Algernon Moncrief

About Algernon Moncrief

Independent Nationwide Public Pension Rights Blogger.

Former Colorado Springs PERA Members Sue City.

From Plan Sponsor: "Hospital Employees Sue Colorado Springs for Colorado PERA Pension."

"A lawsuit claims the City of Colorado Springs’ termination of Memorial Health System’s affiliation with the state pension system violated state law."

"Employees of Memorial Health System, owned by the City of Colorado Springs, Colorado, have sued the city, claiming they were unlawfully removed from the state’s Public Employees Retirement Association (PERA) and subsequently not given promised benefits."

"Prior to termination of the City’s administration of Memorial, Memorial employees were repeatedly told that when PERA affiliation was terminated, their pension plan would be replaced by another plan that would be at least as good as the PERA benefit plan."

"The lawsuit alleges the new employee pension benefit plan for Memorial employees after October 1, 2012, is inferior to the benefits they would have accrued under PERA."

"For Memorial employees (except the Children’s Hospital sublease employees) the retirement benefits accrue at the rate of only approximately 1% of the average of the highest five years of service per additional year of service, instead of 2.5% of the average of the highest three years of service under PERA."

(This rate of accrual of PERA benefits is called the pension "multiplier." In 2010, rather than PROSPECTIVELY reducing this PERA pension multiplier from a 2.5 percent level for PERA benefits not yet accrued, the sponsors of SB10-001 sought a RETROSPECTIVE reduction of Colorado PERA pension [ABI] COLA benefits that had already accrued, that is, PERA pension benefits that had already been earned by Colorado PERA retirees. SB10-001 was challenged in court [Justus v. State] and ultimately blessed by a Colorado Supreme Court that: disregarded 50-year old Colorado public pension precedent, ignored federal case law [US Trust,] ignored ubiquitous evidence of the contract, and failed to conduct a "contract analysis" . . . all of this to summarily eliminate legal Colorado governmental debts. The plaintiffs, Colorado PERA retirees, had exchanged years of labor and pension contributions for this ABI benefit. How did the Colorado Supreme Court justices reach the conclusion that Colorado PERA members do not exchange their labor and contributions for the ABI benefit? In their superficial, state-serving review, the justices did not address this question.)

Plan Sponsor:

"In addition, as newly minted private-sector employees, these employees now must contribute to and qualify for Social Security. They have not accrued Social Security credits because previously they did not contribute to Social Security."

(The Colorado PERA pension system is theoretically a replacement for Social Security. The Colorado PERA pension system is theoretically a "qualified" public pension plan under the Internal Revenue Code. "Qualified public pension plans" must have "definitely determinable" benefits under the Internal Revenue Code. The Colorado Supreme Court recently ruled in [willful?] ignorance of this federal requirement. Evidence and law are much easier to bury when no trial or discovery are allowed.)

Plan Sponsor:

“'These differences amount to tens of thousands, or even hundreds of thousands of dollars per employee, in lost retirement benefits,' the lawsuit says."

"The lawusit is filed on behalf of all affected employees, and the city has acknowledged that approximately 4,000 or more such employees of Memorial Hospital existed as of October 1, 2012."

Complete article at PlanSponsor:

http://www.plansponsor.com/Hospital_Employees_Sue_Colorado_…

The complaint, Romstad v. City of Colorado Springs:

http://www.plansponsor.com/…/RomstadvCityofColoradoSprings.…

http://coloradopols.com/…/the-colorado-supreme-court-politi…

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New Jersey Court: Pension ARC Must Be Paid. Colorado PERA: Unnecessary.

Coverage of today's New Jersey Superior Court Decision:

"(New Jersey Governor) Christie has said the pension cuts (failure to pay public pension 'actuarially required contributions, ARC') were necessary to balance the state’s budget and that 'there are no alternatives' to such reductions. At the same time, he has backed record amounts of new corporate tax subsidies — some of which flowed to Republican campaign contributors. He has also vetoed legislation to increase taxes on income above $1 million. That legislation was projected to raise $1.1 billion, which proponents said would have allowed the state to make its required pension contribution."

http://coloradopols.com/diary/66484/colorado-pera-fiduciaries-severely-underfunded-but-see-no-problem

http://www.ibtimes.com/chris-christie-court-overturns-new-jersey-governors-pension-cuts-1825710

Today (2/23/2015), the Superior Court of New Jersey forced the State of New Jersey to abide by a recently enacted statutory requirement that public pension ARCs be paid. In Colorado, the issue of the payment of the Colorado PERA pension ARC isn't even on the table. Colorado PERA's Executive Director recently testified to the Colorado Joint Budget Committee that the PERA ARC need not be paid, i.e., he stated that, although the PERA ARC has not been paid for thirteen years in Colorado, and is not currently being paid, the PERA pension fund needs no additional contributions. As far as I can tell, Colorado PERA is the lone public pension system in the United States taking the position that public pension ARCs need not be paid. See the following article for Greg Smith's testimony:

http://coloradopols.com/diary/66484/colorado-pera-fiduciaries-severely-underfunded-but-see-no-problem

Link to the complete New Jersey court opinion:

http://www.judiciary.state.nj.us/pension_payment/FINAL%20decision%202-23-2015.pdf

A few interesting excerpts from the New Jersey Court's opinion:

"And, history has shown that the public pension system and its members routinely have been targeted by administrations of both parties when budget problems arise."

"See Berg v. Christie . . .describing a 'series of Executive and Legislative policy decisions' that 'resulted in underfunding of the pension systems' and deciding whether a legislative act suspending cost of living adjustments for current and future retirees violated the contract clause."

"Now, for the first time, Chapter 78 expressly provides that members of the public pension systems 'shall have a contractual right to the annual required contribution amount being made by the member’s employer or by any other public entity.'”

"The Legislature directed that the required contributions be made annually on a timely basis 'to help ensure that the retirement system is securely funded and that the retirement benefits to which the members are entitled by statute and in consideration for their public service and in compensation for their work will be paid upon retirement.'”

"Indeed, the Governor himself characterized this pension legislation as constituting 'historic reforms' that 'bring to an end years of broken promises and fiscal mismanagement by securing the long-term solvency of the pension and benefit systems.'”

"Under the statutory framework requiring employer contributions, the State is required to make an 'annually required contribution' (ARC) which is composed of the 'annual normal contribution' and the 'annual unfunded accrued actuarial liability contribution' (UAAL)."

"The State has failed to pay its full ARC every year from FY 1997 to 2012."

"The State’s continued failure to make the full ARC payment results in exponential growth in the UAAL through both lost contributions and lost expected return on the investment of the contributions."

"Courts in New Jersey have consistently viewed pension payments as a form of 'deferred compensation' that an employee earns for prior service. ('Deferred compensation benefits have been earned by an employee and are no longer considered a gratuity.”)

“Pension statutes should be liberally construed . . . because they represent deferred compensation for a government employee’s service.”

"Despite the broad reach of the doctrine of sovereign immunity, there are several exceptions to the doctrine. For example, the doctrine does not apply if a plaintiff seeks relief from state laws that violate the Federal Constitution."

"This court and the United States District Court for the District of New Jersey previously held in a similar suit brought by the NJEA, challenging Chapter 78’s suspension of the COLAs and seeking enforcement of plaintiffs’ contracts with the State, that these types of claims essentially seek specific performance of their contracts with the State."

"As these two decisions explain, actions seeking specific performance of a contract do not fall under Ex parte Young’s exception from the doctrine of sovereign immunity, largely because they seek retroactive, rather than prospective, relief."

"Notably, both the Federal and the State Contract Clauses speak of a violation of the Clause’s guarantee as an 'impairment.' Consequently, when the Legislature chose to use the term 'impairment' in Chapter 78, it did not intend to limit plaintiffs’ constitutional protections to the New Jersey State Constitution."

"Like any private party to a contract, then, the State may repudiate a contract, as long as it is willing to pay the damages resulting from the breach."

"Consequently, although plaintiffs’ Federal Contract Clause claims are not necessary to the outcome of this case, the court concludes that plaintiffs have properly asserted claims arising under the Federal Constitution, which support their parallel claims arising under the New Jersey Constitution."

"The court is unwilling to rely on what has now become a succession of empty promises. Defendants’ assertions about the health of the fund also do not take into account the fact that the State’s failure to make its payments in a timely fashion results in the loss of interest on the investment of money that otherwise should have been put into the pension funds. The continued failure to make timely payments therefore causes the unfunded liability to increase exponentially."

"Further, after a State binds itself in a contract, 'a State is not completely free to consider impairing the obligations of its own contracts on a par with other policy alternatives.U.S. Trust Co."

"Although a state’s asserted justifications for impairing private contractual obligations are typically given significant deference by the courts, less deference is accorded to a state in regard to public contracts because a state’s self-interest is at stake."

" . . . a contract impairment will be considered unreasonable if the State considered impairment of the contract right “on a par with other policy alternatives. U.S. Trust"

"The court cannot allow the State to simply turn its back on its obligations to New Jersey’s public employees–especially in light of the fact that the State’s failure to make its full payment constitutes a substantial blow to the solvency of the pension funds in violation of plaintiffs’ constitutional rights, and due to the fact that the terms of the UAAL payments were set forth–and even publicly endorsed–by the Governor himself."

"The complaints raise a number of other claims that were not argued by plaintiffs either in the moving briefs or in the reply briefs. For example, the complaints allege estoppel, unconstitutional taking, breach of the implied covenant of good faith and fair dealing . . ."

http://www.judiciary.state.nj.us/pension_payment/FINAL%20decision%202-23-2015.pdf

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Colorado PERA: Forcing Retirees to Eat 90 Percent of Pension Reform Costs was “Sensitive” and “Equitable.”

Yes dear reader, in 2010, a juggernaut of 27 Colorado statehouse lobbyists "sensitively" forced the PERA reform bill (SB10-001) through the legislative process.

The propaganda produced by our Colorado state pension administrative agency, Colorado PERA, simply boggles the mind. It is boundless . . . and unconstrained by normal human decency.

Allow me to translate this recent Colorado PERA propaganda piece: Colorado PERA officials recently argued, on their website, that using PERA trust funds (in part, the property of PERA retirees) to pay for public relations, lobbying, and legal campaigns to take the retirees' accrued statutory PERA benefits (benefits that PERA officials have, in legislative testimony, confirmed as PERA contractual obligations) and thus push 90 percent of the cost of the 2010 PERA reform bill onto the backs of these elderly PERA retirees, was "sensitive," and an "equitable distribution of costs."

Elderly PERA retirees eat 90 percent, PERA employers and taxpayers, who actually owe the debt, bear ten percent of the burden. This is the Colorado PERA definition of "equitable"?

In my opinion, Colorado PERA officials are now capable of writing anything, even the most outrageous lies, without compunction. No other Colorado state agency can approach the Colorado PERA talent for propaganda.

http://coloradopols.com/diary/64487/the-colorado-supreme-court-politicians-in-black-robes-as-it-turns-out

A few days ago this statement was posted on Colorado PERA's website:

"The goal of the General Assembly’s reforms enacted in 2010 was for PERA to achieve fully funded status – thus ensuring retirement security – WITH SENSITIVITY TO THE EQUITABLE DISTRIBUTION OF COSTS AND BURDENS ASSOCIATED WITH THE REFORMS." (My emphasis in caps.)

https://www.copera.org/about/pera-on-the-issues/conversations-about-colorado%E2%80%99s-public-employee-retirement-system-should

Implicit in this Colorado PERA statement is a belief that accrued Colorado PERA ABI (COLA) benefits ARE NOT a Colorado PERA contractual obligation. Surely, Colorado PERA officials do not believe that the breach of a public pension contract can be "equitable," or "sensitive."

But, if Colorado PERA officials believe that the statutory PERA ABI benefit is not a Colorado PERA contractual obligation, then why did they provide this perfectly contradictory legislative testimony in 2009?

December 16, 2009

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

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

COLORADO PERA OFFICIALS AND SB10-001 SPONSORS: PERA RETIREES WILL EAT 90 PERCENT OF THE COSTS OF THE 2010 REFORM:

January 22, 2010

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

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

January 26, 2010

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

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

October 26, 2011

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

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

April 17, 2011

Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post: “I sponsored last year's legislation, known as Senate Bill 1, to protect PERA. The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”

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

May 29, 2011

Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

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

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

We see above that Colorado PERA officials have testified that the PERA statutory ABI (COLA) benefit is a Colorado PERA contractual obligation. (For the record, this evidence was conveniently ignored by the Colorado Supreme Court in its 2014 Decision in the case, Justus v. State.) In 2014, Colorado state government CONVENIENTLY forgave Colorado state government debt (violating federal case law, US Trust.)

"The Colorado Supreme Court: Politicians in Black Robes."

http://coloradopols.com/diary/64487/the-colorado-supreme-court-politicians-in-black-robes-as-it-turns-out

It is critical to the proper functioning of a democratic republic that truth be widely disseminated. "Friend" Save Pera Cola on Facebook.

The Traditional Colorado State “Screwing” of Colorado Teachers and Public Sector Workers.

Former Colorado Union (AFSCME) Officials Weigh In, and Comment on the Legacy of Colorado State Senator Pat Steadman.

I provide below, for the record, a few examples of the historical state deception of Colorado teachers and other Colorado public sector employees. It's important that Colorado teachers, and Colorado state and local government workers, be fully informed relating to their employment situations. For the most part, Colorado's public sector unions have not fully informed their members.

Examples of the historical deception of Colorado public sector workers:

The reduction of Colorado state employee compensation by means of a promised "performance pay" scheme that was subsequently not funded by the Colorado Legislature.

The past repurposing of resources allocated for state employee compensation, to pay the salaries of hundreds of new Executive Branch political appointees.

The retention of gubernatorial political appointees in high-salaried administrative positions across both Democratic and Republican administrations (including, many former Colorado state legislators whose ultimate Colorado PERA retirement benefits will be based on their new six-figure salaries rather than on their $30,000 legislative salaries.)

The annual Legislative transfer of billions of dollars of Colorado state and local government resources to corporations (in the form of "tax expenditures") while actuarially required contributions to the Colorado PERA pension system are ignored. (Google: "Colorado Tax Expenditure Report.")

The 2010 Colorado (union supported) elimination of state employee and teacher contractual rights to pension inflation protection in retirement (a benefit that these employees had already paid for with their contributions and labor.)

The immoral 2009 use of teacher and public employee PERA pension contributions to pay for political and legal campaigns to break the PERA pension contracts of these same teachers and public employees.

The Colorado Legislature's past transfer of $700 million to pay off legacy pension debts of Colorado local governments (debts that are not Colorado state contractual obligations) while the Legislature failed to pay actuarially required contributions for their own Colorado state contractual obligations in the PERA pension system.

The Colorado PERA Board's past unanimous endorsement of Governor Bill Owens' "service credit fire sale," designed to reduce the labor costs of Colorado PERA-affiliated employers by ridding government of "expensive" older employees. (This scheme increased the debt of the Colorado PERA pension system by billions of dollars.)

These few examples characterize the employment environment of Colorado teachers, and Colorado state and local government workers. Only fully-informed workers are able to make rational decisions regarding their ongoing participation in this Colorado public sector employment environment.

The Colorado SB10-001 Deception:

The most recent deception of Colorado teachers and Colorado state and local government workers occurred in 2010. In that year, a group of proponents of breaking Colorado PERA pension contracts successfully divided active Colorado PERA members from retired members in order to take their contracted inflation protection in retirement. (This taking was supported by Colorado's public sector unions.) The support of Colorado's public sector unions contributed to the elimination of the contractual rights of their own union members to inflation protection in retirement. In 2010, Colorado's public sector unions supported the bill (SB10-001) that allows Colorado governments to inflate away legal governmental pension debts. Colorado's unions are unique in the history of the Labor Movement in that they have facilitated the destruction of their own members' contractual rights.

The primary interest of Colorado politicians is reelection. Pleasing voters is simply more important than speaking the truth about TABOR to Colorado voters, or honoring state contracts. Colorado politicians have no desire to tell voters that they must actually pay for governmental services. Breaking Colorado PERA contractual obligations, and directing the resources that support these contractual obligations to pay for public services allows politicians to avoid speaking the truth to voters. Ignoring state financial and contractual obligations to pensions frees up money to fund programs that help legislators get reelected. Political connections in the courts have smoothed the path to the desired Colorado PERA pension contract breach.

See the article: "The Colorado Supreme Court: Politicians in Black Robes" at ColoradoPols.com.

http://coloradopols.com/diary/64487/the-colorado-supreme-court-politicians-in-black-robes-as-it-turns-out

Colorado legislators have not paid the full annual Colorado PERA pension bill, as calculated by Colorado PERA's actuaries, since 2002. They are not paying this "ARC" pension bill even today. Colorado PERA's Executive Director Greg Smith is alone in the nation in claiming that a public pension system does not have to pay the pension bill calculated by its own actuaries.

Initially, in 2009, Colorado public sector unions and other proponents of SB10-001 sought a one-time reduction of this contractual inflation protection (ABI, "COLA") for PERA retirement benefits, based on a claim of financial need, i.e., "actuarial necessity." Colorado's unions did not realize that their support for SB10-001 would ultimately wipe out the entire contractual right of teachers and state workers to inflation protection in retirement. Teachers be sure to thank your CEA officials!

Although they had already admitted to the existence of the contractual PERA COLA obligation in 2009, the proponents of SB10-001 later realized that establishing "actuarial necessity" would be difficult, so they switched their legal strategy to a simple denial of the existence of the PERA COLA contract. Although their testimony as to the contractual inflation protection obligation was on the record (written and recorded at a Colorado Joint Budget Committee hearing) this admission meant nothing to the Colorado Supreme Court. The Court threw out the worker's contract right without examining evidence in the case.

I find it ironic that in 2010, Greg Smith, Executive Director of the Colorado PERA pension system argued that the PERA COLA (inflation protection) contract must be broken when the funded ratio of the PERA pension stood at 69 percent, yet now that the funded ratio of the Colorado PERA pension system is in the low 60s, Greg Smith has recently stated that the pension system does not need additional contributions. It looks like he just makes this up as he goes along.

Imagine what life is like as one of the 4,500 employees of the Colorado Judicial Branch. These employees are enrolled in the Colorado PERA pension system. They watched in 2012 as the Colorado Court of Appeals found Colorado public pension case law (Bills and McPhail) "dispositive" as to the contractual right of Colorado PERA members to their statutory "inflation protection" in retirement (which the PERA members have paid for with labor and contributions.) Then, in 2014, they were forced to watch the politicians installed at the top of their organization (Supreme Court Justices) ignore all evidence in the case Justus v. State, ignore federal case law (US Trust), and embrace a Denver District Court decision that conveniently failed to even mention Colorado's on-point public pension case law (Bills and McPhail.) The reality is that these 4,500 employees work for an organization that is ultimately arbitrary, political, and not guided by the Rule of Law. The Judicial Branch employees get a paycheck, but in their heart of hearts, realize that their organization is unprincipled, ignores the US Constitution when convenient, and so serves no higher purpose.

Recently, an article relating to the support of Colorado State Senator Pat Steadman for the taking of the PERA COLA benefit in 2010 was posted on the blog ColoradoPols.com and on Facebook. This article elicited some commentary from a few former Colorado public sector union officials that documents the historical deception of Colorado teachers and other public sector workers.

Comments of Former AFSCME Colorado Official Guy Santo:

"Guy Santo . . . Facebook's still new to me; but some things aren't so novel…like the duplicitous incompetence of a professional politician; e.g, Mr. (Colorado State Senator Pat) Steadman and his role in the Great Colorado Pension Heist of 2010, a.k.a. Senate Bill 1 (SB-001).

