vote in favor of a proposition and a non-vote is treated as a negative vote."

"Effect of inflation upon purchasing power."

"The base benefit provided in the SWDB Plan does not have any form of automatic adjustment for inflation. Without some type of inflation protection, an annuity will not provide equivalent purchasing power over time."

"It cannot be over-emphasized, however, that the SWDB Plan does not provide guaranteed benefit adjustments."

"In the event that the Plan were ever to become actuarially unsound, the board of directors has the authority to: Reduce or eliminate plan amendments voted in by the membership."

"Retirement income needs to keep pace with inflation as much as possible, so that over time the retiree can continue to maintain his or her standard of living."

"Benefit adjustments provide protection against inflation and are the most cost-effective way to achieve that protection."

"Working together, members of the SWDB Plan can proactively act to preserve and improve retirement security for themselves."

http://www.fppaco.org/pdfs/election-2012-pdfs/white-paper.v03.pdf

(My comment: Colorado PERA retirees "worked together," and made mandatory contributions to the Colorado PERA pension system for a "DEFINED" pension COLA benefit upon retirement.  Colorado PERA retirees "acted proactively" to ensure their "retirement security."  For decades Colorado PERA retirees made these mandatory contributions.  In 2010, Governor Ritter, with the stroke of a pen, seized these PERA contributions, and breached the retirees' PERA contracts.)

From the FPPA "Election Handout":

"Why vote 'yes' on increasing the member contribution rate?  The short answer is that added funding: Increases the likelihood that you will get a greater benefit adjustment (commonly called a COLA) when you retire . . .".

http://www.fppaco.org/pdfs/election-2012-pdfs/handout.V4.3.19.13.pdf

(My comment: "Likelihood," an excellent word choice here.)

 

COLORADO'S ARBITRARY PARAMETERS FOR MEETING PUBLIC PENSION LIABILITIES.

As noted earlier, a public pension plan's "maximum amortization period" is the number of years allowed by the legislative body overseeing the plan during which any pension liabilities must be paid off.  Although public pension benefits will come due over the next 70 years, Colorado law requires that these liabilities be paid off in about half that time frame.

Under Colorado law, the Colorado PERA pension system is currently permitted a period of 30 years to pay off its unfunded pension liabilities.  Seven years ago, Colorado law allowed the Colorado PERA pension system 40 years to pay off unfunded pension liabilities (the time period was reduced in SB06-235.)  Sixteen years ago, Colorado law allowed the Colorado PERA pension system 60 years to pay off its unfunded pension liabilities (the time period was reduced in HB97-1114.)  Colorado law currently allows the FPPA pension system to pay off unfunded pension liabilities over a 40-year period, except for FPPA "Old Hire" pension plans that get 37 years.  You can see that this factor, incorporated into written, statutory public pension contracts in Colorado, is set in law in an arbitrary fashion.

Colorado PERA, in its publication "Setting the Record Straight":

"The bottom line is that SB 1 prefunds these liabilities over the next 30 years while the payment of benefits will occur over the next 70 years."

"PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years."

https://www.copera.org/pera/about/issues.htm

In 2006, the Colorado Legislature lowered Colorado PERA's maximum amortization period to 30 years, in 2010 the Colorado Legislature claimed that this 30-year maximum amortization period was such a burden that the State of Colorado was forced to break its PERA pension contracts.

Recall the words of Representative Jack Pommer, JBC Chairman in 2009.  At the December 17, 2009 meeting of the Joint Budget Committee, Representative Pommer asked: “Are we not just saying we’re going to pick 30 years because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”  Representative Pommer asked if the Legislature could legally alter the statutory parameters of the PERA pension to manufacture a “crisis” in order to justify its breach of pension contracts.

http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

Colorado law governing the FPPA:

"31-31-102. Definitions. (1) "Actuarially sound" means a police officers' or firefighters' pension fund . . . receiving or scheduled to receive employer and member contributions . . . actuarially determined to be necessary . . . to pay the annual contribution necessary to amortize any unfunded accrued liability over a period not to exceed FORTY years."

