Algernon Moncrief

About Algernon Moncrief

Independent Nationwide Public Pension Rights Blogger.

Colorado’s 2010 Public Pension Legal Fiasco.

LEGAL SCHOLARS DECRY THE BREACH OF FULLY-VESTED PUBLIC PENSION CONTRACTS . . . CONSERVATIVE SCHOLAR SASHA VOLOKH ADDS HIS VOICE TO SCHOLARS DEFENDING ACCRUED PUBLIC PENSION BENEFITS.  (Does Colorado State Treasurer Walker Stapleton disagree with the conservative legal scholar Volokh?)

In 2009 (when the scheme to pay off Colorado state and local government debts by forcibly taking money from older Coloradans was hatched) there seems to have been an assumption on the part of the Colorado PERA Board of Trustees that PERA pensioners were (1) too weak politically to defend their contracts at the Legislature, (2) too unorganized to defend their rights in court, and (3) too unsophisticated to even research and comprehend the on-point Colorado court precedent supporting their PERA contractual pension rights.

Well, in 2009, the Colorado PERA Board was wrong.  Colorado public sector union officials complicit in the taking were wrong.  And, those who conveniently reversed their long-standing recognition of contractual rights to the PERA COLA benefit, i.e., Colorado PERA Executive Director Meredith Williams and then General Counsel Greg Smith, were wrong.

The weak, unorganized, unsophisticated Colorado PERA retirees challenged the breach of their contracts in 2010.  The case, Justus v. State, has arrived at the Colorado Supreme Court.

In recent years, Colorado PERA retirees involved in the public pension case, Justus v. State, have followed the work of Professor Amy Monahan of the University of Minnesota School of Law.  Professor Monahan is the preeminent legal scholar in the United States on public pension contractual rights.  "Amy Monahan is a professor and the Solly Robbins Distinguished Research Fellow at the University of Minnesota Law School."

Professor Monahan argues that previously accrued public pension benefits should be protected, but suggests that public pension plan sponsors should have the flexibility to alter the rate of FUTURE accrual of pension benefits:

March 17, 2010

Professor Amy Monahan in "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

May, 2013

Professor Monahan addresses the Colorado PERA retiree lawsuit, Justus v. State in her paper, "Understanding the Legal Limits on Public Pension Reform":

"In Colorado, retirees challenged actions by the state legislature that reduced the COLA retirees were eligible to receive.  The plaintiffs included individuals who had retired under Colorado’s public employee retirement system at a time when there was a guaranteed 3.5 percent COLA in place."

Professor Monahan notes that the Denver District Court's initial decision in the case, Justus v. State, was surprising in light of Colorado public pension case precedent:

"The (Denver District) court’s ruling is surprising both because the court appeared to break from earlier Colorado decisions that found pension benefits to be contractually protected prior to retirement and because the change could be characterized as a retroactive change to benefits, which is the type of change that invites the most scrutiny under a contract clause analysis."

https://www.dropbox.com/s/cvzed3lmwt8t8v2/Understanding%20Pension%20Reform.pdf

Professor Monahan on the public pension legal doctrine, the "California Rule" (embraced by Colorado courts):

“The (Denver District) court’s ruling is surprising both because the court broke from the previously endorsed California Rule, under which it is clear that detrimental changes to the benefits of current employees are only permissible where they are offset with comparable new advantages, and because the change at issue is one that could be characterized as a retroactive change to benefits, which is the type of change that invites the most scrutiny under a contract clause analysis.”

Iowa Law Review article):

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

Recently, conservative legal scholar Alexander Volokh, added his voice to those questioning the "California Rule," but Volokh (like Professor Monahan) defends contractual rights to previously accrued public pension benefits.

Link to the Volokh paper:

http://www.fed-soc.org/doclib/20140103_VolokhPublicPensionsWP.pdf

Volokh's recent paper was published serially in the Washington Post:

"Courts in California, and in other states following California’s example, follow a particularly strict rule: they hold not only that public employees are entitled to the pension they’ve accrued by their work so far, but also that they’re entitled to keep earning a pension (as long they continue in their job) according to rules that are at least as generous. Thus, in states where the California rule applies (my comment, including Colorado,) one can’t constitutionally increase employee contribution rates or reduce (my comment "automatic" as opposed to "ad hoc") cost-of-living allowances."

http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/02/03/how-california-courts-overprotect-public-employee-pensions/

Volokh in the Washington Post:

"I argue that protecting pensions accrued based on past work is reasonable; protecting the current rules into the future is far less so."

"California case law holds that 'a public employee’s pension constitutes an element of compensation and that the right to pension benefits vests upon the acceptance of employment even though the right to immediate payment of a full pension may not mature until certain conditions are satisfied.'”

"But with defined-benefit pensions, which are more common in the public sector, the financial risk is borne by the pension provider."
(My comment: Colorado PERA officials seem to have conveniently forgotten this fact.  They are attempting to unconstitutionally shift market risk to pensioners.)

Volokh:

" . . . governments, free from the ERISA regulations that govern private employers, find it easier to promise generous pensions and then underfund them, leaving future generations to pick up the bill.  Underfunded public employee pensions are thus a form of deficit spending."

(My comment: In 2010, uninformed members of the Colorado Legislature were not aware of the fact that Colorado PERA-affiliated governments had not paid the full PERA pension ARC [annual required contribution as calculated by PERA's actuaries] for a decade.  Given that the plan to take PERA pensioner assets was developed outside of the open legislative process, most members of the Legislature could not be expected to comprehend that the failure to pay the ARC constitutes deficit spending in our state.)

Volokh:

" . . . borrowing money from future taxpayers by underfunding current pensions is less transparent than traditional borrowing."
http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/02/05/are-public-employees-well-served-by-the-california-rule-for-pensions/

VOLOKH: WE CAN SAFELY CONCLUDE THAT A CONTRACT EXISTS AND PROTECTS ACCRUED PENSION BENEFITS.

Volokh:

"We can safely conclude that a contract not only exists but also covers at least the services performed so far.  The government owes the employee for whatever work has been completed. Overdue salaries are owed, as is accrued vacation time . . . and the pension one has accrued so far.  This much should clearly be within the bounds of federal deference."

Link to the Volokh paper:

http://www.fed-soc.org/doclib/20140103_VolokhPublicPensionsWP.pdf

Excerpts from the Volokh paper:

"Courts in California, and in other states following California’s example, follow a particularly strict rule: they hold not only that public employees are entitled to the pension they’ve accrued by their work so far, but also that they’re entitled to keep earning a pension (as long they continue in their job) according to rules that are at least as generous."

". . . in 1977, in U.S. Trust Co. v. New York v. New Jersey, the Supreme Court reaffirmed that some limits remain on state abrogation of contracts, and that in fact the limits are stricter when
the state seeks to abrogate its own (public) contracts since then its own 'self-interest is at stake.'”

"Ultimately it’s a question of federal law; otherwise, states—whether their legislatures or their courts—could define contract rights out of existence, making the Contract Clause 'a dead letter.'”

Volokh on the public pension case, United Firefighters of Los Angeles . . .

"In the court’s view, the (my comment, in United Firefighters, prospective only) COLA cap had no relation to the goals of a pension system (it reduced retirees’ economic security rather than enhancing it); any unsustainability in the pension system came from the government’s history of underfunding rather than from the recent history of high inflation rates; and the city’s desire to 'enhance [its] ability to predict and plan for long-range . . . budgeting and financing' could also be fulfilled by, for instance, levying 'a separate ad valorem property tax specifically to meet the pension system funding requirements.'  Thus, the city couldn’t show that its modifications were reasonable; nor could it show comparable new advantages, since the change to the pension system was merely disadvantageous on its face."

(My comment, if we allow a measure adopted by Colorado voters in 1992, TABOR, to justify the breach of contracts to which the State of Colorado is a party, we are granting Colorado voters the right to ignore both the Colorado and United States constitutions.)

Volokh:

"It makes good sense to defer to California’s doctrine that pension statutes form a contract—even without analyzing the language of the statute—because pensions are a form of deferred compensation."

"Thus, 'the circumstances' of the statutory enactment 'evince a legislative intent' to be bound."

Volohk argues that the "California Rule" is constitutional, but it is bad public policy.  (He believes that states should be allowed to change the rate at which pension benefits will be earned in the future):

"If the legality of the California rule isn’t the problem, what remains is pure policy."

. . . “'deferred compensation in the form of pension rights has the status of a contractual obligation from the moment one accepts public employment.'"

Colorado PERA members and retirees, please take note that the Colorado PERA Board of Trustees, through their lobbyists, are asking much more from the Colorado Supreme Court than simply eliminating Colorado's historical embrace of the "California Rule." 

Colorado PERA is asking that: (1) the California Rule be abandoned in Colorado public pension legal doctrine, (2) fully-vested contractual rights of current PERA retirees be discarded, and (3) certain specific accrued public pension benefits (COLAs) in our state be deemed gratuities, (of course, a finding that would itself conflict with the Colorado Constitution's prohibition against gratuities.)

In his paper, Volokh channels former Colorado Governor Bill Owens . . .

"The inability to adjust pensions for existing employees may also lead to a bias in favor of replacing existing employees with new ones or encouraging existing employees to leave . . ."

(My comment: Recall that this was Governor Bill Owens' plan 14 years ago when he initiated the PERA "service credit fire sale" to encourage the early retirement of older, "more expensive" PERA members and (as has been documented) shift labor costs from PERA-affiliated employers [Colorado state and local governments] to the Colorado PERA trust funds.)

Volokh:

"How much leeway to modify public pensions does a 'fiscal emergency' offer?  Not much.  As the Allen rule says, one can modify pension rights before retirement for the sake of flexibility in light of changed conditions, but the changes must be reasonable, which means both that they need to have a relation to pension theory and must compensate for disadvantages with comparable advantages.  Clearly, merely reciting the need to shore up pensions is insufficient, and arguments in favor of COLA caps that 'the integrity of the pension system is strengthened when it can be determined with certainty what the obligations of the system are' are likewise insufficient."

To some conservatives (specifically, former United States Senator Hank Brown) the breach of Colorado state contracts is (in Hank Brown's words) "Colorado Courage."  The legal analysis of the conservative Volokh truly sets former Colorado U.S. Senator Hank Brown's simple-minded arguments in bold relief.

Volokh:

"In United Firefighters, the Court of Appeal rejected the contention that the modifications were necessary to preserve the soundness of the system because it held that the fiscal crisis was caused by the government’s own conduct in inadequately funding the system: 'a public entity cannot justify the impairment of its contractual obligations on the basis of the existence of a fiscal crisis created by its own voluntary conduct.'"

"And even if the modifications are justified by sound pension theory, this doesn’t prevent the government from having to offer compensating advantages.  So the ability to modify pensions seems to be of little help in resolving a fiscal crisis."

"Another possibility would be a state constitutional amendment abolishing the California rule and establishing that pension statutes only entitle the employee to that portion of the pension accrued so far."

Volokh on the Colorado Court of Appeal's 2012 support for contractual rights to accrued PERA COLA benefits, reversing the Denver District Court:

"The Colorado lower-court case, Justus v. State, No. 2010-CV-1589 (Colo. Dist. Ct. June 29, 2011), has now been reversed, 2012 WL 4829545 (Colo. App. Oct. 11, 2012), and cert. has been
granted by the Colorado Supreme Court, 2013 WL 4008216 (Colo. Aug. 5, 2013)."

Link to the Volokh article:

http://www.fed-soc.org/publications/detail/overprotecting-public-employee-pensions-the-contract-clause-and-the-california-rule

Alexander Volokh's paper was written for the Federalist Society.  What is the Federalist Society?

"The Federalist Society for Law and Public Policy Studies, most frequently called simply the Federalist Society, is an organization of conservatives and libertarians seeking reform of the current American legal system."

"The Society asserts . . . that it is emphatically the province and duty of the judiciary to say what the law is, not what it should be."

"The Lawyers Division consists of over 30,000 legal professionals and others interested in current intellectual and practical developments in the law.  It has active chapters in sixty cities, including Washington, D.C., New York, Boston, Chicago, Los Angeles, Milwaukee, San Francisco, Denver, Atlanta, Houston, Pittsburgh, Seattle, and Indianapolis."

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

The Federalist Society has a Denver Chapter.  Our State Treasurer, Walker Stapleton, spoke to the Denver group of the Federalist Society in 2011:

http://www.fed-soc.org/events/detail/colorados-pera-unfunded-liabilities-require-a-fix

Who is Alexander Volokh?  "Alexander 'Sasha' Volokh is an Associate Professor at Emory Law School.  An economist by training, he has written numerous articles on law and economics, privatization, antitrust, prisons, constitutional law, regulation, and legal history."

http://www.fed-soc.org/doclib/20140103_VolokhPublicPensionsWP.pdf

Colorado PERA retirees, continue to demonstrate strength, unity, and sophistication in defending your contractual rights!

This is the House that Mark Built.

This is the House that Mark Built.

This is the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the Colorado PERA pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the Governor who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the political party, also represented by Mark, divided by the PERA contract breach, that nominated the Governor, who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the new Supreme Court Justice, who "hosted campaign events" for and contributed to the campaign of the Governor, and was first appointed to the bench by this Governor, a member of the political party, also represented by Mark, divided by the PERA contract breach, that nominated the Governor, who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the now-defunct law firm, a former employer of Mark, that served as local counsel to the National Committee of the aforementioned political party, and also employed as a "shareholder," the new Supreme Court Justice, who "hosted campaign events" for and contributed to the campaign of the Governor, and was first appointed to the bench by this Governor, a member of the political party, also represented by Mark, divided by the PERA contract breach, that nominated the Governor, who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the former Colorado Supreme Court Justice, an evaluator of Colorado judges and a current political activist, who wrote the legal opinion justifying the PERA pension contract breach, and created, with Mark, a judicial integrity organization, and who has served as co-counsel with employees of the now-defunct law firm, a former employer of Mark, that served as local counsel to the National Committee of the aforementioned political party, and also employed as a "shareholder," the new Supreme Court Justice, who "hosted campaign events" for and contributed to the campaign of the Governor, and was first appointed to the bench by this Governor, a member of the political party, also represented by Mark, divided by the PERA contract breach, that nominated the Governor, who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the public pension administrator that, incredibly, for many years, was ALSO represented by Mark, that used retiree trust fund assets to pay for the lobbyists, and the public relations personnel and all of the lawyers, who ran the campaign, to take property from those same retired trust fund beneficiaries, in the hopes of inflating away government debts and breaking the pensioners' contracts, and that solicited the legal opinion from the former Colorado Supreme Court Justice, an evaluator of Colorado judges and a current political activist, who wrote the legal opinion justifying the PERA pension contract breach, and created, with Mark, a judicial integrity organization, and who has served as co-counsel with employees of the now-defunct law firm, a former employer of Mark, that served as local counsel to the National Committee of the aforementioned political party, and also employed as a "shareholder," the new Supreme Court Justice, who "hosted campaign events" for and contributed to the campaign of the Governor, and was first appointed to the bench by this Governor, a member of the political party, also represented by Mark, divided by the PERA contract breach, that nominated the Governor, who signed into law the pension contract breach, that shifted government debts onto the backs of PERA pensioners, that was supported by the public sector union, represented by Mark (that tossed its retired "brothers and sisters" under the bus) and took their property, to minimize the pension contributions of active "dues-paying" unionists, and ignored the Contract Clause, and sullied the Labor Movement, that funded, in part, the house that Mark built.

This is the public pension rights blogger who apologizes to Mark, and recognizes his talents, and understands his zeal that benefits the party, yet who grows battle-weary, after having followed the money, and asked for justice, and for the rule of law, and for the sanctity of contracts, and who remains certain that the State of Colorado and the Colorado Democratic Party are better than all this.

Montana Considers Ditching Term Limits.

From washingtonpost.com:

“'Term limits have created a much more divisive and uneducated legislature in Montana,' said state Sen. John Brendan (R), of Scobey, near the borders with Canada and North Dakota. 'Now under term limits, we have sophomores and sometimes freshmen heading committees, as they only have eight years of service.'”

"State Sen. Tom Facey, a Missoula Democrat, said it can take six to ten years to pass comprehensive legislation, and several sessions to learn enough about complex topics like education funding and taxes.  State Rep. Kris Hansen, a Havre Republican, said term limits mean the legislature is led by less experienced leaders."

“'Term limits need to change so that the institutional knowledge can be transferred from one generation to the next,' said Rep. David “Doc” Moore (R) of Missoula.  'Currently we are only hurting ourselves.'”

"The Montana legislature is one of the least experienced in the country.  At the start of the 2013 session, more than 70 percent of the state House had served two terms or less."

“'One might ask, where in private business, after having been in your job for nine months, are you qualified to be senior management?' Miller said."

“'The strongest branch of government is the executive and the lobbyists,' said state Sen. Mary Caferro (D), who said she had voted for term limits when they were on the ballot in the early 1990s."

(Gratuitous pet issue reference:  In my opinion, the fact that so many Colorado state legislators had so little knowledge of public pension administration and public pension legal doctrine in 2010 largely explains the ability of 27 statehouse lobbyists to push a Colorado PERA pension contract breach through the legislative process that year.  This epic blunder will cost the state millions of dollars spent on fruitless litigation and further run up the state's PERA pension debt, [that has already been run up by the Legislature's failure to pay its PERA pension bills for the last decade.]

Washington Post:

"Several states that instituted term limits in the early 1990s have already rolled back those laws. State supreme courts threw out term limits in Oregon, Washington and Wyoming, while legislators in Utah and Idaho voted to scrap limits about a decade into the experiment."

Link to complete Washington Post article:

http://www.washingtonpost.com/blogs/govbeat/wp/2013/10/25/montana-legislators-debate-rolling-back-term-limits/

Visit saveperacola.com.

Congratulations to Our New Colorado Supreme Court Justice.

Congratulations to newly-appointed Colorado Supreme Court Justice William Hood III.  As a critic of the Colorado General Assembly's 2010 breach of Colorado PERA pension COLA contractual obligations, I have more than a passing interest in the Colorado Supreme Court justices who will render a decision in the case (Justus v. State.)  In the past, Justice William Hood has been employed by a (now-defunct) law firm, Isaacson Rosenbaum, P.C. that has represented a defendant in the Colorado PERA retiree COLA lawsuit, Justus v. State.  In spite of the fact that Justice Hood has worked for Isaacson Rosenbaum P.C. (with an attorney, Mark Grueskin, who has represented the defendant in the case, Justus v. State) I have full confidence in Justice Hood's judicial impartiality and fairness.  Nevertheless, in litigation, it is always best that all current and former relationships be openly acknowledged.

