April 23, 2013 08:19 PM UTC
Anatomy of a Colorado PERA Pension Contract Breach. (Part 1 of 2.)
0 Comments- by: PolDancer
In this article I have compiled an extensive (but, incomplete) chronology of events and statements surrounding the Colorado General Assembly's breach of Colorado PERA pension COLA contracts in 2010. Colorado PERA retirees have filed a lawsuit, Justus v. State, asking that Colorado courts protect the retiree's accrued, earned, contracted Colorado PERA public pension benefits. (More complete information germane to this lawsuit may be obtained only through formal discovery.)
Readers of the article should note the abrupt transition of the organization, Colorado PERA, in 2009, from an organization that had historically defended the contractual rights of PERA members, to an organization influenced by self-interested parties . . . parties that successfully induced the Colorado PERA Board of Trustees to attempt a breach of the pension plan's contractual obligations in 2010.
Many Colorado politicians are primarily engaged in seeking votes, and bestowing political favors . . . compliance with constitutional provisions for these politicians is an afterthought. The prevailing legislative sentiment at the Colorado General Assembly in 2010 was that, since the idea of breaking Colorado PERA pension contracts was popular with influential self-interested groups and many constituents . . . those contracts should be scrapped. Colorado Constitution be damned! In 2010, political considerations trumped respect for the State of Colorado's contractual obligations.
Colorado PERA retirees (the target of the SB10-001 contract breach) have many unanswered questions regarding the 2010 breach of their pension contracts by the State of Colorado:
Was the Colorado PERA Board of Trustees "opinion shopping" for a legal rationale to break PERA pension contracts in 2009? How was Jean Dubofsky's firm selected to create this legal opinion? On her resume, Jean Dubofsky writes that Colorado PERA "requested" that she provide an opinion to PERA arguing that the Colorado General Assembly could "repeal" the PERA COLA benefit "without violating the vested rights" of PERA members. When exactly, in early 2009, did the Colorado PERA board decide to seek a legal opinion that would justify taking contracted PERA COLA benefits?
Colorado PERA retirees should grasp the full implications of this statement Jean Dubofsky makes on her resume. This statement on Jean Dubofsky's resume proves that the Colorado PERA Board intended to attempt a taking of PERA COLA benefits prior to the 2009 PERA "Listening Tour," prior to the placement into Colorado statute of the "requirement" for the Colorado PERA Board to recommend pension reforms to the General Assembly, and prior to any sort of objective contemplation of pension reform options.
In 2009, we do not see the Colorado PERA Board of Trustees seeking a legal opinion regarding changes in the rate of accrual of PERA pension benefits to be earned in the future. We don't see the PERA board searching for a legal rationale to increase the retirement age of active PERA members, or increase the number of years over which active PERA member base pension benefits are calculated (increasing years in the HAS calculation).
We DO see the PERA board ignoring "less drastic" impairment of PERA pension contracts, and targeting "fully-vested" PERA pension COLA benefits. We DO see the PERA board seeking a legal opinion regarding their FIRST CHOICE for PERA pension reform, breach of "fully-vested" pension COLA contracts. (Or, perhaps this option was the first choice of PERA employer lobbyists.)
Given the numerous previous statements of Colorado PERA officials (that have been reported in the press and in Colorado PERA publications) supporting the contractual pension rights of PERA members, why would the Colorado PERA Board of Trustees actively seek a legal opinion contravening this legal advice?
What was the initial reaction of Colorado PERA's in-house attorneys to the PERA board's objective to break PERA pension contracts? Were these in-house attorneys charged with the task of finding an attorney who might create the board's desired legal opinion? Or, was Jean Dubofsky recommended to the PERA board by outside lobbyists (perhaps education lobbyists, or other representatives of PERA-affiliated employers?)
If the Colorado PERA board sought a legal opinion regarding PERA COLA contractual rights in early 2009, it follows that the PERA board anticipated litigation in early 2009, and thus the organization, Colorado PERA, should have had a "litigation hold" in place at that point in time on all materials relevant to the COLA taking. Why bother seeking a legal opinion if you are on solid legal footing?
Why would a board, that has a fiduciary duty to act only in the interests of the beneficiaries of the pension trust, actively seek a legal opinion that would rationalize contemplated harm to the rights of those beneficiaries?
Who made the original proposal to attempt to break PERA COLA contracts? A member of the PERA Board of Trustees? Education lobbyists? Colorado PERA staff? When was this suggestion first proposed to the PERA Board?
Did Executive Director Meredith Williams leave PERA due to a disagreement with the PERA Board over the COLA-taking? As we have seen, he was a finalist for a public pension job in Texas in November 2010 . . . nine months after SB10-001 was signed. Were Meredith Williams and General Counsel Greg Smith forced to defend a PERA Board decision to attempt a contract breach against their will? Or, did they personally support the contract breach attempt?
Apparently, Colorado PERA officials wanted the Colorado General Assembly to submit an interrogatory to the Colorado Supreme Court seeking clarification regarding PERA contractual public pension rights. Was this idea quashed by legislative leadership? Why was this responsible step ignored in 2009?
How did the Colorado General Assembly reach the conclusion in 2010 that the state's public pension contracts are inferior to the state's contracts with corporations?
By what means did the Colorado General Assembly conclude that it is free to pump $700 million of state revenue into local government pensions that ARE NOT the contractual obligation of the State of Colorado, while ignoring the funding of the state's own contractual PERA public pension obligations?