"31-31-408. Modification of state plan by the board. (1) . . . the board may modify the pension benefits and the age and service requirements for pension benefits . . . with respect to the members of the statewide defined benefit plan if:  (f) The modification does not adversely affect the pension benefits of retired members."

http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

Colorado Legislature: We'll break Colorado PERA pension contracts in order to pay off the unfunded liability in 30 years, but we'll give local government Old Hire fire and police pension plans 37 years.  (The arbitrary 30-year time frame is included in the title of the bill that broke Colorado PERA pension contracts, SB10-001.)

"31-30.5-304. (4) (a) For municipalities, fire protection districts, and county improvement districts (with Old Hire fire and police pension plans) . . . contributions for each calendar year . . . shall be at a rate . . . required to amortize the unfunded accrued liabilities of such state-assisted fund over a period of not more than thirty-seven years . . .".

"31-30.5-305. No change in employer obligation. It is the intention of the general assembly that the minimum funding standards established by this part 3 shall not enlarge nor diminish the obligation of municipalities and fire protection districts to their employees for pension benefits provided pursuant to this article."

Colorado Legislature: However, the funding standards that we put in SB10-001, WE DO INTEND to use to break pension contracts and diminish our own state PERA pension obligations.

From the FPPA Rules:

"909. Vesting. Upon attaining the eligibility requirements for a benefit, a Member shall be fully vested in the benefits such Member has accrued."  "This rule is not to be construed as a reduction or limitation of rights heretofore existing, nor as an indication that vested benefits would be forfeitable before the stated age is attained."

http://www.fppaco.org/pdfs/rnr/120927%20%20Codified%20Final%20FPPA%20Rules%20Regulations.pdf

Colorado law governing Colorado PERA:

"24-51-211, C.R.S. Amortization of liabilities.  (1) . . . A maximum amortization period of thirty years shall be deemed actuarially sound . . . the employer or member contribution rates for the plan may be adjusted by the general assembly when indicated by actuarial experience."

(My comment: No mention here in Colorado statutes about the Colorado General Assembly breaking its pension contract when "indicated by actuarial experience.")

Instead of simply re-amortizing Colorado PERA's unfunded pension liabilities in 2010, a majority of Colorado legislators preferred to break PERA contracts.

 

THE COLORADO LEGISLATURE INTENDS TO PAY AN ADDITIONAL $142  MILLION IN NEXT YEAR'S BUDGET FOR LOCAL GOVERNMENT PENSIONS THAT ARE NOT ITS RESPONSIBILITY . . . WHILE IGNORING ITS OWN CONTRACTUAL PERA PENSION OBLIGATIONS.

The Colorado General Assembly claims that financial hardship necessitates its breach of Colorado PERA pension contracts, while simultaneously the Colorado General Assembly tops off a collective $700 million appropriation for local government public pensions that are not its responsibility.  At least the local government lobbyists are happy.

On September 19, 2012,  FPPA CEO Dan Slack provided testimony to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans."  Dan Slack: "So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link:

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

“31-31-101. Legislative declaration.”  “The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits . . . but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

This “Legislative Declaration” states that the Colorado General Assembly has provided state resources “in recognition that local governments are currently burdened with financial obligations relating to pensions . . .”. Accordingly, the policy preference of the Colorado General Assembly is that discretionary grants of state resources should be made to Colorado local governments when they are “burdened by financial pension obligations,” but when the State of Colorado is also “burdened by financial pension obligations” the State of Colorado will break its public pension contracts.

More Colorado law:

"31-30.5-304, C.R.S. (3) The general assembly finds and determines that it has contributed substantial sums to the (FPPA Old Hire fire and police pension) program established by this part 3 and that the state has a responsibility to evaluate the advisability of its contribution in light of its own fiscal situation."

http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

In spite of this statutory language, and the fact that the State of Colorado is currently in breach of its own pension contracts, the Colorado Legislature intends to pump this additional $142 million into local government pension obligations in the next fiscal year.

How much more evidence is needed to demonstrate that no fiscal emergency exists in Colorado that would justify any breach of state contracts?