As background: I met Mr. Steadman before he was a lobbyist or legislator (his only jobs besides lawyer), when he was staff attorney with our national umbrella labor organization, American Federation of State County & Municipal Employees (AFSCME), in which capacity he single- handedly botched a lawsuit against reclassifying all state jobs in the early 90's. The lawsuit concerned an obviously flawed 'Class Description' project based on management buzz words. New class descriptions squeezed existing job descriptions into fewer general ones and replaced the old merit-based pay structure with performance pay (which was never funded); and the whole thing was just another way to cut workers' pay. I speak from my experience as a state employee and an officer of the state employees' local that relied on our national AFSCME office for legal support (since that's why we paid dues); and although my perception of events may seem biased; what is not open to interpretation is the importance of deadlines and submitting appeals timely … and I remember Mr. Steadman as the person who failed to file our appeal on time.

Fast forward 17 years, and he's representing the people from Senate District 31 (but definitely not workers, particularly public servants) and he's the mouthpiece for PERA staff and management in railroading through SB10-001's onerous measures to once more balance the state budget on the backs of state employees and raid their pensions. In 2010, Mr. Steadman chaired the (Colorado House) Finance Committee responsible for PERA oversight . . . and despite numerous pleas to him to show PERA members the financial records purportedly necessitating the draconian actions of SB10-001, Mr. Steadman would only give me his word that the financial situation was dire, as he personally looked at the books (which would be much too complicated for people like me to comprehend). NOT very reassuring, coming from a lawyer-lobbyist turned career politician who apparently couldn't read a calendar.

'nuff said. – Guy Santo

(My comment: Remember that the proponents of SB10-001 argued that the financial position of Colorado PERA was so dire [at a 69 percent funded ratio in 2010] that PERA pension contractual obligations had to be broken, yet now that the PERA funded ratio is in the low 60s, PERA officials argue that no additional contributions to the pension system are necessary.)

Comments of Former AFSCME Colorado Official Jeremiah Attridge:

"As the former President of AFSCME Local 3534 I would like to confirm the statements that Mr. Santo has made regarding a class action grievance filed on behalf of employees of the Colorado Department of Labor regarding the proposed 'class description' changes proposed by the Romer administration, and that the lawyer provided by AFSCME Council 76, Patrick Steadman, failed to file the suit in a timely fashion. As I recall, Mr. Steadman had been handed the final copy of the grievance written by Mr. Santo and Mr. William Lafferty a week before it was due, and for reasons unknown, Mr. Steadman waited until the last day the grievance was to be filed and then stated: 'When I got there, the courthouse was already closed.' As the complaint was not filed in a timely fashion in accordance with the rules of procedure, the state employees lost their rights to be heard, and the case was dismissed without any chance of appeal. The irony of this situation was that the basis of the employees' grievance was that management of the CDLE had failed to follow the correct procedures when implementing this reclassification of public employees, and as a result of this procedural flaw, their actions were arbitrary, capricious, and contrary to the rule of law. The case was a 'no-brainer.' It would have been an easy win, and would have increased the union's standing among state employees. Due to the case dismissal, the opposite took place and AFSCME membership plummeted.

Aside from the possible need of (Colorado State) Senator Steadman to revise and edit his resume, there is still a residual effect on the way state government functions and how PERA benefits are paid to certain individuals, that is a direct result of the Romer administration's 'Class Description,' program that Mr. Santo had tried to challenge. The reasons why the Romer Administration chose this course of action was due to the fact that the Governor had sought to expand the number of political appointees he could place in upper management positions. State Representative Tony Grampsas and State Senator Dave Owens who ran the JBC at the time informed the Governor that he could have his additional 125 appointees in the Senior Executive Service, only if the hiring of these upper level managers was 'revenue neutral.' In other words, if Romer wanted an additional 125 hacks on the payroll, then existing payroll had to be cut to pay for this increase in salary. This is why the 'Class Description' changes had to be made. Rank and file employee pay and the possibility of being promoted had to be severely cut. The reason why these changes to employee compensation still have an effect on the pension fund itself is due to this dirty, little secret, that nobody in the fourth estate, the State Legislature, the Governor's office, or even Jon Caldara and the guys over at the Independence Institute really like to talk about: You see, not all political appointees leave when their political patron leaves office. Some of them really like their high paying jobs, and quite a few of them stay in those positions for years, and thanks to some sort of unwritten rule of the Sherman Street Country Club, while political fealty may have been a prerequisite to becoming employed, once you get the job, it's yours for life. Almost all these jobs pay well over 100 grand a year, and if you can add in all those years as a State Legislator (you know like Joe Donlon, or Doug Dean, or Tom Plant, or Vicky Armstrong) to your total state service time, with the top three years deciding your pension level, well, gosh, I guess there really is a 'pot-o-gold' at the end of the PERA rainbow for some very special people, who, like the upper level managers of Pinnacol Assurance who all were allowed to grandfather in PERA pensions when Workers Comp was privatized (just like the guys in the other privatized agencies) well, you deserve to pull in 60 to 90 grand a year, without question. If you are an employee of PERA and you have never worked for the State in any capacity, you too can pull in a pension not only for your salary, but also for the bonuses you paid to yourselves while declaring a fiscal emergency at the same time. When State Treasurer Walker Stapleton tried to pull the lid off the cesspool two years ago, the PERA Board took him to court, and members of the Judiciary (who receive PERA pensions at a higher rate than other state employees) agreed with them that the State Treasurer had no business inquiring where and to whom state funds were being paid. It was a matter of 'privacy' the court said. That was a close one, after all, now with the passage of Amendment S, Governor Hickenlooper will be able to expand the SES from 125 to 270 positions and that means a lot more deserving people will be able to bleed the fund dry. Who knows, what with term limits and all, maybe the Governor can find a position for a Democratic State Senator in need of a job and having a really nice, well-edited resume."

More comments on Colorado Senator Pat Steadman's work for AFSCME Colorado (from Facebook:

"I believe, actually I know, that there were quite a few of us who thought he wasn't representing us correctly, particularly during a grievance and lawsuit filed regarding the changing of job classification and pay rates back around in about 1993 or so. Back then, Romer was proposing the creation of the Senior Executive Service that would allow him to expand the number of political appointees up to about 125 positions. (Hickenlooper's Amendment S increases it to about 350.) Well, as I recall, Steadman failed to file the initial court challenge in a timely fashion. I remember the grievants' disgust at the time and their quoting of Steadman's statement that: 'when I got there, the court was closed, and it was too late.' A lot of people dropped out of AFSCME because of this. Somehow Steadman's explanations didn't ring true and it was suspected, but never proven . . . told by AFSCME 76 to drop the matter. In the lovely world of AFL-CIO internal politics a lot of back room deals got cut. (They still are; it's a favorite past time of union staff reps to ____ each other over and cut political deals. I think the straw that broke the camel's back with Steadman, though, was that he failed to represent people in AFSCME Local 935 (Correctional Officers in Canyon City) in disciplinary hearings. Local 935 was the biggest local and they wanted Steadman gone due to the fact that he wasn't doing his job and was working on his Amendment 2 instead. After Steadman, there was a lawyer named Carol Iten who actually did the job, but then quit to go to work for Salazar when he became AG. She was replaced by Mark Schwanne who . . . CFPE for failing to file the necessary paperwork on behalf of grievants in the UI Tax Division about their job classifications. Schwanee went on to become the Executive Director of AFSCME 76 and was the guy who signed off on endorsing the PERA ____ over, and then selling off the AFSCME state employee locals to the SEIU (without a vote of the membership) to Colorado WINS, that thereupon hired him for a while, and then he  . . . after Scott Wasserman, his friend at WINS, got a job in the Lt. Governor's Office. As a result, AFSCME in Colorado is a pathetic organization . . . representing a few employees in Pueblo, DU, and a dying local in the City of Denver. Their one employee who is an 'Assistant Director' is Cheryl Hutchinson. She started out as a Business Agent at the same time as Steadman and she might have the exact details . . .

One of my . . . contacts is a guy named Bill Lafferty. He was also involved in the job classification PPQ grievance: Let me clarify the background to that. Back then, (Governor) Romer wanted the Senior Executive Service, but (State Senators) Tony Grampsas and Dave Owen, on the JBC, wanted it to be 'revenue neutral.' In order to achieve those raises for upper management the Personnel Director, Andre Pettigrew along with Jeff Schutt and Ken Ailikian came up with the reclassification of all state employees: It eliminated many of the different job classes and put them into classes that were defined with broader, generalized titles. As a result, there were fewer steps and grades of employees which meant that there was a de facto elimination of career ladders and promotions on the lower levels of government and a general lowering of wages, resulting in a surplus of funds to pay for the Senior Executive Service. That was the court case Steadman dropped the ball on. The problem with the Corrections Local 935 had to do with disciplinary hearings: In all of the (state) departments, CDOT and Corrections always have the most disciplinary hearings. (They used to be called R-8-3's back then, now they are R-6-10's.) They are a pain in the ass to do, and there was a Business Agent named ____ (now deceased) who was supposed to do the R-8-3's but Reyes Martinez, the Local 935 President wanted 'the lawyer' to do them, and I guess (current State Senator Pat) Steadman didn't show up or something.

(My comment: It looks to me like insane, shady crap has been happening in the Colorado public sector unions historically and SB10-001 provides an example of these shady deals reaching the level of state government administration, the Colorado Legislative Branch, and Colorado courts. Perhaps if Colorado had stronger labor unions they would not have been tempted to support the breach of the contracts of their former members. This was kind of cannabalistic.)

Response:

"Well, that's the sad thing about it all: You see, unions were supposed to exist for the betterment of the rank and file, and in Colorado things got turned around and completely out of whack, particularly in the public employee unions where it got to the point that the rank and file existed for the benefit of the union staff reps who, actually, never were members of the rank and file; Wendell Pryor, the former Director of CAPE who endorsed (former Colorado Governor) Bill Owens' preventing public employees from having their union dues deducted from their paychecks and then was appointed to be Director of the Colorado Civil Rights Division over in DORA; Miller Hudson, who sold CAPE to the SEIU without a vote of their rank and file; Schwanne; Wasserman and Steadman, all had variations on the same theme.

While (current Colorado State Representative) Crisanta Duran who sat on the JBC last year had her law school tuition paid by grocery workers in UCFW Local 7, while she also pulled in 35 grand a year compliments of her dad, Ernie, the Local President. The list goes on and on from Joe Donlon to Ellen Golombek at the CDLE  . . ."

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 . . ."

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

Here is my posted response to the AFSCME article:

"AFSCME, if you really believe this, 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 has 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."

I received this response from a former AFSCME Colorado official:

"Actually . . . 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. 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.")

Yet another reply from a former AFSCME Colorado official:

"The entire AFSCME endorsement of screwing public employees out of their pension (Colorado PERA 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 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."

(My response: "That seems rather disingenuous on the part of Colorado PERA to attempt to rationalize the PERA COLA-taking by citing the support of AFSCME Colorado, if AFSCME Colorado does not actually represent any employees in PERA." "Have you ever heard any sort of an explanation from Colorado WINS for breaking PERA contracts? I have always assumed it was to minimize future contributions that might be needed from active Colorado WINS members. To the extent that money can be taken from PERA retirees, the needed pension support from current workers is diminished, not a very good reason to trash the Colorado Constitution.")

Former AFSCME official:

"Yes, doesn't it? But then again, let us not forget the first piece of legislation that Colorado WINS supported was the bill written by Democratic Senator Dan Gibbs to do away with state employees having the right to strike or engage in labor stoppages. The 'S' in AFSCME is supposed to stand for 'State' but the International of AFSCME basically gave up on Colorado when Wellington Webb failed to deliver his campaign promise to give Denver City employees collective bargaining. The grand plan was 'First we'll get collective bargaining for Denver, then we'll repeal 8-73-104 (C) of the Colorado Labor Peace Act, and get all public employees' collective bargaining rights.' After they realized that wasn't going to happen, Gerry McEntee, Paul Booth, and Larry Scanlon decided to cut their losses, and 'traded' the Colorado State Employee locals to the SEIU which had acquired CAPE (that had gone into virtual bankruptcy when Bill Owens prohibited employees having their dues deducted from their paychecks.) All in all, it was a rather tawdry affair, and for AFSCME Council 76 to come out in favor of screwing public employees out of their pensions by having members of Local 158 of who were hacks from the Denver Democratic Party and Ritter supporters is just reflective of the fact that AFSCME has always placed the interests of the union and the Democratic Party above that of rank and file employees they profess to represent."

(My response: "As I recall, Miller Hudson, formerly of CAPE also supported SB10-001. This is ironic since Bill Owens eviscerated CAPE financially. Bill Owens is very culpable in the decline of PERA's funded ratio [selling PERA service credit cheap to encourage the departure of the more 'expensive' older employees, i.e., shifting labor costs from Colorado governments to PERA.] Why would Miller Hudson go along with pushing the PERA debt burden onto Colorado PERA retirees when the problem was caused by Bill Owens, and Bill Owens actions harmed CAPE?  It doesn't make sense.")

Former AFSCME official:

"You'd have to ask Miller about that one. Now as far as Colorado WINS goes, well, you have to understand the way union organizers think: Why should they be concerned about the pensions of state employees who were not members of their union? What WINS wants is current state employees, and most of them who have been hired since 2005 don't have the same pension plan as older state employees, and that is not what they are concerned about: By concentrating on health care costs, and doing away with the inequitable 'pay for performance' plan proposed by Penn Pfifner and signed into law by Romer, Colorado WINS needs to play nice with the legislature and the executive branch so that they can market themselves with a 'victory,' to the majority of state employees who don't belong to their organization, or care about somebody else's pension. So why play the heavy and alienate the incumbent politicians in somebody else's fight? If you win, well, good. They'll get up there and say they were with you all the way……"

Quotations of Miller Hudson, formerly of CAPE:

"They will pay their taxes and rely on politicians to keep the promises made to them when they were hired. After 30 or more years, they will rely on their Public Employee Retirement Association (PERA) pensions rather than social security to provide a modest but dignified retirement."

"In fact, they (Colorado PERA retirees) will shoulder more than 90 percent of the costs of fixing PERA. This isn’t because they haven’t been doing their part. They have."

"If state employees have learned little else, it should be that when economic times get tough both Democratic and Republican administrations will move swiftly to balance state budgets on their backs."

"Miller Hudson is a former state representative from Denver who served five years as executive director of the Colorado Association of Public Employees."

http://www.coloradostatesman.com/content/991576-so-called-perasites-are-tired-having-budget-balanced-their-backs

Miller Hudson states that Colorado PERA faces no financial "crisis," yet Miller Hudson "helped negotiate" the COLA-taking bill:

"Taxpayers have been told they will be held responsible for an imminent fiscal catastrophe projected in the tens of billions of dollars. These scare tactics fail to put the true situation in perspective. PERA benefits are much like the mortgage on your house. They will be paid out over the next 30 to 50 years. If Colorado misses a payment — or, more accurately, fails to collect as much as revenue as it should for a year or two — these shortfalls can be remedied in succeeding years. A home mortgage doesn't become due and payable just because a homeowner loses his or her job. Payments can be made out of savings."

"For Colorado's public employers, total contributions into PERA represent about 3 percent of their annual budgets. If this were to be doubled, it would be less than half the current 'sequester' cuts being absorbed in the federal budget. PERA is not a fiscal calamity."

"Unfortunately, when the plan went into surplus during the dot.com boom at the turn of the century, the Legislature reduced the state's contributions, increased the match for refunds paid before normal retirement eligibility and held a fire sale on the purchase of unearned years of service credit at a fraction more than 15 cents on the dollar."

"Miller Hudson served as executive director of the Colorado Association of Public Employees for six years (2003-10) and helped negotiate the 2007 and 2010 PERA reform bills."

http://www.denverpost.com/ci_23167652/there-is-no-need-panicky-fixes-pera

Miller Hudson:

"It is important to understand why tax credits and exemptions are referred to as tax expenditures. Without loopholes, taxpayers (both individual and corporate) would otherwise pay higher taxes dumping additional moneys into the general fund. Business and special interest lobbyists have understood this relationship for decades. Find a plausible rationalization and then you can begin campaigning for special treatment."

http://thetaborfoundation.org/hudson-the-math-isnt-so-simple/

Alan Greenblatt in Governing in 2006:

"In Colorado, at least some of (Governor) 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

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Does Colorado State Senator Pat Steadman Actually Seek “Justice FOR ALL”?

Today's Denver Post reports that Colorado State Senator Pat Steadman, a sponsor of the bill that took Colorado PERA pensioners' contractual rights (SB10-001) has stated that he seeks "Justice FOR ALL."

But, does State Senator Pat Steadman actually desire "Justice FOR ALL"? Apparently, Senator Steadman is not interested in seeking justice for the elderly Colorado PERA pensioners whose constitutional rights he considers irrelevant, and whose property rights he has ignored.

If Senator Steadman is truly interested in "Justice FOR ALL," would he not have pointed out on the floor of the Colorado Senate, at every opportunity, legislative testimony from Colorado PERA's lawyers regarding the constitutional rights of PERA pensioners? That is, part of the evidence supporting the contractual rights of Colorado PERA pensioners that was recently and conveniently ignored by the Colorado Supreme Court?

December 16, 2009

Colorado PERA officials in written testimony to the Joint Budget Committee: “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”
http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

See the article: "THE TRADITIONAL COLORADO STATE 'SCREWING' OF COLORADO TEACHERS AND PUBLIC SECTOR WORKERS."

(Former Colorado Union [AFSCME] Officials Weigh In, and Comment on the Legacy of Colorado State Senator Pat Steadman.)

http://coloradopols.com/diary/66972/the-traditional-colorado-state-screwing-of-colorado-teachers-and-public-sector-workers

Colorado State Senator Steadman rightly fights for the constitutional rights of a group (of which he is a member) . . . a group that has been politically weak and accordingly targeted in the past. But, is Senator Steadman truly interested in "Justice FOR ALL"? When Senator Steadman states that he seeks "Justice FOR ALL," does he simply mean that he seeks justice for members of groups of citizens to which he belongs? Would Senator Steadman have supported the targeting of the constitutional rights of elderly Colorado pensioners if he were a member of that particular group? Does Senator Steadman believe that only the constitutional rights of certain politically weak US citizens should be defended? The rights of others discarded, if this abandonment conforms with prevailing public sentiment toward the politically weak group? The rights of others discarded if this taking of rights frees up money that politicians would like to use elsewhere? Apparently, the constitutional rights of some citizens are disposable.

In granting a judicial blessing to the SB10-001 Colorado PERA COLA taking, and in ignoring long-standing case precedent, the Colorado Judicial Branch has provided a political favor to the Colorado Legislative Branch.

"The general liberty of the people can never be endangered from the judiciary, so long as it remains truly distinct from both the legislature and the executive.”

Alexander Hamilton, Federalist 78

The Legislative and Judicial taking of the constitutional rights of Colorado PERA retirees continues and excuses a long history of mismanagement of the Colorado PERA pension system. If our State Senator Pat Steadman truly desired "Justice FOR ALL" he would have refused to have been part of this scheme in 2009. Sadly, Senator Pat Steadman's support for SB10-001 is now part of his legacy.

From the Denver Post:

"The Pledge of Allegiance follows the prayer, and Steadman loudly accentuated the final two words.”

“'With liberty and justice FOR ALL,' said Steadman."

“'And not just for some,' Newell loudly added."

http://blogs.denverpost.com/thespot/2015/01/16/morning-prayer-riles-senate-democrats/116412/

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Colorado PERA Fiduciaries: Severely Underfunded, But See No Problem.

Colorado PERA Fiduciaries: Severely Underfunded, But See No Problem.