Did lobbyists for PERA-affiliated employers pressure the PERA board to attempt a taking of fully-vested pension benefits from retirees in order to prevent changes to the partially-vested pension benefits of their union dues-paying members?
As late as December of 2009, Colorado PERA officials provided written testimony to the Colorado General Assembly stating that PERA members have a contractual right to their PERA pension COLA benefits. In light of this, why is Colorado PERA currently appealing a Colorado Court of Appeals decision with this same finding?
Did the Colorado PERA Board (through PERA lobbyists) actually "ask itself" to make pension reform recommendations to the General Assembly? Did PERA lobbyists initiate the amendment (request drafting of this 2009 bill amendment through a legislator)? Did PERA lobbyists seek the amendment to the bill, SB09-282, at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board? Was this amendment adopted in anticipation of the coming litigation over the PERA COLA, to potentially benefit the defendants? The PERA defendants have emphasized in their pleadings that PERA Board recommendations were made in conformance with this "legislative mandate."
Many aspects of the Colorado General Assembly's breach of Colorado PERA pension contracts in 2010 are revealed in the chronological compilation of events and statements provided in this article.
"The Preordained Colorado PERA COLA Contract Breach."
We see the co-prime sponsor of SB10-001 and Colorado PERA's attorneys stating that the COLA is a Colorado PERA contractual obligation. We see members of the Legislature stating that SB10-001 breaks PERA contracts.
We see officials of Governor Bill Ritter's administration describing the Colorado PERA COLA benefit as a "present obligation" arising from the "employment exchange transaction," which will result in an average loss of $165,000 for PERA retirees over the next twenty years (a substantial loss.)
We see numerous statements by Colorado PERA officials that PERA pension benefits are "guaranteed."
We see a former Colorado Assistant Attorney General, and numerous Colorado PERA retirees, warn the Colorado PERA board and the General Assembly against an attempted PERA COLA contract breach.
We see state legislators using market volatility to justify the breach of Colorado PERA pension contracts, retroactively take accrued pension benefits, slash the pension debt of PERA employers, and seize what they believe is a "window of opportunity" to break pension contracts.
We see Colorado PERA attempting to deceive Colorado courts by conflating constitutionally permissible improvements to the contracted PERA COLA benefit, with retrospective legislative takings of accrued PERA COLA benefits in 2010.
We see Colorado PERA attempting to confuse Colorado courts regarding the distinction between "ad hoc" public pension COLA benefits and "automatic" pension COLA benefits.
We see Colorado PERA attempting to exaggerate the financial condition of the Colorado PERA trust funds by employing "market-based" public pension funding ratios in legal briefs, while Colorado PERA has used "actuarial funded ratios" historically (as is common practice in public pension administration.)
We see documentation of legal research conducted by Colorado PERA attorneys supporting the contractual pension rights of PERA members. (I doubt that PERA's General Counsel originated the idea to attempt the COLA contract breach given his numerous previous statements and his legal briefs [cited in the press] that militate against such an attempt.)
We see Colorado PERA officials emphasize the fact that PERA members are not eligible to receive Social Security benefits, and are accordingly particularly vulnerable to state breach of pension contracts.
We see the Colorado General Assembly enact "prospective" pension reform for thousands of Colorado county government retirees, honoring their accrued pension benefits, after having retroactively seized the accrued pension benefits of Colorado PERA retirees in 2010.
We see the adoption of legislation in the past by the Colorado General Assembly in which PERA employee pension contributions are "technically being paid by employers, from their salary-raise pools" in order to AVOID the breach of PERA member pension contracts.
"The Colorado PERA SB10-001 Lobbying Juggernaut."
We see a member of the Colorado Legislature stating that SB10-001 was "a deal cut before this body met," (that is, prior to legislative deliberation of PERA pension reform alternatives.) We see PERA lobbyists orchestrating debate on SB10-001.
We see the co-prime sponsor of SB10-001 stating that the Colorado PERA Board of Trustees "needs to make it toxic" (through lobbyists) for anyone to challenge Colorado PERA in the legislative arena.
We see a Deputy Colorado Attorney General stating that the Colorado education establishment is attempting to raise education funding by "legislating through the courts."
We see PERA officials (in 2009) blaming the Colorado General Assembly for the decline in the actuarial funded ratio of the PERA trust funds.
We see a member of the PERA Board state that the PERA trust funds are in no immediate danger, and that benefits can be paid for decades.
We see a 27-member team of lobbyists assembled to push the pension contract breach through the legislative process. We see the Colorado PERA Board of Trustees spending the resources of PERA trust fund beneficiaries in an attempt to take the contracted benefits of those same beneficiaries.
"Chronic Legislative Mismanagement of the Colorado PERA Pension Plan."
We see historical and ongoing mismanagement of the Colorado PERA pension plan by the Colorado General Assembly, a preference to shortchange the pension in order to lower PERA employer pension contributions, regular cuts to employer contribution rates, enactment of "early retirement incentives" to shift labor costs from Colorado governments to the PERA pension, enactment of pension benefit enhancements without paying for the enhancements, and a lack of respect for the state's contractual obligations.
We see the 15th wealthiest state in the nation, a state with $1 billion in new revenue, a state that has pumped $700 million into local government public pensions that ARE NOT its contractual obligation, a state that makes $100 million grants in discretionary property tax relief, a state with (nearly) the lowest per capita state tax revenue in the country, attempting to escape its contractual obligations.