Isaacson Rosenbaum's work for Colorado PERA:

"Both the state and PERA filed motions in May asking the court to dismiss six of the eight claims contained in the plaintiffs’ case.  The state is represented by the Attorney General’s office; PERA’s lead attorneys are Mark Grueskin and Edward Ramey of Isaacson Rosenbaum, PC."

http://coloradostatesman.com/content/991958-ruling-pera-bill-expected-shortly

"Among those representing PERA are two well-known Denver governmental affairs lawyers, Mark Grueskin and Edward Ramey of the Isaacson Rosenbaum firm."

http://www.ednewscolorado.org/2010/05/13/pera-responds-to-retiree-lawsuit/comment-page-1

Justice William Hood's work at Isaacson Rosenbaum:

"Before moving to the bench, Judge Hood was a shareholder at Isaacson Rosenbaum P.C., where he did both civil and criminal trial work."

http://www.law.du.edu/index.php/profile/judge-will-hood

"Hood, 50, has been a Denver District Court judge since 2007.  Prior to becoming a judge, Hood practiced at the private firm Isaacson Rosenbaum."

http://www.denverpost.com/breakingnews/ci_24389795/hickenlooper-appoints-new-colorado-supreme-court-justice

"Prior to becoming a judge, Hood was in private practice at Isaacson Rosenbaum P.C., where he was a shareholder from 2005-2007 and of counsel in the litigation department from 2003-2005."

http://kdvr.com/2013/10/25/hickenlooper-will-name-william-hood-to-colo-supreme-court/

Apparently, in 2006, Isaacson Rosenbaum was representing Colorado PERA (while Justice Hood was a shareholder):

"Colorado PERA files motion challenging (2006) ballot initiative."

"The motion was filed on behalf of attorneys Mark G. Greuskin and Edward T. Ramey of the Denver Law Firm Isaacson Rosenbaum, P.C."

https://www.copera.org/pdf/NewsReleases/2006/Initiative.pdf

Law Week online:

"Redistricting Judge, Dem Lawyer Worked At Same Firm."

"Asked about a possible conflict between himself and the judge, Grueskin said, 'Even before you get to the issue that he and I were formerly colleagues, he may have a docket that’s full.'"

"Grueskin explained that the redistricting case must be decided well before the Feb. 7 caucuses, and 'typically there will be some reallocation if necessary because not every judge’s docket would accommodate that.'”

http://www.lawweekonline.com/2011/05/redistricting-judge-dem-lawyer-worked-at-same-firm/

From clearthebenchcolorado:

"However, the case may not remain with Judge Hood, due to his past association (working together at the same law firm) with Democratic attorney Mark Grueskin, as also reported by Law Week online: Denver District Judge William Hood, who was randomly assigned to hear Colorado congressional redistricting lawsuits filed Tuesday by Republicans and Democrats, once was a law-firm colleague of the lead attorney for the Democratic side."

"Before his appointment to the Denver bench in 2007, Hood worked at Isaacson Rosenbaum, the firm that until recently employed Democratic Party lawyer Mark Grueskin."

http://www.clearthebenchcolorado.org/tag/colorado-judiciary-project/page/2/

“ . . . Matt Arnold appeared on the Your Show television program [moderated by Adam Schrager,] debating former Colorado Supreme Court justice Jean Dubofsky [my note, author of the 2009 Colorado PERA "COLA-taking" legal opinion] representing the 'Colorado Judiciary Project' [a legal-establishment special-interest group formed by Democratic state party attorney and Mark Grueskin.]”

http://www.clearthebenchcolorado.org/tag/devils-advocate/

Denver Post:

"Gov. John Hickenlooper on Friday announced his appointment of Denver District Court Judge William Hood III as the 103rd Colorado Supreme Court justice."

"Hood will fill the vacancy created next year when Supreme Court Chief Justice Michael Bender retires.  Bender, who will step down Jan. 7, has served on the Supreme Court since 1997 and as chief since 2010."

"'He (Hood) has consistently demonstrated an ability to fairly apply the law while administering justice,' Hickenlooper said. 'His breadth of experience on both sides of the courtroom is invaluable to informed decisions.'"

"Hood, 50, has been a Denver District Court judge since 2007.  Prior to becoming a judge, Hood practiced at the private firm Isaacson Rosenbaum.  He also served as a prosecutor for the 18th Judicial District Attorney's office."

http://www.denverpost.com/breakingnews/ci_24389795/hickenlooper-appoints-new-colorado-supreme-court-justice

Isaacson Rosenbaum's recent (2011) closure:

"Venerable 50-year-old Denver law firm Isaacson Rosenbaum will wind up operations and close at the end of June, people familiar with the situation today told Law Week Colorado."

"The firm, which lists 23 shareholders and five associates on its website, was a victim of the 2008 economic downturn, a heavy emphasis in real estate law and an expensive office lease at the recently renovated 1005 17th St."  "It wasn’t immediately known where all of its top attorneys would land."  "Ramey and Lawrence joined Heizer Paul Grueskin, and Corrada is moving to Lapin & Lapin."

http://www.lawweekonline.com/2011/06/breaking-isaacson-rosenbaum-will-close-at-months-end/

CBSLocal.com:

"The 50-year-old Hood has been a Denver District Court judge since 2007.  He’s also an adjunct professor at the University of Denver."

"Hickenlooper said geography was a consideration but that his top priority was finding the best fit to represent all of Colorado."

http://denver.cbslocal.com/2013/10/25/william-hood-iii-named-new-colorado-supreme-court-justice/

From Justice Hood's Colorado Court Biography:

"Some of his legal writing on trial work and criminal procedure has been published by the Colorado Lawyer and the Virginia Law Review.  Judge Hood is also a certified instructor for the National Institute of Trial Advocacy and a past member of the Denver Bar Association’s Board of Trustees."

http://www.courts.state.co.us/Bio.cfm?Employee_ID=560

Justice William Hood also has experience with Colorado PERA litigation:

From "Tracey Lawless v. Standard Insurance Company and Colorado PERA":

"In sum, Standard’s Motion to Dismiss Plaintiff’s first and second claims is denied.  Summary judgment enters in favor of PERA and against Plaintiff on Plaintiff’s first, second, and third claims for relief."

"Statutory interpretation is a question of law.  Sperry v. Field, 205 P.3d 365, 367 (Colo. 2009). 'A reviewing court begins the analysis with the plain language of the statute.  If the statute is clear and unambiguous on its face, then the court need look no further.' Id. The statutory scheme should be considered as a whole, giving 'consistent, harmonious and sensible effect to all its parts.' People v. Luther, 58 P.3d 1013, 1015 (Colo. 2002)."

(My comment: The plain language of the Colorado PERA statutes identifies accrued, "automatic," Colorado PERA COLA benefits as a contractual obligation of Colorado PERA-affiliated employers.

According to the September 29, 2010 version of the Legislative Drafting Manual, the Colorado Legislature’s lawyers believe that “shall” means mandatory.  The lawyers have another word that they use if they want to indicate that an action is discretionary. That word is “MAY.”

Colorado Legislative Drafting Manual, Revised 9/29/2010:

Drafting Manual, page 5-15 – “In the statutes, ‘shall’ should be used to indicate a command.”
Drafting Manual, page 5-18 – “Use the word ‘shall’ in statutory directions or requirements.”
Drafting Manual, page 5-19 – “‘Shall’ indicates a command.”
Drafting Manual, page 5-19 – “Use ‘may’ to grant discretion.”

The provision in Colorado law providing the contracted Colorado PERA 3.5 percent COLA benefit (prior to its retroactive alteration by SB10-001) read:

Colorado Law – Section 24-51-1002 (1), Colorado Revised Statutes, “ . . .the cumulative increase applied to benefits paid SHALL be recalculated annually as of March 1 and SHALL be the total percent derived by multiplying three and one-half percent, compounded annually, times the number of years such benefit has been effective . . .”

Under Colorado law, members of Colorado PERA who purchase PERA service credit SHALL receive Colorado PERA pension benefits in effect at the time of the purchase:

Colorado Law – Section 24-51-502 (3), Colorado Revised Statutes, “Service credit purchased by members . . . SHALL be subject to the benefit provisions in effect for the existing member contribution account.”

In November of 2011, the Colorado General Assembly’s Legislative Drafting Manual was revised.  Drafting rules (on pages 5-16 through 5-20) relating to use of the word “shall” in Colorado law were changed.  According to the November 29, 2011 version of the Legislative Drafting Manual, “shall” now means “has a duty to.”  (Note that the date of revision on the Legislative Drafting Manual is found on the final page of the document.)

From the November 29, 2011 Legislative Drafting Manual:

“Shall” means that “a person ‘has a duty to.’"

“(a) Shall. Use ‘shall’ to impose a duty on a person.  ‘Will’, ‘must’, and ‘should’ should not be used as a substitute for ‘shall’.”

“(II) When using ‘shall’ to mandate an action in which the outcome is in the discretion of the actor, include alternative actions the actor may take:

Avoid: The commissioner shall approve an application within thirty days.

Write: The commissioner shall approve or deny an application within thirty days.

(c) May. Use ‘may’ to permit or grant discretion or authority with regard to a thing or person.”

In my mind, it doesn’t really matter whether Colorado PERA is “commanded” to provide the 3.5 percent contracted COLA benefit, or Colorado PERA “has a duty” provide the 3.5 percent contracted COLA benefit.  Under either set of legislative drafting definitions, Colorado PERA is required by law to pay Colorado PERA retirees their contracted, accrued 3.5 percent COLA benefit as deferred compensation.  Thus, Colorado PERA and the State of Colorado are currently in breach of contract.)

From Tracey Lawless v. Standard Insurance Company and Colorado PERA:

"If the statute is ambiguous, the court looks to the statute’s legislative history, the consequences of a given construction, and the overall goal of the statutory scheme to determine the proper interpretation of the statute.” Sperry 205 P.3d at 367.  Therefore, it is appropriate for me to look beyond the plain meaning of the words, including the statute’s legislative history, the consequences of a given construction, and the overall goal of the statutory scheme to determine the proper interpretation of the statute."

http://www.svs-law.com/_images/Order%20MSJs%20&%20MTD%20010412.pdf

Legislative history of the PERA COLA benefit:

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.])

Justice Hood's Judicial Performance Review:

"As a result, prior to taking his seat on the bench, Judge Hood completed several courses in domestic relations matters and read extensively on the subject to advance his skills in this area. Judge Hood was highly rated by the attorneys in the areas of case management, overall application and knowledge of the law, communication and demeanor. The non-lawyers surveyed found him to be fair, compassionate, and an effective communicator."

http://www.coloradojudicialperformance.gov/retention.cfm?ret=719

Justice William Hood is knowledgeable on the subject of spousal maintenance:

"- Spousal Maintenance 2013 – Gary Polidori, Denise Mills , and Hon. William Hood III."

http://cle.cobar.org/HomeStudies/productinfo/productcd/FL080913D.aspx#.Umvwbr7na4M

Justice Hood helped write Colorado's new divorce law:

"Judges, including William Hood of the 2nd Judicial District and Angela Arkin of the 18th Judicial District, helped craft the law, so that it would work for families and courts in the way that those who drafted the law intended."

http://www.denverpost.com/breakingnews/ci_24340928/new-law-changes-alimony-landscape-divorcing-colorado-couples

"New law changes alimony landscape for divorcing Colorado couples."

"Divorcing couples will face dramatic changes — and significant uncertainty — related to alimony after a new state law goes into effect on Jan. 1."

"Judges, including William Hood of the 2nd Judicial District and Angela Arkin of the 18th Judicial District, helped craft the law, so that it would work for families and courts in the way that those who drafted the law intended."

http://www.canoncitydailyrecord.com/ci_24346211/new-law-changes-alimony-landscape-divorcing-colorado-couples

From the recent Act, House Bill 13-1058:

"CONCERNING GUIDELINES FOR THE DETERMINATION OF SPOUSAL MAINTENANCE."

"(c) (I) 'GROSS INCOME' MEANS INCOME FROM ANY SOURCE AND

INCLUDES, BUT IS NOT LIMITED TO:

(H) PENSION PAYMENTS AND RETIREMENT BENEFITS ACTUALLY RECEIVED THAT HAVE NOT PREVIOUSLY BEEN DIVIDED AS PROPERTY IN THIS ACTION, INCLUDING BUT NOT LIMITED TO THOSE PAID PURSUANT TO ARTICLES 51, 54, 54.5, AND 54.6 OF TITLE 24, C.R.S., AND ARTICLE 30 OF TITLE 31, C.R.S."

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont2/DF14C3B93C0EBF9387257A8E0073C4E0/$FILE/1058_enr.pdf

"Like the child support statute, the list defining income is lengthy, and can include most sources, such as income from employment, self employment, retirement or pension pay . . ."

http://www.denverdivorceattorneyblog.com/2013/03/changes-coming-related-to-colo-1.html

"Accrued or vested retirement benefits are community property. This means they need to be divided in a divorce."

http://www.legalzoom.com/divorce-guide/retirement-benefits-divorce.html

"You can value this (defined benefit pension) plan in one of two ways.  First, an actuary or accountant can mathematically compute the present-day value of the future income stream from the plan.  Second, rather than using a present-day cash value, you can divide the future income stream by a Domestic Relations Order.  The present-day cash value of the retirement benefit may be a substantial amount, especially for an employee who has participated in the plan for a long period of time.  A divorcing spouse may benefit from using this valuation method as a tactic to encourage the other spouse to trade an interest in the pension for a different asset."

"Some states and some judges will not value a defined benefit plan by the present-day cash value method.  In these instances, the court may choose to divide the pension account by a Domestic Relations Order rather than award the pension to the participating spouse."

http://smartdivorce.com/articles/retirement.shtml

If the 3.5 percent Colorado PERA COLA is not a contractual obligation of Colorado PERA-affiliated employers, and can be legally "clawed back," must all past Colorado divorces that have involved a division of PERA annuities be revisited?

From saveperacola.com:

"Finally, it appears that Judge Hyatt has previously ruled that the statutory PERA COLA provisions are a contractual obligation of PERA plan sponsors."  "A comment from 'Alan B' was posted in the on-line version of the Denver Post regarding his divorce case.  If Alan’s post is authentic and accurate it makes one wonder whether or not Judge Hyatt believes the COLA (aka, annual benefit increase) is contractually protected.  Here’s what Alan wrote: 'What truly confounds me in this case is that Judge Hyatt ruled the opposite in my divorce case. Which only shows what I have read before that it takes the courts 5 to 10 years to figure something out. He ruled that my wife was entitled to her share of PERA discounted at the legal rate assuming that PERA would pay my pension compounded at 3.5 percent for the rest of my life. Her lawyers argued that her social security could not be guaranteed yet the PERA could be. Judge Hyatt ruled for her and in this case he ruled the opposite of what he had ruled in the current case. Is the 3.5 percent annual adjustment guaranteed or not, Hyatt has spoken on the record, yes and no.'”

How can the 3.5 percent PERA COLA obligation be recognized as a contractual obligation in Colorado divorce cases by Judge Hyatt, if the 3.5 percent PERA COLA obligation is not itself a contractual obligation?

Coincidently, Mark Grueskin's daughter (Abigail Grueskin) has also worked for Colorado PERA.  She is young, talented and just beginning her professional life.

"Brainstormed, edited, and assisted in the editorial process of Colorado PERA’s newly created sub-branding effort, 'The Dime Colorado'."

. . . as well as for Isaacson Rosenbaum, "Records Assistant, Isaacson Rosenbaum P.C., Facilitated the implementation of the firm's record retention and storage policy.  Interacted with various lawyers and staff members to acquire accurate data"

http://www.linkedin.com/pub/abigail-grueskin/50/723/482

More relationships:

"Par Sponsors: Litvak Litvak Mehrtens and Epstein, P.C. (by Steve Epstein), Mark Grueskin & Lola Farber Grueskin & Family, Sam Mamet & Judith Cassel-Mamet & Family . . ."

http://www.micahdenver.org/blog/?p=623

In the rarefied environment of the Colorado legislative arena many of the key players are acquainted.

Sam Mamet is Executive Director of the Colorado Municipal League (CML.)  Some of CML's municipal members have benefited from the Colorado General Assembly's use of approximately $700 million in state revenue to pay off legacy local government pension debts (Old Hire Fire and Police pension obligations) that are not the contractual obligation of the State of Colorado.  Many of these past legislative appropriations, to cover Colorado local government debts, were made during years in which the Colorado General Assembly failed to pay its full Colorado PERA pension bill (ARC.)  An appropriation of $142 million in state revenue was made for this purpose (paying local government legacy pension debts) at the 2013 legislative session.

From KDVR:

“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/

FPPA CHIEF EXECUTIVE OFFICER: THESE LOCAL GOVERNMENT PENSIONS ARE NOT A CONTRACTUAL OBLIGATION OF THE STATE OF COLORADO.

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

Colorado Municipal League:

"Mark Grueskin is a partner with the Denver law firm of Heizer Paul Grueskin LLP."

"Formerly a political campaign manager, Mark has worked as a lawyer on election related issues for more than 25 years."

"Mark served as Deputy Legislative Director for the Governor of Colorado and as the Governor’s Legal Counsel before re-entering private practice."

http://www.cml.org/uploadedFiles/CML_Site_Map/_Global/training/atty_bios.pdf

Colorado PERA active and retired members.  Continue to support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Illinois Senate President: The Public Pension “Crisis” Has Been Manufactured to Lower Taxes.

To the extent that state legislatures (such as the Colorado General Assembly) can break state contracts, escape their debts, ignore state constitutions, and push the debts of all taxpayers onto a small group of pensioners . . . well, taxes can be further reduced, and votes will be won.  Politics is a ruthless, dirty business.  Politicians are not beyond using the force of government to illegally seize property to curry political favor.  Only the courts can prevent such immoral, extralegal behavior.

As we have seen, the Colorado General Assembly has skipped out on its Colorado PERA public pension bills for a decade, and now seeks to escape its accumulated pension debts through breach of Colorado PERA pension COLA contractual obligations (SB10-001.)  For several years now, Illinois' politicians have also toyed with the idea of taking contracted, accrued, earned, "automatic," public pension COLA benefits in order to escape their debts.  After all, the State of Illinois is the poster child of public pension mismanagement and underfunding among the states.  Illinois Senate President John Cullerton has been among those pondering a potential pension contract breach, a contract breach advocated by corporate interests in his home state.  Yesterday, (October 20, 2013) Senator Cullerton finally admitted what public pensioners in the United States already know.  This modern public pension "crisis" in the United States has been manufactured, and promoted by corporate interests seeking to lower their tax burdens.  In Colorado, lobbyists for the business organization, Colorado Concern, supported the bill taking contracted PERA COLA benefits in 2010, SB10-001.

In the 1950s, public pensions in the U.S. typically had funded ratios in the 50-60 percent range.  Several U.S. public pension systems currently have comparable levels of funding.  Yet, in the 1950s, no claims of a financial "crisis" among U.S. public pension systems were made by politicians overseeing these pension systems.  Why is this?  Answer: In the 1950s, a well-funded, self-interested, corporate noise machine promoting such a public pension "crisis" did not exist.

Chicago Tribune:

"Illinois Senate President John Cullerton said Sunday that the state's massive public employee pension debt is not a 'crisis,' but instead an issue being pushed by business-backed groups seeking lower income taxes at the expense of retiree benefits."

"'People really misunderstand the nature of this whole problem.  Quite frankly, I don't think you can use the word 'crisis' to describe it at the state level,' Cullerton said in an interview on WGN-AM radio."

"'It's something we have to deal with, but it's not something that we're on the verge of bankruptcy on,' Cullerton said."

(My comment: As Senator Cullerton knows, state governments cannot declare bankruptcy under federal law.)

Chicago Tribune:

"A bipartisan House-Senate panel has been meeting since June in an attempt to come up with a plan to alter retirement benefits without running afoul of a state constitutional prohibition against diminishing or impairing pensions."