"We Don't Need Additional Contributions," Colorado PERA General Manager Greg Smith.

A few years ago, Colorado PERA officials and their hired lobbyists argued that the PERA public pension system's 69 percent funded ratio was such a crisis that the contracts of Colorado PERA pensioners just had to be broken.

They contended that the Colorado PERA pension system's 69 percent funded level constituted an "actuarial emergency" that justified the breach of Colorado PERA retiree pension contracts.

December 16, 2009

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

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

http://coloradopols.com/diary/66279/colorado-pera-officials-corrupt-state-budget-process-joint-budget-committee-analyst-silenced

Since Colorado PERA officials have held the position that a 69 percent funded ratio is a financial crisis, and the pension system is currently funded in the low 60s, it seems odd that Colorado PERA officials are now suddenly complacent about Colorado PERA's funded level.

December 11, 2014, Colorado PERA public pension General Manager Greg Smith testifying to the Colorado General Assembly's Joint Budget Committee: "We don't need additional contributions."

Colorado PERA's Greg Smith may very well be alone in the nation in that he, as a fiduciary who heads a major public pension system that has been grossly and historically underfunded, testifies to elected officials overseeing the pension system "we don't need additional contributions." This is a truly bizarre position for a public pension fiduciary. Colorado PERA is a public pension with a funded ratio currently in the low 60s, headed up by a General Manger who claims that the pension system does not need any additional funding. Rather than serving in the capacity of a fiduciary, Greg Smith appears to motivated primarily by political concerns. The Colorado Legislature has paid only 73% of the actuarially required contributions (ARC) for the Colorado PERA pension system over the last twelve years                                                                                                                  

I ask: Were Colorado PERA officials speaking the truth to Colorado legislators on February 23, 2012 when [then] Colorado PERA General Manager Meredith Williams, testified to the Colorado House Finance Committee, in regard to the Legislature’s failure to pay the Colorado PERA ARC? Meredith Williams: “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.”

Or, were Colorado PERA officials speaking the truth to Colorado legislators on December 11, 2014 when JBC members heard from Colorado PERA that "we don't need additional contributions"?

Logically, only one of these Colorado PERA statements to Colorado state legislators can be true.

http://coloradopols.com/diary/66279/colorado-pera-officials-corrupt-state-budget-process-joint-budget-committee-analyst-silenced

Greg Smith's position on public pension underfunding is at odds with the position of the National Governors Association, the National Conference of State Legislatures, the Council of State Govern­ments, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the International City/County Management Association, the Govern­ment Finance Officers Association, the National Association of State Auditors, the Comptrollers and Treasurers Association; the National Association of State Retirement Administrators (NASRA); the National Council on Teacher Retirement, and the credit rating firms Standard and Poor's, and Morningstar.

NASRA:

"Employer Contributions: A variety of state and local laws and policies guide governmental pension funding practices. Most require employers to contribute what is known as the Annual Required Contribution (ARC), which is the amount needed to finance benefits being accrued each year, plus the cost to amortize unfunded liabilities from past years, minus required employee contributions."

http://www.nasra.org/files/Issue%20Briefs/NASRACostsBrief.pdf

NASRA:

"PENSION FUNDING: A Guide for Elected Officials, Report from the Pension Funding Task Force 2013."

"The 'Big 7' (National Governors Association, National Conference of State Legislatures, Council of State Govern­ments, National Association of Counties, National League of Cities, U.S. Conference of Mayors, and the International City/County Management Association) and the Govern­ment Finance Officers Association established a pension funding task force in 2012. The National Association of State Auditors, Comptrollers and Treasurers; the National Association of State Retirement Administrators; and the National Council on Teacher Retirement also serve on it. The Center for State and Local Government Excellence is the convening organization for the Task Force."

"The Task Force recommends pension funding policies be based on the following . . . have a pension funding policy that is based on an actuarially determined contribution."

"The Task Force recommends that state and local governments . . . stay within the ARC calculation parameters established in GASB 27 . . ."

"The most important step for local and state govern­ments to take is to base their pension funding policy on an actuarially determined contribution (ADC). The ADC should be obtained on an annual or biannual basis."

http://www.nasra.org/files/JointPublications/PensionFundingGuide.pdf

Colorado PERA General Manager Greg Smith at 2/31/40 on the recording of the December 11, 2014 Colorado Joint Budget Committee meeting (available on-line):

"I'm not a huge fan of the credit rating agencies and the job that they do."

Standard and Poor's:

"We believe that not fully funding the ARC is a short-term solution that will likely result in a larger unfunded actuarial accrued liability down the line."

"We've observed that persistent underfunding of ARC correlates highly with pension funding contributions that are statutorily or contractually determined."

http://www.nasra.org/Files/Topical%20Reports/Credit%20Effects/A_Bumpy_Road_Lies_Ahead_for_US_Public_Pension_Funded_Levels.pdf\

S&P emphasizes the importance of pension ARC funding discipline. Yet, Colorado PERA staff casually dismiss ARC funding discipline, and ignore the fact that (as S&P's analysts have noted) fixed statutory contribution levels, like those set for Colorado PERA, result in pension systems "with the weakest funded ratios."

Morningstar Analyst Rachel Barkley:

"Although Colorado is still absorbing losses from 2009, the main reason its funding gap is yawning is the state's failure to make the contributions recommended each year by its own budget experts, Barkley said."

"Even if public pensions realize their projected investment returns on average over coming years, the failure by many plans 'to pay less than the full ARC . . . will produce less than full funding over the next 30 years,' according to a recent report by the Center for Retirement Research (CRR)."

http://www.reuters.com/article/2014/03/10/us-usa-pensions-rally-analysis-idUSBREA2907320140310

A recent study by the Tennessee Treasurer's Office reveals that the cost of delaying public pension plan actuarially required contributions [with an assumed 7.5 percent return assumption] for a 12-year period [the Colorado Legislature began underfunding the PERA pension system 12 years ago] is a premium of 138.2 percent of the skipped pension contribution.

Link to the Tennessee Treasurer's report:

http://s3.amazonaws.com/s3.documentcloud.org/documents/1012837/pension-report.pdf

Read the complete article at:

http://coloradopols.com/diary/66279/colorado-pera-officials-corrupt-state-budget-process-joint-budget-committee-analyst-silenced

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Why Has AARP Colorado Opted Against Defending Colorado PERA Retirees?

WHY HAS AARP COLORADO OPTED AGAINST DEFENDING COLORADO PERA RETIREES?

A few years ago, when the Rhode Island Legislature broke the public pension COLA (inflation protection) contracts of Rhode Island retirees, the AARP provided legal representation to fight the breach of pension contracts. As I understand it, AARP continues the legal battle in Rhode Island on behalf of these retirees. Yet, in 2010, when the Colorado Legislature took COLA benefits from Colorado PERA retirees AARP Colorado simply "monitored" the taking.

How was the AARP decision made to defend public pensioner rights in one state, but not in another? I can't believe that this was a question of available resources. It doesn't consume a significant amount of organizational resources to have an AARP representative show up to testify at a bill hearing. Is the defense of retiree interests not a central purpose of the AARP?

An AARP representative informed us that the decision of AARP Colorado to simply "monitor" the Colorado PERA COLA taking in 2010 was made with input from AARP Colorado's "volunteer leadership." Who were these persons, serving as AARP Colorado volunteer leaders, whose "input" eliminated the possibility of an AARP Colorado defense of Colorado PERA retiree rights?

Were these individuals (the AARP Colorado volunteer leadership) involved with the Colorado PERA political campaign to take Colorado PERA retiree COLA benefits?

What is the value of the legal resources that the AARP has brought to bear in defending the contractual rights of Rhode Island pensioners? Tens, or hundreds, of thousands of dollars? Why is it that a local AARP chapter, such as AARP Colorado, cannot spend a few hundred dollars fighting for pensioner rights in their home state?

The AARP has worked with the Pension Rights Center to defend public pension contractual rights in the US. Recently, a Pension Rights Center representative (on Facebook) explained that the Center has limited resources, and cannot defend against every attack on public pension rights in the nation, and accordingly has been unable to assist in the defense of Colorado PERA pensioners' rights. But, this begs the question, how is the decision made to defend the rights of some retirees in the United States, but not the rights of others? What amount of Pension Rights Center organizational resources would have been consumed in simply sending a letter or an email to Colorado state legislators objecting to a violation of retiree pension rights?

http://coloradopols.com/diary/66348/why-has-aarp-colorado-opted-against-defending-colorado-pera-retirees

http://www.providencejournal.com/business/pensions/content/20111025-opponents-supporters-prepared-for-battle.ece

AARP Fights Rhode Island Pension Contract Breach, "Monitors" Colorado Pension Contract Breach.

"AARP Foundation Legal Advocacy – Advocacy Issue Teams.

AARP Foundation Litigation (AFL) is an advocate in courts nationwide for the rights of people 50 and older, addressing diverse legal issues that affect their daily lives and assuring that they have a voice in the judicial system."

http://www.aarp.org/aarp-foundation/our-work/legal-advocacy/afl-teams.html

Jay E. Sushelsky, Attorney, AARP Foundation Litigation – (Fighting for Rhode Island Public Pension Contractual Rights.)

"ATTORNEYS OF RECORD

Rhode Island Public Employees’ Retiree Coalition, et al. Carly Beauvais Iafrate, Esq., (401) 421-0065, ciafrate@verizon.net

Jay E. Sushelsky, Esq., (202) 434-2151, jsushelsky@aarp.org

Jay E. Sushelsky, Mo. Bar # 30934, AARP Foundation Litigation

jsushelsky@aarp.org"

http://www.courts.ri.gov/Courts/SuperiorCourt/DecisionsOrders/decisions/12-3166.pdf

http://www.ricouncil94.org/Portals/0/Uploads/Documents/PC-2010-2859_R%20I%20_Council_94_v%20_Carcieri_.pdf

"Jay Sushelsky is a Senior Attorney at AARP Foundation Litigation (AFL), where he practices in the areas of Employee Benefits and Investor Protection. He graduated from Tufts University and Washington University School of Law. Mr. Sushelsky was in private practice in St. Louis for twenty-five years prior to joining AFL in 2005."

http://www.americanbar.org/content/dam/aba/events/labor_law/2014/02/employee-benefits-committee-midwinter-meeting/bio/sushelsky.authcheckdam.pdf

"AARP is represented by Jay Sushelsky of AARP Foundation Litigation and Michael Shuster of AARP, both in Washington. The New York City pension funds are represented by Michael A. Cardozo of the City of New York. 

The Colorado Public Employees' Retirement Association of the City of New York is represented by Gregory W. Smith of the Colorado Public Employees' Retirement Association in Denver."

http://www.lexisnexis.com/legalnewsroom/securities/b/securities/archive/2012/11/06/high-court-asked-to-decide-whether-securities-suit-may-proceed-as-a-class-action.aspx

"MOTION OF PENSION RIGHTS CENTER AND AARP FOR LEAVE TO FILE AMICI CURIAE BRIEF IN SUPPORT OF PANEL REHEARING AND/OR REHEARING EN BANC

Mary Ellen Signorille

Jay E. Sushelsky

AARP Foundation Litigation

Melvin Radowitz

AARP

601 E Street, NW

Washington, DC 20049

Counsel for AARP"

"The local chapter of the (Rhode Island) AARP has been lobbying its 135,000 Rhode Island members to oppose the existing (pension COLA-taking) bill and is also asking its members to attend Wednesday's hearing, which begins at 11 a.m."

"In a recent mailer to 20,000 members who are retired, the AARP said the suspension of the COLAs – which could be frozen for up to 19 years – was 'unthinkable' and could make it 'impossible for many retirees to afford life-saving drugs and basics, such as food and heat. We have to tell lawmakers this is unacceptable.'"

"AARP spokesman John Martin said Tuesday that the position the local AARP has taken with the pension proposal 'is consistent with AARP's advocacy for the retirement security for older Americans, I should say, for half a century. It's consistent with our advocacy for protecting Social Security and Medicare benefits.'"

http://www.providencejournal.com/business/pensions/content/20111025-opponents-supporters-prepared-for-battle1.ece

Here is the AARP Colorado statement (on Facebook) regarding their decision to simply "monitor" the Colorado General Assembly’s 2010 pension reform legislation (public pension COLA taking) rather than defending Colorado public pension contracts:

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

AARP: Cutting COLAs is Wrong, (Well, unless it's the Colorado Legislature Breaking Contracts.)

"AARP strongly objects to any cuts to the pension benefits of current retirees, many of whom live on $20,000 per year or less. AARP will continue to fight for solutions that keep the retirement promises made to older Americans."

"What You Can Do

If you agree that it is wrong to cut benefits for those who are already retired, whether it's Social Security or earned pensions, then sign up today to be an e-activist. We will let you know the best time to communicate with your elected representatives.

A. Barry Rand is the CEO of AARP."

http://www.aarp.org/politics-society/advocacy/info-01-2014/tell-congress-protect-retirees-pensions.html

The Interconnected World of Public Pensions: AARP, NIRS, Colorado PERA and the NCTR.

Jay E. Sushelsky, Attorney, AARP Foundation Litigation, Defending Rhode Island Public Pension Contracts.

("NRTA: AARP’s Educator Community has joined the National Institute on Retirement Security, a research and education not-for-profit organization in Washington, DC.)

A few members of the Board of Directors of the National Institute on Retirement Security:

Gregory Smith, NIRS Chair and Executive Director, Colorado Public Employees' Retirement Association;

Meredith Williams, (former Executive Director, Colorado PERA,) NIRS Vice Chair and Executive Director, National Council on Teacher Retirement;

Hank H. Kim, Esq., NIRS Secretary/Treasurer and Executive Director and Counsel, National Conference on Public Employee Retirement Systems;

Bill Finelli, Board Member and Trustee, Employees' Retirement System of Rhode Island;

http://www.nirsonline.org/index.php?option=com_content&task=view&id=13&Itemid=42

"NRTA: AARP’s Educator Community has joined the National Institute on Retirement Security (NIRS), a research and education not-for-profit organization in Washington, DC. NIRS was established to fill a gap in understanding on the value that defined benefit pensions play in ensuring retirement security for workers, as well as their value to employers, and the economy.

Through the collaboration with NRTA, active and retired educators can now access NIRS products and services — at no cost. NIRS programs and information serve as valuable tools to help educate local officials and stakeholders about teacher retirement issues. NIRS member services include: Research, Education Materials, Counsel, Commentary, Events/Speakers, and Technical Assistance.

NRTA and NIRS will continue to work together to help ensure that public pensions remain the cornerstone of retirement security for America’s teachers.

About National Institute on Retirement Security

Founded in 2007 by the National Council on Teacher Retirement, the Council of Institutional Investors, and National Association of State Retirement Administrators, NIRS has a diverse membership of organizations including employee benefit plans, state or local agencies that manage retirement plans, trade associations, financial services firms, and other retirement service providers."

http://www.aarp.org/about-aarp/nrta/info-04-2010/nrta_nirs.html

The taking of earned, contracted deferred compensation from Colorado PERA retirees in SB10-001 was patently immoral. Apart from the question of the constitutionality of SB10-001, recognition of its immorality should have given pause to AARP officials and volunteers in 2010.

Support public pension contractual rights at saveperacola.com.

Colorado PERA Considers Entering Hedge Fund Investments.

At a recent meeting of Colorado PERA officials with members of the Colorado Legislative Audit Committee, a Colorado PERA official stated that approximately eight percent of the Colorado PERA portfolio (trust funds) is currently invested in "alternative investments," including private equity investments. What investment fees have been paid on this portion of the Colorado PERA portfolio that is invested in alternative investments in the last fifteen years? What percentage of total Colorado PERA portfolio investment fees have been paid each year on alternative investments? What percentage of total portfolio growth can be attributed to PERA's alternative investments in the last fifteen years? Colorado PERA officials noted, at the Legislative Audit Committee meeting (recording available on-line) that the PERA Board is currently "researching" potential Colorado PERA portfolio investments in hedge funds (recently banned in California by the public pension fund CALPERS.) If the nation's largest pension fund has recently banned investments in hedge funds, why are Colorado PERA officials currently "researching" potential investments in hedge funds?

"CALPERS Dumps Hedge Funds Citing Cost, To Pull $4 Billion Stake."

"The California Public Employees' Retirement System, the largest U.S. pension fund, said on Monday that it will pull all $4 billion it has invested in hedge funds because it finds them too costly and complicated."

"The $300 billion fund, known as Calpers, invests with firms including Och-Ziff Capital Management, Deepak Narula's Metacapital Management and Bain Capital's Brookside Capital and plans to pull the money out over the next year. The fund will also exit from fund-of-funds Pacific Alternative Asset Management Co and Rock Creek Group."

"(Former CALPERS Chief Investment Officer Joe) Dear, who joined Calpers in 2009, embraced riskier assets including hedge funds and private equity funds, to help recover losses suffered during the financial crisis when its investments lost 23.6 percent during the fiscal year that ended on June 30, 2009."

"But in the last years, most hedge funds have not delivered the out-sized returns the industry became famous for, prompting many pension funds and other large institutional investors to question hedge funds' fees which often include a 2 percent management fee and 20 percent of the gains achieved. Hedge funds returned 4.10 percent this year through August, according to Hedge Fund Research, lagging the Standard & Poor's 500 9.87 percent gain."

"The fund's alternative asset program has had its ups and downs in recent years. Former Calpers Chief Executive Officer Fred Buenrostro pleaded guilty earlier this year to bribery and fraud in a federal conspiracy case."

http://www.businessinsider.com/r-calpers-dumps-hedge-funds-citing-cost-to-pull-4-billion-stake-2014-9

Is the Colorado PERA Board "researching" potential investments in hedge funds as a means of increasing the funded ratio of the Colorado PERA pension system from the low 60's? If the PERA Board believes that the funded ratio of the PERA pension system is too low, then why did PERA General Manager Greg Smith recently testify to the Joint Budget Committee that the pension system does not need additional contributions? How can a public pension system with this level of taxpayer liabilities not need additional contributions? Since the pension system's actuarially required contributions (ARC) have not been paid for twelve consecutive years, investment returns on the missing (ARC) funds are lost, and compound each year. Why would the PERA Board not simply endorse a prospective reduction of the 2.5 percent PERA "multiplier" as a means of addressing system unfunded liabilities? (A public pension system's "multiplier" is the percentage of employee salary that accrues for each year worked as the ultimate retirement benefit.) How does the Colorado PERA 2.5% "multiplier" compare with "multipliers" of other major US public pension systems?

"No Vested Right in Pension Multiplier, Supreme Court Majority Says."

http://www.wisbar.org/NewsPublications/Pages/General-Article.aspx?ArticleID=23775

Matt Taibii:

"This is done in the name of saving taxpayer money, even though these 'alternative investments' involve fees paid to billionaire money managers that are often nearly as high as the cuts to public worker benefits."

"In more than a dozen states, legislators have enacted exemptions for hedge funds and other alternative investments to laws such as the Freedom of Information Act."

http://www.afscme.org/blog/its-time-to-hold-wall-street-accountable

From a recent Colorado PERA CAFR:

"The Total Fund underperformed the policy benchmark return by approximately 53 basis points (0.53 percentage points) for the year ended December 31, 2012."

"Alternative Investments was the primary contributor to the underperformance . . ."

What has been the performance of PERA's investment staff historically?  In what years have they missed their peer benchmarks? What has been the cost to the PERA trust funds of these missed benchmarks?

Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board’s historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

“Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization. We were very aggressive in what I’ll call private equity or alternatives. At the board’s direction we’ve pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each. I think that the portfolio as we headed into the dotcom bust was far riskier than it is today. We paid the price for that.”