We see PERA officials and the prime sponsors of SB10-001 stating that 90 percent of the "cost" savings in SB10-001 derive from those who do not "owe" the debt, i.e., PERA members, rather than from the Colorado governments that are bound contractually to pay the debt. We see Colorado PERA officials and legislative sponsors of SB10-001 boasting that their PERA reform plan pushes 90 percent of the costs onto parties who do not legally owe the debt.
We see the Speaker of the House state that he has no intention of allowing increased Colorado PERA employer pension contributions to be a significant part of the planned pension reform.
We see the Colorado General Assembly cutting its revenue stream beyond the requirements of the 1992 TABOR amendment, and later claiming that limited state revenues constitute a "crisis" justifying the breach of Colorado PERA pension contracts.
We see officials from Colorado PERA and the National Council on Teacher Retirement (former Colorado PERA Executive Director Meredith Williams' current employer) stating that public pension systems consume under three percent of all state and local government spending.
We see a 2002 veto of a bill that would have improved Colorado PERA's funded ratio by Governor Bill Owens.
We find that the Colorado PERA Board has considered the use of pension obligation bonds (POB) in the past, that a PERA official considers POBs a "useful tool" for addressing unfunded pension liabilities, and we find this "less drastic" means of bolstering the PERA trust funds (re-amortization of the pension debt) off the table in 2010.
"Jean Dubofsky: Author of the 1999 'Requested' Colorado PERA COLA-taking Legal Opinion."
We see the author of the Colorado PERA COLA-taking legal opinion write a letter of recommendation for attorney Monica Marquez to serve on the Colorado Supreme Court. The letter states that the author of the COLA-taking legal opinion "worked on the case," Justus v. State, with attorney Monica Marquez. The letter further states that attorney Monica Marquez will "bring sophistication" to the Colorado Supreme Court on "public pensions."
We see attorney Monica Marquez advising Colorado PERA, prior to her appointment to the Colorado Supreme Court.
(In my view, the State of Colorado is fortunate that a talented jurist, Monica Marquez, has recently joined the Colorado Supreme Court. However [although I have complete confidence in Justice Marquez’s objectivity and dedication to the rule of law] it appears unlikely that our new Supreme Court justice will be able to participate in the coming decision in the case, Justus v. State, since she has worked on the case.)
"Actuarial Funded Ratios" vs. "Market-based" Funded Ratios."
Note that, historically, Colorado PERA has used "actuarial funded ratios" (almost) exclusively in its written communications to gauge the financial soundness of the PERA divisions. In 2010, we see Colorado PERA begin to use "market-based" funded ratios (in an attempt to exaggerate the financial condition of the pension plan) only after the commencement of the legal, political and lobbying campaign to break Colorado PERA pension contracts.
We see PERA officials in the past stating that an 80 percent PERA actuarial funded ratio is "sound."
We see numerous statements by Colorado PERA officials indicating that the Colorado PERA Board of Trustees finds an 80 percent actuarial funded ratio (AFR) for the pension plan acceptable, as well as documentation that the PERA Board seeks to cap the AFR at a 90 percent level.
We see PERA officials condemning employer contribution cuts by the Colorado General Assembly. We see PERA officials stating that a PERA AFR under 60 percent is not a "crisis."
We see the Colorado General Assembly modify the Colorado PERA pension statutory contract in SB10-001 through the introduction of an absurd "100 percent" pension funding threshold.
We learn that, in the past, Colorado legislators argued that an 87 percent PERA actuarial funded ratio is "too well-funded," and yet current legislators intend in SB10-001 to retroactively take contracted PERA COLA benefits until a 100 percent AFR is achieved.
We see the firm, Fitch Ratings, state that a 80 percent actuarial funded ratio (AFR) for public defined benefit pensions is considered "well-funded," and that an AFR of 70 percent or above is an "adequate" actuarial funded ratio.
We learn that, for the entire decade of the 1970s, the Colorado PERA actuarial funded ratio remained lower than its level at the time of the breach of PERA COLA contracts in 2010 (a low of 54.5 percent.) There was no concern about a PERA financial "crisis" that decade.
We see public pensions in the United States with actuarial funded ratios as low as the 30s (in the 1970s) and yet public pension contracts were honored.
We see Colorado PERA's General Counsel stating that in order for a pension reform to be found "reasonable" under the Colorado Constitution, such changes to the Colorado PERA pension must be "the minimum changes necessary." We see Colorado PERA's actuaries stating that the 100 percent funding threshold in SB10-001 is much stronger than is necessary (not "the minimum changes necessary") to meet public pension regulatory (GASB) standards.
"Maximum Amortization Period."
We see Colorado PERA officials stating that the pension's investment time horizon extends to 70 years.
We see the Colorado General Assembly arbitrarily cut Colorado PERA's "maximum amortization period" in half (from 60 years to 30 years) putting pressure on PERA's funded ratio. There is no federal statutory mandate for this change, it is merely a "recommendation."
We find the Chairman of the Joint Budget Committee asking his colleagues: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”
"Service Credit Purchase Contracts."
We see Colorado PERA officials encouraging PERA members to send in checks for the purchase of "service credit" in 2002, only to later renege on those pension contracts. Much of this money was taken from the PERA member's separate retirement accounts (401Ks, 457 plans.) The value of these "service credit purchases" was dramatically reduced by SB10-001, after Colorado PERA had their member's money. The purchase of a defined pension benefit, "service credit," by Colorado PERA members is a separate Colorado PERA pension contract that was broken by SB10-001.