Colorado PERA active and retired members, it is clear that the Colorado Legislature has placed into statute public pension contract provisions that are arbitrary, providing unequal protection under the law.  Fight for your contractual public pension rights!  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: 6,000 Colorado Police and Firefighters to Consider Taxing Themselves to Pay for a Pension COLA Benefit.

LEGISLATURES SHOULD "RECOGNIZE EXPLICITLY THE PAST AND FUTURE SERVICE DISTINCTION."

"FOR EVERY DAY ONE WORKS, ONE IS ENTITLED TO KNOW WHAT ONE IS EARNING THAT DAY, INCLUDING WHAT PENSION BENEFIT ONE IS EARNING."

A few days ago, a "guest column" addressing contractual public pension rights was published in the periodical, Oregon Live.  The author of the "guest column" is Professor Henry Drummonds of the Lewis and Clark Law School.  Professor Drummonds is a public pension legal scholar who agrees with Professor Amy Monahan (University of Minnesota School of Law) that public pensions should be reformed prospectively, in conformance with state and federal constitutions.  The law professors argue that the rate of future accrual of public pension benefits should be modified as a means of bolstering public pension funded ratios.

http://www.oregonlive.com/opinion/index.ssf/2013/04/the_tragedy_of_the_oregon_publ.html

Professor Monahan's legal arguments:

“This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

Link to Monahan law article:

http://www.law.umn.edu/facultyprofiles/monahana.html

This legal argument, for prospective reform of public pensions, was also made in testimony to the Colorado Legislature's Senate and House Finance committees regarding SB12-149.  (The Colorado General Assembly has adopted prospective pension reform for some Colorado public pension systems, those administered by certain county governments, while it has also enacted retroactive pension reforms that seize accrued pension benefits from Colorado PERA members.)

Here are a few quotations from attorneys representing the Adams County Retirement Plan (Vickie Johnson and Cindy Birley of Davis, Graham and Stubbs) in testimony on SB12-149 before legislative committees in 2012:

“As I said, in Subsection 3, we make clear in the proposed legislation that vested benefits already accrued, including the vested benefits of retirees, are not going to be touched.”

“So, if a board was going to go and make changes, it would be to future benefit accruals, not stuff that has already been earned.”

“For example, if you’re going to be paid a 2.5 percent multiplier, we could say ‘you’ve earned it to this day,’ and here’s your benefits to this day, we may reduce your benefit multiplier going forward.”

“For future service . . . we would like to be able to lower that benefit formula, multiplier . . .”.

“These are fully-vested rights once the person is eligible to retire.”

“You’ve got fully-vested rights for everything that you’ve accrued, but your future accruals could be at a lower formula rate.”

“So, let’s just say that you’ve worked for 25 years.  And, you’ve earned your benefits at this multiplier.  Those would not be taken away.  If you elect to stay on for five more years, then that accrual may be reduced.”

“Under the current law . . . once you start working as an employee for a governmental pension plan and you contribute to your pension benefits it’s understood that you have obtained a contract right.”

“And, as long as you continue to work it’s understood under the law that your benefits cannot be changed."

If legal, prospective pension reform is appropriate for an administrative division of Colorado state government (county government), why is legal, prospective pension reform not appropriate for the State of Colorado itself?  Language from SB12-149:

“(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”

Here are a few excerpts from Professor Drummond's guest column at Oregon Live:

"As explained below, pension promises must stand immutable for work already performed, but changeable prospectively for future work."

"First, as one relevant point of comparison, private sector pensions operate with just such a rule under the federal Employee Retirement Income Security Act (ERISA). Under ERISA, employers cannot renege on promises made regarding work already done, but can change the promises of what is earned for future work."

"Second, looking at public employees, pension promises are a form of deferred compensation and one aspect of TOTAL compensation, which includes salaries, fringe benefits, vacation and holiday pay, etc. Every other aspect of this total compensation package — most dramatically, salaries — CAN be changed prospectively, for future work."