(My comment: Meredith Williams tells us here that PERA “paid the price” for its past investing mistakes. Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds. Colorado taxpayers bear the burden of these investment mistakes.)

Support the Rule of Law in Colorado at saveperacola.com.

Colorado PERA Officials Corrupt State Budget Process. Joint Budget Committee Analyst Silenced.

Colorado state agencies will be surprised to learn that answering questions posed by the Joint Budget Committee's staff and members in the state budget oversight process is optional.

Colorado PERA administrators have manipulated the Colorado state budgetary process to avoid answering budget process questions posed by the members and/or staff of the Colorado Joint Budget Committee (JBC.) This recent Colorado PERA action continues an historical pattern of manipulation of Colorado state legislators by Colorado PERA officials.

The non-partisan JBC staff analyst, who posed the inconvenient budget questions, relating to Colorado PERA pension oversight, is a staffer named Alfredo Kemm. An investigation is warranted of what is clearly political interference with the duties and professional obligations of a non-partisan Joint Budget Committee analyst.

On December 11, 2014, the Colorado Joint Budget Committee set aside 30 minutes for their annual review of this state agency, Colorado PERA. The state's historical mismanagement of the Colorado PERA pension system has racked up nearly $30 billion in state debt. (Yet, 30 minutes were set aside for this review.)

But, even this 30 minutes of Colorado legislative scrutiny of the state agency, Colorado PERA was too much for Colorado PERA administrators to bear. Accordingly, it was arranged that the most difficult budgetary questions posed by the members and/or staff of the Joint Budget Committee would be quashed.

The JBC prepared five sets of questions for Colorado PERA's response at the December 11, 2014 hearing. Colorado PERA officials agreed to answer only the four questions that posed no threat to their political agenda. The fifth set of questions, of the greatest consequence for the State of Colorado, were suppressed. Apparently, state agency administrators have the power to ignore JBC budget questions that they might find politically inconvenient to answer. That is, some state agency administrators (such as Colorado PERA's administrators) view questions posed by the members of the Colorado Joint Budget Committee as optional.

The five question sets posed by the JBC staff and/or members are listed at the end of the PERA response document (at the link below, beginning on page 24.) Note that, at the beginning of this PERA response document Colorado PERA administrators choose to respond to only four of the question sets (beginning on page 1 of the document.)

http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2014-15/perahrg.pdf

Here is the comprehensive set of questions from the Joint Budget Committee that Colorado PERA ignores in their response to this legislative committee:

"22. Do current normal yearly contributions – member and state contributions – fully fund the retirement liabilities generated over the year for state employee PERA members? If not, what is the projected percentage of current year liabilities that are being funded by the normal yearly contribution and how much should the normal yearly contribution rate increase to fully fund the liability?

IF NOT, WHY HASN'T PERA REQUESTED AN INCREASE IN THE NORMAL CONTRIBUTION RATES FOR MEMBER AND STATE CONTRIBUTIONS IN ORDER TO FULLY FUND CURRENT YEAR LIABILITIES?

OR WHY HASN'T PERA REQUESTED AN ADJUSTMENT TO FUTURE MEMBER BENEFITS THAT WOULD BE FULLY FUNDED BY NORMAL YEARLY CONTRIBUTIONS? (My emphasis.)

If not, what percentage of AED and SAED are for the purpose of fully funding liabilities generated due to the shortfall in normal yearly contributions and what percentage are for the purpose of back-filling or paying off the unfunded liabilities that were recognized at the point that AED and SAED were implemented? Are AED and SAED compensation provided to current state employees or are they payments made for underfunding PERA benefits for state employees in the past? If AED and SAED are intended to cover a shortfall in the normal yearly contribution for current state employees, why shouldn't that percentage be included directly in the normal yearly contribution rather than being lumped in with amortization payments intended to cover existing unfunded liabilities?"

The JBC staff asks why Colorado PERA officials have not sought increased contributions or pension benefit cuts to meet the annually accruing actuarial liabilities of the PERA pension fund. Colorado PERA officials quash and ignore their questions. The fact that questions of such moment for Colorado state finances have been ignored or suppressed by a Colorado state agency does not pass the smell test.

Colorado Revised Statutes: "2-3-203. Powers and duties of the joint budget committee.

(1) The committee has the following power and duties:
(a) To study the management, operations, programs, and fiscal needs of the agencies and institutions of Colorado state government."

"The JBC is statutorily charged with analyzing the management, operations, programs, and fiscal needs of the departments of state government."

http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/jbcrole.pdf

"JBC hearings provide an opportunity for members to question department staff about programs, needs, new funding initiatives and other issues for the upcoming fiscal year."

http://cclponline.org/wp-content/uploads/2013/12/Colorado-Budget-Primer-2012_DOC-6.6.12.pdf

The Joint Budget Committee staff provides an annual written and verbal update to the members of the JBC regarding Colorado PERA. Here is a link to the 2014 JBC staff written PERA update:

http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2014-15/perbrf.pdf

In this document, the JBC staff reports Colorado PERA's claim that ARC underfunding is $1.4 billion (in the period 2009 to 2013.)

"An amortization contribution deficiency is generated when the actual contributions flowing into PERA are less than the annual required contribution that is calculated as a part of the actuarial liability analysis. PERA reports that the 30-year amortization contribution deficiency over the period from 2009 through 2013 totaled just under $1.4 billion."

The JBC staff document notes that the payment of Colorado PERA pension benefits is a payment of Colorado state and local government debt to creditors:

"Employees earn their pensions while working as a part of their compensation; pensions are not earned when they are received. The retirement pension payment is a payment of debt to the creditor – the retiree – who has already earned that payment. As a matter of fairness, the people who receive that employee's services should pay for those services at the time services are provided."

The JBC staff notes that additional payments must be made into the Colorado PERA pension system to address pension fund deficits:

"Therefore, normal yearly contributions should be fully funding those retirement liabilities. A normal yearly contribution that does not fully fund those retirement liabilities necessarily pushes the unpaid cost to future payers that did not receive those services. Underfunding the normal yearly contribution creates a debt that will have to be repaid by others. If a significant pension fund deficit develops due to underfunding or due to financial market declines, the government must make additional payments to eliminate that deficit with unfunded pension amortization payments."

The JBC staff criticizes the current AED/SAED pension funding mechanism as "back-loaded":

"However, the amortization of unfunded liabilities through the AED and SAED payments was structured as a percentage of payroll amortization rather than as a flat amount amortization over the 30-year projected period of amortization. Further, both AED and SAED payments were also structured to ramp-up the percentage of payroll over a period of time. This ramped-up percentage of payroll payment structure even further back-loaded the amortization period."

The Colorado PERA Board Has Reduced the PERA Portfolio Return Assumption. The Cost of the Reductions Was Paid by Colorado PERA Pensioners with the Taking of Their Statutory "Annual Benefit Increase" (COLA) in 2010.

"In 2013, PERA reduced its investment rate of return and discount rate assumptions to 7.5 percent from 8.0 percent. This followed PERA's reduction in 2009 from 8.5 to 8.0 percent. The rate reduction in 2009 generated a $4.8 billion loss or increase in liabilities in PERA's actuarial liability analysis. The 2013 reduction generated an additional $3.1 billion increase in liabilities.

These changes in rate are responsible for a total of $7.9 billion in actuarial unfunded liability.

These actuarial loss figures give an idea of the scale of change in fund status that is implied when assuming a more conservative rate of return or discount rate."

The 2014 JBC Staff Budget Briefing document for Colorado PERA is available at the following link:

http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2014-15/perahrg.pdf

For the record, Alfredo Kemm's presentation of his PERA briefing to the JBC begins at 2/06 on the recording of the December 3, 2014 JBC hearing.

To me, it really isn't surprising that Colorado PERA pension administrators have refused to answer the questions of the Colorado Joint Budget Committee relating to the underfunding of the pension system. Colorado PERA administrators recently refused to answer this identical question when posed by Colorado PERA retirees. Colorado PERA retirees requested that lawyers at the Office of the State Legislative Counsel (or the Office of the State Economist) examine the payment of the PERA pension system ARC historically, and provide a comparison of "ARC funding discipline" among major US public pension systems.

Instead of the requested ARC statistics, the Office of the Legislative Counsel acted as a conduit for a Colorado PERA political response, sending the following off-topic political commentary:

“I learned that the State of Colorado has always paid PERA the amount that has been owed by statute.” (My comment: This is an answer to a question that PERA retirees did not ask.)

“According to PERA staff, PERA has never been shorted on receiving these contributions.”

(My comment: Again, PERA retirees inquired about the failure to pay the pension ARC, not statutory contribution rates. There is no issue regarding the payment of statutory contribution rates by PERA employers or employees. The current statutory contribution rates are insufficient to cover the pension ARC.)

“PERA staff also explained that the ARC is just an actuarial calculation and measurement, and it roughly amounts to $3.3 billion for the whole system since 2001.”

(My comment: This $3.3 billion figure does not consider lost investment opportunities for funds not contributed, and is accordingly false. The provision of this figure is intended to minimize the significance of the Colorado PERA pension system ARC underfunding, and mislead the state legislators who followed up on the retirees' request for information. Expecting Colorado PERA officials to casually dismiss the historic lack of Colorado PERA ARC funding discipline, PERA retirees sought out an independent agency to provide the information, the Legislative Counsel. The PERA retirees were disappointed by the political response they received from the Legislative Counsel, but are encouraged by the forthright examination of state pension debt by the Joint Budget Committee staff.)

The December 11, 2014, Colorado Joint Budget Committee annual review of the state agency, Colorado PERA, was recorded. Listen to the JBC agency hearing for Colorado PERA at this link (arrow down to December 11, 2014):

http://www.leg.state.co.us/clics/clics2014A/cslFrontPages.nsf/Audio?OpenPage

Below I provide a few of the most pertinent comments made during the December 11 PERA hearing and my reactions. At 1 hour/49 minutes into the recording of the JBC's December 11, 2014 agency hearing schedule, Greg Smith begins the Colorado PERA testimony to the JBC:

" . . . appreciate the opportunity to be here and meet with you all and answer any questions including the predetermined questions."

(My comment: Greg Smith appreciates the opportunity to answer any of the JBC's "predetermined questions," with the exception of the JBC's question set #22, or any other question that is contrary to the Colorado PERA political agenda.)

"We've provided each of you a packet that consists of a brief slide show that I'll go through . . . also HAS THE WRITTEN RESPONSES TO YOUR QUESTIONS . . ." (my emphasis.)

(My comment: Given the fact that JBC Question #22 to Colorado PERA was ignored or suppressed, this appears to be a false statement by a state agency head. What are the standards that must be met by state agencies in our state budgeting process? Are agency heads granted the power to ignore or suppress budgetary questions at their pleasure? If this is indeed the environment in which Colorado budgeting occurs, I am not surprised that the Colorado PERA ARC under-funding has been successfully ignored for 12 years.)

At 1/56/51 on the recording Greg Smith states: "We don't need additional contributions."

(My comment: Colorado PERA's Greg Smith may very well be alone in the nation in that he, as a fiduciary who heads a major public pension system that is grossly and historically underfunded, testifies to elected officials overseeing the pension system "we don't need additional contributions." This is a truly bizarre position. Colorado PERA is a public pension with a funded ratio in the 60s, headed up by a General Manger who claims that the pension system does not need any additional funding.

I ask: Were Colorado PERA officials speaking the truth to Colorado legislators on February 23, 2012 when [then] Colorado PERA General Manager Meredith Williams, testified to the Colorado House Finance Committee, in regard to the Legislature’s failure to pay the Colorado PERA ARC? Meredith Williams: “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.”

Or, were Colorado PERA officials speaking the truth to Colorado legislators on December 11, 2014 when JBC members heard from Colorado PERA that "we don't need additional contributions"?

Logically, only one of these Colorado PERA statements to Colorado state legislators can be true.

Greg Smith's position on public pension underfunding is at odds with the position of the National Governors Association, the National Conference of State Legislatures, the Council of State Govern­ments, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the International City/County Management Association, the Govern­ment Finance Officers Association, the National Association of State Auditors, the Comptrollers and Treasurers Association; the National Association of State Retirement Administrators (NASRA); the National Council on Teacher Retirement, and the financial firms Standard and Poor's, and Morningstar.

NASRA:

"Employer Contributions: A variety of state and local laws and policies guide governmental pension funding practices. Most require employers to contribute what is known as the Annual Required Contribution (ARC), which is the amount needed to finance benefits being accrued each year, plus the cost to amortize unfunded liabilities from past years, minus required employee contributions."

http://www.nasra.org/files/Issue%20Briefs/NASRACostsBrief.pdf

NASRA:

"PENSION FUNDING: A Guide for Elected Officials, Report from the Pension Funding Task Force 2013."

"The 'Big 7' (National Governors Association, National Conference of State Legislatures, Council of State Govern­ments, National Association of Counties, National League of Cities, U.S. Conference of Mayors, and the International City/County Management Association) and the Govern­ment Finance Officers Association established a pension funding task force in 2012. The National Association of State Auditors, Comptrollers and Treasurers; the National Association of State Retirement Administrators; and the National Council on Teacher Retirement also serve on it. The Center for State and Local Government Excellence is the convening organization for the Task Force."

"The Task Force recommends pension funding policies be based on the following . . . have a pension funding policy that is based on an actuarially determined contribution."

"The Task Force recommends that state and local governments . . . stay within the ARC calculation parameters established in GASB 27 . . ."

"The most important step for local and state govern­ments to take is to base their pension funding policy on an actuarially determined contribution (ADC). The ADC should be obtained on an annual or biannual basis."

http://www.nasra.org/files/JointPublications/PensionFundingGuide.pdf

Colorado PERA General Manager Greg Smith at 2/31/40 on the recording:

"I'm not a huge fan of the credit rating agencies and the job that they do."

Standard and Poor's:

"We believe that not fully funding the ARC is a short-term solution that will likely result in a larger unfunded actuarial accrued liability down the line."

"We've observed that persistent underfunding of ARC correlates highly with pension funding contributions that are statutorily or contractually determined."

http://www.nasra.org/Files/Topical%20Reports/Credit%20Effects/A_Bumpy_Road_Lies_Ahead_for_US_Public_Pension_Funded_Levels.pdf\

S&P emphasizes the importance of pension ARC funding discipline. Yet, Colorado PERA staff casually dismiss ARC funding discipline, and ignore the fact that (as S&P's analysts have noted) fixed statutory contribution levels, like those set for Colorado PERA, result in pension systems "with the weakest funded ratios."

Morningstar Analyst Rachel Barkley:

"Although Colorado is still absorbing losses from 2009, the main reason its funding gap is yawning is the state's failure to make the contributions recommended each year by its own budget experts, Barkley said."

"Even if public pensions realize their projected investment returns on average over coming years, the failure by many plans 'to pay less than the full ARC . . . will produce less than full funding over the next 30 years,' according to a recent report by the Center for Retirement Research (CRR)."

http://www.reuters.com/article/2014/03/10/us-usa-pensions-rally-analysis-idUSBREA2907320140310

A recent study by the Tennessee Treasurer's Office reveals that the cost of delaying public pension plan actuarially required contributions [with an assumed 7.5 percent return assumption] for a 12-year period [the Colorado Legislature began underfunding the PERA pension system 12 years ago] is a premium of 138.2 percent of the skipped pension contribution.

Link to the Tennessee Treasurer's report:

http://s3.amazonaws.com/s3.documentcloud.org/documents/1012837/pension-report.pdf

From the Tennessee Treasurer's report:

"It costs an additional $435,000 to delay a one million dollar pension payment for five years assuming an earnings rate of 7.5%. This is a 43.6% increase in the amount to be paid. The pension cost more than doubles by delaying a payment by 10 years. A $1 million pension cost becomes $2.06 million if delayed 10 years. See Attachment 2 that illustrates the cost of delaying employer pension contributions."

"GASB noted in its release accompanying Statement No. 68 that pension contribution issues are public policy matters. Indeed, leading finance professional organizations, including the Government Finance Officers Association have adopted positions calling for governments to adopt a funding policy based on an actuarially determined annual funding amount."

"Failure to pay annually when due the full actuarially required contribution is in effect underfunding the pension plan. The amount that is not funded increases the unfunded accrued liabilities of the plan. Further, the pension plan will not have the under-funded amount available to invest, thereby resulting in lost earnings opportunity."

"The funding for a pension plan assumes that 100% of the ARC will be paid annually, and further assumes that those contributions will be invested to earn at least the assumed rate of return for the pension plan. Thus, the failure to pay 100% of the ARC can quickly lead to a serious underfunding of the pension plan. Chronic underfunding of the ARC will eventually make the pension plan financially unstable. Nationwide, multiple severely underfunded pension plans that are now financially unstable are examples of the failure to pay annual funding requirements."

Greg Smith states (at 2/03/29 on the recording of the December 11 JBC PERA hearing) that the Colorado Supreme Court Decision regarding SB10-001 "was exactly what we had advocated for."

This statement is not entirely accurate. The Colorado Supreme Court Decision in the case, Justus v. State, found that Colorado PERA retirees had no contractual right to the statutory pension COLA benefit (that it can legally be reduced by the Legislature after it has been supported by employee labor and contributions.)

Colorado PERA officials, in 2009, admitted the existence of the PERA COLA contract to the members of the Joint Budget Committee (audio recording and in writing.) Accordingly, in the case Justus v. State, Colorado PERA's lawyers did not initially deny the existence of the contractual right to the PERA COLA, as is implied by Greg Smith's statement at 2/03/29 on the recording. In the case, Colorado PERA officials originally admitted that the contractual obligation to pay the PERA COLA existed, but they argued that a retroactive taking the COLA benefit was "actuarially necessary." As we know, the Colorado Supreme Court ignored this evidence in the case, Justus v. State.

December 16, 2009

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

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

Representative Jack Pommer, JBC Chairman in 2009, asked if the Legislature could legally alter the statutory parameters of the PERA pension to manufacture a “crisis” in order to justify its breach of pension contracts. At the December 17, 2009 meeting of the Joint Budget Committee, Representative Pommer asked: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”

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

January 29, 2010

Rep. Lambert on SB 10-001:

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

March 11, 2009

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

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

August 11, 2009

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

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

Greg Smith comments at 2/06/26 regarding the PERA Board's authority, telling the legislative members of the JBC, "you determine what the benefits in the PERA system are exclusively."

I also find this statement by Greg Smith to be disingenuous given Colorado PERA's extensive lobbying activities. Later in this article I provide an example of the level of control of Colorado PERA's lobbyists and lawyers over the Colorado Legislature. A level of control that demonstrates the falsity of Greg Smith's comment "you determine what the benefits in the PERA system are exclusively."

Greg Smith neglected to mention to the JBC members that PERA administrators spend up to $400,000 each year lobbying the legislators to help them "determine what the benefits are."  What is the total Colorado PERA lobbying expenditure related to "determining the benefits" in SB10-001?

From the Denver Post:

"The system budgeted $400,000 for lobbying this year, although it receives help at the state Capitol from influential unions including the Colorado Education Association."

"The fund also has spent as much as $2.2 million per year on staff and contracted attorneys, who advise on benefit disputes with retirees and review investment contracts."

"The fund's $49.6 million administrative budget includes $28 million for salaries and benefits."

http://www.denverpost.com/ci_18404598

A 2009 article in the publication “State Bill Colorado,” addressed the initial recruitment of the Colorado PERA SB10-001 lobbying troop:

“PERA is ‘obviously gearing up for some heavy-duty lobbying, one observer noted. The agency has hired two lobbyists from the firm Colorado Communique, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO. The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler. Coalition members have their own lobbyists, and the well-staffed higher education lobby is sure to be involved in this issue as well.” “All that lobbying power will be focused on 100 legislators . . .”