The entries in this article (below) summarize material that is posted at saveperacola.com on the internet, "Save Pera Cola" on Facebook, and also on Coloradopols.com. Additional information on the subject of each entry is generally available through a search of these sites. Many Coloradans know the answers to the questions posed in this article, I encourage such persons to post their answers to the questions (even anonymously) on these three sites.
I believe that complete revelation of the truth regarding the political machinations that resulted in the breach of Colorado PERA pension contracts in 2010 would benefit the Colorado state legislative process in the future.
I don't believe that accrued Colorado PERA COLA benefits can be successfully taken by Colorado PERA lobbyists, PERA employer lobbyists, or members of the Colorado General Assembly. I don't believe that such a taking is possible under Colorado case law, McPhail, Bills or even DeWitt . . . (if that case is applicable.)
The chronology:
August 1, 1876
The Colorado Constitution takes effect upon statehood: Colorado: Art. II, § 11: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges, franchises or immunities, shall be passed by the general assembly.”
http://www.colorado.gov/dpa/doit/archives/constitution/1876.pdf
May 26, 1905
Franklin MacVeagh, U.S. Secretary of Treasury: “There is no moral exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private respect for a contract breaker. A contract breaker is an utter misfit as a citizen or a business man.”
http://www.senatedem.ilga.gov/phocadownload/PDF/PensionDocs/madiarrevisedpensionclausearticle.pdf
June 28, 1954
Hickey v. Pittsburgh Pension Board: "But when Thomas Hickey started contributing to the city pension fund in 1915, there appeared on the horizon not the slightest suggestion of a cloud to imperil the pension toward which he was faithfully to plod for 31 years. It is not reasonable or logical to suppose that, given the liberal attitude that the General Assembly has assumed in this field of legislation, that it would impose restrictions so fundamentally contrary not only to its policy but to the elemental rules of fairness ‘Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.’"
http://scholar.google.com/scholar_case?case=13490833546797588256&q=Hickey+v.+Pittsburgh+Pension+Board&hl=en&as_sdt=2,6
May 4, 1959
Colorado Supreme Court, Police Pension and Relief Board of Denver v. McPhail:
“ . . .we believe that in a case, such as that before us, involving a contributory system it is the only reasonable conclusion that can be reached (the contract principle.)”
“It would be unjust and contrary to our basic notions concerning the validity of contracts to hold that this provision could be changed by the lawmakers.”
“We conclude that the (Colorado constitutional Contract Clause) applies to the status of the plaintiffs here and prevents the enforcement of the (Denver Charter Amendment) against them.”
http://scholar.google.com/scholar_case?case=14051800929013625867&q=McPhail+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6
December 11, 1961
Colorado Supreme Court, Police Pension and Relief Board of Denver v. Bills: “We now hold that not only prior to their actual retirement, but also prior even to their eligibility to retire, there was a limited vesting in these plaintiffs of their pension rights to the end that although prior to their eligibility to retire the pension plan could be changed, it could not be abolished nor could there be a substantial change of an adverse nature, without a corresponding change of a beneficial nature." "Hence, prior to eligibility for retirement, changes may properly be made in a pension plan if these changes strengthen or better it, or if they are actuarially necessary."
"The charter amendment with which we are here concerned constituted an adverse change in the overall pension plan which deprived plaintiffs of a very substantial right, was unaccompanied by a corresponding change of a beneficial nature, was not shown to be actuarially necessary, nor that it in anywise strengthened or bettered the pension plan.”
http://scholar.google.com/scholar_case?case=3470001684402878070&q=Bills+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6
1969
SB 69-144, SB 69-311, HB 69-1230, and HB 69-1247 (Colorado PERA notes that the PERA COLA benefit in 1969 was an "ad hoc" COLA in its publication "History of Colorado PERA Legislation," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in this same PERA publication.)
– New annual post-retirement increase (COLA) adopted provided maximum 1.5% per year, in addition to AD HOC COLA increases that were based on the year in which the retirement benefit had begun.
– Legislature declared its intent to establish employer contribution rates to provide adequate funding of PERA’s accrued retirement benefits. (In later years [2010], the Legislature finds it more convenient to break PERA pension contracts to erase its public pension debt.)
– Amortization of PERA’s actuarial liabilities over a 60 year period was deemed adequate to maintain the retirement fund’s actuarial stability. (In later years, this "maximum amortization period" is arbitrarily cut in half. There is no federal statutory mandate for this change, it is merely a "recommendation.")
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
December 31, 1973
The Colorado PERA actuarial funded ratio reaches its nadir of 54.5 percent. There are no concerns at the Colorado General Assembly regarding a Colorado PERA financial "crisis." For the balance of the decade of the 1970s, the Colorado PERA actuarial funded ratio remains lower than its level at the time of the breach of PERA COLA contracts in 2010.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true
1975
HB 75-1364 (Colorado PERA notes that the PERA COLA benefit in 1975 was "ad hoc," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in its publication "History of Colorado PERA Legislation.")
– Improved AD HOC post-retirement benefit increases.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
November 17, 1975
Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”
http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6
August 14, 1984
Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee"
http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984
1987
SB 87-239 (Cuts to PERA employer pension contributions.)