"Instead it is much more reasonable to construe pension promises — like every other term of total compensation — as immutable for service already performed, but subject to democratic processes for work to be performed in the future. This would not only protect needed public services and younger public employees, but would also rest upon the reasonable expectation of the affected public employees; for every day one works one is entitled to know what one is earning that day, including what pension benefit one is earning."

"The (Oregon Supreme) Court struck down the portion of the 2003 law (in Strunk) that again attempted to eliminate the 8 percent guaranteed return as to both past and future work, and another portion of the 2003 law that reduced cost-of-living adjustments for already retired public employees."

"In sum, a firm basis exists in the holdings of the Oregon Supreme Court for the past service/future service presumption presented in this essay."

"It is time for both the Legislature and the Oregon Supreme Court to recognize explicitly the past and future service distinction."

"Henry Drummonds is a professor at Lewis and Clark Law School."

"More recently, Professor Drummonds served as an advisor to the Oregon Attorney General, to Oregon Governor John Kitzhaber, and Oregon Governor Ted Kulongoski on labor relations, tenure law, and pension matters."

"Academic Credentials: B.A. 1969 University of Oregon, J.D. cum laude 1972 Harvard Law School, Editor, Harvard Law Review, Member, Phi Beta Kappa."

http://law.lclark.edu/faculty/henry_drummonds/

Recently, the Oregon Legislature requested an opinion (from their in-house legislative attorneys, the Oregon Legislative Counsel) on a proposal to take back accrued public pension COLA benefits.  Here is the February 4, 2013 response of Oregon’s legislative attorneys:

“Based on recent Oregon Supreme Court precedent, we conclude that an attempt to limit the COLA in this way would be found to be a violation of the contract rights of the members.”

“The Oregon Supreme Court has found several times that the 1953 law establishing PERS created a contract between public employers and public employees.”

“The court stated several times in Strunk that there is a contract right to the COLA. For example, the court found that:

‘We note that the status of the law is particularly clear with regard to retired members, and there can be little question that the COLA is a fully accrued benefit for a member who has retired.’”

Here is a link to the complete February 4, 2013 opinion of the Oregon Legislative Counsel:

http://media.oregonlive.com/politics_impact/other/LC%20Opinion.pdf

Colorado legislators were not aware of such prospective, legal public pension reform options (as the Monahan proposal) in 2009/2010 because they allowed self-interested outside groups to run the PERA pension reform show.  In any event, legislators did not want to know the truth.  Instead of appointing a commission (or an interim committee) to examine all legal, prospective public pension reform options, the Colorado General Assembly abdicated its pension policy-making authority to the 27-member SB10-001 lobbying troop (we have identified earlier).  The Colorado General Assembly did not conduct due diligence prior to breaking Colorado PERA contracts.

During the 2009 "Listening Tour," Colorado PERA distributed a list of its own predetermined pension reform options that was quite short on prospective solutions.  The preference from the outset was to break PERA contracts.  One person present at the Denver meeting of the "Listening Tour" pointed out that, of the many pension reform ideas on the list, only 2 or 3 impacted those who actually owe the debt, PERA-affiliated employers.

Also, in 2009, the General Assembly ignored an on-point Colorado Attorney General Opinion precluding their proposed PERA contract breach.  Further, the General Assembly ignored advice to send an interrogatory to the Colorado Supreme Court to clarify the constitutionality of the developing SB10-001 proposal.  They did not want to hear the truth.

Colorado PERA claims that the General Assembly requested that the PERA Board make recommendations regarding pension reform in 2009, while I suspect that PERA lobbyists actually put this request into Colorado statutes at the end of 2009 in an attempt to add legitimacy to a preordained outcome.  (Perhaps I am wrong, but this suspicion could be easily confirmed by deposing the SB10-001 bill drafter, or by examining "member files" at the Colorado State Archives for the 2009 bill, which would identify the person who requested that the "PERA Board pension reform recommendation" amendment be drafted.  I suspect that the amendment request came from a PERA lobbyist, or was made by a legislator on behalf of a PERA lobbyist.)