"Still, Cullerton said that under a 1996 law aimed at gradually boosting the amount of money put into the state's pension funds to eventually get them funded at 90 percent of their liability, payments to the retirement systems are already near their highest level and require only small annual future increases to stay on track."

"As a percentage of state general revenues, pension payments would continue to be about one-fifth of the state's general revenues through 2044, his office said."

(My comment: Colorado's public pension obligations are a fraction of the pension obligations of the State of Illinois.  These obligations represent a few percentage points of revenue that will be received by Colorado governments over the next five decades, an insignificant portion of future Colorado state GDP.  Nevertheless, in 2010, many Colorado politicians were persuaded by lobbyists to attempt the PERA COLA contract breach, taking one-third or more of a pensioners contracted benefit.)

Chicago Tribune:

"But the Senate president also noted that the state's personal income tax rate is scheduled to fall from 5 percent to 3.75 percent, and the corporate rate is supposed to drop to 5.25 percent from 7 percent in 2015.  The loss of revenue is estimated at about $5.4 billion."

"'But the pension reform then is about tax reduction — not about the solvency of the pension fund or about diverting money to spend more money for education,' he added."

(My comment: Colorado politicians, former Governor Bill Owens in particular, have made a habit of cutting state revenues that would otherwise be available to meet Colorado state contractual obligations.  Governor Bill Owens also advocated and signed legislation that shifted labor costs from Colorado governments to the PERA pension system.  Having cut available revenues, skipped PERA pension payments, mismanaged the PERA pension system, effectively borrowed from the PERA pension trust funds, and run up the Colorado PERA debt, Colorado politicians now pursue their "solution," namely, abrogation of state contracts.)

Chicago Tribune:

"Cullerton said the conference committee's pension framework represents savings equivalent to lowering the state income tax by 0.25 percent."

"'That's really what it's about.  Now, I wouldn't call that a crisis.  I think people should put that in perspective,' he said.  'Keep in mind, it's not going bankrupt. The money that we save by lowering those benefits is going to be used to lower the tax rates.'"

"Cullerton contended top business organizations were pushing the pension changes for the benefit of lower taxes and that the public was generally supportive because many people have been moved to 401(k)-style defined-contribution plans from the defined-benefit type of plans that state retirees receive."

http://www.chicagotribune.com/news/politics/clout/chi-cullerton-pension-debt-not-a-crisis-but-about-lowering-taxes-20131020,0,4245590.story

WSILTV.com:

"The Chicago Democrat told WGN Radio that the pension shortfall is not an imminent crisis, but that finding a solution can help keep Illinois' income taxes down."

"Cullerton made the remarks as lawmakers head back to Springfield to begin their fall veto session Tuesday.  They face considerable pressure to deal with the pension problem, considered the nation's worst."

http://www.wsiltv.com/news/local/Cullerton-Illinois-Pension-Problem-Not-Crisis-228638501.html

A few interesting comments made on yesterday's Chicago Tribune article:

"If there is any crisis (in Illinois) then it was caused by lowering taxes, and by giving tax incentives to corporations, in the first place.  Let's not lose sight of the fundamental issue: the state and localities failed to pay MANDATED pension contributions ('borrowing') and now refuse to repay the money they 'borrowed'.  This is wage theft, pure and simple.  If the state refused to pay out tax refunds – claiming it was borrowing them – and then years later said 'sorry, we won't repay you the money we borrowed' it would be called a default, and the interests pushing to steal pensions now would be outraged."

"This is a zero sum game, that the 1% don't want to lose, Simple as that."

Illinois' Corporate Interests Lobbied for a Downgrade of Illinois State Debt to Support Their Manufactured Pension "Crisis."

"Not only was (Ty) Fahner (of the Civic Committee of the Commercial Club of Chicago) open about how aggressive the lobbying by the CEOs for the downgrade had been, and didn’t disagree with the questioner who called it irresponsible (as in 'we know we are doing harm to promote what is good for us'), he said they’d had to back off because they didn’t want their handiwork to be too visible, and was exhorting people in the room to take up the campaign for him."

"I asked a colleague who had worked for Moody’s in the 1990s why outside parties were allowed to influence ratings."

"When I first read about the downgrade, my reaction had been that Rahm must have pushed for it.  My colleague had a similar reading."

"Also, I’m pretty sure I read in last couple of days that Rahm himself lobbied Moody’s to downgrade his state."  ". . . I’m sure his hedge fund buddies taught him all about it."

http://www.nakedcapitalism.com/2013/07/chicago-ceo-club-with-rahm-and-pritzkers-on-board-pushed-for-chicago-bond-downgrade-whacking-local-investors-and-pension-holders.html

An Illinois pension conference committee has been appointed to consider "reform" of Illinois' pensions.  The conference committee is chaired by Senator Kwame Raoul, a very engaging politician who has been, unfortunately, sucked into the Illinois pension conspiracy.

Instead of enactment of PROSPECTIVE, LEGAL public pension reform measures, Senator Raoul recently expressed support for shifting the debts of all Illinois taxpayers onto the backs of a relatively small group of the state's elderly.  Illinois' plutocrats are smiling.

"Sen. Kwame Raoul, Chicago:

Raoul, the committee chairman, who considered a campaign for governor, says he remains optimistic a plan can be brought for a vote in the coming weeks.  Last spring he supported a Senate-backed plan that would have given retirees an option of the benefits received during retirement, saving $58 billion according to Senate estimates. He now is pushing the $138 billion savings plan.  It includes a provision that would reduce a current 3 percent annual compounded cost-of-living adjustment in retirement benefits to half the rate of inflation and a reduction in employee contributions by one percent — a concession to state employees for other sacrifices."

http://www.pjstar.com/free/x1155177197/Illinois-pension-panel-split-on-proposed-fix

Kwame Raoul on Illinois public pension retiree COLA benefits:

"It’s identical in that aspect (the plan’s primary component is changing a 3 percent compounded cost-of-living increase to a percent equal to half of the inflation rate)."

"One of the attractive aspects is the notion of inflation protection for the employees and retirees. And that’s attractive both from just a moral standpoint and from making an argument of constitutionality in terms of having something offered."

(My comment: Senator Raoul, breaking a contractual public pension COLA obligation is not at all "attractive from a moral standpoint," nor is it "constitutionally permissible."  Taking something from a person is not giving something to a person.  Illinois' public pensions have "automatic," contracted COLA benefits.  Public pension COLA benefits are deferred compensation, presently earned.  It looks like Kwame wants to see the State of Illinois "inflate away" its pension debt, by taking money from the elderly.

Note that some members of the Illinois Legislature are at least paying lip service to the constitutionality of reform proposals [proposing that something must be "offered" to Illinois pensioners to compensate for the theft of their contacted COLA benefits.]  In 2010, the Colorado state legislators who supported the breach of fully-vested Colorado PERA pension COLA contractual obligations made no pretense of "offering" anything to affected PERA pensioners.  The 2010 Colorado PERA pension COLA taking was brazen.)

http://www.chicagolawbulletin.com/Articles/2013/07/30/dispatch-7-30-2013.aspx

A pension reform bill in Illinois will not pass court muster if a "less drastic" reform is available to the Legislature.  Numerous "less drastic" public pension remedies are indeed available to the Illinois Legislature.  The Illinois Legislature could simply extend its recent income tax hike to pay down the state's pension debt.  This solution has the advantages of unquestionable morality and constitutionality.  It is perfectly legal and moral for governments in the United States to pay off their accumulated debts.

The State of Illinois could impose a financial transaction tax that would be collected by securities exchanges in the state.  Dozens of nations around the world impose such a "FTT."  A one dollar tax per transaction on Illinois exchanges (a fraction of the level of such assessments in place in other countries) would raise billions of dollars, have an inconsequential impact on the securities industry, and allow the State of Illinois to pay its accumulated debts.  The FTT would be paid by the industries that created a real financial crisis in 2008-09, driving down public pension funding ratios.  The Illinois Supreme Court should take note of the fact that the imposition of a small FTT to meet Illinois' contractual obligations is manifestly a "less drastic" option than the breach of Illinois state contracts.  IF THE STATE OF ILLINOIS BREAKS ITS PUBLIC PENSION CONTRACTS, THIS BREACH OF CONTRACT WILL HAVE BEEN A CHOICE RATHER THAN A "NECESSITY."  Illinois public employees did not cause the pension crisis, they have made uninterrupted pension contributions, unlike the State of Illinois.

The Illinois Legislature could consider reforming the state tax system, closing corporate tax loopholes that cost the state billions of dollars.  The Illinois Legislature could consider re-amortizing the state's pension debt over the life of the debt, 50-70 years.  (See Ralph Martire's public pension refinancing plan for Illinois.

http://www.sj-r.com/opinions/x1665859717/Ralph-Martire-Dont-pass-unconstitutional-pension-fix)

The Illinois Legislature might consider lowering the rate of FUTURE accrual of pension benefits in the state by reducing the public pension "multiplier" on a PROSPECTIVE basis (for pension benefits not yet accrued.)  See Professor Amy Monahan's paper: "Public Pension Reform: the Legal Landscape."  She is Professor of Law at the University of Minnesota School of Law, and the foremost expert in the U.S. on public pension contractual obligations.

But, let's be clear . . . taking "fully-vested," contracted, earned, and accrued public pension COLA benefits from current Illinois retirees is the MOST DRASTIC idea that has been put forth at the Illinois Legislature.

Senator Cullerton's legal aid Eric Madiar believes that Colorado's recent theft of fully-vested, accrued public pension COLA benefits is likely unconstitutional.  So, why would Senator Cullerton consider going down this path in Illinois?  Kick the can?

From “Public Pension Benefits Under Siege”:

“The adoption of the contractual approach by Colorado . . . however, make(s) it more likely that pension reform efforts (the COLA provisions of SB 10-001) will be found unconstitutional.”

A PDF of the Madiar paper is available on the website of the National Conference of State Legislatures at the following link:

http://www.ncsl.org/home/search-results.aspx?zoom_query=madiar%20public%20pensions

Senator Cullerton's recent statements:

"The proposal now on the table, he (Senator Cullerton) said, is "less unconstitutional than SB1."

http://www.sj-r.com/breaking/x452546738/Cullerton-backs-pension-reform-plan-to-save-138-billion

"He (Senator Cullerton) called the committee's proposal 'less unconstitutional' than the Madigan-backed plan."

http://www.chicagobusiness.com/article/20131003/NEWS02/131009900/cullerton-supports-138-billion-pension-plan

A question for Senator Cullerton: Is one pregnant woman "less pregnant" than another pregnant woman?

Another means by which Illinois' public pensions might be bolstered is elimination of the Illinois property tax breaks that have been won in the past by Illinois House Speaker Madigan's law firm and Senator Cullerton's law firm for various business interests, and use of the resulting state revenues to meet the state's contractual public pension obligations:

"Chicago Ald. Ed Burke, chairman of the City Council finance committee; Illinois House Speaker Michael Madigan; and Illinois Senate President John Cullerton.  Their firms have collectively won more than $114 million in property tax refunds for Cook County businesses since 2003, according to the Sun-Times analysis."

http://www.bettergov.org/three_top_pols_steeped_in_ethical_conflicts/

Colorado PERA active and retired members.  The campaign to break public pension contracts is nationwide and well-funded.  It is imperative that, in Colorado, we continue to do our small part to defend the contracts of vulnerable, politically weak public pensioners.  It is critical that we stand up for rights guaranteed under the U.S. Constitution.  Contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!

Virginia Legislature Vows to Begin Paying its Public Pension Bills. Colorado Legislature Prefers Breach of Pension Contracts.

The Colorado Legislature has not paid its full public pension bill for a decade.  By failing to pay its pension bills, the Colorado Legislature has effectively borrowed from the trust funds of the Colorado PERA pension system to finance state and local government operations.

In 2010, rather than paying back the money "borrowed" from the Colorado PERA pension system, rather than meeting contractual obligations and paying accrued debts, a majority of Colorado state legislators decided to attempt to break the state's pension contracts.  Few Colorado residents know about this ongoing contract breach by the State of Colorado, since most of Colorado's media tacitly support the Colorado attempt to further cut taxes in our state through breach of contract.

Like the Colorado Legislature, the Virginia Legislature has also failed, historically, to pay its public pension bills (called the pension ARC), but rather than enacting legislation to attempt a pension contract breach, Virginia state legislators now propose to actually pay their debts.  What a concept!

From the Times Dispatch:

"Currently, the state is paying about 70 percent of the pension contributions required by the VRS, but Gov. Bob McDonnell and the General Assembly agreed last year to require the state to gradually increase its contributions to 100 percent of the requirement in six years."

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill (ARC) for a decade.

2012 PERA CAFR, page 35 – "ARC Deficiency."

"In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries."

"During the past 10 years, this shortfall in funding . . . has been $3.4 billion."

https://www.copera.org/pdf/5/5-20-12.pdf

It is exceedingly ironic that the amount of money by which the Colorado Legislature underfunded its contractual PERA pension system obligations (in just 2012) is almost exactly the amount of money that the Colorado Legislature appropriated in 2013 to pay for public pensions that ARE NOT the contractual obligation of the State of Colorado.

It is simply incredible, but the Colorado Legislature, while failing to keep up with its own contractual pension obligations has transferred a total of $700 million of state funds to pay for local government pensions (Old Hire Fire and Police legacy pension debt) that is not the legal responsibility of the State of Colorado.  That's sort of like skipping your own mortgage payment to pay your neighbor's mortgage.  Your neighbor is happy, but your own mortgage company?  Not so much.

When a group of lobbyists is able to persuade elected officials to skip paying their own contractual obligations, in order to meet the contractual obligations of other organizations, rest assured that either these lobbyists are very talented, or the elected officials involved have so little knowledge of their pension obligations that they are easily manipulated.  In 2010, 27 Colorado statehouse lobbyists were registered as supporting the bill that seized Colorado PERA retiree assets, SB10-001.  Colorado legislators have relatively little knowledge of public pension administration and contractual obligations due to the fact that Colorado PERA pension administrators, lobbyists, and many Colorado public sector union officials find financial benefit in this ignorance.  These self-interested parties cut a pension COLA contract breach deal with the Leadership of the Colorado Legislature in 2009, thus an interim study committee (that would have educated Colorado legislators in the area of public pension contractual obligations) was never appointed by Legislative Leadership.

From the Richmond (Virginia) Times-Dispatch:

"'We were well aware it was going to be a significant number when we agreed to the reforms,' said Del. S. Chris Jones, R-Suffolk, chairman of the House Appropriations subcommittee on compensation and retirement. 'We’re not surprised at all.'”

"Sen. John Watkins, R-Powhatan, was the main sponsor of the reforms, including the escalating requirement on state pension funding."

"'That was the deal we made,' Watkins said Wednesday.  'Nobody is going to be happy with it, but that was the deal.'”

"The state has underfunded VRS so much that they had to pass a law so they could partially fund it,' said Henrico County Manager John A. Vithoulkas, who expects a significant increase in the county’s share of teacher pensions."

"The state still is not paying its full share of required pension contributions, which then increase unfunded liabilities."

“'Every time the full contribution is not paid, that adds a little bit to the unfunded liability,' Fernandez (Jose I. Fernandez, principal actuary for the VRS and its consulting firm, Cavanaugh Macdonald) said."

(From a publicsectorinc.ord article:

"If people are willing to look the other way at corruption in investments, they’re willing to look the other way at deliberate [public pension] underfunding, which I consider corruption as well."

"So the state is only putting in 50% of what they’re supposed to, and negative cash flows have actually hurt and dampened the investment return.  When you continue to underfund the ARC, it messes up all the usual [pension] mathematics."

"I’m more of a proponent for government in general, and I think that holding them to the ERISA standards [federal standards for private sector pensions] would get rid of a big portion of the corruption that’s out there.  A corporate pension plan could not pay half the payments for ten years like the states like Kentucky and Illinois have done.  Those guys would be in jail.  I think that public pension plans should be held to the same standard as corporate defined benefit plans. There may need to be some type of federal bailout.  If there is, we want some accountability."

Link:

http://www.publicsectorinc.org/podcasts/070613tobe.php#.UgQ3zr7nbX5)

Richmond Times-Dispatch:

"The estimate, first given to lawmakers in July by VRS Director Robert P. Schultze, has been proved accurate by an actuarial study that recommends an increase of about 3.5 percent of pay for state employee pensions and nearly 3 percent for teacher retirement just to cover 80 percent of the system’s long-term liabilities."

"The plans remain underfunded, based on the assets available to pay long-term unfunded liabilities."

"The state employee plan, with about $7.4 billion in unfunded liabilities, has a funded status of 65.1 percent.  The teacher plan, with $15 billion in unfunded liabilities, has a funded status of 62.1 percent."

"Ideally, the plans should be at least 80 percent funded, but the retirement system is still recovering from the stock market crash and recession, which slashed the value of its investments nearly 22 percent in 2009."

(My comment: Of course, equity markets have more than doubled in recent years, and in any event, public pensioners in DEFINED benefit plans bear no market risk under their statutory contracts.  Colorado PERA pension administrators seem to have forgotten this fact.

Note that the 2010 bill taking contracted PERA retiree COLA benefits, SB10-001, proposes to continue the theft of contracted PERA pension benefits until the Colorado PERA pension system achieves a 100 percent funded ratio.  That is, the Colorado legislators who voted for SB10-001 in 2010 propose to continue taking PERA retiree assets to cover state and local debt until the pension system is funded at a level 20 percent higher than the level considered to be "well-funded" for public pensions.  The pension administrators and lobbyists who developed the scheme to take property from Colorado's pensioners in 2009 decided to "Go Big."

Virginia Attorney General Kenneth T. Cuccinelli in the Harvard Journal of Law and Public Policy – "Judicial Compulsion and the Public Fisc – A Historical Overview," September 13, 2011.

Cuccinelli:

“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 [to public pension contract breach] 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 [public pension] benefits of the retired, those qualified to retire, and voluntary participants in contributory programs probably would not be worth the effort."

"The legislatures in all states have great discretion in altering benefits prospectively for those to be newly hired.”

http://www.harvard-jlpp.com/wp-content/uploads/2013/10/35_2_525_Cuccinelli_Getchell_Russell.pdf)

Richmond Times-Dispatch:

"Pressure on contribution rates also is expected to ease as new employees enter the public workforce with reduced pension benefits under reforms enacted in 2010 and again last year.  But the new hybrid retirement program adopted last year for state and local employees will not begin applying to new hires until Jan. 1."

"The law that imposed the hybrid — a combination of limited pension benefits and a 401(k) style contribution plan — also requires the state to fully fund its share of pension plans by the fiscal year that begins in mid-2018."

(My comment: Note that the Virginia Legislature has adopted PROSPECTIVE legislation to reform Virginia public pensions, whereas the Colorado Legislature has enacted blatantly RETROSPECTIVE legislation [SB10-001] addressing the Colorado PERA pension system.  Oddly, after having adopted such retrospective legislation, taking accrued benefits from retirees in the Colorado PERA pension system in 2010, two years later the Colorado Legislature adopted SB12-149 honoring the accrued pension benefits of retirees in Colorado county government pension systems.  So, if you happen to be a retiree in certain county government pensions in Colorado, your pension contract is honored.  On the other hand, if you are a Colorado PERA retiree, your pension contract has been abrogated.  A constitutional double standard on public pension contracts is now enshrined in Colorado law.)

http://www.timesdispatch.com/news/state-regional/pension-figures-prove-accurate/article_57b47a06-2a5b-5024-ab0a-ddaec7d83459.html

Colorado PERA active and retired members, clearly, the power that lobbyists have to manipulate members of the Colorado Legislature, and in particular the power of lobbyists for Colorado PERA-affiliated employers, deserves extensive scrutiny.  In SB10-001, the Colorado Legislature gave these lobbyists access to the Colorado PERA pension trust funds, through the front door.