– Legislature reduced FY88 PERA employer payroll contribution rates to:
– 10.2% from 12.2% for the State Division;
– 11.2% from 13.2% for State Troopers (also in the State Division);
– 11.5% from 12.5% for the School Division;
– 13.0% from 15.0% for the Judicial Division.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
1992
HB 92-1335 (Cuts to PERA State and School Division pension contributions.)
– Reduced the School Division employer contribution rate by 0.6% to 11.6% of payroll.
– Temporarily reduced the State Division employer contribution rate by 1.0% of payroll in FY92.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
1993
HB 93-1324 ("Automatic" PERA COLA benefit enacted. The auto COLA was later improved by the Legislature to a fixed 3.5 percent. Legislative improvements in the contracted COLA are permissible as there is no impairment of existing contracts. Colorado PERA members began paying for this automatic COLA benefit out of each paycheck, and earning this PERA benefit for each day worked.)
– Changed annual COLA to 3.5% maximum, compounded annually, based on the CPI, and folded the PERA CLSF into the PERA pension trust funds.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
March 24, 1993 (1:32 PM – 2:28 PM)
Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature's House Finance Committee in regard to the "automatic" PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA "adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”. Rob Gray characterizes the "automatic" PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.” (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])
1997
HB 97-1082 (PERA employer pension contribution cuts, benefit enhancements.)
– Increased retirement formula from 1.5% to 2.5% per year of HAS on 20-40 years service, with 100% HAS maximum benefit. Benefits were recalculated for current benefit recipients on a prospective basis.
– One year HAS adopted for Judicial Division’s future retiring judges.
– Combined the State Division’s and the School Division’s trust funds, and reduced the State and School Division employer contribution rate by 0.1% to 11.5% of payroll.
HB 97-1114 (Statutory timeframe for meeting PERA obligations cut by one-third, in later years, the Legislature continues to arbitrarily cut this timeframe to half of the 1997 standard.)
– Reduced PERA’s maximum amortization period to 40 years from 60 years.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
1998
HB 98-1242 (Cuts to PERA employer pension contributions in State and School Divisions.)
– State and School Division employer payroll contribution rate was reduced from 11.5% to 11.4%.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
1999
SB 99-90 (Cuts to PERA employer and trooper pension contributions.)
– Permanent 1% employer payroll contribution rate cut for state, school, and judicial employers authorized when PERA is fully funded in the State and School Division, and in the Judicial Division.
– Municipal employer payroll contribution rate cut authorized when Municipal Division is fully funded.
– Reduced State Trooper member contribution rate from 11.5% to 10.0% of salary, effective 7/1/99.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
1999
George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?” (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved? As PERA officials have noted, the pension debt comes due over up to 70 years, it is not "due tomorrow.")
2000
December 31, 2000
The Colorado PERA actuarial funded ratio reaches a peak of 105.2 percent. The General Assembly determines that PERA is overfunded, and the effort to bring down the PERA actuarial funded ratio accelerates. (The General Assembly enacts legislation shifting labor costs to the pension through "early retirement incentives," and employer contribution cuts and benefit enhancements continue.)
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true
2000
HB 00-1458 (Cuts to PERA employer pension contributions, PERA COLA set at automatic 3.5%.)
– Moved date of 1% reduction in employer payroll contribution rate forward from 1/1/01 to 7/1/00 since PERA was now fully funded, to 10.4% for the State and School Division, and to 14.0% of payroll for the Judicial Division.
– Established an additional minimum 0.25% employer payroll contribution rate cut.
– 20% of any PERA overfunding amortized over 10 years, would be allocated for further employer payroll contribution rate cuts.
– 30% of PERA overfunding amortized over 10 years, would be allocated to the HCTF for retiree health care premium subsidy increases.
– Established 3.5% compounded annual automatic COLA effective March 2001.
– Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
2001
November 20, 2001
Buck Consultants study presented to the Colorado General Assembly's Legislative Audit Committee. (The report provided the results of a retirement plan study for Colorado PERA, conducted pursuant to SB 01-149.) Six of the seven members of the Audit Committee sitting at the table had sponsored [the prior year] the bill enacting the 3.5 percent fixed, automatic PERA COLA, HB 00-1458 the prior year.) The Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” the “fixed” COLA, that is “compounded annually for each year of retirement,” and contrasts the PERA COLA with an “ad hoc” COLA “as approved by Legislature.” If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented in 2001?
http://www.nctr.org/pdf/coloradodcdbstudy.pdf
December 31, 2001
Colorado PERA Executive Director Meredith Williams:
“Be assured that your PERA account is safe, and that the benefit you receive when you retire is not affected by PERA’s short-term return on investments.”
http://www.copera.org/pdf/5/5-21-01.pdf
2002
February 25, 2002
From Colorado PERA News Release: "Colorado PERA’s monthly retirement benefits are guaranteed for life and purchasing time makes good sense for many of our members.”
https://www.copera.org/pdf/NewsReleases/2002/Purchasing.pdf
February 15, 2002
Kim Natale, Chairman, Colorado PERA Board of Trustees: “As a comprehensive retirement plan, PERA benefits are guaranteed for life.” “However, the loss . . . does not affect our ability to pay guaranteed lifetime benefits to you.”
http://www.copera.org/pdf/Newsletters/MemberUpdate3-02.pdf
July 18, 2002
"PERA’s Funding Status": "Because Colorado PERA is a defined benefit plan, members and retirees will receive a guaranteed benefit. Those members who are planning on retiring should not be alarmed by the underfunded status of PERA. Retirement benefits will be calculated and paid, in the same manner, regardless of PERA’s funded status.”
http://www.copera.org/pera/about/newsarchives2002.htm
2003
Colorado PERA: “In any event, members and retirees with fully vested rights and entitlements provided by the PERA statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”
https://www.copera.org/pera/about/newsarchives2003.htm
June 3, 2003
Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”
http://www.copera.org/pdf/5/5-21-02.pdf
October 9, 2003
“Colorado PERA Fund Secure, Board of Trustees Seeks to Improve Funded Status.”