Link:

http://statebillnews.com/2009/10/pera-woes-loom-large-for-education/

At 2/08/09 on the recording of the JBC PERA oversight hearing Greg Smith comments on a recent e-mail from Colorado PERA retirees to state legislators addressing the failure of the Legislature to pay the PERA pension system ARC.

Greg Smith: "There's been a recent e-mail transmission to a number of legislators questioning whether or not PERA has been paid the contributions that were due to it."

The PERA retirees' "e-mail transmission" did not question whether PERA has been paid the statutory contributions that are due from PERA employers and employees. The e-mail drew attention to the fact that PERA ARC is not being paid. The e-mail states that setting a fixed contribution rate in statute IS NOT THE EQUIVALENT OF PAYING THE ARC."

Greg Smith states: "The concern is that we have not been receiving the ARC for the past many years, AND THAT IS AN ACCURATE STATEMENT, WE HAVE NOT BEEN RECEIVING THE ARC," (my emphasis.)

On the recording, Greg Smith goes on to rationalize the failure of the Legislature to ensure that the PERA pension ARC is paid, stating that since 2010 paying the ARC would have been difficult. He then presents false choices. He presents the false choice of immediately raising both employer and employee contribution rates by four percent in 2010, and ignores the option at the time of PROSPECTIVE benefit reductions, for pension benefits not yet earned, as a means of reducing PERA liabilities. In lieu, of prospective reductions of benefits not yet earned in the PERA pension system, the Legislature enacted a retrospective claw back of contracted pension ABI (COLA) benefits. Colorado's public sector unions wanted to protect active members at the time, and so went after the PERA retirees' contractual inflation protection.

Greg Smith fails to mention that the PERA Board could have proposed a simple reduction in the PERA pension system "multiplier" in 2010. That is, the rate at which PERA benefits accrue each year. A reduction in the PERA pension system multiplier was a policy option available to the General Assembly, as a means of reducing unfunded liabilities and facilitating payment of the pension ARC. The Colorado PERA "multiplier" is currently set at 2.5 percent per year. Rather than reducing the PERA pension "multiplier" the unions involved in the development of SB10-001 schemed to push almost the entire cost of the SB10-001 reform [90%] onto the backs of PERA retirees (who don't pay union dues.)

Some courts have recently sanctioned the prospective reduction of public pension "multipliers":

http://m.jsonline.com/news/milwaukee/supreme-court-oks-milwaukee-county-cuts-to-pension-benefits-b99411960z1-286363761.html

At 2/10/33 on the recording, Greg Smith plays the JBC members like a fiddle, misdirecting the members, and wasting the JBC's time with a red herring. Greg Smith states:

"The other part of that communication that's important is that there was a suggestion that some of the employers are not paying in or PERA is not working to collect those dollars. Every single employer without exception, every single employee without exception has paid all of the statutory contributions that the law of the State of Colorado requires them to pay."

Greg Smith goes on at length, piously assuring the JBC members that something is not happening, that no one has suggested happens. In their e-mail, PERA retirees did not suggest that PERA employers and employees are failing to pay their statutory pension contributions.

Here is the text of the e-mail sent by a number of Colorado PERA retirees to all Colorado state legislators:

"Request for Information Re: Colorado PERA.

Hello, my name is _______. I am a Colorado PERA retiree who is concerned about financial management of the Colorado PERA pension system.

Recently, a letter was published that pointed out the failure of the Colorado Legislature to make 'actuarially required contributions' (ARC) payments to our public pension system, that is, to pay the state’s annual public 'pension bill.'

The letter is available at this link:

http://www.boulderweekly.com/article-13611-letters-week-of-november-13.html

As a state legislator charged with management of our pension system, I ask that you request that your staff, or the Office of the State Economist, examine the level of the Colorado PERA pension system ARC that has been paid historically. I wonder what percent of the Colorado PERA pension system ARC has been paid in recent decades and how this percentage compares to other public pension systems across the nation. My understanding is that payment of a public pension system’s “ARC” is critical to the long-term sustainability of a public pension system.

A retiree organization has drawn attention to the following statements of current and former Colorado PERA leaders lamenting the underfunding (failure to pay the ARC) of the PERA pension system.

On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s (then) General Counsel Greg Smith commented on the decline of PERA’s actuarial funded ratio: “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.”

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

On February 23, 2012 (then) Colorado PERA General Manager Meredith Williams, before the Colorado House Finance Committee, testified relating to the Legislature’s historical underfunding of its PERA pension obligations, i.e., the failure of the Legislature to ensure payment of the ARC through appropriate statutory contribution rates, or supplemental appropriations. Colorado PERA General Manager Meredith Williams: “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.”

Since most Colorado state and local government employees are ineligible to receive Social Security benefits in retirement, they rely on the appropriate financial management of the Colorado PERA pension system to avoid poverty after giving a lifetime of service to the public. I would very much appreciate your help in gathering information regarding the historical Colorado PERA ARC payments.

Sincerely,"

This letter is just seven paragraphs long. It is not difficult to read these seven paragraphs and see that Greg Smith has made a false statement in a JBC budget hearing. The letter makes no mention of PERA employers failing to pay statutory pension contributions. This letter simply points out that the Colorado Legislature is failing to pay the PERA pension system ARC. Greg Smith's red herring is a transparent manipulation of state legislators and the Colorado budgetary process by a state agency head.

As noted above, unfortunately, Colorado legislators forwarded this letter to the staff of the State Legislative Counsel which, rather than conducting the requested ARC statistical research for PERA retirees, acted as a conduit for a Colorado PERA political response.

As evidenced by the letter above, Colorado PERA retirees requested that the Legislative Counsel (or the Office of the State Economist) examine the payment of the PERA pension system ARC historically, and provide a comparison of "ARC funding discipline" among major US public pension systems. Colorado PERA administrators ignored the requested statistics and instead, sent legislators and retirees a political statement.

Below is a link to a PERA retiree response to PERA's refusal to provide the requested statistical information. This response was subsequently sent to all Colorado state legislators:

http://coloradopols.com/diary/65975/the-colorado-legislatures-chronic-underfunding-of-the-colorado-pera-pension-system

Greg Smith at 2/11/40 on the recording of the JBC agency hearing:

"We pride ourselves in our transparency." (My response: Indeed, Colorado PERA administrators "transparently" quashed the JBC's question set #22.)

Greg Smith at 2/21/23:

"We're interested in everybody understanding the facts about PERA."

Greg Smith at 2/21/04:

"GASB is eliminating that provision (the ARC calculation), as a part of the adoption and the effective dates of 67 and 68. The ARC will no longer be a component of GASB's requirements."

(My comment: Of course, the fact that GASB is changing its emphasis from ARC funding discipline to plain statements of pension liabilities on public sector employer balance sheets DOES NOT EXCUSE the failure to pay the PERA pension ARC for the previous twelve years.

This Greg Smith statement also ignores that fact that, as noted earlier, nearly all organizations representing public sector entities in the United States recommend a continuation of public pension calculation of an annual "actuarially determined contribution," with implementation of the new GASB rules.

National Association of State Retirement Administrators:

"Of note, our associations recommend that state and local governments continue to calculate an actuarially determined annual required contribution (ARC). For those who do, GASB’s new standards will require governments to provide supplementary information regarding their actuarially determined pension contribution, the history of their funding commitment in relation to this amount, and underlying assumptions regarding this calculation and other factors that materially affect the trends in financial reporting schedules."

http://www.nasra.org/Files/Letters/Joint%20Letter%20to%20Commissioner%20Gallagher%206-16-14%20%282%29.pdf

Note that, at its 2014 legislative session, the Tennessee Legislature enacted a bill requiring payment of their public pension system ARC each year. (Some states, recently Alaska, have supplemented statutory contribution rates to pay off their public pension liabilities.)

See the articles:

http://coloradopols.com/diary/58527/tennessee-legislature-models-responsible-public-pension-management-for-colorado-pera-and-the-colorado-legislature

http://coloradopols.com/diary/65975/the-colorado-legislatures-chronic-underfunding-of-the-colorado-pera-pension-system

"When government entities fail to pay annual required contributions, not only do they jeopardize the actuarial soundness of the funds, but they also put pension plan trustees in a precarious position. Have plan trustees breached their fiduciary duty when they do not take action to try to collect a contribution underpayment? In other words, does fiduciary duty obligate the plan trustee to take action to try to compel a government entity to pay its required contribution? If the answer to this question is 'yes,' what actions are required? Are they required to bring legal action against the government sponsors to collect the required contributions, or is simply sending a demand letter sufficient to satisfy the obligation? The ultimate answer may be largely determined by state law and whether the obligation to pay the ARC derives from the state constitution, statute or a matter of contract law between the government sponsor and the pension fund. To date, this issue has not been addressed by a court, but it may only be a matter of time."

http://www.bgdlegal.com/news/2011/04/29/articles/are-public-pension-plan-trustees-at-risk-for-fiduciary-liability-when-public-plans-are-underfunded/

"Does Your Pension Board Need Help Meeting Its Fiduciary Liability? – Create a Funding Policy."

http://www.publicpensioninstitute.org/public/10292print.cfm

THE POWER OF COLORADO PERA'S LOBBYISTS.

Historically, Colorado PERA has purchased a substantial lobbying presence at the Colorado Legislature with PERA Trust Fund assets. See the article: "Colorado State Senators Jump for Angry Colorado PERA Attorneys." at this link:

http://coloradopols.com/diary/36778/colorado-state-senators-jump-for-angry-colorado-pera-attorneys

The influence of Colorado PERA's internal and external lobbying force was revealed during Senate floor debate on SB10-001 in 2010. This is the bill that struck Colorado PERA pensioner contractual rights to the statutory "annual benefit increase" (COLA.)

During floor debate of SB10-001, Senator Scott Renfroe: "IF YOU WANT IT TO GO OUT OF HERE (THE SENATE) WITH THE PERA APPROVED DOCUMENT."

The Colorado Senate took up SB10-001 on two occasions; “Second Reading” on January 29, 2010, and “Third Reading” on February 1, 2010.

On “Second Reading,” a member of the Senate, Senator King, tried to amend the bill to provide that Colorado law would permit the breach of its public pension contracts if a financial condition called “actuarial necessity” could be established. The King amendment also stated that the Colorado Legislature could not break the contracts of Colorado PERA members who had already fulfilled all of the conditions of their pension contract and retired. This amendment proposed by Senator King was voted down.

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

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

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

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

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

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

Listening to the floor debate of SB10-001 it’s clear to me, that PERA’s attorneys were running the show.

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

Senator John Morse stated:

“I ask permission for a Third Reading amendment.”

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

Senator Renfroe stated:

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

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

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

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

Senator Harvey stated:

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

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

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

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

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

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

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

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

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

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

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

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

After the powwow, Senator Morse has abruptly changed his mind. He now supports the Renfroe amendment.

Senator Morse withdraws his own (PERA-sponsored) amendment and asks for the Senate’s support for the Renfroe amendment that puts into Colorado law the language about “actuarial necessity” that is in the final version of SB10-001, (Floor Amendment #41).

Senator Renfroe’s amendment was adopted.

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

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

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

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

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

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

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

It is ironic that, during floor debate of SB10-001, the Colorado Senate debated the concept of "actuarial necessity" which Colorado PERA and the sponsors of SB10-001 believed was necessary for the state to escape the PERA COLA contractual obligation to PERA pensioners. The irony is found in the fact that, later in the litigation of the case Justus v. State, Colorado PERA switched its legal strategy, from arguing that "actuarial necessity" was necessary to break the PERA COLA contract, to arguing that the PERA COLA contract did not exist. [Of course, as noted above, PERA's lawyers had already testified to the JBC in 2009 that the PERA COLA contract did indeed exist.])

During the debate on SB10-001 there was universal guarded speech on the floor of the Senate and much tiptoeing around the subject of Colorado PERA retiree vested pension rights. The Senators were concerned about accidently providing too much evidence for Colorado courts that they were aware of the contractual nature of the PERA COLA benefit. But, it turns out that the Senators' fears were unfounded. The Colorado Supreme Court had no intention of examining evidence in the case, Justus v. State, and did not examine the evidence. Such an examination of  evidence in the case would have interfered with the desired political resolution of the case.

Longstanding Colorado case law has deemed fully-vested public pension contracts inviolate. (An earlier Colorado Supreme Court concluded in McPhail: “ . . .we believe that in a case, such as that before us, involving a contributory system it is the only reasonable conclusion that can be reached (the contract principle.)”  “It would be unjust and contrary to our basic notions concerning the validity of contracts to hold that this provision could be changed by the lawmakers.”  Colorado courts have historically adhered to the "California Rule" of public pension contractual rights.

The final language of the Renfroe “Third Reading” amendment to SB10-001 (that is now part of Colorado law) requires that written notice be provided to Colorado PERA members and inactive members that in the event of "actuarial necessity," the Colorado General Assembly is free to break its public pension contracts.

Colorado PERA's gamesmanship during the 2014 Joint Budget Committee PERA hearings are simply a continuation of its historical manipulation of Colorado state legislators to conceal the underfunding of the PERA pension, and a premeditated breach of Colorado PERA pension ABI statutory contracts. This is all very ugly, and a sad statement about the reality of our Colorado state government.

Colorado, the tenth wealthiest state in the nation, is allegedly forced to break its contracts with public pensioners.

"Gov. John Hickenlooper's economists predict, however, that the state needs to refund $196.8 million (TABOR refund to taxpayers) next year because of revenue increases in the current budget year. Lawmakers weren't expecting refunds until the 2016 tax year, and Hickenlooper's budget request sets aside nearly $137 million for those."

http://www.bnd.com/2014/12/22/3575777_lawmakers-getting-briefing-on.html?sp=/99/102/&rh=1

The fact is that many Colorado state legislators have desired to use state funds (that should be directed to meeting state contractual obligations) for other purposes. These legislators are willing to go to great lengths to achieve that goal. Our Colorado Legislature has lacked statesmen who will speak the truth and inform Colorado voters that the Legislature cannot break its existing contracts to accommodate TABOR. We lack elected officials who will honestly inform Colorado voters that either TABOR must be modified, or state services must be further diminished. We lack leaders who will inform Colorado voters that our Legislature will no longer continue the charade of borrowing from the PERA pension system, and from future generations, to maintain state services in the present.

Support the Rule of Law in Colorado at saveperacola.com.

The Incredibly Intricate Colorado PERA SB10-001 Political Web.

I find a few interactions in this web of relationships surrounding SB10-001 particularly noteworthy:

Colorado Supreme Court Justice Hood contributed to Democrat Bill Ritter's campaign for Governor, and "hosted campaign events" for Ritter.

Governor Ritter initially appointed Justice Hood to the bench.

Governor Ritter signed SB10-001 into law.

Democratic Governor Hickenlooper appointed Hood to the Colorado Supreme Court.

Justice Hood upheld SB10-001 as a member of the Colorado Supreme Court.

Justice Hood has worked with attorney Mark Grueskin at Isaacson Rosenbaum, P.C.

Attorney Grueskin represented the SB10-001 PERA defendants.

Justice Hood was a shareholder at Isaacson Rosenbaum in 2006.

Isaacson Rosenbaum worked for Colorado PERA during this time period.

Attorney Grueskin has provided legal representation for the Colorado Democratic Party.

Justice Hood has been recused or removed in a separate case due to his past association with Attorney Grueskin.

In 2010, the Colorado Legislature enacted a bill, SB10-001, designed to reduce unfunded pension liabilities of the Colorado PERA pension system by cutting the statutory COLA inflation protection of pensioners (called the "annual benefit increase" [ABI] in Colorado law.) These public pension liabilities had accumulated over time, since "actuarially required contributions" to the pension system have been underpaid since 2002. Ninety percent of the "cost savings" in the bill, SB10-001, are the result of cutting the pensioner's statutory ABI (COLA.)

Naturally, Colorado PERA pensioners challenged the bill in court as a violation of their contractual rights. Lawyers for the defendants in the case (the State of Colorado and the pension system, Colorado PERA) began by arguing that the contract breach and reduction of the PERA ABI (COLA) were "actuarially necessary," but soon abandoned this legal strategy. Later in the litigation the defendants switched their legal strategy, and simply argued that the contract right to the PERA COLA did not exist. (Inconveniently, Colorado PERA's lawyers had already testified to the Legislature that it did exist. December 16, 2009, Colorado PERA officials in written testimony to the Joint Budget Committee: “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

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

But, the Denver District Court's Judge Robert Hyatt ruled against the plaintiffs (PERA pensioners,) deciding the case (Justus v. State) without citing Colorado's on-point public pension case law (Bills/McPhail.) The Colorado Court of Appeals reversed the Denver District Court finding Colorado case law "dispositive" as to the contractual rights of the PERA pensioners to the COLA benefit. Ultimately, the Colorado Supreme Court reversed the Decision of the Colorado Court of Appeals, embracing the Denver District Court decision that failed to even mention the on-point case law, (Bills/McPhail.)

Thus, Colorado state government acted to eliminate billions of dollars of Colorado state government debt. Colorado taxpayers are pleased, and Colorado politicians have more money to spend on their favorite projects.

The myriad political connections, the legal, lobbying and public relations campaigns that ultimately resulted in the enactment and judicial blessing of the Colorado PERA COLA reduction bill, SB10-001, provide an excellent example of political action at the Colorado Legislature, and the power of Colorado political parties. I am astounded at the intricacy of these political connections. Perhaps you will be too.

The connections include the interaction or collaboration of former Governor Ritter, Attorney Mark Grueskin, Colorado Supreme Court Justice Hood, former Colorado Supreme Court Justice Dubofsky, Governor Hickenlooper, the Colorado Education Association, the Colorado Coalition for Retirement Security, Colorado unions, and Colorado PERA administrators and trustees.

The PERA COLA reduction bill, SB10-001, was supported by a group called the Colorado Coalition for Retirement Security. The Colorado Coalition for Retirement Security and Attorney Mark Grueskin:

Articles of Incorporation for a Nonprofit Corporation for the Colorado Coalition for Retirement Security filed with the Colorado Secretary of State:

http://www.securepera.org/wp-content/uploads/2013/01/Art-of-Incorporation-filed-7.30.12.pdf

"Address: 3087A Tejon Street."

"Registered Agent: Lynea Hansen."

"The true name and mailing address of the incorporator are:"

"Heizer Paul Grueskin LLP."

http://www.securepera.org/wp-content/uploads/2013/01/Art-of-Incorporation-filed-7.30.12.pdf

The true name of the incorporator of the Colorado Coalition for Retirement Security is the firm of Heizer Paul Grueskin LLP?

What is (or was) the relationship between Secure PERA (also known as the Colorado Coalition for Retirement Security,) the Colorado PERA pension system, and this law firm? Has Colorado PERA paid the law firm for services relating to SB10-001?