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

Colorado AFSCME’s Involvement in the 2010 Colorado PERA Pension Contract Breach. Yet Another Colorado PERA Distortion?

In their propaganda supporting the 2010 breach of pension contracts in our state, Colorado PERA administrators have tried to justify (in part) the abrogation of state and local pension contracts by noting the support of public sector unions for the "COLA-taking" bill, SB10-001.  As we read on the Colorado PERA website:

“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

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

I have suggested, in the past, that this support may have been motivated by the fact that active union members (of course) pay union dues, while retired union members no longer contribute to union coffers.  Did this economic reality motivate union officials to "toss retirees under the bus" in 2010?  Did public sector unions support the taking of PERA retiree assets in order to minimize future PERA contributions that might be needed from their active members?  Why did we not see Colorado's public sector unions insist that Colorado PERA-affiliated employers actually pay their annual pension bills and meet their contractual obligations in 2010? 

In a recent article AFSCME (International) writes:

"The very Wall Street-backed politicians who raided and underfunded the pension systems in the first place are now 'using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities,' he writes."

http://www.afscme.org/blog/lawmakers-loot-public-pension-funds-then-blame-retirees-for-underfunding

Here was my response to this AFSCME article a few days ago:

"AFSCME, if you really believe this post, why did you allow your affiliate, AFSCME Colorado, to support the breach of Colorado PERA pension contracts in 2010, after the Colorado Legislature had underfunded the pension for a decade?  The Colorado Legislature failed to pay its pension bills for a decade, essentially borrowing from the pension fund, now they seek to shift their debt onto the backs of retired public sector workers.  It's sick, but your own people supported this in 2010.  Visit saveperacola.com."

I received a response from a former AFSCME Colorado official:

"Actually Al, that isn't what happened: The rank and file members of Colorado State Employees AFSCME Local 821 had their local dissolved by a unilateral decision of AFSCME International and the Executive Board of Colorado AFSCME Council 76, prior to the sellout, as they were to be 'incorporated' into the Colorado WINS 'partnership' created with Ritter: without their consent or even being given the right to vote on the matter.  The AFSCME 'representatives' who endorsed the PERA plan (i.e. Vivian Stovall and company) weren't even state employees: they were members of Denver City employees AFSCME Local 158, who aren't even covered by PERA.  The Colorado State AFSCME retirees (Phyliss Zamaripa, Kathy Bacino, and Guy Santo) opposed the PERA plan put forth by Ritter, Schaffer, and Penry at the public hearing where proponents were allowed to testify first, and at length while opponents had their testimony relegated to the end of the hearing, and had their testimony time truncated.  So please don't give the impression that the rank and file members of Colorado State AFSCME Local 821 had anything to do with this sellout, because we didn't.  As the former president of that Local I take umbrage with the disparaging innuendo that we did.  Give the credit to where it is due: Give it to Colorado WINS, and the SEIU."

My response:

"Thanks for this new information. I have noted that Colorado AFSCME supported the PERA pension contract breach since Colorado PERA has made this claim in its propaganda. Al"

And another reply from the former AFSCME official:

"The entire AFSCME endorsement of screwing public employees out of their pension COLA's in Colorado is unfortunately quite true, however, it should be remembered that AFSCME no longer represents Colorado State Employees, and it hasn't for about 7 years now.  It was decided 7 years ago in a backroom deal in Washington that the three state employee unions would become Colorado WINS.  The rank and file members of AFSCME Locals in Colorado were not given the right to vote on this, nor were the members of CAPE or the CFPE. The people who espouse 'democratic labor trade unionism' in America, wouldn't allow it to take place in Colorado.  Ritter and company granted a an exclusive franchise to Colorado WINS (which is a subsidiary of SEIU) and Colorado State employees do not have the right to belong to any other union, as both Change To Win and the AFL-CIO have prevented other unions (such as the CWA, which has had a consistent record of fighting for public employees' pensions) from organizing.  Thanks to their betrayal of Colorado State employees, Colorado AFSCME Council 76 is now a bankrupt shell of an organization that represents some county employees in Pueblo, city employees in Aurora, the remnants of Denver City employees Local 535 and 158 and the maintenance staff at DU.  They have one 'assistant Executive Director' and two clerical workers for a staff.  All they are is a paper tiger, shell organization that is used as a conduit to 'move money' in state elections."

Here we have AFSCME's Collective Bargaining Director Steve Kreisberg on PERA:

"Investment returns in the exuberant 1990s had an unfortunate effect.  Governments grew lazy about making their regular contributions.  And that's a big reason that they're in so much trouble now.  'Defined- benefit plans have been victims of their own success,' says Steve Kreisberg, AFSCME's collective bargaining director.  'They've been so successful that some politicians decided that the benefits are free and stopped contributing to the plans.'"

"In Colorado, at least some of Bill Owens' pension problem was self- inflicted, the result of his pressuring PERA to sell discounted 'service credits' to public employees, allowing them to buy more time on the job."  "Owens hoped that state employees would retire early, helping his efforts to streamline government."  "Because pensions are, by their nature, a long-term problem, it's difficult to get public officials–classic short-term thinkers–to pay them serious attention even when the bills are coming due."

http://www.governing.com/topics/economic-dev/Plight-Benefits.html

As I have noted before, I believe that Colorado WINS made a mistake in 2010.  What kind of a union casually discards the contracts of its retired members?  There is scant precedent for this type of behavior in the history of the U.S. labor movement.  This act was clearly immoral and treacherous.  It undermines the moral standing of the U.S. labor movement. Public sector unions have done much to improve the working conditions of middle-class Americans over the last century, but advocating the breach of the contracts of their retired union members crosses a moral line.

Rather than conspiring with others to "claw back" the earnings of Colorado's pensioners, I think that Colorado WINS should be demanding that the Colorado Legislature actually pay its public pension bills.  What are these lobbyists doing?  For the last decade, they should have demanded that the Colorado Legislature meet its contractual obligations, that the full pension "ARC" be paid.  Colorado WINS' lobbyists should have made these demands before the committees of the Legislature at every opportunity.  In every year that the Colorado Legislature failed to make its PERA pension payments and instead appropriated funds to cover local government pension debt that IS NOT the contractual obligation of the State of Colorado, Colorado WINS lobbyists (and previous union lobbyists) should have been there to demand an end to the practice.

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill for a decade.
2012 PERA CAFR, page 35 – "ARC Deficiency."

"In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries."
"During the past 10 years, this shortfall in funding . . . has been $3.4 billion."

https://www.copera.org/pdf/5/5-20-12.pdf

Colorado WINS membership and organization:

“The Colorado Association of Public Employees/Service Employees International Union (CAPE/SEIU); the American Federation of State, County and Municipal Employees (AFSCME); and the American Federation of Teachers (AFT) are joining forces to organize state employees. The new organization will be known as Colorado WINS (Workers for Innovative and New Solutions).”

"In addition, Colorado WINS will have the ‘sole authority to advocate for legislation affecting state employees, including but not limited to legislation affecting PERA [the Public Employees' Retirement Association], the state personnel system, employee accountability and state employee protections.’”

“Under the agreement, SEIU will provide 50 percent of the budget for Colorado WINS; AFT and AFSCME will provide the rest.”

“The agreement also says that funding contributed by Colorado WINS members for political purposes will be divided, with 50 percent going to SEIU/CAPE and 50 percent to the AFT and AFSCME political funds.”

“A copy of the agreement is available online at:

http://www.eiaonline.com/coloradowins.pdf.”

https://www.cu.edu/sg/messages/5895.html

Colorado PERA active and retired members, help put an end to this travesty.  The rule of law will not be abandoned in Colorado, not even with the support of some union officials, some party officials, corporations or lobbyists.  Contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!

What Do (a Few) Colorado Democrats Have in Common with Tea Party Anarchists?

Yes, I know that the very idea of conflating the machinations of the Tea Party with past practices of Democratic members of the Colorado Legislature is repulsive.  But, for a few minutes (for purposes of the following exercise) try to set aside your horror and dispassionately consider the behavioral commonalities noted below.  (This hurts me more than it hurts you.)  And, who knows?  Members of the Colorado Democratic Party might benefit in the future by acknowledging and correcting a few past mistakes.

To set the stage, a few particularly relevant lines from the platform of the Colorado Democratic Party:

"At a time when public confidence in government is perhaps at its lowest in our history, when government has come to a standstill, held hostage by those who seek to serve themselves and not the common good, it is imperative that health and trust be restored to our democracy or we risk losing it all together."

"Above all, we expect officials to uphold and defend the Constitution of the United States."

http://www.coloradodems.org/sites/coloradodems/files/CDP2012PlatformProposal4%2014%20v2.pdf

Today, (October 6, 2013) as I listened to the pundits analyze the Tealiban's efforts to repudiate the debt of the United States, it occurred to me that many Democratic members of the 2010 Colorado General Assembly have something in common with these Tea Party anarchists.  Steel yourself, dear reader,  as we engage in a rather unsavory juxtaposition.

Parallel #1:  Here we are in 2013, and Congressional Tea Party anarchists are pushing Congress toward a default on the debt obligations of the United States.  Incredibly, just three years ago, many (not all) Democratic Colorado state legislators supported a default on the debt obligations of the State of Colorado (contracted, accrued, Colorado PERA pension debts.)  Colorado legislators defaulted on PERA pension debt with full knowledge of the fact that making such payments is a contractual obligation of the state.

Colorado's Democratic (and Republican) state legislators have been aware of the contractual nature of accrued public pension benefits in our state for more than 60 years (since the Colorado Supreme Court decisions in the public pension cases Bills and McPhail.)

Colorado Court of Appeals 2012 decision in Justus v. State (October 11, 2012):

“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

Nevertheless, in 2010, many Democratic Colorado legislators embraced a contrivance advanced by lobbyists for Colorado state and local governments, unions and corporations that sought financial benefit through breach of contract.  The lobbyists convinced many Democratic state legislators that the inflation protection provision in PERA pension contracts (COLA provision) could be altered retroactively.

Yet, a public pension COLA provision is simply a method by which a total defined public 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.  How many Colorado state and local government employees would have stipulated up front the right of the Colorado Legislature to claw back one-third or more of their total accrued PERA pension benefit after retirement?

When the Colorado Legislature created the "automatic" Colorado PERA COLA provision in statute, the Legislature could just as well have offered PERA members a higher monthly pension benefit with no COLA provision attached.  Instead, Colorado legislators chose to deliver accrued Colorado PERA pension benefits by means of a pension COLA "escalator."  For decades, Colorado PERA members have exchanged their labor (and their pension contributions) for this statutory offer of a PERA COLA benefit.  Many have retired based on the PERA COLA benefit contractual offer.

Note that many private insurance companies sell annuities that offer delivery of the total purchased annuity benefit by means of an annual COLA "escalator" on the purchased income stream.  Having supported SB10-001 in 2010, taking contracted PERA COLA benefits, will these Colorado Democrats now argue that insurance companies that have sold annuities with contractual COLA provisions should have the right to unilaterally eliminate the COLA provisions after the fact?  Do these Colorado Democrats support one constitutional standard for corporations (insurance companies) and a separate constitutional standard for public entities?

Not all Colorado Democratic legislators supported the Colorado PERA pension contract breach in 2010.  The Pueblo Chieftain quoting from House Minority Leader Sal Pace’s website in February 2010:

"'I voted against the proposal because I don’t believe that the problems with PERA need an immediate fix and the solutions proposed unduly placed a burden on our seniors,’ Pace said in a statement on his Web site Tuesday."

http://trsbaudit.wordpress.com/

Thanks also to the following Colorado House Democrats who refused to go along with the lobbyists' Colorado PERA debt-shift scheme in 2010: Representatives McFadyen, Merrifield, Massey, Weissman and Primavera.  When the lobbying pressure was intense, these state legislators retained their integrity.

Parallel #2: This week we see Congressional Tea Party anarchists decrying the level of the accumulated debt of the United States while ignoring the fact that these debts accrued in legislation adopted by the legislative body in which they currently serve.  Tea Partiers refuse to acknowledge that the nation's debt ceiling must be raised simply to meet debts that were previously incurred by Congress, legitimate debts of the United States.

Similarly, in 2010, many Democratic Colorado state legislators decried the levels of the public debt in Colorado (unfunded PERA pension liabilities) without acknowledging that these debts were accrued as a result of legislation adopted by the legislative body in which they currently serve (the Colorado General Assembly.)  The General Assembly sets PERA benefit levels in statute.  Colorado PERA pension benefits are offered by the General Assembly in statutory contracts as deferred compensation for work performed in the past.  In 2010, many of these Democratic state legislators enacted a bill that attempts to repudiate Colorado state and local debt.  In essence, the Colorado General Assembly is attempting to shift accumulated PERA pension debts onto the backs of a relatively small group of elderly Colorado residents.  (The Colorado General Assembly seeks to abrogate PERA pension contracts in spite of the fact that Colorado has the 16th lowest per capita public pension debt in the nation, according to the investment research firm Morningstar.  The Colorado General Assembly seeks to repudiate its pension debts in spite of the fact that less than three percent of all Colorado state and local government expenditures support public pension obligations, hardly a financial "burden.")

Parallel #3: Congressional Tea Party anarchists have no interest in raising additional resources to meet financial obligations that Congress has approved in the past.  Their preference is that the U.S. government default on its obligations.  Similarly, in 2009 and 2010, the first preference of many Colorado Democratic state legislators (encouraged, of course, by 27 statehouse lobbyists) was also default.  Rather than seeking additional resources to meet the accrued debts of Colorado state and local governments, these state legislators favored default.

(As we have seen, additional resources have been readily available to meet PERA pension debts.  For example, the legislators could have opted to honor their own contractual PERA pension obligations instead of appropriating $700 million for local government pensions that are not the state's contractual obligation, Old Hire Fire and Police Pensions.  Colorado legislators could have curtailed the state's generous corporate welfare programs.  Colorado legislators could have followed the example of other states and explored the use of mineral royalties to meet state pension obligations.  Colorado legislators could have submitted referenda to the voters proposing new revenues to meet the state's contracted debts.  Again, many Democratic legislators preferred breach of contract in 2010.)

Attention Colorado Democrats: Enough red flags have been raised by the party's complicity in the 2010 PERA pension contract breach to drape six miles of the Arkansas River.  The fact that I am able to draw any parallels at all between the behavior of some Colorado Democrats and the contemptible Teanderthals should raise concern in the party.

Is it acceptable for Colorado Democrats to abandon core principles (even when the lobbyists are wrenching their arms?)

More from the Colorado Democratic Party 2012 Platform:

"We petition Congress to enact legislation preventing courts and bankruptcy laws to be used to abrogate labor contracts and pension obligations."

"Colorado Public Employees Retirement Association (PERA) should remain a defined benefit plan, directed by a board elected by the membership."

"Colorado Democrats support: 'The implementation of cost of living adjustments on Social Security and Social Security disability benefits, equal to actual increases in the cost of living.'"

(My comment: the party supports the enhancement of Social Security COLAs that ARE NOT contractual obligations.  Should the party not also support the payment of COLAs that ARE INDEED contractual obligations?)

"Every human being has the right to be treated with dignity and all persons residing in the United States deserve equal protection under the law regardless of their race, disability, gender or gender identity, religion, sexual orientation, national origin, age, or physical or mental differences."

(My comment: Do Colorado PERA retirees not deserve equal protection under the law?  Is it acceptable that many Democratic Colorado lawmakers voted the break the contracts of this group in 2010?)

"We expect our elected officials to be committed to the highest standards of behavior, personal integrity and honesty and to demand transparency and open government . . .".

"The people must be informed by facts, not deception."

"We support the enforcement of laws addressing the inequities between men and women."
 
(My comment: Note that women were disproportionately impacted by the Colorado PERA pension contract breach.  Women make up 57 percent of all government workers, and 60 percent of local government workers.  Under the PERA pension contract breach, women provide a disproportionate share of the PERA pensioner subsidy to Colorado governments.
 

http://www.nwlc.org/resource/womens-stake-battle-over-public-employees-collective-bargaining-rights)

Not surprisingly, the Colorado Legislature's 2010 attempt to escape its contractual public pension obligations hits women, minorities, and particularly older women in Colorado hard.  Also, as noted earlier, the Colorado Legislature has just finished paying off $700 million in local government fire and police pension debt (that IS NOT the contractual obligation of the State of Colorado.)  It just happens that these local government pension contracts belong to primarily . . . males.

http://www.coloradodems.org/sites/coloradodems/files/CDP2012PlatformProposal4%2014%20v2.pdf

Colorado Democrats: We must examine the influence that lobbyists have on Democratic state legislators.  We must ask why a Democratic state legislator would support breaking the contracts of workers in order to lower the tax burden of corporations and wealthy taxpayers in the nation's 10th wealthiest state.

We must ask why Colorado Democrats helped employers attempt this abandonment of contractual obligations to pensioners in 2010?  Why a deal was cut in 2009 without deliberation of pension reform options in open legislative hearings in 2010?  Why Democratic Leadership relinquished the Legislature's public policy making authority regarding pensions to administrators and lobbyists in 2009?  Why Democratic Leadership failed to appoint an interim study committee in 2009 to examine legal, prospective pension reforms that were being enacted by other state legislatures?  Why Democratic Leadership failed to send an interrogatory to the Colorado Supreme Court in 2009 regarding PERA pension reform options? (Recall that the Legislature was encouraged to take this step.)

Colorado Democrats; let's clean up our act.  The Colorado Democratic Party is better than breach of contract.  The State of Colorado is better than breach of contract.  Support contractual public pension rights at saveperacola.com.  Friend Save Pera Cola on Facebook!

Morningstar: Colorado Has the 16th Lowest Public Pension Debt in the Nation, Yet the Colorado Legislature Seeks to Break These Contracts.

According to the investment research firm, Morningstar, Colorado ranks 34th in the nation in public pension debt per capita.  Only 16 states currently have a lower per capita public pension debt than does Colorado.  The obligation of Colorado taxpayers for public pension debts remains easily supportable in spite of the fact that the Colorado Legislature has not paid its full Colorado PERA public pension bill for a decade.

Colorado taxpayers (by contract of their representative governments) must meet relatively low public pension debt obligations.  Yet, the Colorado Legislature seeks to escape these public pension obligations.  The Colorado Legislature seeks to further cut the public pension debt of taxpayers in the 10th wealthiest state in the nation through breach of contract.  (Perhaps Colorado taxpayers will reward the politicians who voted for pension contract breach at the polls.)

According to a Morningstar study released two weeks ago, Colorado's per capita public pension debt in 2011 was $1,804.  That year, the state of Alaska had a per capita pension debt of $10,235 (the highest per capita pension debt in the nation.)  The Alaska Legislature is not attempting a retroactive alteration of public pension contracts.  The Alaska Legislature has not enacted legislation breaking "fully-vested" public pension contracts.  Alaska legislators have not tried to set aside constitutional protections of a targeted group.