"It is our opinion that PERA continues to have a relatively good funded ratio of 88 percent (based on the actuarial value of assets)."
“PERA believes that state constitutional provisions that prohibit the reduction of benefits to existing retirees and restrict the changes which can be imposed on vested members of PERA further limit alternatives.”
“The funding reductions enacted as a result of the up markets of the 1990s must end. The State must return to fully funding future obligations to PERA members and retirees.”
“PERA Benefits being paid are guaranteed . . .”
“PERA staff is in the process of fully researching and analyzing the issue of changing benefits and has not recommended anything to the Board regarding such changes. PERA has not made the decision to propose legislation that would change the current benefit levels of vested members.”
“In any event, members and retirees with fully vested rights and entitlements provided by the PERA Statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”
"With PERA, Las Animas employees have a guaranteed benefit for life.”
http://www.copera.org/pera/about/newsarchives2003.htm
October 10, 2003
“In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”
http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf
“Adding to the problem is the fact that the legislature voted to reduce the amount of the state's contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)
December 4, 2003
"Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”
https://www.cu.edu/sg/messages/2718.html
December 4, 2003
“JBC members questioned why PERA is asking for an increase in the employer contribution but not asking employees to contribute more. Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”
https://www.cu.edu/sg/messages/2718.html
2004
February 21, 2004
“PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that's not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.” – Rocky Mountain News, David Milstead.
July 2004
"PERA Benefits at a Glance": “Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.” (PERA Document 5/58 (REV 7-04)
July 7, 2004
PERA response to July 5, 2004, Rocky Mountain News Editorial:
“PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”
“The fact is that benefits guaranteed to PERA members are of a contractual nature, and that means that unless benefits are increased, contribution rates for members cannot be increased.”
“The PERA Board agrees with the Treasurer that a 40-year period should be used as a standard for amortizing the unfunded liability.”
“PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”
http://www.copera.org/pera/about/newsarchives2004.htm
October 28, 2004
PERA official: Legislators say PERA is "too well-funded" at 87 percent actuarial funded ratio. Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 81-year] history, in 1999 and 2000.” Silver and Gold Record:
https://www.cu.edu/sg/messages/3851.html
November 18, 2004
Colorado Attorney General Ken Salazar Opinion (post-DeWitt): "Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly."
http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf
2005
May 12, 2005
“Befort also noted that several years ago, the Legislature and Gov. Bill Owens decided to encourage higher-paid employees to retire early. Payroll expenses went down for the state, but PERA’s costs increased, he explained.”
https://www.cu.edu/sg/messages/4405.html
July 14, 2005
Colorado PERA would rather break pension contracts than issue pension obligation bonds at historically low interest rates: “Rob Gray, PERA government relations director, told S&GR this week that the PERA board has looked at pension obligation bonds and will meet later this week with its regular actuary and an outside actuarial company that did its own review of PERA’s unfunded liability, and which may make recommendations on additional steps PERA could take to cover the liability.” “PERA has been approached by investment firms about POBs during the past several years, Gray said this week. He agreed with Doherty’s assessment that POBs could be a useful tool to cover the liability and improve PERA’s funding situation, and Gray noted that the independent actuarial firm also is reviewing POBs as a solution.”
https://www.cu.edu/sg/messages/4467.html
August 13, 2005
Colorado PERA Executive Director Meredith Williams,. "The liabilities of the system, frankly, will be paid out over multiple decades, and we're talking 70 or 80 years. We're kind of designed for the long haul and we know we're going to experience ups and downs in the marketplace."
http://www.chieftain.com/metro/slow-stock-market-retiree-boom-hurts-pension-system/article_da58863b-1799-50b4-8ff3-0548d16be68c.html
August 17, 2005
Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): "'Everyone agrees you certainly can make changes for people you haven’t even hired yet,' said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. 'On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.'"
"Smith said in his opinion that 'other (non-Colorado) courts have set a high burden to meet the necessity threshold.'"
“His (Colorado PERA General Counsel Greg Smith) briefing paper said 'there has never been a finding in Colorado that the state has reserved its power to make changes' in PERA's benefit structure.”
"The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member. That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan."
"Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem."
http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/
September 14, 2005
Colorado Treasurer’s "Commission to Strengthen and Secure PERA,” co-chaired by former Colorado Senator Hank Brown (who later supported a retroactive taking of PERA COLA benefits):
“For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The commission may not make any recommendations that materially affect current retirees.”
https://www.copera.org/pdf/Misc/CommissionReport.pdf
November 4, 2005
PERA Shareholders Meeting Presentation, Fall, 2005:
"Note that PERA’s funded status was lower 30 years ago than it is now. You may recall that there was no perceived 'crisis' in PERA’s funded status in 1975.” “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent. Why? Because not all benefits are due and payable today or tomorrow . . . PERA can weather the ups and downs in the markets.” “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”
http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf
2006
SB 06-235
– Reduced PERA’s statutorily prescribed maximum amortization period (MAP) from 40 years to 30 years. (In 1997, the PERA MAP was set in law at 60 years.)