The Colorado Coalition for Retirement Security and Governor Hickenlooper:

It seems peculiar that the Colorado Coalition for Retirement Security has had the same street address as Colorado Governor Hickenlooper's political campaign:

http://tracer.sos.colorado.gov/PublicSite/SearchPages/CandidateDetail.aspx?SeqID=16370

Political Consultant Lynea Hansen, the Colorado Coalition for Retirement Security, and Governor Hickenlooper, from Mediatrackers.org:

"When liberal communications strategist Lynea Hansen took the over the reins of BlueFlower from Taylor in early 2009, the filing violations continued. What changed was the address on the fund’s place of business. The official mailing address for the BlueFlower Fund changed from 8092 E. 8th Place, which was Taylor’s Denver home, to 3087A Tejon St. in Denver. This address also happened to match that of Gov. John Hickenlooper’s campaign committee, the Colorado ASSET bill advocacy page, the public affairs contact for the Colorado Education Association, the Secure PERA network, and a gaggle of other Democratic campaigns. Many of these groups paid Hansen for consulting or financial reporting services."

http://mediatrackers.org/colorado/2012/07/11/liberal-campaign-group-in-colorado-repeatedly-failed-to-file-required-financial-reports

“Lynea Hansen, executive director of the Colorado Coalition for Retirement Security."

http://www.governing.com/topics/finance/gov-states-search-retirement-security-obama-myra.html

"Lynea Hansen, Senior Vice President at Strategies 360."

http://www.cspera.org/CSPERA-NLAug2014.pdf

"Lynea Hansen, from the Colorado Coalition for Retirement Security (CCRS).  CCRS, also called Secure PERA, was founded in 2006 to work with PERA and the State Legislature. The coalition has 8 member organizations as follows: AFSCME Colorado (American Federation of State, County and Municipal Employees), American Federation of Teachers Colorado, Association of Colorado State Patrol Professionals, Colorado Association of School Executives, Colorado Education Association, CSPERA – Colorado School and Public Employees Retirement Association, Colorado WINS (Workers for Innovative and New Solutions,) and Friends of PERA. As you can see, our parent organization, CSPERA, is a member of the coalition. Lynea Hansen runs the Secure PERA website and works very hard to keep PERA strong. She also makes it very easy for all of us as PERA retirees to keep abreast of issues and news regarding PERA, as well as what is happening in the legislature regarding PERA."

http://ppspera.org/wp-content/uploads/2013/12/14-01PPSPERANewsletter.pdf

Attorney Grueskin and the Colorado Education Association:

“Mark Grueskin, best known in education circles as a lawyer for the Colorado Education Association . . .”

http://www.ednewscolorado.org/news/capitol-news/gaming-bill-debated-delayed

Colorado Education Association and SB10-001, from 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

A former AFSCME Colorado official on SB10-001:

"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."

Attorney Mark Grueskin and the Colorado Judicial Project, from WestWord:

"In the meantime, Grueskin is still in the process of getting the Colorado Judicial Project on its feet; when asked if the CJP would have a web presence, he laughingly admits, 'I don't know. We've chatted about a number of ways to help educate the public — but you've got a roomful of lawyers, for crying out loud. So we have dissenting and concurring opinions, but no decision.'"

http://blogs.westword.com/latestword/2010/05/mark_grueskin_matt_arnold_tang.php

Former Supreme Court Justice Jean Dubofsky and the Colorado Judicial Project:

“ . . . 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/

Former Colorado Supreme Court Justice Jean Dubofsky and Colorado PERA:

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

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

Colorado PERA General Counsel Greg Smith, December 17, 2009 – “We have obtained outside counsel’s opinion on this issue.”

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

In a deposition Jean Dubofsky submitted to Colorado PUC she notes that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit, October 18, 2010:

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

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

Colorado PERA's Greg Smith on Colorado PERA pension benefits:

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

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

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

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

Greg Smith, Colorado PERA’s former General Counsel told us in a Denver Post article from November 30, 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)

Colorado Supreme Court Justice Hood and the Colorado Democratic Party:

"Hood's history as a Democrat party contributor – he maxed out to Bill Ritter's 2006 campaign, contributed to the Democrat House Majority Fund, and others – is notable."

"Interesting that the Denver Post failed to uncover and/or report on this salient fact."

http://www.clearthebenchcolorado.org/20 … t-justice/

"The notion of partisan 'pay to play' for judicial appointments is disturbing, irrespective of party. The fact that Hood maxed out to Ritter's campaign before being appointed by Ritter to the bench certainly calls his objectivity into question, wouldn't one think?"

http://neighbors.denverpost.com/viewtopic.php?p=3202155

"Prior to being appointed to the Denver District Court in 2007, Hood was a long-time contributor to Democrat candidates and causes: hosting events for Bill Ritter’s campaign and contributing the maximum amount ($1,000) in 2006, contributing to the State Democratic Party House Campaign Fund, and supporting Steve Bernard’s failed campaign for District Attorney in 2004."

"Hood also has close ties to Democrat Party attorney (and frequent Colorado Supreme Court litigator) Mark Grueskin, dating from their time as colleagues in the politically connected (and politically active) Isaacson Rosenbaum P.C. law firm – associations that may have been related to his removal from the 2011 Congressional redistricting lawsuits, before the case was reassigned to Denver District Court Chief Judge Robert Hyatt . . ."

http://www.clearthebenchcolorado.org/2013/10/26/governor-Hickenlooper-picks-democrat-contributor-hood-as-new-colorado-supreme-court-justice/

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

Mark Grueskin and Colorado PERA:

"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

Colorado Supreme Court Justice William Hood and 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

"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/

"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/

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/

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

Initiative #93: PERA Reform:

http://www.leg.state.co.us/lcs/0506initrefr.nsf/dac421ef79ad243487256def0067c1de/4b04cbf7d9ce8812872571260077d751?OpenDocument

The "Purposes" of 2006 State Initiative #93. A few of the purposes of the proposed initiative that were addressed at a hearing on the measure:

"In the event of an actuarial necessity, to authorize the general assembly to modify the member and employer contributions and the benefits allowed to members of the defined benefit plan, so long as the benefits of members who are eligible for a service retirement benefit or a reduced service retirement are not modified."

"To specify that PERA shall be subject to administrative direction by the governor's office of budget and management."

"To specify that the general assembly shall appropriate funding for the administrative oversight of PERA."

"To prohibit the attorney general from delegating his or her responsibilities as legal advisor to the PERA board to any legal advisor or in-house counsel hired by the association."

"Memorandum Question 9. "The proposed initiative appears to specify that the benefits allowed to members who are eligible for a service retirement benefit or a reduced service retirement benefit under the defined benefit plan cannot be modified during an actuarial necessity. Can the proponents please explain the purpose of this change from the original proposed initiative #81?"

(My comment: This is interesting, that Justice Hood's law firm, Isaacson Rosenbaum, was grappling with the issue of the taking of vested Colorado PERA benefits through a claim of "actuarial necessity," while Justice Hood was a shareholder at the firm.

As legal representatives of Colorado PERA in 2006, shareholder Hood's firm and colleague Mark Grueskin assisted Colorado PERA in addressing this state-wide ballot initiative providing that "actuarial necessity" could not be used to take "fully-vested" PERA pension benefits. This is particularly ironic since the use of the "actuarial necessity" strategy was the original legal strategy in PERA's attempt to take the PERA COLA benefit, was noted regularly by SB10-001 bill co-prime sponsor Josh Penry as the legal underpinnings for the proposed taking of the COLA, and was likely employed in the legal memorandum supporting a PERA COLA taking that PERA officials solicited from former Colorado Supreme Court Justice Dubofsky.

While he was a shareholder at Isaacson Rosenbaum did Justice Hood discuss the concept of actuarial necessity with colleague Mark Grueskin? While Justice Hood received the compensation of a shareholder at Isaacson Rosenbaum, the firm was paid by the Colorado PERA pension system to provide legal services to Colorado PERA relating to the legal concept of "actuarial necessity."

It appears that this Supreme Court Justice (Hood) recused himself (or was removed) in 2011 in the Colorado redistricting case, Moreno, due to his association with the politically-connected attorney (Grueskin.) The extent of the relationship of Justice William Hood with the Colorado PERA lawyer (until recently) Grueskin should be explored.

Colorado PERA retirees should make a point of discovering the rationale for Justice Hood's recusal (or removal) from the case, Moreno, in 2011. Was Justice Hood indeed recused in the Moreno case due to his association with the defendant's (Colorado PERA) lawyer (Grueskin) in the current case, Justus v. State. What documents exist relating to Justice Hood's removal or recusal in the Moreno case?)

Attorney Grueskin and Colorado Supreme Court Justice Hood, from the CTBC:

"Given Hood’s close associations with Democratic party attorney and frequent Colorado Supreme Court litigant Mark Grueskin, this pick could lead to a number of recusals in some high-profile, politically-charged cases that might come before the Colorado Supreme Court."

http://www.clearthebenchcolorado.org/2013/10/26/governor-Hickenlooper-picks-democrat-contributor-hood-as-new-colorado-supreme-court-justice/

Was attorney Grueskin involved in the selection of Dubofsky to create a legal rationale for the contemplated PERA COLA taking? Has Justice Hood had any association with the Colorado PERA defense team's Grueskin while Colorado PERA was contemplating a taking of the PERA COLA benefit in 2008, 2009, or 2010?  If so, what was communicated between the two?

Governor Hickenlooper and Colorado Supreme Court Justice Hood, 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

From ColoradoPols.com:

"Hickenlooper was under some natural pressure to appoint a Democrat to replace the liberal Bender with a similar-minded justice — particularly after his last appointment to fill a vacant seat; in 2011, Hickenlooper chose Jefferson County Republican Brian Boatright to replace the retiring Alex Martinez, a decision that did not sit well with Democrats. Martinez had been a liberal voice on the Colorado Supreme Court, and replacing him with the conservative Boatright may have ultimately been the difference in the Lobato education lawsuit. Selecting Hood, a registered Democrat, keeps the court's political affiliations about the same: 3 liberals (Hood, Nancy Rice, Gregory Hobbs), 3 conservatives (Allison Eid, Nathan Coates,and Boatright), and 1 "Unaffiliated" (Monica Marquez).

http://coloradopols.com/diary/51002/hickenlooper-appoints-new-supreme-court-judge

Justice Hood and the University of Denver Law School, 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."

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

At these lofty heights of the Colorado legal community many of the most prominent figures are acquainted. Justice Hood has been an adjunct professor at DU. The wife of (now retired) Judge Robert Hyatt, who issued the original decision in the case, Justus v. State, happens to teach at DU:

"Sheila Hyatt teaches in the areas of Civil Procedure, Evidence and Trial Practice."

http://www.law.du.edu/index.php/profile/sheila-hyatt

http://www.law.du.edu/documents/directory/full-time/sheila-k-hyatt.pdf

Attorney Grueskin and Sam Mamet of the Colorado Municipal League:

"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

(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 contractual obligations of the State of Colorado. Billions of dollars of Colorado PERA pension debt, contractual obligations owed by Colorado municipalities [many of them members of CML] were erased by the bill SB10-001.)

Governor Hickenlooper and SB10-001:

Hickenlooper casually dismisses the contractual property rights of elderly Colorado pensioners:

". . . Sobanet is careful in discussing the studies, noting that his boss, Gov. John Hickenlooper. . . supports defending Senate Bill 1.'”

http://co.chalkbeat.org/2014/06/02/pension-study-bill-may-set-stage-for-future-pera-debates/#.U432l2cU-14

Yet, Hickenlooper aggressively defends the contractual property rights of oil and gas companies:

“Whether it’s local government or state government, I don’t think government should come in and snatch somebody’s property.” . . .

http://www.gjsentinel.com/news/articles/fractious-issue-of-fracking-may-reach-voters/

Support the Rule of Law in Colorado at saveperacola.com.

The Colorado Legislature’s Chronic Underfunding of the Colorado PERA Pension System.

Recently, several Colorado PERA retirees contacted the Legislature and requested: (1) statistics regarding payment of the "actuarially required contribution" (ARC) to the Colorado PERA pension system since 2002, and (2) a comparison of Colorado PERA's ARC "funding discipline" over this period with the ARC funding discipline of other major US public pension systems.

Since Colorado PERA retirees rely entirely on their public pension benefit (Colorado PERA benefits replace Social Security for PERA members) retirees very much appreciate the attention given to the request by members of the Legislature.

Several members of the Legislature forwarded the retiree's request for statistical information to the staff of Colorado PERA. But, rather than providing the requested statistical and financial information to legislators, Colorado PERA staff provided what is in essence a political response from a Colorado state agency.

The requested ARC statistics were not provided, and instead of providing the requested analysis of relative ARC "funding discipline" among major US public pension plans, state legislators and PERA retirees were referred to a website. It is disappointing that the request for information was so casually dismissed.

Note that the credit rating firm, Standard and Poor's, stresses the importance of pension ARC funding discipline. A Standard and Poor's (2013) report on US public pensions, condemns the failure of public pension systems to meet annual ARC payments:

"For some states that decided to achieve budgetary relief by underfunding their pensions during the Great Recession or more chronically, a significant portion of the new revenue would be absorbed by restoring higher contributions to their pension systems, making this decision even more difficult. The decision to underfund the ARC might have turned out to be a very costly one."

"We believe that not fully funding the ARC is a short-term solution that will likely result in a larger unfunded actuarial accrued liability down the line."

"We've observed that persistent underfunding of ARC correlates highly with pension funding contributions that are statutorily or contractually determined."

http://www.nasra.org/Files/Topical%20Reports/Credit%20Effects/A_Bumpy_Road_Lies_Ahead_for_US_Public_Pension_Funded_Levels.pdf\

S&P emphasizes the importance of pension ARC funding discipline. Yet, Colorado PERA staff, in their response, casually dismiss ARC funding discipline, and ignore the fact that (as S&P's analysts have noted) fixed statutory contribution levels, like those set for Colorado PERA, result in pension systems "with the weakest funded ratios."

The State Legislative Counsel provided the following PERA response to a PERA retiree's request for ARC funding statistics:

"I learned that the State of Colorado has always paid PERA the amount that has been owed by statute." "According to PERA staff, PERA has never been shorted on receiving these contributions." "PERA staff also explained that the ARC is just an actuarial calculation and measurement, and it roughly amounts to $3.3 billion for the whole system since 2001."

Members of the Colorado Legislature should know that merely setting PERA pension system contribution rates in statute is not the equivalent of annually meeting the Colorado PERA ARC obligation. Failure to pay the pension ARC is simply borrowing from the future. The failure to pay the PERA ARC is largely responsible for accrued liabilities in the Colorado PERA pension system. Why must Colorado legislators hear these truths from PERA retirees instead of from the PERA pension system's fiduciaries? Why would the pension system's fiduciaries downplay the failure to make the full PERA ARC payment since 2002, and the continuing failure to meet the ARC obligation?

A recent study by the Tennessee Treasurer's Office reveals that the cost of delaying public pension plan actuarially required contributions [with an assumed 7.5 percent return assumption] for a 12-year period [the Colorado Legislature began underfunding the PERA pension system 12 years ago] is a premium of 138.2 percent of the skipped pension contribution.

Link to the Tennessee Treasurer's report:

http://s3.amazonaws.com/s3.documentcloud.org/documents/1012837/pension-report.pdf

From the Tennessee Treasurer's report:

"It costs an additional $435,000 to delay a one million dollar pension payment for five years assuming an earnings rate of 7.5%. This is a 43.6% increase in the amount to be paid. The pension cost more than doubles by delaying a payment by 10 years. A $1 million pension cost becomes $2.06 million if delayed 10 years. See Attachment 2 that illustrates the cost of delaying employer pension contributions."

"GASB noted in its release accompanying Statement No. 68 that pension contribution issues are public policy matters. Indeed, leading finance professional organizations, including the Government Finance Officers Association have adopted positions calling for governments to adopt a funding policy based on an actuarially determined annual funding amount."

"Failure to pay annually when due the full actuarially required contribution is in effect underfunding the pension plan. The amount that is not funded increases the unfunded accrued liabilities of the plan. Further, the pension plan will not have the under-funded amount available to invest, thereby resulting in lost earnings opportunity."

"The funding for a pension plan assumes that 100% of the ARC will be paid annually, and further assumes that those contributions will be invested to earn at least the assumed rate of return for the pension plan. Thus, the failure to pay 100% of the ARC can quickly lead to a serious underfunding of the pension plan. Chronic underfunding of the ARC will eventually make the pension plan financially unstable. Nationwide, multiple severely underfunded pension plans that are now financially unstable are examples of the failure to pay annual funding requirements."

As was noted in the initial PERA retiree request for information, former Colorado PERA General Manager Meredith Williams (on February 23, 2012) testified to the House Finance Committee regarding the cumulative harm that results from a lack of Colorado PERA ARC funding discipline:  “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.”

Morningstar Analyst Rachel Barkley:

"Although Colorado is still absorbing losses from 2009, the main reason its funding gap is yawning is the state's failure to make the contributions recommended each year by its own budget experts, Barkley said."

"Even if public pensions realize their projected investment returns on average over coming years, the failure by many plans 'to pay less than the full ARC . . . will produce less than full funding over the next 30 years,' according to a recent report by the Center for Retirement Research (CRR)."

http://www.reuters.com/article/2014/03/10/us-usa-pensions-rally-analysis-idUSBREA2907320140310

In my opinion, Colorado state legislators and Colorado PERA retirees deserve factual, rather than political responses to their requests for information from taxpayer supported state agencies. The state legislators who submitted the request to Colorado PERA asked for statistical information. They did not ask for a rationalization of the chronic underfunding of the PERA pension system.

Colorado elected officials may be interested to know that the Tennessee Legislature has recently enacted a bill that requires governmental sponsors of public pension plans in the state to pay their pension bills on time. From Chattanoogan.com:

"Governor Bill Haslam has signed into law a bill that officials said is designed to assure Tennessee local government entities fully pay the annual payment to their public employee pension plans in order to protect the financial stability of local governments and to protect workers’ pensions."

"The legislation, called the first of its kind in the nation, was sponsored by Senate Majority Leader Mark Norris (R-Collierville) and Rep. Steve McManus (R-Memphis) and written by state Treasurer David Lillard, Jr."

"The new law, called the Public Employee Defined Benefit Financial Security Act of 2014, will require all local government entities that operate pension plans in Tennessee to pay the payments recommended by their actuaries each year. These payments, formerly known as the Annual Required Contribution or ARC, are the amount of money actuaries determine is needed to annually fund in a financially-sound manner the benefits provided by public pension plans."

"If local government entities fail to pay 100 percent of the ARC after that phase-in period, the state will have the authority to withhold money it provides to those governments and use it to make the required payments."

“'A local government that fails to pay 100 percent of its ARC each year is like a runner with a shorter stride than the people he is racing against,' Treasurer Lillard said.  'With each stride, the runner falls farther and farther behind the competition. For local governments not funding annual pension payments, it is the taxpayers who ultimately lose.'”

“'This legislation is something all states should consider,' said Charles E.F. Millard, managing director, head of pension relations for Citigroup and a former director of the United States Pension Guaranty Corporation. 'The health of public pensions depends upon their investment returns and plan structures, of course. But the key determinant of the health of our public plans is whether the public employer makes its full annual contribution. If everyone did this, public pensions would be far healthier than they are today.”

"The Public Employee Defined Benefit Financial Security Act of 2014 is Public Chapter 990, which may be viewed at http://www.tn.gov/sos/acts/108/pub/pc0990.pdf."

http://www.chattanoogan.com/2014/5/28/277432/Haslam-Signs-Local-Government-Pension.aspx

Colorado PERA retirees offer thanks to those state legislators who attempted to gather the requested Colorado PERA statistical information.

Colorado PERA is Concerned About Legal Protection of Benefits in non-PERA Colorado Pension Systems. Why?

Recently, a number of Colorado PERA retirees sent emails to members of the Colorado Legislature expressing concern regarding the Legislature's failure to pay the full "actuarial required contributions" (ARC) to the Colorado PERA pension system since 2003, i.e., pay the pension system's bills. The Legislature's failure to pay the Colorado PERA pension system ARC for the last decade has racked up the PERA pension system's debt. (Note that simply placing Colorado PERA employee and employer contribution rates in Colorado law IS NOT THE EQUIVALENT of paying the Colorado PERA pension system's "actuarially required contribution" as calculated by Colorado PERA's actuaries.)