"When measuring liability per capita, Alaska, Illinois and Hawaii recorded the highest amounts."

"The report employed two primary measures to assess pension funds. The funded ratios compare a system's total assets to its liabilities.  The second measure, unfunded actuarial accrued liability per capita, pegs the amount each state resident would need to pay to fully fund the system."

http://www.governing.com/gov-data/state-pension-funds-retirement-systems-unfunded-liabilities-obligations-data.html

Recall that the bill breaking Colorado PERA retiree pension contracts, SB10-001, was enacted in 2010 and that the financial condition of the Colorado PERA pension trust funds in 2009 was put forth as a rationale for breaking PERA retiree pension contracts.  Now, note the level of unfunded per capita pension liability for Colorado in 2009 ($1,349 per capita) on the spreadsheet in the cited Governing article (link above.)

An unfunded per capita pension liability below $1,500 is considered a desirable level of liability according to this Morningstar state pension debt metric.  Thus, when the Colorado General Assembly enacted legislation to break Colorado PERA pension contracts in 2010, the Legislature did so at a point in time when Colorado taxpayers enjoyed a "good" level of unfunded public pension liabilities according to the research firm Morningstar.  Colorado taxpayers were not burdened by pension debt in 2010, yet Colorado PERA pension administrators, dozens of hired lobbyists for PERA-affiliated employers, and Colorado Legislative Leadership conspired to break PERA public pension contracts.

"Thirteen states have a UAAL of less than $1,500 per capita, which is Morningstar’s threshold for 'Good' unfunded liability levels, and Alaska had the highest UAAL per capita for the second year in a row, currently more than $10,000."

http://www.plansponsor.com/NewsStory.aspx?id=6442494908

Further, the Morningstar study reveals that, in 2009, as Colorado PERA administrators, Colorado union officials and some state legislators contemplated breach of Colorado PERA pension contracts, Colorado had the 13th lowest public pension debt per capita in the nation.

MORNINGSTAR STUDY: A 70 PERCENT PENSION FUNDED RATIO IS "FISCALLY SOUND."

http://corporate.morningstar.com/US/documents/Retirement/StateofPensions2013.pdf

At  the time of the Colorado Legislature's breach of Colorado PERA pension contracts in SB10-001, the combined funded ratio of the Colorado PERA pension system stood at 68.9 percent, a level 1.1 percent below that level considered "fiscally sound" by the research firm Morningstar.

The Colorado Legislature sought to break "fully-vested" public pension contracts at a time when the Colorado PERA pension system enjoyed a "fiscally sound" financial condition.

From the Silver and Gold Record archives:

“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.”

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

The actuarial funded ratio of the Colorado PERA pension system has fallen below the Morningstar "fiscally sound" threshold due to the simple fact that (as we have noted repeatedly) the Colorado Legislature has not been paying its public pension bills for a decade.  If I avoid paying my debts in order to free up money for discretionary expenditures I will eventually encounter financial distress.  This practice has been a standard operating procedure for the Colorado Legislature for a decade.  In effect, the Colorado Legislature has been borrowing from the PERA pension system to pay for their preferred governmental programs.  Now that the bill is coming due, many Colorado legislators want to skip out on the tab.  If I ignore my contractual obligations for an extended period I should not be surprised to find my creditors seeking redress by judicial action.

I ask: Why should Colorado PERA retirees accept the breach of their pension contracts as a result of the failure of the Colorado General Assembly to pay the full Colorado PERA public pension bill for the last decade?  Rather than paying its full public pension bill (ARC) the Colorado Legislature has directed state funding to discretionary programs, including $100 million grants of property tax relief and, incredibly, payment of $700 million in local government legacy pension debt that is not the contractual responsibility of the State of Colorado (a $142 million grant for this purpose at the 2013 legislative session.)  Why should Colorado PERA pensioners, a small group of Coloradans bear the burden of Colorado politicians' historical budgetary mismanagement?  The tenth wealthiest state in the nation, a state that can apparently afford to transfer hundreds of millions of dollars of its revenue stream to pay for pension obligations THAT ARE NOT ITS CONTRACTUAL OBLIGATION, now seeks to abandon its own contractual public pension obligations.  In light of all this, the fact that the Colorado Legislature is attempting to push state and local government debt onto elderly pensioners is immoral and outrageous beyond measure.

"Morningstar would like to highlight the UAAL per capita, which in our opinion is a useful metric not commonly applied in the current pension analysis narrative."

http://images.mscomm.morningstar.com/Web/MorningstarInc/%7B43f240a0-4c8f-47b5-bc01-45cbc9e9d33b%7D_StateofStatePensionsReport2013.pdf

http://corporate.morningstar.com/US/documents/Retirement/StateofPensions2013.pdf

Colorado PERA active and retired members, the Colorado Legislature's attempt to escape its contractual obligations, to set aside the protections of the U.S. Constitution, is an ugly stain on our state.  Continue to support public pension contractual rights with your contributions to saveperacola.com.  Friend Save Pera Cola on Facebook!

Colorado PERA’s Pension Contract Breach Relies on “Biased” Research.

In 2010, a majority of Colorado state legislators, induced by lobbyists, passed a bill that attempts to illegally slash the accrued debt of Colorado state and local governments.  The bill, Senate Bill 10-001, proposes to shift Colorado state and local government debt (an obligation of all Colorado taxpayers) onto the backs of elderly pensioners in the state.  Apparently, in 2010, a majority of Colorado state legislators believed that, when one reaches a certain age, that person's rights may be freely trampled and their property seized by the State.  Apparently, many Colorado legislators, contravening their oaths of office, believe that protections afforded by the U.S Constitution no longer apply to this particular group of Americans.

In 2010, Colorado PERA pension administrators scheming to take property from PERA retirees employed the mantra "shared sacrifice" in their propaganda.  I will describe for you Colorado PERA's idea of "shared sacrifice":  According to the provisions of SB10-001, those who ACTUALLY OWE the accrued PERA pension debt (Colorado state and local governments) "sacrifice" a fraction of a percent of future revenue streams; while those who DO NOT OWE the PERA pension debt (Colorado PERA retirees) "sacrifice" one-third or more of their contracted, earned deferred pension compensation.  Colorado PERA pension officials consider this arrangement to be a "shared sacrifice."  In what universe is such outrageous deception considered to be "reasonable"?

In 2010, Colorado PERA officials, self-interested lobbyists, and a majority of state legislators supported public relations, lobbying and legal campaigns with pension research published by the Pew Center on the States.  Research disseminated by this organization has since been labeled "biased," "flawed," and "inflammatory" by the National Conference on Public Employee Retirement Systems.

Yesterday (September 24, 2013) the Huffington Post published an exposé regarding Pew's efforts to gut public employee pensions.

HuffingtonPost.com:

"Pew first thrust itself into the national debate on public sector pensions when its Center on the States released a headline-grabbing 2010 study claiming that the combined pension shortfall for all the states was a staggering $1 trillion."

http://www.huffingtonpost.com/2013/09/24/pew-trusts-pensions_n_3983654.html

Pew's "research" even made it into legal briefs filed in the Colorado PERA retiree pension COLA lawsuit, Justus v. State.  Clearly, information that was relied upon by the Colorado General Assembly and Colorado PERA in their SB 10-001 political, lobbying and legal campaigns to break PERA pension contracts is of questionable validity.  Below I provide examples of reliance on public pension statistics from the Pew Center in legal briefs filed in the case Justus v. State.  From the PERA Defendants motion to dismiss of May 10, 2010:

“According to a study cited in Plaintiffs’ Complaint, PERA experienced $11 billion in investment losses, with PERA’s assets falling from $43 billion to $32 billion. See Ex. A at 27 (Pew Center on the States, Pew Charitable Trusts, The Trillion Dollar Gap: Underfunded State Retirement Systems and the Roads to Reform (2010) (“Pew Report”)) (cited in Complaint ¶ 42).”

(My comment: The bias in the Pew study is clear, Colorado PERA could only experience an "investment loss" after a market decline by liquidating its portfolio.  Colorado PERA did not liquidate its portfolio after the 2008-2009 equity market volatility.  Colorado PERA administrators invest over an "investment horizon" that extends to 70 years.)

“According to the Pew Report, in 2008, PERA suffered investment losses of $11 billion, which constitutes a 26% decline in the value of its assets.”

“Plaintiffs also cite to the Pew Report, which concluded that PERA was one of many pension funds facing significant shortfalls between the value of pension assets and the amount of benefit obligations encompassed within the system. Id. ¶ 42 (citing Pew Report (Ex. A) at 27).  The Pew Report also identified PERA’s large investment losses during the market downturn as one of the causes of PERA’s unfunded liabilities.”

(My comment: Colorado is a low-debt, low-tax state.  Many Colorado taxpayers do not want to pay for governmental services.  In 2010, Colorado state legislators bought the votes of these taxpayers with a pension contract breach.  The funded ratio of the Colorado PERA pension system has declined because the Colorado Legislature has not paid its full pension bill for a decade.)

Link:

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

HuffingtonPost.com:

"And the head of the largest trade association for public sector plans finds serious flaws in Pew’s figures.  Hank Kim, executive director and counsel of the National Conference on Public Employee Retirement Systems, says that 'generally our position is that we are very disappointed in Pew.  Since 2010, we’ve expressed to Pew that its methodology for reports is flawed.  Their reports incite fear.'”

"With its $5.6 billion endowment, the Pew Charitable Trusts ranks number 19 on a list of the world’s wealthiest charitable foundations.  Originally called the Pew Memorial Trust, the foundation was created in 1948 by the heirs to the Joseph N. Pew Sun Oil fortune and hewed far more closely to the family’s conservative, small-government political beliefs."

"Pew first thrust itself into the national debate on public sector pensions when its Center on the States released a headline-grabbing 2010 study claiming that the combined pension shortfall for all the states was a staggering $1 trillion."

“'It’s an eye-popping number,' Kim says of Pew’s claim.  'But that trillion dollar deficit covers both pension and health care costs, and health care costs are at least 60 percent of that figure.'”

"Whether the report reflected actual history or hyperbole, it launched Pew into the public-sector fixit business in a big way."

(My comment: Accrued public pension debts represent a fraction of all state and local government debt in the United States.  Why do we see a corporate-funded public relations noise machine attacking public pension debt in the U.S., but ignoring all other state and local government debt?  These think tanks churn out an endless stream of material advocating the breach of public pension contracts.  Why do they not propose breach of state and local government contracts with corporations?  Or, default on state and local government bonds held by wealthy investors?  Why is public pension debt a "crisis" warranting breach of contract, but all other state and local government debt [multiples of public pension debt] is not a "crisis"?)

HuffingtonPost.com:

"To date, Pew has partnered with the Arnold Foundation in Illinois, Montana, Kentucky and Rhode Island, wading in with actuarial studies and polling data to prod municipal and state lawmakers into incorporating Pew-authored restructuring plans."

"Pew’s promotion of technocratic-sounding solutions to pension shortfalls, especially its mantra about 'data-driven' problem-solving, lends its white papers the texture of dispassionate scholarship.  Its partnership with the Arnold Foundation, however, has created intense controversy and provided ammunition to its critics."

http://coloradopols.com.lb.soapblox.net/diary/19042/texas-enron-billionaires-pension-reform-efforts-arrive-in-colorado

http://coloradopols.com/diary/19072/national-public-pension-coalition-criticizes-pew-center-on-the-states

http://coloradopols.com/diary/19039/denvers-donnellkay-foundation-hears-pension-reform-ideas-from-pew-center

HuffingtonPost.com:

"Jim Wayne (D-Louisville), who has been a member of the Kentucky House of Representatives since 1991, says that Pew played a crucial role throughout the legislative process."

"'They had a tremendous influence,' says Wayne.  'The parties interested in change needed to rely on an outside source.  Pew drew up the proposal, they did the analysis and presented the information to a [legislative] task force.'”

"Wayne says that Pew generally pushed the positions favored by his state’s Chamber of Commerce and League of Cities, working both behind the scenes and publicly."

(My comment: Colorado's "league of cities" [the Colorado Municipal League] did nothing to defend the contractual rights of their retired municipal workers during the 2010 PERA pension contract breach.  The CML, funded by Colorado cities, simply watched the efforts of pension administrators and legislators to slash the debts of CML's municipal members.  The CML did nothing in spite of the fact that its municipal members have benefited from the Colorado Legislature's transfer of $700 million to cover legacy Colorado municipal pension debt that IS NOT the contractual obligation of the State of Colorado.  [$142 million appropriated for this purpose at this year's Colorado legislative session alone.])

HuffingtonPost.com:

“'Pew gave them credibility,' Wayne says of these two groups.  'Pew is recognized nationally as experts, with facts and figures.'  As a result of Pew’s work, Wayne adds, 'new workers have a much weaker pension program.'”

"'The fact is that they [Pew] go into states arguing they are non-partisan and then proceed to make recommendations and undermine and dismantle [public employee] pension plans,' says Hank Kim.  'They have a bias — that bias is that public plans ought to be closed or frozen.'”

"Pew has called for transparency in other groups that conduct public surveys and the Arnold Foundation boasts about its research transparency.  Yet both have given vague answers to specific questions about whether the Laura and John Arnold foundation has given financial support to Pew relating to work on public employee pensions."

"The collaboration between the two organizations, says Jordan Marks, could ultimately undermine Pew’s reputation for good works and non-ideologically driven research."

"'If Pew had its way,' Marks says, 'it would retire teachers and firefighters and others into poverty.'”

http://www.huffingtonpost.com/2013/09/24/pew-trusts-pensions_n_3983654.html

The Executive Director of the National Conference on Public Employee Retirement Systems (NCPERS), Hank Kim, states in an address to NCPERS members via YouTube that his organization has discovered “bias” in public pension statistics provided by the Pew Center on the States.

The National Conference on Public Employee Retirement Systems (I believe Colorado PERA is a member) has found the Pew Center’s public pension reports to be “inflammatory,” that the Pew Center’s methodologies have been “debunked,” that the Pew Center “has an agenda,” and that “they have been pitching themselves as honest brokers.”

Here’s a link to the video:

Here are a few important excerpts from Hank Kim’s presentation:

“Pew has issued reports that are inflammatory.”

“We have taken their reports and debunked a lot of the myths and methodologies they have used.”

“They are partnering with the Arnold Foundation, which is a foundation out of Houston, Texas to really attack public sector plans at the state level.”

“They have been pitching themselves as honest brokers.”

“Their methodologies are quite flawed.”

“It seems as if they do have an agenda.”

“We have good documentation from reputable actuaries who find great flaws in the way Pew and the Arnold Foundation calculate the funding status and their criticisms of public sector pension plans.”

“If the state legislature . . . has invited Pew to be an honest broker, let us know.”

The National Conference on Public Employee Retirement Systems.

“NCPERS is the leading advocate for public pensions on Capitol Hill and in federal regulatory agencies.  To achieve our goal of preserving retirement benefits for public employees, our staff maintains strong working relationships with Members of Congress, Congressional staffers and regulatory agency officials.”

Link to the website of the National Conference on Public Employee Retirement Systems:

http://www.ncpers.org/

The 2010 effort of Colorado state and local governments to escape their debts, to break fully-vested PERA pension contracts, rests upon a rotten legal foundation.  Colorado PERA active and retired members, continue to fight for your constitutional rights.  
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Gazette Telegraph on Colorado PERA’s Self-inflicted Legal Fiasco.

The Colorado Springs Gazette Telegraph has broken the Colorado media radio silence on our state's attempt to break its contracts.  Last month, the Colorado Springs Gazette Telegraph ran a pair of articles on Colorado PERA.  As expected, these articles were dripping with the Gazette's consistent anti-government bias, but nevertheless, I found portions of the articles interesting.  I give the Gazette Telegraph some credit.  The newspaper has published an article that ACTUALLY MENTIONS the fact that the Colorado Legislature is attempting to escape contractual Colorado PERA pension COLA obligations.  (For readers new to this topic, in 2010 the Colorado Legislature enacted a bill, SB10-001, that attempts to shift [through breach of contract] the accumulated public pension debts of Colorado state and local governments onto the backs of old people.  The Colorado Legislature wants to seize up to 40 percent of Colorado PERA retiree's accrued pension benefits.)

Now, when the Colorado Legislature declares a new "official state amphibian," rest assured that our Colorado media will provide exhaustive coverage of the event.  However, if for the first time in the history of our state, the Colorado Legislature seeks widespread abandonment of the contractual obligations of the State of Colorado?  Nothing.  Why is that?  How many times has the Colorado PERA retiree lawsuit, Justus v. State, been mentioned by Colorado media in the last three years?  When a state government attempts to escape its contractual obligations is that not newsworthy?  So, kudos to the Colorado Springs Gazette Telegraph.

The two Gazette Telegraph articles on PERA were written by Gazette reporter Megan Schrader and published on August 17, 2013.  Although Megan's articles were badly bent when they were pressed through the Laugesen "Ayn Randian filter,"  they serve an important purpose by letting Coloradans know that their state and local governments are attempting to violate the contract clauses of the Colorado and U.S. constitutions.

I also commend Gazette Telegraph reporter Megan Schrader for her interviews with John Sugden, senior director in Standard & Poor's U.S. Public Finance Ratings Group, and Standard & Poor's senior Colorado analyst, David Hitchcock.

From Megan's articles, John Sugden, Senior Director, Standard & Poor's U.S. Public Finance Ratings Group:

"You're capturing at a potentially low point.  We're going to see the market strengthen.  We've seen these numbers fluctuate over time.  Back in 1975, it was 51 percent, and with the market boom in the '90s, it was 100 percent or close to that."

(My comment: John Sudgen of Standard and Poor's provides an important historical perspective on public pension funding ratios.  Why are today's public pension funding ratios [i.e., funding ratios that far exceed those of the 1970s] considered a financial "crisis" while public pension funding ratios of the 1970s were a nonevent?  Answer: today we have a well-funded national political and public relations infrastructure created specifically to promote a "public pension crisis."  Note that, in 1975 Colorado PERA had a 59.6 percent actuarial funding ratio.)

From the 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 [1973].  [Colorado PERA Executive Director Meredith] Williams said former Gov. Richard Lamm, who co-chaired the PERA commission [Treasurer's Commission to Strengthen and Secure Colorado PERA] 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.”

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

Megan, realize that if the Colorado Legislature skips out on its public pension bills [as it has for a decade] Colorado PERA's funding ratio will fall.  Megan, if you choose to make only 60 percent of your mortgage payment, you will eventually encounter "foreclosure."  No surprises here.

Below I provide historical perspectives on public pension funding ratios from Keith Brainard of NASRA, and Ronald Wirtz of the Federal Reserve:

Keith Brainard;

February 14, 2011, Subcommittee on Courts, Commercial and Administrative Law, Committee on Judiciary House of Representatives, Testimony of Keith Brainard, Research Director, National Association of State Retirement Administrators:

“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.]

“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."