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true
2006
Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:
“From a long-term perspective, however, one can't really pin too much of the pension problem on the recent stock market pullback . . .". "During the 1970s, funding ratios generally hovered between 50 and 60 percent.” (Yet, public pension contracts in the United States were honored.)
January 2006
Colorado PERA Member Report: “As I said above, no changes are proposed for ‘legally protected’ benefits.” “The package addresses PERA’s funded status without impairing earned pension benefits for existing and retired members.”
http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf
January 12, 2006
Governor Bill Owens 2006 State of the State:
“We need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer. This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.
"We also need to take the politically tough step of examining benefit levels for our current employees. We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the ‘out’ years for those furthest from retirement. These changes should not affect those closest to retirement, but could be phased in for those who have years to go.”
http://www.pewstates.org/projects/stateline/headlines/colorado-state-of-the-state-address-2006-85899394414
January 13, 2006
Rocky Mountain News: “(Colorado PERA Executive Director Meredith) Williams claims that any compromises in promised benefits to current employees could be deemed unconstitutional.”
http://m.rockymountainnews.com/news/2006/jan/13/brosenb-slay-the-pera-dinosaur/
February 2006
From PERA Legislative Update:
“Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”
“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”
http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf
February 10, 2006
Colorado PERA Board meeting summary on DocStoc: “A motion was made by Scott Noller and seconded by Carole Wright that 'as it is in the best interest of the members and beneficiaries of PERA, and in compliance with the fiduciary obligation of the Board of Trustees, that any laws affecting PERA be legally adopted, that staff take appropriate action, including incurring reasonable expenses, to ensure that any laws affecting PERA be legally adopted.'”:
http://www.docstoc.com/docs/61834277/Colorado-Public-Employees-Retirement-Association
February 11, 2006
“It defines ‘actuarial necessity’ in state law, opening the door for benefit reductions for current PERA members who have not retired.”
http://m.rockymountainnews.com/news/2006/feb/11/governor-demands-pera-solution/
February 16, 2006
“Joint Budget Committee member Rep. Bernie Buescher (D-Grand Junction) told S&GR this week that he hopes in the next week to meet with representatives of CAPE, CEA, the Colorado Federation of Public Employees, the Colorado Association of School Executives, PERA and Gov. Bill Owens to work out a PERA solution.”
"Deputy Colorado Attorney General Bernie Buescher, 'who spent 20 years as a pension attorney,' has said that he believes Colorado PERA needs changes, but not drastic ones, pointing out that the ‘beauty’ of pension plans is that small changes compound interest over time. ‘When you're talking about something as complex as retirement plans, the planning horizon is 30 to 50 years — even 20 years is too short.’”
"'Some folks feel urgency' to solve PERA's problems, Buescher added. 'I feel much more strongly that we need to do it right,' he said. 'We don't have to do it this year, but the sooner we deal with it, the less painful the solution would be. It would be better to not do anything than to do something that is not productive.'" (Note that Buescher later served as Colorado Secretary of State and now works at the Colorado Attorney General's office in the position formerly occupied by our new Colorado Supreme Court Justice, Monica Marquez.)
https://www.cu.edu/sg/messages/4829.html
February 24, 2006
“In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”
http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/
March 5, 2006
Colorado PERA's "Five Minute Rule." Denver Post article by Bob Ewegen (who retired from the Denver Post in 2008 after 36 years at the paper.) The title of the article is: “A 3 Percent Solution for PERA: Rescue Plan for Retirement Groups Finances Might be Simple”:
"In excluding any cuts for current retirees and slashing benefits for new hires, PERA and its critics agree on what might be called the ‘five minute rule.’ PERA members who are already retired – even if they left just five minutes ago – are considered ‘fully vested’ and thus legally immune from any changes that would reduce their current or future benefits."
"Current or retired employees are guaranteed a 3.5 percent increase in benefits each year." "PERA itself argues that the law bans any adverse change affecting even future earned benefits for existing employees."
http://www.denverpost.com/opinion/ci_3566250
March 9, 2006
Silver and Gold Record: “Williams noted that most people don't have enough money to pay off their mortgages, and that PERA's assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’" (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)
https://www.cu.edu/sg/messages/4871.html
April 2006
Colorado Association of School Executives (an organization that supported SB10-001) in an issue brief, "Politics and PERA, Separating Fact from Fiction":
“What is PERA’s financial condition? Is PERA stable? Yes. PERA is quite stable. As of this writing, PERA's market value is in excess of $35 billion. If there were flat investment returns in the future, PERA would have enough cash to pay benefits or over 40 years. By almost every standard, PERA is solvent.”
“How did PERA get into this predicament? Several factors have contributed to PERA's current funded status. In 1999 and 2000 when PERA had more assets than liabilities, there was a major political movement to increase benefits, to lower the age of retirement, and to lower employer contribution rates for PERA.”
“Now, some of the same politicians who voted for increased benefits and lower contribution rates are the ones pointing fingers and talking about a ‘crisis.’”
“One result of these changes is that PERA's employer contribution rate has declined by 25 percent since the late 1990s. Current contribution rates and estimated return on investments aren't enough to pay off the debt over time.”
“In short, employer contributions were lowered during the boom years — now employers need to step up to fill some of the gap.”