The Colorado PERA retirees, in their e-mail, highlighted past statements from Colorado PERA officials lamenting the failure of the Colorado Legislature to pay the pension system's bills.

http://www.patsteadman.com/

On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s (then) General Counsel Greg Smith commented on the decline of PERA’s actuarial funded ratio: “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.” Link:

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

On February 23, 2012 (then) Colorado PERA General Manager Meredith Williams, before the Colorado House Finance Committee, testified relating to the Legislature’s historical underfunding of its PERA pension obligations, i.e., the failure of the Legislature to ensure payment of the ARC through appropriate statutory contribution rates, or supplemental appropriations. Colorado PERA General Manager Meredith Williams: “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.”

Colorado Senator Pat Steadman (a member of the Colorado Joint Budget Committee) should be commended for recently responding to the PERA retiree's e-mail, and stating that he is committed to doing what he can to protect Colorado public employee pension systems in the future.

Senator Steadman should also be commended for placing language into Colorado law (in 2012, SB12-149) that protects accrued benefits in Colorado's county-run public pension systems.

The statutory language protecting accrued benefits in Colorado county-run pension systems, that was sponsored by Senator Steadman, and adopted by the Colorado Legislature, DOES NOT apply to accrued benefits in the Colorado PERA pension system.

Senator Steadman, why not seek similar legal protection of accrued benefits for members of the Colorado PERA pension system? I have no doubt that Senator Steadman would agree that the labor of Colorado public servants who are members of the Colorado PERA pension system is as valuable as the labor of Colorado public servants who are members of Colorado's county-run public pension systems.

I propose that similar language be placed into Colorado law providing such legal protection for accrued Colorado PERA pension benefits.

Public records (recordings) of legislative testimony on SB12-149 reveal that, at Senator Pat Steadman's "stakeholder" meetings for the development of SB12-149, Colorado PERA officials opposed the placement of a test for "actuarial necessity" for reduction of accrued pension benefits in county-run pension systems into Colorado law.

Why were Colorado PERA officials present at these SB12-149 stakeholder meetings that addressed vested pension rights in Colorado's county-run public pension plans?  (Separate from Colorado PERA.) Why do Colorado PERA officials care about statutes relating to vested rights in Colorado public pension plans other than their own?

Why did Colorado PERA officials oppose the placement of a test for "actuarial necessity" into Colorado law at these meetings? Why are Colorado PERA officials so concerned about placing a test for "actuarial necessity" into Colorado law?

Senator Pat Steadman's emailed response to a Colorado PERA retiree:

"Dear Randy,

Thank you for contacting me regarding your concerns about adequate funding of our PERA system. Last session, I sponsored a bill on behalf of the Joint Budget Committee that required our personnel director to contract a third party compensation consulting firm with actuarial expertise to study the overall effectiveness and health of our PERA compensation system. This will allow us to assess the ongoing sustainability of PERA and adjust the appropriations towards the program. I am adding a link to the entire bill here for your review:

http://www.leg.state.co.us/clics/clics2014a/csl.nsf/fsbillcont2/DE9404F7F0E17CC587257C600001DF7C/$FILE/214_01.pdf

The bill was signed by the governor and is currently being implemented. As you can see in the legislation’s language, the full report is due on January 15, 2015.

Please know that I share your concerns about the health of our public employee pension systems and that I am committed to doing what I can to protect it for the future.

I remain available to hear your concerns and answer any questions you may have.

I have added you to my e-mail list to keep you updated about this and other legislative matters relevant to you. You can opt-out of these at any time.

Regards,

Pat Steadman

State Senate, District 31"

Colorado Senator Pat Steadman is responsible for placing language into Colorado law that protects vested benefits in Colorado county-run public pension systems (no such statutory protection for Colorado PERA members.) In Senator Steadman's bill, the Colorado Legislature  demonstrated that it is capable of adopting prospective pension reforms (honoring accrued benefits) in county government pension systems (county governments are "arms" of Colorado state government) and honoring Colorado retiree pension contracts. The 2010 Colorado PERA "COLA-taking" bill, SB10-001, was "retrospective" in its operation, taking back benefits already earned.

Language from SB12-149:

“(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”

From the Senate Finance meeting summary for SB12-149, March 13, 2012:

“02:20 PM — Senate Bill 12-149

Senator Steadman, prime sponsor, presented Senate Bill 12-149 concerning allowing local government pension plan boards to make modifications to defined benefit plans. Senator Steadman stated that the bill impacts defined benefit plans in five counties in Colorado: Adams County, Arapahoe County, El Paso County, Pueblo County, and Weld County.

(Public pension attorney) Cindy Birley before the Senate Finance Committee:

“We did have . . . in initial drafts of the bill, we had a numerical test (a percent funded ratio threshold) . . .”.

“We met in Senator Steadman’s office . . ., at a reception that Senator Steadman had for stakeholders on January 9th, and we met with representatives from PERA, Colorado WINS, AFSCME, as well people from Arapahoe and Adams.”

“The various union groups and PERA were adamantly opposed to putting in an actuarial necessity test.”

(My comment: Well of course, the proposed test for “actuarial necessity” was lower than Colorado PERA’s funded ratio [69% AFR] at the time of the breach of Colorado PERA retiree pension contracts in 2010.)

Recently, the Colorado Supreme Court decided that the Colorado Legislature's historical underfunding of the Colorado PERA pension system could be addressed by clawing back accrued public pension benefits in the PERA pension system.

In its 2014 decision, the Colorado Supreme Court endorsed the 2010 PERA legislation, the subject of a PERA retiree lawsuit, SB10-001. Ninety percent of the state's "cost savings" in the 2010 bill are derived from taking accrued Colorado PERA COLA (statutory "annual benefit increase") benefits. Some members of the Colorado Legislature opposed these Colorado PERA shenanigans (i.e., theft).

Example:

Minority Leader and House Finance Committee Chairman Brian DelGrosso, February 23, 2012:

"I voted against Senate Bill1, and I voted against Senate Bill 1 not because I felt like we didn't need to fix PERA, I agreed with that part of it, but I voted against Senate Bill1 for the fact that it did adjust some of the COLAs and it did adjust stuff for folks that were already retired and people that were about ready to retire, and to me I felt like that was violating a contract that those people had got into . . . they played by the rules that were of the game at the time, and these folks . . . got up to where they about to retire or were retired, and now all of a sudden we were going to change the rules of game on them after they were done playing.  So to me, that was why I voted against Senate Bill 1, because I felt like that violated some of the contractual issues that we had."

Rep. DelGrosso: "The problem that we ran into with Senate Bill 1 . . . is that when they start adjusting things like the COLA . . . that's where it opens us up to lawsuits, because people are like 'hey, I'm five years away from retirement, I'm ten years away from retirement, I'm one year away, I am retired,' and then we go and make changes that's where we have lawsuits, because hey this a violating a contract . . . "

The premeditated scheme to claw back accrued Colorado PERA pension benefits, from its inception in 2009, was to forcibly take Colorado PERA retiree' assets outside of bankruptcy. (State governments cannot declare bankruptcy under federal law.) The only way that the Colorado Supreme Court (in concert with the Colorado Legislative Branch) could achieve this goal was by ignoring on-point Colorado public pension case law, and all evidence in the Colorado PERA retiree lawsuit, Justus v. State. In its October 2014 decision in the case, the Colorado Supreme Court ignored the testimony of Colorado PERA's own lawyers (in 2009) stating, on the record, that the Colorado PERA COLA benefit was a contractual obligation of Colorado-PERA affiliated employers. The Colorado Supreme Court embraced the original Denver District Court decision in this case, which did not even mention Colorado's public pension case law, (Bills and McPhail.) Is it possible that Denver District Court Judge Hyatt and his staff (in 2011) just happened to be such bad legal researchers that they were unaware of Colorado's on-point public pension case law that was being read by Colorado's relatively unsophisticated PERA retirees? This case law was indeed recognized by the forthright members of the Colorado Court of Appeals (in 2012) who found the case law to be "dispositive" in establishing the contractual right of PERA retirees to their accrued PERA COLA (ABI) benefits.

So, let's get this straight for posterity: The Colorado Court of Appeals (in 2012) found the relevant Colorado public pension case law in the case, Justus v. State, to be "dispositive," as to the contractual right to accrued PERA COLA benefits, yet Denver District Court Judge Hyatt (in 2011) acted as if this Colorado public pension case law did not exist (he did not mention it in his decision,) and Judge Hyatt's Denver District Court decision in the case was later embraced by the Colorado Supreme Court (in 2014.) So, here we have a situation in which state government forgives state government debt without the heightened scrutiny (no discovery) required under federal law, in US Trust.

All nice and tidy.

Chalkbeat, May 6, 2014 comment on the ongoing Colorado PERA studies, mentioned (above) by Senator Pat Steadman in his email:

"And the House Tuesday gave preliminary approval to Senate Bill 14-214, a bill that could have future implications for the 130,000-some teachers who are covered by the Public Employees’ Retirement Association. The bill proposes three studies of PERA, possibly setting up pension legislation in the 2016 legislative session. The measure needs Senate approval of a minor House amendment."

http://co.chalkbeat.org/2014/05/06/final-school-funding-debate-fails-to-materialize/#.U2orzGcU-14

Chalkbeat:

"The problem, (Colorado Budget Director) Sobanet notes, is 'you really don’t know until 30 years from now' if the rate of return assumption was correct."

“'Isn’t it more important to think about what we could do along the way to know if we’re off' in the effort to make the system solvent, he said."

(My comment: Budget Director Henry Sobanet, one way to ease your concerns about being "off" in efforts to make PERA "solvent" is to request that the State of Colorado actually pay its bills. The Colorado Legislature's PERA "bill" (ARC) is presented to the Legislature each year by Colorado PERA's actuaries. This is a responsible means by which you can begin to allay your concerns: As Budget Director, insist that the State of Colorado make the pension contributions that are actuarially required to meet the state's contractual obligations.)

http://co.chalkbeat.org/2014/06/02/pension-study-bill-may-set-stage-for-future-pera-debates/#.U432l2cU-14

Here we have Governor Hickenlooper aggressively defending the contractual property rights of oil and gas companies:

“Whether it’s local government or state government, I don’t think government should come in and snatch somebody’s property.” . . .

http://www.gjsentinel.com/news/articles/fractious-issue-of-fracking-may-reach-voters/

Yet, Governor Hickenlooper casually dismisses the contractual property rights of elderly Colorado pensioners:

". . . Sobanet is careful in discussing the studies, noting that his boss, Gov. John Hickenlooper. . . supports defending Senate Bill 1.'”

http://co.chalkbeat.org/2014/06/02/pension-study-bill-may-set-stage-for-future-pera-debates/#.U432l2cU-14

Henry Sobanet, Governor Hickenlooper's Budget Director, was "intimately involved" in crafting SB10-001, the 2010 Colorado PERA "COLA-taking" legislation. Henry Sobanet has also worked as a "consultant," and a "policy advisor" for the business group "Colorado Concern."

From the Colorado Association of School Boards:

"Sobanet also served under former Gov. Bill Owens and was intimately involved in the crafting of SB 10-001, the bill passed in 2010 to shore up PERA."

http://www.casb.org/event/casb-annual-convention/saturday-sessions

THE SOBANET/COLORADO CONCERN CONNECTION:

The business organization Colorado Concern lobbied in support of SB10-001 at the Legislature in 2010. Henry Sobanet is a former "consultant" for Colorado Concern.

Hickenlooper Budget Director Henry Sobanet's employment history includes:

"- Consultant: Colorado Concern

- Economic and Policy Advisor: Colorado Concern

- Director: Colorado Office of State Planning and Budgeting."

Link:

http://www.zoominfo.com/p/Henry-Sobanet/58878975

From State Bill News in 2011:

"Henry Sobanet, now president of Colorado Strategies LLC, a private consulting firm that specializes in economics, Colorado budget issues, legislative affairs and strategic management, is joining the governor’s office as budget director.

Sobanet also consults for a pro-business advocacy group, Colorado Concern."

http://statebillnews.com/2011/01/sobanet-returning-to-state-government-as-hickenloopers-budget-chief/

THE COLORADO CONCERN/SB10-001 CONNECTION:

The Colorado Secretary of State’s Directory of Lobbyists by Bill for SB10-001 includes the following two Colorado Concern lobbyists listed as supporting SB10-001:

Peter Kirchhof – Colorado Concern – supporting

Janice Sinden – Colorado Concern – supporting -

(http://www.coloradoconcern.com/, Colorado Concern is a business organization. Janice Sinden is now Denver Mayor Hancock's Chief of Staff.)

Link:

http://www.sos.state.co.us/lobby/SubjectSearchResults.do?&cmd=passgo&pi1=1

THE SOBANET/GOV. BILL OWENS/GOV. JOHN HICKENLOOPER CONNECTION:

From Governor Hickenlooper's website:

Gov. John Hickenlooper named Henry Sobanet to return as Director of the Office of State Planning & Budgeting in 2011. In this role, Sobanet is responsible for the budget forecasting of the State’s revenue and budget planning."

(There is no mention of Henry Sobanet's Colorado Concern consulting services on this page of the Governor's website.)

http://www.colorado.gov/cs/Satellite/GovHickenlooper/CBON/1251588314689

From cbslocal.com:

"The Democrat also appointed Henry Sobanet to be director of the Governor’s Office of State Planning and Budgeting. Sobanet also served as GOP Gov. Bill Owens’ budget director."

(My comment: Recall that it was Governor Bill Owens who championed the Colorado PERA service credit "fire sale" a dozen years ago, costing the Colorado PERA pension system billions of dollars.)

http://denver.cbslocal.com/2011/01/04/hickenlooper-appoints-another-cabinet-member/

From the Denver Post:

"Gov.-elect John Hickenlooper today named a Republican and one of the most experienced hands in state fiscal issues to head his Office of State Planning and Budgeting."

"Hickenlooper, a Democrat, named Henry Sobanet, formerly a budget director for Republican Gov. Bill Owens, to do the same job for him."

"Sobanet worked for the Office of State Planning Budgeting as deputy director from 1999 to 2004, when former Owens appointed him as director."

http://blogs.denverpost.com/thespot/2011/01/04/hickenlooper-names-former-owens-budget-director-henry-sobanet-to-same-job/20061/

(My comment: Henry Sobanet was Governor Owen's Deputy Budget Director in 2000 when Governor Owen's Colorado PERA pension "fire sale" legislation was adopted. It would be interesting to hear Henry Sobanet's perspectives and recollections regarding the Bill Owens "fire sale."

Denver Post editorial page editor Vince Carroll in the (July 31, 2013) Denver Post: "The administration of Gov. Bill Owens, in a major blunder, lobbied for the (Colorado PERA) fire sale as a shortsighted way to encourage early retirement . . ."

http://www.denverpost.com/carroll/ci_23762597/carroll-secret-rep-mike-coffmans-pera-pension)

Discover the true nature of Colorado state government at saveperacola.com.

Former Governor Bill Owens Shamelessly Offers Colorado PERA Management Advice.

Governor Bill Owens, Pioneer of Colorado PERA Pension Mismanagement, Now Shamelessly Offers PERA Management Advice.

In a recent Denver Post opinion piece, former oil and gas lobbyist and Colorado Governor Bill Owens supports the latest corporate campaign attacking the Colorado PERA public pension system (11/20/2014 Denver Post):

http://www.denverpost.com/opinion/ci_26980300/undefined?source=infinite

As per usual, corporate representatives see evil in the use of taxpayer dollars for deferred public pension compensation, but have no problem with Colorado's diversion of billions of these taxpayer dollars to unearned corporate welfare. Indeed, the elimination of the Colorado PERA public pension system would free up even more taxpayer dollars that could be targeted by corporate lobbyists. (This activity of persuading elected officials to give away public resources can be quite lucrative, see the Colorado Department of Revenue's "Colorado Tax Expenditure Report,"

https://www.colorado.gov/pacific/sites/default/files/2012.pdf.)

In reading the recent Bill Owens Denver Post opinion piece I wondered, is the hypocrisy of Colorado politicians infinite? Do our politicians secretly compete with each other in a clandestine hypocrisy contest? Is reaching the pinnacle of hypocrisy a common life goal among politicians?

An excerpt from the Bill Owens Denver Post opinion piece:

"While PERA highlights its average retiree benefits — $3,068 monthly, according to the latest data — this statistic hides the fact that a few retirees make far more than that and the vast majority make far less. Quite simply, the benefit structure, set by the state legislature, is skewed to benefit a minority of public employees at the expense of the rest."

My reaction: This is rich. Bill Owens laments the fact that some Colorado PERA members receive greater public pension benefits than others. Allow me to explain the hypocrisy I see associated with Bill Owens' "concerns."

While in office more than a decade ago, Bill Owens championed the "Bill Owens Colorado PERA Service Credit Fire Sale" scheme (HB00-1458.) Service credit (years of service) in the Colorado PERA pension system were sold, at his urging, at a fraction of their actuarial cost. This Bill Owens scheme represents perhaps the most consequential pension mismanagement event in the history of the Colorado PERA pension system. This mismanagement increased the Colorado PERA pension system's unfunded liabilities (and thus contractual obligations borne by Colorado taxpayers) by billions of dollars. I do not blame Colorado PERA members for taking advantage of this opportunity made available to them in Colorado law at the time. (Indeed, representatives of the Colorado PERA pension system encouraged PERA members to make purchases of "service credit" in those years.) I blame elected officials and members of the Colorado PERA Board of Trustees for acquiescing to this fiscally irresponsible, political ploy. Under the "service credit purchase" scheme, a number of Colorado state legislators (including Bill's political buddies?) were able to buy years of service credit in the Colorado PERA pension plan on the cheap. They then, conveniently, found themselves moving from low-paying state legislative positions to lucrative appointments in the Administration. Thus, their ultimate Colorado PERA retirement benefit was calculated based on the higher final salaries of jobs in the Administration. Since Bill Owens was the prime mover behind this "Colorado PERA Service Credit Fire Sale," I find it astoundingly hypocritical that Bill Owens now has the temerity to complain about the fair distribution of Colorado PERA retiree benefits.

While Governor, Bill Owens persuaded (pressured?) the Colorado PERA Board of Trustees to endorse his "service credit fire sale" scheme, which they obediently and unanimously supported. Bill Owens' goal, at the time, was to rid Colorado state and local government of "expensive" older employees, encouraging them to buy these cheap years of "service credit" and qualify for early retirement. Thus, public employee labor costs were shifted from state and local governments to the Colorado PERA pension system, raising system unfunded liabilities.

The Colorado Supreme Court recently decided to ignore the evidence of Bill Owens' mismanagement of Colorado PERA (and in fact all evidence in a Colorado PERA pension lawsuit) in order to facilitate a reduction of Colorado PERA's unfunded liabilities through breach of contract. Of course, the Colorado Supreme Court necessarily ignored the Colorado and US Constitutions in the process. This transparent political favor provided by the Colorado Supreme Court (to the Colorado Legislative Branch) has tarnished the Colorado Judiciary, and diminished the careers of Colorado judges who actually believe in the Rule of Law. In reading the Decision in the case, Justus v. State, judges on the Colorado Court of Appeals see the true colors of the politically motivated Colorado Supreme Court. If the Colorado PERA pension system had been responsibly managed by past Colorado state legislators and Governors, the Colorado Supreme Court would never have found itself in a position where it was tempted to abandon constitutional principles, Colorado case law, and its integrity.

Given his history, Bill Owens' recent posturing in the Denver Post as a person even remotely qualified to offer public pension management advice lends insight into his character.