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

Ronald Wirtz;

A 2006 Federal Reserve paper, by Ronald A Wirtz, notes that public pension funding 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—in fact, it's [the stock market in recent decades] been a savior for most pensions.  Rewind 50 years, and almost all pension assets were invested in U.S. bonds and other fixed-income sorts of securities.  Though comparatively safe in terms of protecting assets, such a portfolio could not generate the returns necessary for pension funds to keep up with the benefits promised by generous government employers.  During the 1970s, funding ratios generally hovered between 50 and 60 percent.”

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1349

"As of Dec. 31, 2008, the state's Public Employees' Retirement Association pension fund [excluding the health care fund] was 69.8% funded, down from 75.1% in 2007 and a high of 105.2% in 2000."

http://www.leg.state.co.us/clics/clics2009a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/6778eb9ddf2ca301872575ee0050f424/$FILE/0709AttachmentB.pdf)

Gazette Telegraph reporter Megan Schrader quoting Standard & Poor's senior Colorado analyst, David Hitchcock: "Colorado is a 'low debt' state."  I ask why a "low debt" state faces such a financial "crisis" that is must break its contracts.

Megan quoting David Hitchcock:

"Their debt load is pretty low, so it's really the pension issue that is in our view creating a weakness.  It does affect the rating.  Most other things in the state are ranked relatively highly, and it is one of the things that is holding the state back from potentially a higher rating."

(My comment: Many Colorado politicians are primarily concerned with lowering taxes in the state, already a "low-tax," "low-debt" state.  Many of these politicians would gladly break state contracts if it results in lower taxes for constituents whose votes they seek.  Many Colorado voters do not want to pay for the governmental services they receive, and in particular, they do not want to pay contracted deferred compensation, such as public pension benefits.

If the Colorado Legislature's 2010 bill retroactively taking Colorado PERA COLA benefits is upheld by courts, then the need to raise revenue from Colorado taxpayers will be reduced.  Such a reduction of PERA's unfunded pension liabilities might result in a better credit rating for Colorado state and local governments, further reducing the need for taxpayer support of public sector services.  Morality and constitutionality aside, breaking the contracts of Colorado's pensioners, taking their property, and shifting the debt of Colorado state and local governments onto the shoulders of the state's elderly, would benefit Colorado's taxpayers.  Apparently, many Colorado state legislators would like to see our state become a place where the rule of law is a joke and immoral behavior by government is de rigueur, but hey . . . the taxes are low.)

As we have seen over the last three years, the Colorado General Assembly has historically mismanaged the Colorado PERA pension system.  Colorado PERA pension officials have failed to perform their fiduciary duty, to regularly and emphatically inform members of the Colorado Legislature's Joint Budget Committee that payment of the full PERA pension actuarially required contribution [ARC] is not optional.  The ARC is paid to meet contractual obligations.

One aspect of the ongoing mismanagement of the Colorado PERA pension system that is not widely recognized is the assumption by Colorado legislators that when they set PERA contribution rates in Colorado statute their contractual obligations are met.  This is an erroneous assumption that has resulted in declining public pension funding ratios in states where legislators have embraced this folly.  Simply setting PERA pension contribution rates in statute does not ensure that the Colorado Legislature has met its contractual obligations, paid its ARC.  The Colorado General Assembly must make additional annual appropriations to ensure that it has met the full PERA pension ARC obligation every year.  Such fiscally responsible behavior would have required that the Colorado General Assembly refuse to abide by the wishes of local government lobbyists in recent decades who have successfully redirected state revenues to paying off local government legacy pension debt [that is not the contractual obligation of the State of Colorado.]  Fiscally responsible behavior on the part of the Colorado General Assembly might have required the body to forego making $100 million appropriations for discretionary property tax relief that is popular with the electorate.  Statesmanship demands that Colorado's elected officials prioritize the sanctity of the Constitution of the State of Colorado ahead of next year's reelection campaign.

Below are a few excerpts from the first Gazette Telegraph article on PERA, "Legal issues cloud PERA's future" published on August 17, 2013, and my comments:

Gazette Telegraph reporter Megan Schrader:

"Adding to the uncertainty for the Public Employees' Retirement Association financial outlook are two pending court cases that could change the multibillion-dollar retirement fund's bottom line."

Gazette Telegraph reporter Megan Schrader:

"In a separate case with broad implications, the Colorado Supreme Court has agreed to rule on whether PERA violated its contract with current and future retirees when it lowered the annual cost-of-living adjustment."

"Lawmakers removed a guaranteed 3 percent annual cost-of-living increase to current retirees, instead capping the increase at 2 percent.  If retirees win that case, the cost-of-living increases will continue into perpetuity, costing PERA millions every year."

(My comment: Note to Gazette reporter Megan Schrader, Colorado PERA is a public sector defined benefit pension plan.  Here's how defined benefit [DB] plans work: governments offer a “defined” benefit at retirement to workers in exchange for a worker’s labor and pension contributions over decades.  The “defined” benefit contract includes a “base benefit” and, in the case of many public sector DB plans, a pension COLA “escalator.”  These benefits, base and COLA, are paid for the LIFETIME of the beneficiary [see "annuity"], they are not paid in perpetuity.  The Colorado Legislature could choose to end the payment of PERA pension COLAs in statutory contracts for NEW HIRES [although I do not support such a step.]  This action would be constitutionally permissible as it would not impair existing PERA contracts.  Thus, the payment of the PERA COLA benefit in perpetuity is a policy choice of the Colorado Legislature.  Megan, just as you cannot unilaterally cut the rate in your mortgage contract, Colorado PERA's payment of contracted PERA COLA benefits on EXISTING fully-vested PERA contracts is not optional.)

Gazette Telegraph reporter Megan Schrader:

"PERA is a more than $42 billion retirement fund that 500,000 public employees rely on.  The outcomes of these lawsuits will not immediately affect the ability of PERA to meet obligations but will extend the fund's growing unfunded liability."

(My comment: Megan, when the provisions of SB10-001 that seized PERA COLA benefits are found to be unconstitutional, this finding will not "extend" PERA's unfunded liability.  Since the provisions of SB10-001 taking PERA COLA benefits are facially unconstitutional, these provisions of SB10-001 never actually reduced PERA's unfunded liability.  PERA's unfunded pension liabilities will remain unchanged.  In 2010, Colorado PERA retirees agreed with the admonition of prominent public pension attorney Gino L. DiVito: “ . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”  In 2010, Colorado PERA administrators, Governor Ritter, and a misguided majority of Colorado legislators . . . all ignored this warning.)

Gazette Telegraph reporter Megan Schrader:

"Denver District Court will decide in coming months whether PERA is owed roughly $200 million by Memorial Health System for the unfunded liabilities of employees who departed when Memorial merged with University of Colorado Health.  If PERA loses that case, it will force other local government employers and retirees around the state to absorb the liability."

(My comment: Megan, Colorado PERA retirees will not "absorb" a "liability" if PERA were to lose this Memorial case.  Again, Colorado PERA retirees are members of a defined benefit plan.  Colorado PERA-affiliated employers, such as municipalities that exist in perpetuity, are contractually obligated to pay benefits to PERA members who possess fully-vested public pension contracts.  Colorado PERA pensioners have "defined" benefits.  Your articles reveal that you are having trouble with this concept.

If the City of Colorado Springs "wins" the PERA/Memorial case, and is allowed to escape its public pension debts, other Colorado PERA-affiliated local governments will pick up these costs for the City of Colorado Springs, including Colorado Springs Utilities.  In that event, Colorado Springs Utilities would pass part of these costs along to Colorado Springs residents in the form of higher utility rates.  On the other hand, if Colorado Springs loses the Memorial Hospital case the City will be forced to pay its debts.  Spoiler alert!  Colorado Springs will of course lose the case.  Their statutory obligation is clear.)

Gazette Telegraph reporter Megan Schrader:

"As part of the reforms passed in SB1, the annual cost-of-living increase for current retirees was reduced.  It had been a 3.5 percent annual guarantee."

"A group of retirees sued PERA, saying it was a breach of contract."

"Denver District Court ruled in favor of PERA, saying the annual increase was not contractual and could be adjusted."

"This month, the Supreme Court agreed to hear the case on appeal."

(My comment: Megan, your description of the status of the lawsuit, Justus v. State, omits an important fact.  In 2012, the Colorado Court of Appeals REVERSED the decision of the Denver District Court on the contractual nature of PERA COLA benefits.  I can forgive this omission, since Colorado PERA itself fails to acknowledge this aspect of the Colorado Court of Appeals decision in PERA propaganda.

On October 11, 2012, the Colorado Court of Appeals confirmed the contractual, "automatic" nature of the Colorado PERA COLA benefit.  Colorado Court of Appeals 2012 decision in the case 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.)

Link to the first Gazette Telegraph PERA article:

http://gazette.com/legal-issues-cloud-peras-future/article/1504971

Now to the second of the pair of August 17, 2013 Gazette articles on PERA, "Future of state retirement plan in doubt."

Link:

http://gazette.com/future-of-colorado-retirement-plan-in-doubt/article/1504970

Gazette Telegraph reporter Megan Schrader:

"The financial stability of Colorado's $42 billion state pension fund will get worse before it gets better."

(My comment: Megan, this is not necessarily true.  Colorado PERA's investment performance might continue to improve, or the Colorado Legislature might decide to begin paying its public pension bills.  As noted earlier, the Colorado Legislature has not paid its full PERA public pension bill [ARC] for a decade.  Your comment assumes that the Colorado Legislature will continue to ignore its contractual obligations.)

Gazette Telegraph reporter Megan Schrader:

"The Public Employees' Retirement Association is $22.7 billion shy of what is needed to pay out retirement benefits over the next 30 years.  That unfunded liability grew by $143.4 million in 2012 despite a 12.9 percent return on investments."

(My comment: Note that just 16 years ago, Colorado PERA's statutory "maximum amortization period" [MAP] was set in law at 60 years, rather than 30 years.  The PERA amortization period is set arbitrarily, federal agencies do not mandate a particular amortization period.  Reductions of  the MAP give public pension plan sponsors yet another tool by which to place artificial financial pressure on public pension trust funds.  This pressure is useful to Colorado PERA and the Colorado Legislature in attempts to manufacture a  rationale for the breach of PERA contracts.

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.

HB 97-1114
- Reduced PERA’s maximum amortization period to 40 years from 60 years.

Link:

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

Gazette Telegraph reporter Megan Schrader:

"State Treasurer Walker Stapleton – who sits on the PERA board as an honorary member – said the fund is too far underwater for reforms made in 2010 to rescue the system from disaster."

(My comment: Megan, when the Colorado Legislature broke PERA contracts in 2010, PERA's actuarial funding ratio was 68.9 percent.  For the entire decade of the 1970s, PERA's actuarial funding ratio was below this level.  Ask yourself, why did the Colorado PERA pension system not suffer a "disaster" in the 1970s?  Megan, protect your journalistic integrity.  Your job is to find truth, not to advance a political agenda.  Escape as soon as you can.  Megan, see page 3 of this memorandum for an historical perspective on Colorado PERA's funded status:

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

Gazette Telegraph reporter Megan Schrader quoting Treasurer Stapleton:

"I want to see PERA succeed and make promises to workers it can fulfill," Stapleton said. "First and foremost, PERA needs to get to a rational and realistic rate of return, and then it needs to fund the plan properly.  They're spending money in anticipation of investment returns that I don't believe in the long run they are going to earn."

(My comment: Remember that in the most recent “highway bill,” Congress approved return assumptions for private sector defined benefit plans that average 7.5 percent . . . this level of return assumption is in the neighborhood with most public sector defined benefit plan return assumptions.  Good enough for the private sector, but not for the public sector?

"The bottom line is that those opposed to public employee pensions are forced to use low return numbers to grab headlines and try to make the case the systems are doomed.  Ironically, since the push for this began after 2008–pension systems have beat the 7-8% assumed rate of return for the past 1, 3 and 5 year period.  Apparently reality won’t interfere with your viewpoint."

http://www.reuters.com/article/2013/09/03/us-usa-states-pensions-idUSBRE9820YN20130903

"Corporate defined benefit plans have on average a higher than 8 percent assumed rate of return while PERA’s assumed rate of return is in the mid-range of other public retirement plans."

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

NASRA on public pension plan return assumptions:

http://www.nasra.org/resources/InvReturnAssumption_Final.pdf)

Gazette Telegraph reporter Megan Schrader quoting David Hitchcock, Standard & Poor's senior Colorado analyst:

"Even at 8 percent, they're not funding what they would need to, to amortize the unfunded liability," Hitchcock said. "You might say the 8 percent is aggressive or unaggressive, but even with 8 percent, they're not funding what they need to."

(My comment: Here we have David Hitchcock, Standard & Poor's senior Colorado analyst stating that the Colorado Legislature is not paying its public pension bills.  At the 2013 session of the Colorado Legislature did state legislators decide to pay their complete Colorado PERA public pension bill?  No, but they did manage to transfer $147 million of state revenue to pay for public pensions that ARE NOT the contractual obligation of the State of Colorado.  Local government lobbyists earned their keep at the 2013 session.)

Gazette Telegraph reporter Megan Schrader:

"Almost all state pension plans across the U.S. are in the red – lacking the funds to cover the future cost of retirement pensions promised to workers."

(My comment: Megan, your statement here assumes that public pension plans must have a 100 percent funding ratio.  They do not.  Colorado PERA has had a 100 percent funding ratio in only two years since its creation in Colorado statute eight decades ago.  In the past, the Colorado PERA Board of Trustees has sought to "cap" the funding ratio of the Colorado PERA trust funds at 90 percent.  They did so, since public pension funds with 100 percent funding ratios invite mischief on the part of elected officials overseeing the plans.  A decade ago, when PERA's funding ratio [AFR] hit 105 percent, Governor Owens decided to raid the PERA trust funds to lower public sector labor costs in Colorado.  Governor Owens championed legislation providing an incentive for the early retirement of older, “more expensive” public workers [sale of service credit.]  Governor Owens' bill also cut employer contributions to the PERA pension system.  You can see that, where irresponsible elected officials oversee a pension plan, a 100 percent funding ratio is not necessarily desirable.

Megan, you write that public pension systems across the U.S. are "in the red."  Megan, do millions of homeowners in the United States face a "crisis" because they are "in the red," that is, they have home mortgages?  Are these homeowners in a "crisis" because they cannot pay off 100 percent of their home mortgages tomorrow?  Public pension plans are well-funded at an 80 percent funding ratio according to Fitch Ratings.  Public pension plans never have to be funded at a 100 percent funding ratio.)

Gazette Telegraph reporter Megan Schrader:

"PERA wasn't always in bad shape.  In 2000, PERA was 104 percent funded.  Then Lehman Brothers collapsed in September 2008, and everything changed.  That year, PERA lost $10.5 billion in the stock market."

(My comment: Megan, Colorado PERA did not "lose $10.5 billion in the stock market."  Colorado PERA's investment staff could have only "realized" these losses if they liquidated PERA's portfolio in 2008/2009.  Colorado PERA did not liquidate its portfolio in 2008/2009 because Colorado PERA invests over a time horizon that extends to 70 years.  Megan, if you put all of your 401K assets into cash when the 2008/2009 markets bottomed you could have "realized" losses that year.  Colorado PERA did not.)

For her article Megan sought out and interviewed a few relatively wealthy Colorado PERA retirees who supported the 2010 breach of PERA COLA contracts.  A commentator has recently observed that wealthier PERA retirees were more likely to support SB10-001 in 2010 as the "COLA-theft" bill had little impact on their lifestyles or their ability to afford basic necessities such as health care.  Here are the "representative" Colorado PERA retirees Megan sought out for her article: a six-figure school district superintendent, a relatively well-off chief financial officer for a school district, and a retired water engineer.

Megan, where are your interviews with the typical PERA retiree?  Where is your interview with PERA member David Holme?  Remember, he was the PERA member who told the assembled Colorado PERA Board of Trustees in 2009:

“As a state employee, I’m ready to sit down and work on whatever fixes are needed once the deadbeat employer has made arrangements to fully fund its share.”

http://www.copera.org/Flash/DenverListeningTour/PublicComment.html

Megan, how about an interview with a retired teacher or janitor?  Megan, you should also take note of the fact that even wealthy PERA retirees have no power to abrogate the pension contracts of the average Colorado PERA retiree.

From Megan's interview with School Superintendent Walt:

"I keep a pretty close eye on it, and I think that it is on the right track," said Walt Cooper, superintendent of Cheyenne Mountain School District 12.  "I don't think it's the looming crisis that some critics would level.  I also don't think that there aren't other sacrifices and pieces that we should pay in there to help it to a greater solvency."

"In comparison, the private sector must pay 6.2 percent to Social Security – the government-run retirement system – and generally offers a retirement-fund match of 3 percent to 6 percent for a defined contribution plan like a 401(k)."

(My comment: A recent Colorado WINS study revealed that, when past, skipped PERA employer pension contributions are considered, [addressed in Colorado law through the AED and SAED] Colorado PERA-affiliated employers make only a 3 percent state contribution to PERA retirement benefits.  Megan, the state that puts forth the bare minimum of support for public pensions seeks to break its public pension contracts.

http://coloradowins.org/2013/08/19/2014-total-comp-comparing-pera-and-private-sector-retirement-benefits/)

Gazette Telegraph reporter Megan Schrader:

"In the great shake-up of 2010, retirees sacrificed some cost-of-living adjustment.  The 3 percent annual bump is no longer guaranteed.  In fact, it is capped at 2 percent."

(Megan, what occurred at the 2010 session of the Colorado General Assembly was not a "great shake-up," it was a "great shakedown."  In 2010, Colorado PERA retirees did not "sacrifice" their contracted pension COLA benefit, these COLA benefits were forcibly taken.  A bank does not "sacrifice" its cash to a bank robber, that property is taken by force.  Megan, in your article you write that Colorado PERA COLA benefits are "guaranteed," and you write that PERA COLA benefits, after seizure by the Colorado Legislature are no longer "guaranteed."  Do you see anything wrong with that picture?)

A commentator from the Colorado political website ColoradoPols.com on Megan's PERA retiree interviews:

"It appears as though they were both professional employees who were well compensated at the end of their public service careers.  Perhaps a lower COLA on $75K plus annual pension is done with pragmatic acceptance and is easier to swallow for these guys than for those PERA retirees making much less and who have no Social Security benefit.  It seems to me that retiree acceptance (or support) for SB10-001 goes up with increasing income."

(My comment: This relatively small group of wealthy PERA retirees does not feel the pain of the impairment of their PERA contracts like the average PERA retiree feels it.  For some older PERA retirees, the taking of their property by the state means diminished access to needed health care, and diminished quality of life.

At the beginning of PERA's campaign to break pension contracts in 2009 PERA found a handful of PERA retirees who were willing to relinquish their contractual rights, and frightened a few more into agreeing to give up their contracted benefits.  PERA officials argued that these few represented the acceptance of ALL PERA retirees for the breach of PERA contracts.  But, of course, one PERA retiree who is willing to accept breach of his own contract has no power to relinquish contractual rights that are held by others.)

Megan, to be fair you might also have noted in your article that the Colorado Springs region is home to thousands of U.S. military retirees who have federal military pensions.