In legal briefs, Colorado PERA goes so far as to emphasize this “legislative mandate” from the Colorado General Assembly.  In a Response Brief submitted to the Denver District Court PERA attorneys write:

“By LEGISLATIVE MANDATE the PERA Board extensively studied the underfunding and consulted with its members . . . before proposing a solution to the General Assembly.”

Link:

http://www.ednewscolorado.org/wp-content/uploads/2010/05/PERASuitResponse5-10-10.pdf

I ask: Did Colorado PERA plant this request language into SB 09-282 at the end of the 2009 legislative session in order to lend a patina of legitimacy to what was in fact a premeditated attempt to breach pension COLA contractual obligations?

Recall Senator Lundberg’s statement on the Senate floor during the SB 10-001 debate: “This bill is a deal that was cut before this body met.”

Was Colorado PERA’s ostensible, impartial examination of pension reform options in 2009 in reality an elaborate ruse constructed by PERA lobbyists to add legitimacy to a process with a predetermined conclusion?  To falsely portray a preordained conclusion to breach pension COLA contracts as the result of an extensive, deliberative process?

Colorado PERA active and retired members.  Continue the fight for public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: Law Professor: “Pension Promises Must Stand Immutable for Work Already Performed.”

FORBES COLUMNIST LAMBASTES RHODE ISLAND TREASURER GINA RAIMONDO.

RAIMONDO ON COLORADO PERA MANAGEMENT FEES.

In the United States, we have a handful of prominent self-serving politicians who support the breach of public pension contracts.  As we have seen, such politicians serving in the Colorado General Assembly are attempting to take earned, accrued, contracted public pension benefits from a vulnerable group of Colorado residents . . . Colorado PERA pensioners.

Some U.S. politicians seek to advance their own political careers by breaking public pension contracts, some seek further state tax cuts, some want to free up money for state discretionary expenditures.  In Colorado, politicians broke public pension (Colorado PERA) contracts to further reduce state taxation . . . in a state with (nearly) the lowest per capita state tax collections in the nation.  Colorado politicians also have many personal priorities for public program expenditures that supersede the need to meet the state's contractual obligations.

Rhode Island's Treasurer, Gina Raimondo, is apparently directing Rhode Island public pension trust funds to hedge fund cronies, and also hoping to ride her pension contract breach pony all the way to the Governor's mansion.

Edward Siedle, a contributor at Forbes writes:

"According to Institutional Investor, Rhode Island Treasurer, Gina Raimondo is at work solving the nation’s retirement dilemma, showing how tough public pension reforms can pay fiscal and political dividends.  Don’t believe a word of it."

"A look behind the curtain reveals her changes to the investment portfolio of the $7 billion Employee Retirement System of the State of Rhode Island will inevitably dramatically increase both risk and fees paid to alternative investment managers, such as hedge funds and private equity firms."

"There’s no prudent, disciplined investment program at work here—just a blatant Wall Street gorging, while simultaneously pruning state workers’ pension benefits. It’s no surprise that some of Wall Street’s wildest gamblers have backed her so-called pension reform efforts in the state legislature. Former Enron energy trader emerges as a leading advocate for prudent management of state worker pensions? That’s more than a little ironic."

" . . . when alternative investment managers take control of a state pension and recklessly dump pension assets into high-cost, high-risk alternative investments, while they slash workers’ benefits, that’s no reform. Call it what it is: a money grab."

http://www.forbes.com/sites/edwardsiedle/2013/04/04/rhode-island-public-pension-reform-looks-more-like-wall-street-feeding-frenzy/

(My comment: Wall Street Journal: "Hedge Funds Kiss Their Alpha Goodbye":

http://blogs.wsj.com/marketbeat/2011/11/21/hedge-funds-kiss-their-alpha-goodbye/)

Siedle:

"Financial alchemy, whether promoted by Democrats or Republicans, ends up costing the taxpayers dearly."

(My comment: This Siedle remark calls to mind our own Governor Hickenlooper's recent raid on the Colorado PERA trust funds for corporate welfare:

"COLORADO PERA'S LATEST FIASCO."