“Different groups have proposed numerous ‘fixes’ that range from adjusting how Highest
Average Salary is figured, to reconfiguring the benefit package, to privatizing the system.”
(My comment: Here CASE, an SB10-001 proponent, notes in its 2006 Issue Brief the existence of several “less drastic” alternatives to the breach of fully-vested PERA retiree pension contracts.)
“The negative publicity about PERA over the past year is largely the work of organized ideologically motivated activists and profit-minded special interest groups.”
“In reality, PERA has one of the lowest employer contribution rates in comparison with other public pension plans in Colorado and other states. The 2006 employer contribution to PERA is 10.65 percent. By comparison, public pension plans for neighboring states show an average employer contribution rate of 17.2 percent. Even with the scheduled gradual increase of the employer rate up to 13.15 percent by 2012, Colorado will still compare favorably with other public pension plans.”
“By Phil Fox, deputy executive director, and Jana Caldwell, director of communications, CASE.”
http://www.friendsofpera.com/facts/PERAIssuebrief.pdf
June 5, 2006
PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)
http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf
Fall 2006
“Shareholders Meeting Fall 2006” document: “Note that PERA was over 100% funded in only two years of our 75 year history.”
http://www.copera.org/pdf/Shareholder/ShareholderPresentation06.pdf
October 26, 2006
Silver and Gold Record: “One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.” “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools. Williams said this ‘employer contribution’ will not affect retirees . . .”
https://www.cu.edu/sg/messages/5245.html
2007
“Representative Bernie Buescher, a pension attorney from Grand Junction, began a month-long effort (in 2006) to educate the PERA Board and include them in discussions with others, including Senator Owen, in order to forge a compromise.”
http://cppa.utah.edu/_documents/westernstatesbudgets/wpsa-06/colorado-06.pdf
2008
Friends of PERA (an organization that supported SB10-001) in "PERA Quick Facts":
“The employer contribution rate for the PERA pension plan is below the average rate contributed by public & private employers into retirement plans for their employees. Many employers contribute between 6% and 10% of pay in addition to 6.2% of pay for Social Security, for a total of 16.2% of pay.”
“In 1984, the contribution rate to PERA's pension fund for the School and School Divisions was 12.5% and 12.2%, respectively. Over the years, the rate dropped to less than 10%. The rate in 2009 is 11.9%, still lower than it was 25 years ago.”
“Compare PERA’s rate with other non-PERA Colorado public plans: Denver = 13.7%, Adams & Pueblo counties = 13.7%, Douglas County = 14.2%, University of Colorado = 16.2%, City of Fort Collins = 13.7%, Jefferson County = 13.2%, Durango = 11.2%, Westminster = 10.3%, Lakewood = 11.7%.”
“Compare PERA’s rate with the average rate of the seven neighboring state pension plans: 11.9% vs. average of 18.3%, NM State = 22.8%, NM School = 17.8%, Utah RS = 21.9%, Wyoming = 17.5%, NE School = 13.5%, OK RS = 20.7%, KS PERS = 14.2%.”
“Compare PERA’s rate with the average of 32 public DB plans: 11.9% vs. 14.3%.”
“Average pension cost for all Private Employers according to the 2006 Chamber of Commerce Employee Benefits Study is 14.25%. PERA is 16 percent below this.”
“Rate cuts to PERA between 2000 and 2005 equaled some $325 million.”
“The State (taxpayers) is not the major provider of funds to the pension plan; only 17% of PERA’s revenue of $45 billion in the last 20 years came from the taxpayer; members contributed about 18% of the revenue. Investments brought in 65% of the revenue.”
“PERA’s funded level at the end of 2007 was an overall 75% of assets – about the same as it was in 1984.”
“Equating PERA’s amortization period (number of years when it will have the unfunded portion paid off) to an actuarial emergency or necessity is erroneous. PERA continues to have a positive cash flow without selling off assets.”
"PERA has been fully funded only two years in its 75-year history – in 1999 and 2000. When it was fully funded, Governor Owens immediately pursued cutting the employer contribution rate and unwisely pushed the Board of Trustees very strongly to reduce the cost to purchase service credit. This action resulted in a very large unfunded liability increase to the fund. When PERA tried to pursue legislative changes to remedy the situation, Governor Owens vetoed the legislation because it did not include a ‘defined contribution option’ for state employees.”
“PERA benefits are actually lower than private industry and other public plans that have Social Security plus a pension.”
"Laws passed in 1999 and 2000 to reduce the cost to purchase years of service and to provide for earlier retirement were initiated by Governor Owens' office and legislators who wanted to encourage long-term state employees to retire. At the same time that the benefit rules were made better, the employer contribution rates were reduced and the rate employees paid remained the same. These changes were made by the Executive and Legislative branches, not by the PERA board.”
“There is a misconception that the ‘taxpayers’ are owners of the fund; the trust fund is owned by the beneficiaries of the fund . . .”
“PERA reacted promptly to the market downturn in 2001. In 2002, it developed a proposal that would have saved PERA millions of dollars in payments and brought in millions of dollars in additional revenue. This plan was passed unanimously by the General Assembly in 2003 but was vetoed by Governor Bill Owens (R). He vetoed this bill because of a political desire to include defined contribution plans as an alternative option to PERA, even though no other organization in the state offers a ‘choice’ in retirement plans.”
http://www.friendsofpera.com/facts/index.html
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