Megan, this should pique your interest: Recall that Colorado PERA and the Colorado Legislature attempted to break Colorado PERA pension contracts in 2010 when Colorado PERA's funding ratio was 68.9 percent.  Many proponents of PERA pension contract breach call a pension funding ratio in the "60s" a "crisis."  Get this Megan: U.S. military pensions have A ZERO PERCENT FUNDING RATIO.  Military pensions are paid right out of operating budgets.  Yet, we do not see Wayne Laugeson trumpeting the "crisis" in military pensions in the Gazette Telegraph.  Why is that Megan?  Full disclosure requires that the Gazette Telegraph inform its readers that U.S. military pensions have a ZERO PERCENT FUNDING RATIO.

Megan, I hope that you now see the extent of the SB10-001 scam.  The "crisis" atmosphere surrounding Colorado PERA is manufactured.  Public pensions are "well-funded" at an 80 percent funding ratio according to Fitch Ratings.  The unfunded liability will be paid off over 50-70 years . . . like a mortgage, it's not due tomorrow.

Colorado PERA active and retired members, the Colorado Legislature's 2010 PERA default bill was RETROACTIVE, and RETROSPECTIVE, that is, unconstitutional under our Colorado Constitution.  The Colorado PERA pension system can be reformed LEGALLY, PROSPECTIVELY.

When SB10-001 is struck down in the courts, Colorado PERA will begin where they should have started three years ago, with legal, prospective pension reform.  Governments do not have the right to arbitrarily break their contracts.  In making this attempt, Colorado PERA officials have embarrassed themselves and the State of Colorado.  Continue to support public pension contractual rights and the rule of law, contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!

Forget Denmark . . . Something is Rotten in the State of Colorado.

COLORADO PERA: THE COLA BENEFIT IS OUR CONTRACTUAL OBLIGATION.

COLORADO PERA: THE COLA BENEFIT IS NOT OUR CONTRACTUAL OBLIGATION.

COLORADO PERA: WE'RE NOT SURE IF THE COLA BENEFIT IS OUR CONTRACTUAL OBLIGATION.

If you are a party to a contract, and you are uncertain as to your obligations under the contract, and a process exists by which you might easily identify your contractual obligations, would you choose to ignore that process?

In 2010, the Colorado Legislature placed itself in this very position, and ignored the opportunity to have the constitutionality of its pension "reform" proposal (taking accrued PERA COLA benefits from PERA pensioners) assessed by the Colorado Supreme Court.  The PERA COLA benefit is an annual "escalator" of the pensioner's benefits.  In lieu of offering a larger fixed monthly pension benefit in exchange for a PERA member's contributions and labor, the Legislature offers to have the total accrued pension benefit delivered by means of this "escalator."

Late in 2009, Colorado PERA pension administrators testified that payment of accrued public pension COLA benefits is a contractual obligation of public employers affiliated with the PERA pension system.

In 2009, Colorado PERA officials encouraged the members of the Colorado Legislature to ask the Colorado Supreme Court for an opinion on this question of taking back the accrued pension COLA benefits of pensioners.  For some incomprehensible reason, the Leadership of the Colorado Legislature decided against sending this question to the Colorado Supreme Court.  Why? Did they not wish to know the answer?  Or, were they simply trying to buy time with the enactment of a pension bill they knew to be unconstitutional?  Why did the Leadership of the Colorado Legislature not even bother to ask their own attorneys for an opinion on the constitutionality of taking the COLA benefit as has occurred in other states?

“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

Here we have the opinion of the proponents of breaking Colorado PERA pension COLA contracts in late 2009, BEFORE the contract breach, "the PERA COLA IS our contractual obligation":

Colorado PERA in a written document, to the Colorado General Assembly’s Joint Budget Committee on December 16, 2009 states that the PERA COLA benefit IS a contractual obligation of PERA, “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.”

Link:

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

Greg Smith, Colorado PERA General Counsel (in 2008):  “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.”

Link:

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

Senator Josh Penry, co-prime sponsor, SB10-001 appearing on Your Show, Channel 20 with Channel 9 News (KUSA-TV) host Adam Schrager on January 10, 2010 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.”

Here we have the opinion of the proponents of breaking Colorado PERA pension COLA contracts AFTER the contract breach, "the PERA COLA IS NOT our contractual obligation":

Adam Franklin, Senior Staff Attorney, Colorado PERA, April 5, 2011 (as documented by the organization Friends of PERA):

“PERA believes that the COLA formula is not contractual.”

Link:

http://www.friendsofpera.com/0405meeting.pdf

Attorney General John Suthers to the Colorado Legislature’s Joint Budget Committee on December 4, 2012:

“We’re appealing because we believe there was no contractual right (to the PERA COLA.)”

Here we have the opinion of the proponents of breaking Colorado PERA pension COLA contracts later in 2010 . . . we don't know if the PERA COLA is our contractual obligation:

Greg Smith at 2010 PERA Shareholder meeting – YouTube video 10-11 minutes into the video.

“We need to know the answer of whether this action was constitutional.”

Again, if Colorado PERA "needs to know" if the taking of the PERA COLA is constitutional . . . why not simply ask?  Colorado law provides a mechanism for seeking such guidance from the Colorado Supreme Court.  Use of this mechanism might have saved Colorado taxpayer's millions of dollars.

Colorado PERA active and retired members, forget Denmark, it's clear that something is rotten in the State of Colorado.  Support public pension contractual rights in our exceptional state.  Colorado is better than breach of contract.  Contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!

Denver Post: Government Cannot “Unilaterally Ignore Contracts.” Contracts of AIG Executives Must Be Honored. Denver Post, Where is Your Editorial Defending the Contracts of PERA Pensioners?

That is, the Contracts that Were "Unilaterally Ignored by Government" in 2010?  Vince Carroll, Let's See the Denver Post Editorial Board Act on Principle, Write a Column Defending Existing Public Pension Contracts.

On March 18, 2009, in the thick of U.S. market turmoil, while the public was calling for the heads of the Wall Street banksters, and demanding that government break the contracts of AIG executives, the Denver Post Editorial Board admonished us all to keep our own heads and accept that governments in the United States cannot simply abandon their contractual obligations when it is politically popular to do so.

Yet, just ten months later, when it was politically popular to break Colorado PERA pension contracts, when the political power of Colorado pension administrators, unions officials, corporate interests, statehouse lobbyists, politicians and lawyers fueled the campaign to break the contracts of elderly Colorado PERA pensioners, what did we hear from the Denver Post Editorial Board? Not a peep.

The Denver Post Editorial Board:

"Let AIG execs keep bonuses."

"Who isn't angry about the $165 million in bonuses paid to executives at insurance giant American International Group?"

"The company, on its fourth round of government bailout money, recently paid millions to executives who created the risky derivatives at the epicenter of the financial meltdown."

"The president is up in arms."  "And the public anger is palpable."

"We agree the bonuses are morally indefensible.  But the payments should stand for several reasons.

- The bonus contracts were in place long before the insurance giant took the first federal bailout money in September. And the bonuses were paid legally — part of a program that had been disclosed in advance in filings AIG made with the government, according to the Associated Press."

(My comment to the Denver Post Editorial Board: Colorado PERA pension contracts have been in place for many decades.  The Colorado General Assembly has known for more than 60 years [since Bills/McPhail] that the payment of fully-vested Colorado PERA pension benefits is a contractual obligation of PERA-affiliated employers.  If the members of the Colorado Legislature held the belief (during these six decades) that meeting PERA contractual obligations is a burden on governments in Colorado, they had ample opportunity to adopt PROSPECTIVE, LEGAL pension reforms for the PERA pension system.  Colorado legislators have had six decades to enact PERA pension reforms that lessen any burden on Colorado governments without abrogating existing public pension contracts.  Having enacted policies that reduced Colorado PERA's funded ratio [cutting PERA pension contributions, selling service credit for less than its full actuarial cost in order to reduce state labor costs, failing to pay the full PERA pension bill, funding pensions that are not the State's responsibility, slashing state revenues beyond that required by TABOR] these politicians now seek to push their problem off onto old people.  That is sick.)

Denver Post in March 2009:

"If the government begins unilaterally ignoring contracts, it will create more turmoil in an economic atmosphere that can't sustain any more uncertainty."

(My comment: Denver Post Editorial Board, please tell us why the breach of the contracts of AIG executives in March, 2009 would create unsustainable "uncertainty" yet the breach of the contracts of Colorado PERA pensioners ten months later does not result in such damaging "uncertainty."  Do corporations have greater rights under the U.S. Constitution than public sector workers?  Denver Post Editorial Board, if the truth is that those with power and money have greater rights under the United States Constitution, then tell us so.  Let's get it out in the open.)

http://www.denverpost.com/opinion/ci_11935720

Wikipedia: "AIG Bonus Payments Controversy":

"The AIG bonus payments controversy began in March 2009, when it was publicly disclosed that the American International Group (AIG) was to pay approximately $218 million in bonus payments to employees of its financial services division."

"AIG is notable for having received taxpayer bailouts and in the fourth quarter of 2008 posted a loss of $61.7 billion, the greatest ever for any corporation.  Beyond the $165 million in bonus payments that were recently announced, total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion."

"A March 24, 2009 CNN article said that private companies wouldn't feel comfortable doing business with the U.S. government if they thought the government would change the rules after the contracts have already been signed."

"Fred J. Joseph, commissioner of the Colorado division of securities and president of the North American Securities Administrators Association, said 'If these people could get their hands on pitchforks, they really would storm the castle.'"

"In a nationally syndicated opinion column, economist Thomas Sowell claimed that the politicians who did the most to create the situation that led to the use of taxpayer money to fund the bonuses are now the same ones who are complaining the most about the bonuses."

"AIG has defended the bonuses by citing contractual obligations."

"Sorkin also said not paying the bonuses could spark problems across the business community. 'If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right . . ."

(My comment: "Government abrogating contracts, left and right" . . . where is the condemnation of proposals that government break its contracts lately?  The crowds with pitchforks want public pension contracts to be abrogated, will we appease them? 

Does governmental breach of contract not somewhat diminish the lustre of that "shining city on a hill"?  If the rule of law in the United States is actually a myth, let's be honest about it, and cease the claims of "American Exceptionalism.")

Wikipedia:

"AIG has pointed out that Connecticut, the state where AIG is based, has a law called the Wage Act.  According to the law, employers who don't pay employees the money which they are contractually obligated to pay, could ultimately be required to pay twice that amount."

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

Now (For Balance) I Give the Denver Post Editorial Board Some Credit.

In late 2009, the Denver Post did not condemn the ongoing public relations and lobbying campaigns to break Colorado PERA retiree pension contracts, but they did ask the Colorado General Assembly to check with the Colorado Supreme Court prior to acting (by submitting questions to the Colorado Supreme Court through an interrogatory.)  Of course, the Leadership of the Colorado General Assembly ignored this advice.  However, I give the Denver Post Editorial Board their due.  (I give the Editorial Board the same amount of credit that I would give a bank customer who suggests to a bank robber that he check in with the local police regarding the legality of his intended act . . . not much credit, but some!)

(My comment: DP Editorial Board, have you ever wondered why it is that the Colorado PERA pension system needed to be "rescued" when the funding ratio of the Colorado PERA pension system was 69.8 percent, but the PERA pension system did not require any sort of "rescue" in 1973 when PERA's funding ratio was 54.5 percent?  Doesn't add up does it?  By the way, don't fall for Colorado PERA's attempt to deceive the Colorado Supreme Court.  Colorado PERA has inserted a "market-based" funding ratio into its legal briefs instead of the "actuarial funding ratio" it has traditionally used in order to mislead Colorado courts.  This switch is not identified in Colorado PERA's legal briefs and is intended to bolster PERA's case for a PERA "financial crisis."  The funding ratios in SB10-001 and in the Colorado PERA statutes are "actuarial funding ratios."

Standard and Poor's:

"As of Dec. 31, 2008, the state's Public Employees' Retirement Association pension fund (excluding the health care fund) was 69.8% funded, down from 75.1% in 2007 and a high of 105.2% in 2000."

http://www.leg.state.co.us/clics/clics2009a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/6778eb9ddf2ca301872575ee0050f424/$FILE/0709AttachmentB.pdf)

Denver Post Editorial Board: If you decide to act on principle and defend Colorado PERA pension contracts in an editorial, I suggest that you address one other matter in the same piece.  In 2012, the Colorado Court of Appeals reversed and remanded the PERA retiree COLA case, Justus v, State, to the Denver District Court, simultaneously confirming the contractual nature of the Colorado PERA COLA benefit.  Yet, your Denver Post reporter Tim Hoover, in an article addressing the Court of Appeals decision, labeled this reversal a "win" for Colorado PERA.  Essentially, he parroted Colorado PERA propaganda.  Colorado PERA was happy with the initial Denver District Court's decision that the PERA COLA was not a contractual obligation.  Why would Colorado PERA consider a reversal of the Denver District Court decision a "win" for PERA?  They don't.  They are appealing this finding to the Colorado Supreme Court.  So, Denver Post Editorial Board, publish a (belated) correction to this Denver Post story by Tim Hoover.  Protect journalistic integrity!

Denver Post, October 12, 2012:

http://www.denverpost.com/newsheadlines/ci_21754161/pera-wins-ruling-cuts-pension-raises

 

"WE ARE A COUNTRY OF LAWS.  THERE ARE CONTRACTS.  THE GOVERNMENT CANNOT JUST ABROGATE CONTRACTS."

Larry Summers, Harvard Professor, Director of the National Economic Council in the Obama Administration . . . and next Fed Chairman?

http://www.latimes.com/la-oe-goldberg17-2009mar17,0,3689261.column

"Lawrence Henry 'Larry' Summers (born November 30, 1954) is an American economist.  He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton He was Director of the White House United States National Economic Council for President Barack Obama from January 2009 until November 2010.  Summers is the Charles W. Eliot University Professor at Harvard University's Kennedy School of Government.  He is the 1993 recipient of the John Bates Clark Medal for his work in several fields of economics."

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

More on the Sanctity of AIG Executive Contracts, ABC News:

"The potential for a costly lawsuit stems in part from state law in Connecticut, where AIG's now-infamous financial products division — the arm of the company that employs the 400-some employees awarded the $165 million bonuses — is based."

"In a document submitted by AIG to Treasury Secretary Timothy Geithner, the company argues that were it to renege on contractual agreements to make retention payments — which were set in early 2008, before the

government enacted compensation limits under its Troubled Asset Relief Plan – the firm could be liable for 'double damages and attorneys' fees' under the Connecticut Wage Act."

(My comment: Conveniently, public sector entities are generally exempted in these "wage acts."  Thus, public sector workers are forced to rely on the Contract Clause.)

ABC:

"There 'are legal, binding obligations of AIG, and there are serious legal, as well as business, consequences for not paying,' Liddy wrote in a recent letter to Geithner."

"'If we're talking about the possibility of violating the Connecticut or other states' wage act, then there is a real risk that one needs to be concerned about. … Some of these states are fairly punitive,' said Donald P. Carleen, of the law firm Fried, Frank, Harris, Shriver & Jacobson LLP. 'For AIG to do what the public seems to want them to do and certainly what Congress would like them to do could in theory expose them to liability.'"

http://abcnews.go.com/Business/Economy/story?id=7097759&page=1

NYT:

"But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them."

"The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken."

http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=0

"We Can't Break AIG Bonus Contracts But Worker Pensions?  No Problem!"

"But now that we’re talking about breaking contract to pay back pensions that middle class workers have paid into over the course of their professional careers, well — that’s another story."

"So, where was all this 'fiscally responsible' fighting spirit when it came to paying out $32.6 billion in taxpayer funded banker bonuses?"

"Well, as Larry Summers said, 'we are a country of law.'”

http://fdlaction.firedoglake.com/2011/02/23/we-cant-break-aig-bonus-contracts-but-worker-pensions-no-problem/

Politicsdaily.com:

"The United States is a country that follows the rule of law. And it does so even if that means paying employees of AIG, the failed insurance company whose actions nearly caused a global economic collapse last year, millions of dollars in bonuses."

"The second contract problem, involving the bonus payments, follows from the first.  One year ago, AIG revealed that it was paying its employees $165 million in deferred compensation, even though it was then effectively under government control."

"As then-CEO Edward Liddy explained to Geithner in a letter dated March 14, 2009, AIG entered into contracts with about 400 employees of the Financial Products division that guaranteed a minimum level of pay for 2008 and 2009 as retention bonuses. AIG wrote these contracts before it received the federal bailout and entered the TARP."

(My comment: Note that both the AIG controversy and the Colorado PERA retiree lawsuit, Justus v. State, surround the payment of deferred compensation.)

Politicsdaily.com:

"Despite the outcry, the money was paid.  Liddy explained that 'outside counsel has advised that these are legal, binding obligations of AIG, and there are serious legal, as well as business, consequences for not paying.'"

"Additional details attached to Liddy's letter explained that the tax code specifically limits a company's ability to modify deferred compensation agreements."

"As Liddy emphasized, 'Honoring contractual commitments is at the heart of what we do in the insurance business.  I cannot have our clients lose faith in our desire and ability to do just that."

(My comment: Does it matter at all if citizens of the United States lose faith in the willingness of U.S. state and local governments to honor their contractual commitments?)

Politicsdaily.com:

"Like it or not, the sanctity of contracts rules the land.  And, if AIG's contracts say that AIG's employees will receive $100 million in deferred compensation or that its counterparties will receive a $62 billion payment in full for their investments, then that's what the law says."

http://www.politicsdaily.com/2010/02/06/aig-bonuses-why-those-pesky-contracts-cant-be-ignored/

CNN Money, Corporations Won't Feel Comfortable Doing Business with a U.S. Government that Doesn't Honor Corporate Contracts:

"AIG has been given access to $182 billion in taxpayer funds in the past six months.  Recently it paid out $165 million in retention bonuses to employees in the company's financial products division.  Those bonuses were written into employee contracts written in early 2008."

"Another concern: Companies in the private sector won't feel comfortable doing business with Uncle Sam if they think he'll change the rules on them after a deal is done."

"One option: Legislative aides say lawmakers may try to find a face-saving way out of this — perhaps by passing something that beefs up rules concerning future bonuses while dropping the language about bonuses already paid."

http://money.cnn.com/2009/03/24/news/economy/bonus_tax_onsecondthought/index.htm?source=yahoo_quote

Dean Baker, Co-director, Center for Economic and Policy Research, on Public Pension Contractual Obligations:

"This is a contractual obligation, I just find it kind of striking here, because there is such a selectivity about how we view contracts.  You might remember that back when AIG was bankrupt, there was a big issue that they had these bonuses for their top people, hundreds of thousands of dollars per person, and we ended up paying them, because we got lectures, including from people in the Obama Administration about the sanctity of contracts.  Well, here you have contracts with workers that are actually guaranteed by the state constitution that apparently don't mean anything."

News Program Moderator:

"Let me just emphasize that, because that episode was, it was fairly early in the Obama Administration, there were all of these bonuses set to be paid to top AIG Executives . . .  there was massive populist outrage across the political spectrum and the answer that came from everybody was that these was that these bonuses had to be paid because these were contractual obligations and you could not just rip up contracts."

Dean Baker:

"Exactly . . . when it's ordinary workers rather than folks on Wall Street, they're prepared to rip up contracts.  That's what we're talking about here.  So, I think people should be outraged."

http://www.afscme.org/blog/saunders-on-msnbc-dont-scapegoat-detroit-workers

(My comment: Note that the City of Detroit is currently trying to abandon its public pension contracts in bankruptcy.  Note that the State of Colorado is currently trying to escape its contractual public pension obligations OUTSIDE OF BANKRUPTCY.  World of difference.  Also, note that pensioners in Detroit are paid contracted pension benefits that average $19,000 annually, and that most receive no Social Security benefits.)