"News flash for our 'businessman' Governor: By definition, placing an artificial, political restriction on investment options for a portion of the PERA Trust Funds denies PERA members and retirees the benefit of the most productive use of those funds."

"Does the Governor understand that the Colorado PERA trust funds belong to the beneficiaries of the PERA trust? Does the Governor understand that the PERA Trust Funds are not public property to be used to meet public policy goals? [Politicians have been trying to gain access to this 'pile of money' for decades.]"

"If Colorado businesses are desperate for capital why do these businesses not take advantage of available historically low market interest rates? Is it simply the case that these businesses are considered too great a risk by private lenders? This risk must be assumed by the beneficiaries of a public pension fund? Public pensions should be forced to invest in businesses that the private sector won't touch?"

"How is it the responsibility of Colorado PERA members and retirees to redress this shortfall of funding for Colorado entrepreneurs by accepting a less favorable risk/reward ratio for a portion of their PERA Trust Fund property?"

"How did the PERA Board go about determining the geographical investment boundaries that offer the greatest risk/reward potential for the investment our PERA trust funds? What analysis was conducted? What advantages did Colorado's borders offer over limiting investment of the funds to venture capital or private equity opportunities in Massachusetts? California? Australia?"

http://thecontributor.com/colorado-peras-latest-fiasco

"The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado."

"The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group."

http://coloradomilehighfund.com/)

 

RHODE ISLAND TREASURER RAIMONDO ON COLORADO PERA FEES.

Raimondo's comments to a local Rhode Island reporter, WPRI reporter (Nesi): "On fees, Colorado’s pension fund says its expenses total less than 0.4% of assets per year. Do you know what the figure is for Rhode Island?"

Raimondo: "No – you’ve got to be very careful with apples to apples in this, so I don’t know what Colorado means when they say that."

http://blogs.wpri.com/2013/04/05/qa-raimondo-fires-back-after-attack-by-forbes-contributor/

Seidle's reaction:

“On fees, Colorado’s pension fund says its expenses total less than 0.4% of assets per year. Do you know what the figure is for Rhode Island?”

"'No,' says Raimondo."

"Ouch."

http://www.forbes.com/sites/edwardsiedle/2013/04/06/rhode-islands-scary-state-treasurer/

Recall that, some months ago, we heard another Forbes journalist call the breach of public pension contracts "theft."  William Baldwin of Forbes Magazine was interviewed in regard to public pension contracts on Fox:

http://www.youtube.com/watch?feature=player_embedded&v=lD-08JZKDa4

In the interview, Mr. Baldwin recommended the prospective pension reform advocated by Professor Amy Monahan of the University of Minnesota School of Law in her paper “Public Pension Plan Reform: The Legal Framework,” i.e., a reduction of the rate of future accrual of public pension benefits for current public employees.

Link to Monahan paper:

http://www.ncsl.org/documents/fiscal/AMonahan_Handout.pdf

Professor Monahan's PROSPECTIVE, "constitutional" public pension reform has been adopted by the Colorado General Assembly (in SB12-149) for certain county-operated public pension plans in Colorado, while RETROACTIVE pension reforms were enacted by the Colorado General Assembly for the Colorado PERA pension system (SB10-001).  This is, of course, a statutory double standard on Colorado public pension contracts.

The Colorado Legislature has placed into Colorado law a policy providing that the contracts and accrued public pension benefits of certain county government retirees in Colorado will be honored, while up to one-third of the contracted pension benefits of Colorado PERA retirees will be seized by the State of Colorado.

Pension reforms adopted by the Colorado General Assembly in SB12-149 represent a "less drastic" alternative to the Legislature's breach of the fully-vested pension contracts of current Colorado PERA retirees.  Such PERA retirees have met all statutory conditions for the receipt of their PERA public pension benefits.  They have fully performed under their PERA public pension contracts.

Here are a few quotations from Mr. Baldwin's interview:

“It is not fair, and it may even be unconstitutional to take away a pension that has already been earned.  That’s just theft.”