An astute observer has noted that:

"Owens dipped into PERA funds through the back door, moving state employees at the top ends of the pay grades from state paychecks to PERA paychecks. In other words, Owens reduced state costs by shifting them to PERA at the same time he reduced the state's contribution percentage, starting the slide from 107% funded to current levels. Granted the slide was accelerated by the economic downturn, but it began when the state figured out how to supplement the general fund by raiding PERA. Last year's SB-1, if upheld by the court opens the front door to PERA resources. Now, any time legislators decide they need PERA funds, they can pay for reducing further the state's contribution by reducing benefits."

(For the record, we should also note that Colorado's public sector union leaders, in supporting SB-1, held open "the SB-1 front door" for Colorado state legislators. In an unprecedented act, in 2010 these union leaders facilitated the elimination of the contractual public pension rights of their own public employee members.)

It may be that (fair or unfair) media coverage during the Owens Administration diverted attention from the responsible management of the Colorado PERA pension system. But, if media reports and blogger comments from that period of Colorado history reflect reality, the hypocrisy of our GOP "family values" Governor extends well beyond the realm of public pension management.

Ed Quillen:

"Owens moved out of the governor's mansion for a while because he and his wife, Frances, had agreed on a separation. Then they reconciled. After he left office, they divorced. There were all sorts of juicy rumors, among them one about a love child growing up in Texas, but if anyone called for Owens to resign, I missed it."

"This may have stalled Owens's national political career, which had looked promising. One right-thinking publication had touted him as America's best governor and there was serious talk of the vice-presidency or even the Oval Office."

http://edquillen.com/eq2008/20080316p.html

Free Republic:

"Owens, a devout Catholic, has touted family values as a cornerstone of his administration. Some immediately questioned what impact it would have on Owens' political career if the couple were to divorce. Owens has been mentioned by conservative Republicans as a potential presidential candidate, even though he has never publicly said he is interested in running."

Comments on the article published at FreeRepublic.com:

"I have always heard that this guy is ultra career minded. He has a PAC in Washington right now, presumably to set up his 08 bid. He also chaired the GOP Gov's Conference, and was an officer with the National Governor's Association."

"Gang, Governor Owens has had an on-going affair for many, many years. It is well known in Republican circles. You can be sure that no high ranking Republican would encourage Bill to pursue any sort of public office under any circumstances. The Party is reeling from a record number of scandals in the ethics area and is quietly getting rid of the worst offenders. You will begin to see Republicans focusing less on family values and more on fiscal and governing issues. One thing the party has realized is that a large percentage of those who loudly tout family values are the worst offenders. Please pray for Frances and the kids, all of whom spent many years home alone. Believe me, they won’t notice much of a difference after the separation."

http://www.freerepublic.com/focus/f-news/977510/posts

"Hmmm, obviously these Owens fans aren't from Colorado. It's quite well known here that Owens' personal picadillos [sic] make Bill Clinton look like a saint."

http://www.usefulwork.com/shark/archives/002796.html

Conservative Columnist Vince Carroll of the Denver Post Condemns the "Bill Owens PERA Service Credit Fire Sale," July 31, 2013 Denver Post:

"The administration of Gov. Bill Owens, in a major blunder, lobbied for the fire sale as a shortsighted way to encourage early retirement and infuse new blood into the bureaucracy."

"Guessing the answer, I asked (Congressman Mike) Coffman if he had purchased years of service from PERA once upon a time. And, sure enough, he replied, 'I did purchase years of service.'"

http://www.denverpost.com/carroll/ci_23762597/carroll-secret-rep-mike-coffmans-pera-pension

(Governor Owens, Rep. Coffman has admitted to participating in your PERA "service credit fire sale" by buying years of service credit. You have a chance to be as forthright as Rep. Coffman and answer the question. Did you purchase PERA service credit in the "fire sale" yourself?)

WatchDogWire.com:

"As (Vince) Carroll notes, this problem was known as early as 2005, when David Milstead of the late, lamented Rocky wrote about it: 'But the deal got sweeter. Gov. Bill Owens, then in the early part of his first term, wanted to streamline government and bring new employees into the state work force. In 2000, with his encouragement – some say pressure – PERA cut the already-low price of purchasing extra years by 14 percent, to 15.5 percent of salary.'"

http://watchdogwire.com/colorado/2013/08/01/the-pera-fire-sale-the-gift-that-keeps-on-taking/

"Colorado’s state income tax rate was a flat 5 percent until it was lowered to 4.75 percent in 1999 and to 4.63 percent in 2000, under Gov. Bill Owens."

http://completecolorado.com/pagetwo/2013/06/12/ed-tax-proponents-will-aim-for-two-tiered-increase-in-state-income-tax/

Silver and Gold Record, May 12, 2005:

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

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

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

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

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

CASB:

"(Henry) Sobanet also served under former Gov. Bill Owens and was intimately involved in the crafting of SB10-001, the bill passed in 2010 to shore up PERA."

http://www.casb.org/event/casb-annual-convention/saturday-sessions

Denver Post:

"Hickenlooper, a Democrat, named Henry Sobanet, formerly a budget director for Republican Gov. Bill Owens to do the same job for him."

"Sobanet worked for the Office of State Planning Budgeting as deputy director from 1999 to 2004, when former Owens appointed him as director."

http://blogs.denverpost.com/thespot/2011/01/04/hickenlooper-names-former-owens-budget-director-henry-sobanet-to-same-job/20061/

Governing article in 2006:

"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

GAO report, the Colorado Legislature Has Increased Colorado PERA Pension Benefits Without Paying for These Benefits:

"This was also the case in California and Colorado where pension benefit increases in the late 1990s and early in the 2000s helped drive liabilities higher."

From Friends of PERA:

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

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

The complete story can be read here at the Denver Post:

http://www.denverpost.com/opinion/ci_26980300/undefined?source=infinite

Discover the true nature of Colorado government at saveperacola.com.

Teacher Files Lawsuit Addressing Public Pension Underfunding.

Courier Journal, November 11, 2014:

"A Louisville teacher filed a lawsuit Monday demanding that the Kentucky Teachers Retirement System do more to seek funding from the state and better communicate its financial woes with members."

"Randy Wieck, a U.S. history teacher at DuPont Manual High School who is behind the suit, alleges that KTRS has failed in its fiduciary duty by not aggressively pursuing the state money it needs to remain solvent." "He wants KTRS to support legal action against the Kentucky General Assembly if full funding for teacher pensions is not provided within a year."

(My comment: The Colorado approach to public pension underfunding has been breach of pension contract. Specifically, in 2010, Colorado PERA public pension officials supported legislation to take accrued public pension benefits to reduce pension system underfunding. These Colorado PERA officials argued that the contract for the Colorado PERA COLA benefit indeed existed, but that a one-time breach of the PERA COLA contractual obligation was "actuarially necessary." As litigation of the pension benefit taking progressed, Colorado PERA's lawyers abandoned their initial legal strategy ["actuarial necessity"] and suggested to the Colorado Supreme Court that [after having admitted to the existence of the contractual obligation] the contractual obligation did not exist. Apparently, the “justices” appointed to the Colorado Supreme Court [the five who participated in the case] were willing to don the blinders and grant any political favor requested by their political allies in the Colorado Legislative Branch. Thus, the Colorado Supreme Court ignored "stare decisis," disregarded 60-year old Colorado case law, failed to conduct a "contract analysis," ignored evidence of Colorado PERA's attorneys stating that the pension benefit was indeed a Colorado PERA contractual obligation, ignored the bill (SB10-001) sponsor's testimony that the pension benefit was in fact a Colorado PERA contractual obligation, ignored recorded legislative history of the contractual nature of the public pension benefit, failed to engage in the "heightened scrutiny" of the abandonment of state financial obligations required under federal case law (US Trust) and finally, the court embraced a discredited Denver District Court decision that, conveniently, did not bother to mention Colorado's on-point public pension case law. No trial, no discovery, evidence ignored, state government forgiving state government debt, billions of dollars seized, pensions inflated away. Grand Theft Pension.)

Courier Journal:

"The suit, filed in Jefferson Circuit Court, also demands that KTRS fully communicate its 'severe state of underfunding' to members and amend its protocol with new ethics and investment requirements."

"'The purpose of this is to urge the KTRS to take up this cause,' Wieck said."

"Wieck is seeking class-action status for more than 140,000 active and retired members who participate in teacher retirement plans through the system. Chris Tobe, a former trustee of Kentucky Retirement Systems and author of 'Kentucky Fried Pensions: A Culture of Cover-up and Corruption,' is among his advisers in the suit."

"But Robert Barnes, KTRS general counsel and deputy executive secretary of operations, said Monday that Wieck's argument lacks merit."

"'KTRS has been talking about this funding issue for some time with membership, and it has been requesting that the full funding be provided to the retirement system,' he said. 'It does that every budget request.'"

"According to the 2013 valuation of KTRS, the system faces more than $13.8 billion in unfunded liabilities and has only 52 percent of the money it needs to pay out pension benefits in coming decades."

"Officials say KTRS needs around $400 million a year in additional money from the state to shore up investments and meet its obligations."

"Barnes said the system is working with lawmakers to develop a financing plan that involves low-interest bonds — paid for with existing revenue streams."

"House Speaker Greg Stumbo, D-Prestonsburg, indicated last week that the Democratic-controlled House is interested in considering bonds as a funding option, but Senate President Robert Stivers, R-Manchester, has reserved judgment."

"Wieck also warned that he might file additional lawsuits against the legislature and the governor depending on what happens in the 2015 General Assembly."

"He said shoring up the system is critical considering that teachers do not receive Social Security benefits."

See the article at the Courier Journal here:

http://www.courier-journal.com/story/news/politics/ky-legislature/2014/11/10/jcps-teacher-sues-pension-system/18806717/

Discover the true nature of government in Colorado at saveperacola.com.

Will Colorado Union Leaders Relinquish Remaining Colorado PERA Pension Contractual Rights?

The Colorado Legislature has underfunded the Colorado PERA pension system for more than a decade, but from Colorado public sector union leaders we hear not a peep (one might expect them to defend their members' financial interests.)

Today (November 13, 2014), a letter was published which illuminates Colorado government's historical mismanagement of the state's public pension system, Colorado PERA. Below, I provide some excerpts from the letter (by Dinah McKay):

"Colorado needs public employee pension protection laws."

"In Colorado, conservative think tanks (backed by Wall Street firms that stand to financially gain) are spreading anti-public-worker propaganda claiming that PERA (Public Employees’ Retirement Association) employees and retirees are greedy parasites and their exorbitant benefits are going to bankrupt the state. They cite billions of dollars of unfunded pension liabilities as debt that taxpayers will have to pay off. Their tactics are to manufacture the perception of a public pension crisis and their only solution to 'save PERA' is to drastically cut benefits and privatize the pension plan. They would like to strip PERA employees and retirees of their rights to their earned pension benefits and allow Wall Street hedge fund managers to raid PERA assets."

(My comment: For the record, it should be noted that Colorado union leaders supported legislation in 2010 [SB10-001] that ultimately resulted in the elimination of their union member's contractual rights to the Colorado PERA statutorily specified "annual benefit increase" [ABI.] Will Colorado unions defend unionists' remaining contractual public pension rights?  Or, will the unions also choose to relinquish the remaining Colorado PERA contractual rights to the benefit of corporate interests, i.e., lower future corporate tax burdens? Too soon to tell.)

"They don’t mention that the Colorado State Legislature has been underfunding its employers’ obligations to PERA for 12 years and that state employers’ unfunded liabilities have accrued into billions of dollars. (Note: These are state employers’ unfunded liabilities. New GASB accounting rules now require state employers to report their unfunded actuarially accrued liabilities owed to PERA in their annual financial statements)."

"Prior to 2003, the Colorado State Legislature had always met its employers’ actuarially required contributions (ARC) to PERA at 100 percent and since PERA began in 1931, it has weathered every recession. Beginning in 2003 (under Governor Owens) to the present, the state legislature has decided not to fund what actuaries have determined is the state employers’ percentage of payroll (ARC) required to keep the PERA trust fund sound. (PERA employees have always met their required employee contributions to PERA from their monthly paychecks without fail)."

"According to statistics from the Center for Retirement Research at Boston College Public Plans database, the ARC percentages the Colorado State Legislature paid to its employers’ State division were: 2003 = 69 percent, 2004 = 51 percent, 2005 = 48 percent, 2006 = 58 percent, 2007 = 56 percent, 2008 = 63 percent, 2009 = 61 percent. From 2003 to 2009, the Colorado State Legislature created a 42 percent funding shortfall in its State division."

"PERA’s underfunding can be directly traced to the Colorado State Legislature’s failure to make its employers’ actuarially required contributions."

"If you ask your state legislator why the state is not meeting its employers’ annual required contributions to PERA, they may not even be aware that the state legislature is underfunding PERA, or even know what an ARC is. They will likely say, 'Oh, PERA was fixed in 2010 with SB 1,' but they won’t answer your question. If you keep asking, some legislators may not want to talk with you because they do know. They know the money is being diverted and they know retirees got fleeced with SB 1."

"In 2010, the Colorado State Legislature passed Senate Bill 10-001 with pension reforms that broke its contractual obligations with 50,000 PERA retirees. SB 1 primarily targeted this elderly group with the burden of making up billions of dollars, or 90 percent of the state’s unfunded employers’ contribution shortfall to the PERA fund since 2003. SB 1 was not a 'shared sacrifice' as PERA administrators purported in order to sell the deal to employees."

"Political alliances between corporate lobbyists, legislators and PERA administrators forged this bait and switch deal that was precut outside normal legislative processes. Primarily retirees (not taxpayers) will make up for the billions of dollars of state employers’ contributions diverted from the PERA trust fund that the state legislature has used instead to fund multimillion-dollar corporate handouts and business tax breaks, subsidies and other popular discretionary programs without raising taxes. It’s immoral and corrupt to take elderly middle-class retirees’ earned pension benefits (deferred wages) by stealthy means and shift their wealth to subsidize very very wealthy corporate and business interests. (Google: David Sirota’s report, “The Plot Against Pensions — The Pew-Arnold campaign to undermine America’s retirement security — and leave taxpayers with the bill.” and Matt Taibbi’s article, “Looting the Pension Funds.”) There is also a double standard in Colorado law (SB12-149) that protects county government retirees’ pensions while PERA retirees’ benefits can be abrogated."

"Since enacting SB 10-001, the Colorado State Legislature has continued to underfund its employers’ contributions to the PERA trust fund, even with a $512 million-dollar budget surplus. The 2013 Colorado PERA Comprehensive Annual Financial Report, page 34, states: 'In 2013, the actual contributions, as set in statute, were $278.0 million less than the ARC as calculated by the actuaries.'”

"For 12 years, why have PERA trustees not taken action on behalf of public employees to compel the state legislature to fully fund their employers’ contributions to PERA instead of conspiring with corporate lobbyists in 2010 to break the contracts of 50,000 retirees to make up the debt. Every year, the state legislature can always find plenty of money to hand out more and more corporate tax breaks and subsidies, yet the State of Colorado continues to be a deadbeat employer."

"A subsidy tracker report published by Good Jobs First, 'Subsidizing the Corporate One Percent,' found that three-quarters of all the economic development dollars awarded by state and local governments in the name of job creation have gone to just 965 large corporations by tracing parent company to subsidiary ties. The New York Times’ report, 'United States of Subsidies,' found Colorado spends at least $995 million per year on incentive programs. CU News Corps’ four part series, 'House of Subsidies,' analyzed this year’s Colorado legislative session and the key corporate tax-credit incentive bills lawmakers passed and found that they don’t always work as lawmakers intend and their effectiveness is being challenged by a variety of experts whose candid remarks are worth the read. CU News Corps reporter, Lars Gesing states, 'According to the latest Enterprise Zone Annual Report, 7,212 jobs have been created through Enterprise Zone program incentives in fiscal year 2013. At the same time, businesses claimed tax credits for $3.89 billion worth of investments, or more than $530,000 per job.' The Denver Post in 2011 ran an investigative series on the Enterprise Zone program and found that Colorado companies claimed more than $75 million worth of tax credits in 2010, but those companies only created a net 564 jobs."

"Colorado PERA employees and retirees deserve a pension plan that is adequately funded on an annual basis. Colorado should pass laws similar those recently passed in Tennessee. On May 28, 2014, Republican Governor Bill Haslam of Tennessee signed into law a bill called Public Employee Defined Benefit Financial Security Act of 2014 that requires all local government entities that operate pension plans in Tennessee to pay the payments recommended by their actuaries each year in order to protect the financial stability of local governments and to protect workers’ pensions. (http://www.tn.gov/sos/ acts/108/pub/pc.0990.pdf ) Dinah McKay/Boulder.)

The complete letter by Dinah McKay can be read here:

http://www.boulderweekly.com/article-13611-letters-week-of-november-13.html

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

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 the AFSCME article:

"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. 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 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."

My response:

"That seems rather disingenuous on the part of Colorado PERA to attempt to rationalize the COLA-taking by citing the support of AFSCME Colorado, if AFSCME Colorado does not actually represent any employees in PERA."

"Have you ever heard any sort of an explanation from Colorado WINS for breaking PERA contracts? I have always assumed it was to minimize future contributions that might be needed from active Colorado WINS members. To the extent that money can be taken from PERA retirees, the needed pension support from current workers is diminished, not a very good reason to trash the Colorado Constitution."

Former AFSCME official:

"Yes, doesn't it? But then again, let us not forget the first piece of legislation that Colorado WINS supported was the bill written by Democratic Senator Dan Gibbs to do away with state employees having the right to strike or engage in labor stoppages. The 'S' in AFSCME is supposed to stand for 'State' but the International of AFSCME basically gave up on Colorado when Wellington Webb failed to deliver his campaign promise to give Denver City employees collective bargaining. The grand plan was 'First we'll get collective bargaining for Denver, then we'll repeal 8-73-104 (C) of the Colorado Labor Peace Act, and get all public employee's collective bargaining rights.' After they realized that wasn't going to happen, Gerry McEntee, Paul Booth, and Larry Scanlon decided to cut their losses, and 'traded' the Colorado State Employee locals to the SEIU which had acquired CAPE (that had gone into virtual bankruptcy when Bill Owens prohibited employees having their dues deducted from their paychecks.) All in all, it was a rather tawdry affair, and for AFSCME Council 76 to come out in favor of screwing public employees out of their pensions by having members of Local 158 of who were hacks from the Denver Democratic Party and Ritter supporters is just reflective of the fact that AFSCME has always placed the interests of the union and the Democratic Party above that of rank and file employees they profess to represent."

My response:

"As I recall, Miller Hudson, formerly of CAPE also supported SB10-001. This is ironic since Bill Owens eviscerated CAPE financially. Bill Owens is very culpable in the decline of PERA's funded ratio (selling PERA service credit cheap to encourage the departure of the more 'expensive' older employees, i.e., shifting labor costs from Colorado governments to PERA.) Why would Miller Hudson go along with pushing the PERA debt burden onto Colorado PERA retirees when the problem was caused by Bill Owens, and Bill Owens actions harmed CAPE? It doesn't make sense."

Former AFSCME official:

"You'd have to ask Miller about that one. Now as far as Colorado WINS goes, well, you have to understand the way union organizers think: Why should they be concerned about the pensions of state employees who were not members of their union? What WINS wants is current state employees, and most of them who have been hired since 2005 don't have the same pension plan as older state employees, and that is not what they are concerned about: By concentrating on health care costs, and doing away with the inequitable 'pay for performance' plan proposed by Penn Pfifner and signed into law by Romer, Colorado WINS needs to play nice with the legislature and the executive branch so that they can market themselves with a 'victory,' to the majority of state employees who don't belong to their organization, or care about somebody else's pension. So why play the heavy and alienate the incumbent politicians in somebody else's fight?  If you win, well, good. They'll get up there and say they were with you all the way……"

Discover the true nature of government in Colorado at saveperacola.com.