Dean Baker, Co-director, Center for Economic and Policy Research on Detroit Pensions:

"But even if Detroit’s workers got a good deal with their pay and benefit package, so what?  A contract is still a contract.  Workers put in their time in exchange for a specific package of pay and benefits, how can the government arbitrarily change the terms of the deal after the fact."

"There are businesses that end up getting very good deals from the government all the time.  How often does a state or local government end up selling a parcel of land for a price that turns out to be hugely below its true value.  Or they may give tax concessions to lure businesses that prove to be overly generous.  It looks like the City of Chicago made a really bad deal in leasing its parking meters to Morgan Stanley for three quarters of a century.  Does Chicago get to just rewrite the terms of the contract?"

"In these cases involving businesses, somehow a contract is a contract, end of story.  The relationship is sacred and no one suggests changing the terms after the fact.  However, in the case of the pensions for city workers, these are just office workers, custodians, or garbage collectors.  The media would have us believe that contracts with these sorts of people aren’t real contracts.  If they prove inconvenient, then they can be changed."

"While that may be the view that the media is trying to push, the rest of us should insist that the law and the constitution be respected.  Detroit’s city workers have as much right to have their contracts respected as the Wall Street bankers making millions and billions off contracts that are often far more questionable."

"This is class war at its ugliest.  The elites have to learn that they don’t get to change the rules as they go along, if they want their contracts to be respected they will have to respect contracts that protect working people as well."

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/in-detroits-bankruptcy-why-are-contracts-with-workers-a-joke

Colorado PERA members: In 2009, incredibly, Colorado's public sector unions joined the effort to break the contracts of their retired union "brothers and sisters."  Sharp lawyers bought the support of Colorado's public sector unions with the promise to bolster the PERA trust funds by raiding the assets of elderly PERA retirees, leaving the "dues-paying union members" relatively unscathed.  In 2009, Colorado's public sector unions joined the "class war," playing into the sharp lawyers' hands, dividing Colorado PERA members into a group of active members, and a group of retirees whose rights, they believed, could be trashed.  This is the world we live in, and it is going to take time and effort to clean it up.

Fight for your rights!  Support Save Pera Cola!  Contribute at saveperacola.com and Friend Save Pera Cola on Facebook.

AARP: We Will Defend the Contracts of Detroit’s Pensioners. AARP: We Will “Monitor” the Breach of Colorado PERA Pension Contracts.

Today (August 23, 2013) the AARP published an article on the AARP Blog: "Cutting Detroit Retirees’ Pensions Violates State Constitution."  The AARP has decided to defend the contracts of retirees in Detroit.  You may have heard that Detroit has filed for municipal bankruptcy and is attempting to take back contracted public pension benefits from the city's pensioners (who receive an average annual benefit of $19,000.)

Importantly, Detroit is trying to take contracted public pension benefits IN BANKRUPTCY.  The Colorado Legislature is attempting (in SB10-001) to claw back contracted Colorado PERA public pension benefits OUTSIDE OF BANKRUPTCY.  There is a world of difference between the two.  Detroit is a municipality facing severe financial distress.  Colorado is the tenth wealthiest state in the nation and has one of the strongest economies in the nation.  Colorado PERA's members include the State of Colorado and many Colorado local governments.

The AARP Will Fight for Detroit's Pensioners:

"Last month, we heard the news about the City of Detroit filing for Chapter 9 bankruptcy protection in federal court, becoming the largest city to ever do so.  The city’s financial crisis threatens the retirement security of more than 30,000 active and retired employees, and almost immediately, lawsuits were filed in state court to protect Detroit’s two pension funds during the city’s restructuring."

"Michigan Attorney General Bill Schulte has said that, under the state constitution, pension obligations to state and municipal employees and retirees in Michigan may not be 'diminished or impaired.'”

"Cutting the pension benefits of Detroit’s public employees, who have paid into the system over a lifetime of hard work, violates the constitution and the state’s contract with its retirees."

"In a statement, AARP Michigan State Director Jacqueline Morrison said, in part:

'The firefighters and police of Detroit have dedicated their careers to protecting the city’s citizens.  These first-responders – and other hard-working Detroit public employees – made their pension payments.  They count on their health benefits.  We can’t change the rules at the end of the game for these public employees.'

- Many retired public employees live on fixed incomes.

- Unlike most Americans, Detroit’s firefighters and police do not get Social Security, and instead rely more heavily during retirement on the pension benefits they earned.

- The average firefighter in Detroit survives on a pension of only $30,000 a year."

“'Raiding the pensions of hard-working Michiganders to make bondholders whole is not the way to right Detroit’s fiscal house,' AARP’s Morrison emphasized."

“Detroit’s retirees must have effective representation throughout
the process of addressing the city’s challenges.”  "We will continue to be a watchdog for our members and all older Michiganders, and will hold the politicians accountable for finding responsible solutions that protect retirees’ pensions and health benefits."

http://blog.aarp.org/2013/08/23/cutting-detroit-retirees-pensions-violates-state-constitution/

THE AARP FAILED COLORADO PERA RETIREES IN 2010.

The AARP did not "hold any politicians accountable" for the breach of Colorado PERA pension contracts in 2010.  Instead, AARP officials "held" their tongues.

Below, I provide an excerpt from a Colorado AARP statement regarding their decision to simply monitor the Colorado General Assembly's 2010 pension default legislation (public pension contract breach) rather than defending Colorado public pension contracts.

AARP:

"The AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001."

(My response: In my opinion, some of the 27 self-serving lobbyists and lawyers seeking to break Colorado PERA pension contracts got to the Colorado AARP early, in 2009.  I believe that the taking of earned, contracted deferred compensation from retirees in SB10-001 was patently immoral.  Apart from the question of the constitutionality of SB 10-001, recognition of its immorality should have given pause to AARP officials and volunteers in 2010.  In my opinion, the AARP abandoned its mission and will find itself on the wrong side of history in our state.

The Colorado PERA public pension debate in 2010 provided an opportunity for the AARP to demonstrate its value to retirees in the United States, and to stand up for the many Colorado PERA retirees who are unable to defend their own contractual rights. (It's true, for a number of reasons many of these retirees are unable to defend their rights.)  The 2010 PERA debate was a missed opportunity for Colorado AARP officials to make it clear that the AARP is a champion of retiree interests.

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Colorado WINS, a Proponent of Colorado PERA Pension Contract Breach, Condemns the Legislature’s Failure to Pay its PERA Pension Bills.

A few days ago, (8/19/2013) Colorado WINS (a coalition of public sector unions, "Colorado Workers for Innovative and New Solutions") posted an article on its website condemning the historical underfunding of the Colorado PERA public pension system by the Colorado General Assembly.

http://coloradowins.org/2013/08/19/2014-total-comp-comparing-pera-and-private-sector-retirement-benefits/

In 2010, Colorado WINS supported SB10-001, a bill that broke the pension contracts of pensioners in the Colorado PERA pension system.  The 2010 legislation sought to force a "sacrifice" from Colorado PERA pensioners, that is, forcibly take the property of these PERA pensioners, allowing Colorado state and local governments to escape their accrued pension debts. I believe, that Colorado WINS supported the breach of the public pension contracts of their retired union "brothers and sisters" in order to minimize the future pension contributions needed from their current active "dues-paying" union members.  (Retired union members no longer pay union dues, why should their interests and contracts be protected by Colorado WINS? . . . follow the money!)

Colorado WINS is looking out for their current, active members, but I think they made a mistake in 2010.  What kind of a union casually tosses its retired members under the bus?  There is scant precedent for this type of behavior in the history of the U.S. labor movement.  This act was clearly immoral and treacherous.  It undermines the moral standing of the U.S. labor movement. Public sector unions have done much to improve the working conditions of middle-class Americans over the last century, but advocating the breach of the contracts of their retired union members crosses a moral line.

As we read on the Colorado PERA website:

“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

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

(My comment: Yes, Colorado PERA was able to frighten a few PERA retirees into supporting the breach of their own PERA pension contracts in 2009.  The public relations campaign to take money from Colorado PERA retirees was, ironically, funded with these retirees' own money [from PERA pension trust funds.]  It has been observed that many of the PERA retirees who supported the breach of PERA contracts in 2010 were among the wealthier PERA pensioners.)

Rather than conspiring with others to "claw back" the earnings of Colorado's pensioners, I think that Colorado WINS should be demanding that the Colorado Legislature actually pay its public pension bills.  What are Colorado WINS' lobbyists doing?  For the last decade, they should have demanded that the Colorado Legislature meet its contractual obligations, that full payment of PERA's pension bills be made.  Colorado WINS lobbyists should have made these demands before the committees of the Legislature at every opportunity.  In every year that the Colorado Legislature failed to make its PERA pension payments and instead appropriated funds to cover local government pension debt that IS NOT the contractual obligation of the State of Colorado, Colorado WINS' lobbyists should have been there to demand an end to the practice.

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill for a decade.

2012 PERA CAFR, page 35 – "ARC Deficiency."

"In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries."

"During the past 10 years, this shortfall in funding . . . has been $3.4 billion."

https://www.copera.org/pdf/5/5-20-12.pdf

Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” (ARCs), from the Center for Retirement Research at Boston College Public Plans Database:

2001 Colorado School – 100% ARC Paid

2002 Colorado School – 100% ARC Paid

2003 Colorado School – 69% ARC Paid

2004 Colorado School – 51% ARC Paid

2005 Colorado School – 48% ARC Paid

2006 Colorado School – 62% ARC Paid

2007 Colorado School – 60% ARC Paid

2008 Colorado School – 68% ARC Paid

2009 Colorado School – 65% ARC Paid

2010 Colorado School – 70% ARC Paid

2011 Colorado School – 89% ARC Paid

2001 Colorado State – 100% ARC Paid

2002 Colorado State – 100% ARC Paid

2003 Colorado State – 69% ARC Paid

2004 Colorado State – 51% ARC Paid

2005 Colorado State – 48% ARC Paid

2006 Colorado State – 58% ARC Paid

2007 Colorado State – 56% ARC Paid

2008 Colorado State – 63% ARC Paid

2009 Colorado State – 61% ARC Paid

2010 Colorado State – 62% ARC Paid

2011 Colorado State – 85% ARC Paid

2001 Colorado Municipal – 100% ARC Paid

2002 Colorado Municipal – 100% ARC Paid

2003 Colorado Municipal – 69% ARC Paid

2004 Colorado Municipal – 62% ARC Paid

2005 Colorado Municipal – 64% ARC Paid

2006 Colorado Municipal – 85% ARC Paid

2007 Colorado Municipal – 84% ARC Paid

2008 Colorado Municipal – 98% ARC Paid

2009 Colorado Municipal – 96% ARC Paid

2010 Colorado Municipal – 101% ARC Paid

2011 Colorado Municipal – 139% ARC Paid

(According to the 2011 PERA CAFR, the dramatic increase in the percentage contributed for the Colorado PERA Local Government Division in 2011, is a “result of the changes contained in SB10-001,”  [2011 PERA CAFR Financial Section, page 82.]  Apparently, when the State of Colorado breaks its public pension contracts it really facilitates the payment of the full ARC in some PERA divisions.)

The Colorado WINS article published on August 19, 2013 highlights the Colorado Legislature's historical underfunding of the Colorado PERA pension system, and points out that the State of Colorado pays for only 17 percent of state employee retirement benefits.  The WINS article emphasizes the fact that Colorado PERA retirees are not eligible to receive Social Security benefits and are accordingly entirely dependent on their PERA pension benefits.  In the article, Colorado WINS states that the Colorado General Assembly "chose to underfund its portion of contributions," and that the "underfunding" of the Colorado PERA pension system "is not the fault of state employees."  If this is true, why did Colorado WINS support a bill that shifts the burden of this PERA pension underfunding onto state employees (and PERA members employed by local governments?)

Colorado WINS notes that the increased PERA employer costs (AED and SAED) put in place by the Colorado Legislature are the result of the Legislature's failure to make pension payments identified by Colorado PERA's actuaries [necessary to maintain a healthy public pension system, "actuarially required contributions, ARC."]  Colorado WINS notes that the inclusion of the AED and SAED in public employee compensation studies leads to the false conclusion that the State of Colorado contributes more to retirement than do private sector entities in Colorado.

Colorado WINS on Social Security:

"What is important to remember, and which is often lost in the debate over public employee pensions, is that state employees do not earn Social Security while they are employed by the state.  When someone in the general public hears about a PERA Pension they often are not aware of this fact and assume that a state employee’s pension is an add-on to their Social Security benefits, similar to the role of a 401k or a pension in the private sector."

(My comment: The fact that Colorado PERA pensioners are completely dependent to their pension contracts renders the Colorado Legislature's self-serving breach of these contracts in 2010 unconscionable.  Contractual obligations were broken to free up money for discretionary programs popular with voters.)

Colorado WINS:

"The actuarial costs however include moneys needed to make up for years when the state underfunded their portion of the PERA contribution and all other such accrued liabilities and any  other contributions made to PERA."

(My comment: The underfunding of the Colorado PERA pension system by the Colorado Legislature was condemned at the 2009 Colorado PERA "Listening Tour" meeting in Denver, PERA member David Holme:

“My decision to join the state was based on the PERA program.”

“Any sort of a reduction in benefits today would be a violation of that contract, and bait and switch advertising . . . and so fraud.”

“State employees have never failed to provide their contributions  . . . and in fact we’ve paid more into the system than the employers have over the total of the years, according to PERA reports.”

“The employers, starting in 2002, the last year of 100 percent funding, began providing less than the annual contribution requirement, setting contribution rates for the state of less than required.”

“Today, the State of Colorado PERA employer is past due to the tune of $6.5 billion into the trust fund contributions, not counting any interest — if  you do it at the three percent PERA interest, it would be another $1.1 billion past due over the last 9 years.”

“PERA’s overall funds at the end of last year were about $30 billion, this bad debt constitutes about 25 percent of the PERA assets.  If they were paid with interest to the PERA investment fund it would be at 94 percent funded on the actuarial basis or 76 percent on the market basis.  Most experts believe that a fund at 80 percent is a healthy fund.  We’d be above that.”

“The survey today, that we just talked about, is a good example of this.  If you look at that, 28 of the options on there cost the employees money, and only two cost the employers money.”

“As a state employee, I’m ready to sit down and work on whatever fixes are needed once the deadbeat employer has made arrangements to fully fund its share.”

http://www.copera.org/Flash/DenverListeningTour/PublicComment.html

Colorado WINS:

"Based on PERA’s report we see that a state employee pays 83% of the contribution necessary to pay for their future retirement benefits – this is significantly higher than what an employee pays in the private sector."

(My comment: The fact that the State of Colorado and other Colorado PERA employers put forth a minimal financial effort in the provision of public pension benefits renders the Colorado Legislature's 2010 breach of PERA pension contracts that much more egregious.

• 2.16 – percent of Colorado state and local government spending dedicated to public pension support in 2008 [Census Bureau/NASRA.]
• 2.89 – average percent of state and local government spending dedicated to public pension support among the states in 2008.
• 5.55 – highest percent of state and local government spending dedicated to public pension support among the states in 2008 [Nevada.]
• #32 – Colorado 2008 rank among the states in taxpayer support for public pensions.

Colorado WINS:

"The added employer costs in the DPA analysis are a result of underfunding of the State’s pension obligation by the State in previous years."

"First, the underfunding that AED and SAED are designed to address (circumstances that) occurred through no fault of any State employees.  Rather the State chose to underfund its portion of contributions.  Employees should not have their benefits attacked because of an action that their employer freely took.  Second, AED and SAED payments cannot be accurately categorized as part of the total annual compensation package for current employees.  These are not new benefits; rather they are payments on already owed benefits."

"In that analysis it is clear that the State is simply not competitive in any real world, practical analysis of their retirement benefits plan."

Link to the complete Colorado WINS article:

http://coloradowins.org/2013/08/19/2014-total-comp-comparing-pera-and-private-sector-retirement-benefits/

A comment from ColoradoPols.com on the support of Colorado WINS for breach of PERA pension contracts in 2010:

"However, (Colorado PERA's) placing 90% of the reform burden on PERA retirees was the master stroke to win key employee groups, especially Colorado WINS."

http://coloradopols.com/diary/46912/truthout-illinois-plutocrats-manipulate-state-bond-ratings-to-escape-public-pension-contracts-lower-their-tax-burden

The failure of the Colorado General Assembly to pay its public pension bills for the last decade has also been condemned by Colorado PERA officials:

Colorado PERA Executive Director Greg Smith, August 11, 2009:

“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.”

(Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio.)

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

Former Colorado PERA Executive Director Meredith Williams, February 23, 2012:

"We've had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we're involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year."

(Testimony to the House Finance Committee relating to the Colorado Legislature's historical underfunding of its PERA pension obligations.)

As we have seen, a columnist for the Wall Street Journal's Marketwatch.com has recently labeled such deliberate underfunding of public pension systems "corruption."

The columnist, Chris Tobe, has served as a trustee of a public pension system.  Chris Tobe:

"A corporate pension plan could not pay half the payments for ten years like the states like Kentucky and Illinois have done.  Those guys would be in jail.  I think that public pension plans should be held to the same standard as corporate defined benefit plans."

"I compare Kentucky to Illinois, much of whose real corruption happened maybe ten years ago and Blagojevich, the governor, was deeply involved with it. They’ve also underfunded their actuarially-required contribution [ARC], much like Kentucky. Those two things went hand-in-hand, in Illinois and Kentucky, probably the two worst state systems. If people are willing to look the other way at corruption in investments, they’re willing to look the other way at deliberate underfunding, which I consider corruption as well."

Link:

http://www.publicsectorinc.org/podcasts/070613tobe.php#.UgQ3zr7nbX5

Colorado WINS membership and organization:

“The Colorado Association of Public Employees/Service Employees International Union (CAPE/SEIU); the American Federation of State, County and Municipal Employees (AFSCME); and the American Federation of Teachers (AFT) are joining forces to organize state employees. The new organization will be known as Colorado WINS (Workers for Innovative and New Solutions).”

"In addition, Colorado WINS will have the ‘sole authority to advocate for legislation affecting state employees, including but not limited to legislation affecting PERA [the Public Employees' Retirement Association], the state personnel system, employee accountability and state employee protections.’”

“Under the agreement, SEIU will provide 50 percent of the budget for Colorado WINS; AFT and AFSCME will provide the rest.”

“The agreement also says that funding contributed by Colorado WINS members for political purposes will be divided, with 50 percent going to SEIU/CAPE and 50 percent to the AFT and AFSCME political funds.”

“A copy of the agreement is available online at:

http://www.eiaonline.com/coloradowins.pdf.”

https://www.cu.edu/sg/messages/5895.html

Colorado PERA active and retired members, your contracts have equal status to Colorado's contracts with corporations.  There is no reason why the contract of a public sector worker should be viewed as inferior to a contract between the State of Colorado and a corporation.  Note that no Colorado state legislator has proposed breaking state contracts with corporations.  Keep up the fight for your contractual rights!  Contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!