“It’s not as sharp a change (401Ks, reduction of future pension accrual rates) as taking away something that has already been earned . . . which I don’t think you can do . . . I don’t think that’s fair.”  “It’s all politics.”

http://blogs.forbes.com/people/baldwin/

More Seidle comments on Raimondo's pension raid:

"Rhode Island's Scary State Treasurer"

Seidle:

"For the record, I was not provided any opportunity to comment on (local Rhode Island reporter) Nesi’s article. I’ve learned to expect as much whenever I criticize highly-politicized public pension investment shenanigans. Local media is usually, shall we say, heavily influenced by local politicians."

(My comment: Local media heavily influenced by local politicians?  When the Colorado Court of Appeals reversed the Denver District Court's ruling in the case Justus v. State last year, the Denver Post inexplicably labeled the reversal [upholding public pension COLA contractual rights in Colorado] a "win" for Colorado PERA, the organization trying to break those same contracts.  When, last year in SB12-149, the Colorado Legislature contradicted its 2010 legislation, SB10-001, which denied the contractual nature of Colorado PERA COLA benefits, we heard not a peep from the Denver Post or any other Colorado media outlet. SB12-149 impacted the retirement benefits of thousands of Colorado county government employees, yet not a word from the Colorado media.  Heavily influenced by local politicians?  To be fair, the Colorado media gives adequate attention to some substantive state legislation.  They did a great job covering designation of the official Colorado amphibian:

http://blogs.denverpost.com/thespot/2012/02/06/amphibian-bill-up-today-in-house-ag/57717/

http://www.gazette.com/articles/inches-134074-salamander-amphibian.html

http://www.chieftain.com/news/region/lawmakers-consider-state-amphibian/article_abf64222-5151-11e1-9a50-001871e3ce6c.html

http://www.9news.com/news/sidetracks/247456/337/Colorado-considers-a-salamander-as-state-amphibian-

http://www.koaa.com/news/colorado-gets-official-state-amphibian-friday/

http://kdvr.com/2012/02/06/bill-to-name-tiger-salamander-state-amphibian-advances/)

Back to Seidle:

"The Ocean State’s Treasurer scares me. I am alarmed by her poor command of pension fundamentals. A phrase I once heard a Catholic priest use when I was in law school at Boston College comes to mind: Her reputation far exceeds her capabilities. This is the woman who is credited with leading the charge for public pension reform nationally?"

"The high-risk alternative investments you have steered the pension into charge exponentially greater fees—fees of about 2% plus 20% of profits or more. Do the math and you’ll agree, the fees the pension will pay have skyrocketed. Mushroomed. Ballooned. Soared."

"That’s good for your Wall Street pals, no-so-good for workers participating in the pension. It’s a little difficult to reconcile your opinion that the state’s pension system can’t afford to pay workers the benefits they were promised but, on the other hand, it can afford to pay Wall Street’s wildest gamblers one hundred times greater fees than it has in the past."

http://www.forbes.com/sites/edwardsiedle/2013/04/06/rhode-islands-scary-state-treasurer/

Public comments on Rhode Island's COLA-theft Champion Raimondo:

Retiree Binyamin Efreom: "My husband is one of the retired state employees affected by Raimondo’s pension steal. Now that he is 70 years old, we are supposed to be able to switch from an income that has a small built-in inflation correction to a fixed income. It’s too late to do that. We have no idea now how much money we have to live on but we are portrayed as the 'evil' unionists. The entire burden for making the pension system stable by Gina’s definition is on us — nothing is on the state. Engage RI enlisted a shell of figureheads financed by a Texas Enron billionaire to spend a million dollars on local advertising diverting attention away from the fact that her legislation bullies and targets the elderly — who do they think the retired people are. Also, despite her cries of state poverty, the state has been running significant surpluses, none of which have been earmarked for the pension fund. Thank you again for providing one lone voice in the wilderness."

(My comment: At least under Colorado's 2010 pension reform bill, SB10-001, the entire burden of the reform is not on Colorado PERA retirees . . . just 90 percent.  Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post, 4-17-11:

“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.”

http://www.denverpost.com/opinion/ci_17858107

This is how it works at the Colorado Legislature: Those who legally owe the debt pay 10 percent,  those who do not owe the debt pay 90 percent.

Note that the Colorado General Assembly has also recently received word of a one-billion surplus for the coming fiscal year.  Does this news motivate the Colorado's Legislature to conserve funds to meet its contractual obligations?  No.  In next year's state budget, Colorado state legislators transfer $142 million to pay for pensions that ARE NOT the state's responsibility . . . NOT their contractual obligation.  These are pension obligations of local governments.  We find more in next year's state budget . . . although the State of Colorado already has the lowest per capita state tax burden in the nation, we see the Senate President planning to further cut Colorado state taxes by up to one-quarter billion over the next three years.  All this, while Colorado argues that a "financial crisis" prevents the state from meeting its contractual PERA obligations.)

Retiree John Oberle: "Thank you for your research into the workings of Treasurer Raimondo’s office. Since my wife and I are both pensioners in the retirement system managed by Ms. Raimondo we are impacted twofold by her action to freeze our COLAs. There is something very unnerving about the way the Treasurer manipulated the members of the media, i.e., the Providence Journal and Ted Nesi. She seems expert at appealing to people’s basest instincts, i.e., jealousy toward teachers and government workers who have fixed pensions while most private industry employees have been forced into 401k’s, IRA’s and Social Security."

"In our case, we were given a piece of paper at retirement by the state retirement system that clearly asked us to choose one of three options offered to retirees. We selected our option and the retirement system official signed it and we signed it. It stated that the third January after our retirement and every January thereafter we would receive a 3 percent COLA compounded annually. We did not make up the form. The retirement system and State legislature did. Now six years later this past January we did not receive the promised COLA’s. We clearly had a contract signed by both parties yet thanks to Ms. Raimondo’s dire predictions the general assembly of the state of RI changed the rules and has withheld the COLA’s. Now we see evidence of outside parties with political agendas were working behind the scenes supporting Treasurer Raimondo’s agenda. Treasurer Raimondo has snookered most Rhode Islanders into placing blame for the pension systems poor financial performance on retired workers although she hypocritically spent two years saying the retirees did nothing wrong, but for the survival of the system drastic actions were needed. Furthermore, she has spent much of her time as Treasurer building up a war chest for an upcoming run for Governor. Thanks again. Hopefully, shedding light on some of the behind the scenes wheeling and dealing taking place here in RI will result in a fairer, more competent functioning of the Treasurer’s office."

Seidle:

"As a testifying expert in multiple Madoff cases, I can assure you that hedge funds INCREASE risk. In fact, every hedge fund offering statement I’ve reviewed in the past 30 years says in bold print, 'These are speculative, high-risk investments.'  Beware of anyone who, like Bernie, tells you otherwise."

Retiree Paul Zecchino: "Thank you for staying on this. Retirees’ lives have been reduced by the cavalier actions of this individual and the curious cabal of cronyistic individuals who apparently direct her steps."

"Search ‘Raimondo’ in the search box here at Forbes at upper right, and you’ll find a most prophetic article by a Mr. Danker with a comment by WH Rosen which clearly states that withholding COLA’s is in effect a closet tax-hike, and is a most unwise move."

"A little googling will turn all this up and quickly produce troubling suggestions that there’s much more to this than merely looting retirees and teachers, the demonizing of them is clearly to shift guilt from the pension manager and EngageRI, but also perhaps to remake the education system in the image of these characters."

"When someone withholds COLA’s that’s curious. When the ones who withhold then viciously demonize and blame the retirees they just reduced for all the world’s ills, that begins to stink of a Constructed Fraud."

Colorado PERA active and retired members.  Support the rule of law in Colorado.  Help Colorado politicians understand that the Contract Clause takes precedence over pet discretionary public programs.  Let them know that Colorado public contracts will not be discarded on a whim.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Full story: The Nation’s Public Pension COLA-theft Champion Receives her Comeuppance.