April 23, 2013 08:10 PM UTC

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

• 3 Comments
• by: PolDancer

January 2008

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

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

February 2008

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

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

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

April 17, 2008

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

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

August 1, 2008

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

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

October 10, 2008

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

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

November 30, 2008

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

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

December 2008

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

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

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

December 4, 2008

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

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

December 8, 2008

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

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

December 19, 2008

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

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

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

2009

Sometime in 2009

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

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

2009

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

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

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

January 2009

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

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

January 5, 2009

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

January 8, 2009

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

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

January 24, 2009

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

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

January 26, 2009

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

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

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

February 4, 2009

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

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

March 11, 2009

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

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

April 14, 2009

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

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

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

July 14, 2009

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

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

August 11, 2009

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

Sue Ellen Quam: "I was a legislative liaison for many, many years. I sat in the Joint Budget Committee for many, many years, and I remember legislators saying ‘You know, you don’t get very good salary increases and your benefits really stink, but you’re gonna get a really good retirement and so just hang in there.”  “So, I find it to be discouraging that the Legislature may be considering saying, ‘We got you on your salary, we got you on your benefits, and now we’re going to get you on your retirement.”  “I’ve heard rumors that the 3.5 percent increase may be reduced or eliminated and that it’s OK with PERA members. It’s not OK with this PERA member.”

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

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

October 2009

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

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

October 22, 2009

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

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

November 15, 2009

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

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

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

December 16, 2009

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

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

December 17, 2009

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

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

December 17, 2009

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

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

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

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

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

December 31, 2009

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

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

2010

January 5, 2010

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

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

January 10, 2010

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

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

January 15, 2010

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

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

January 22, 2010

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

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

January 26, 2010

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

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

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

January 27, 2010

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

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

January 29, 2010

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

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

January 29, 2010

2010 Senate floor debate on SB 10-001:

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

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

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

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

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

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

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

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

February 1, 2010

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

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

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

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

February 10, 2010

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

February 10, 2010

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

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

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

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

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

February 10, 2010

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

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

February 12, 2010

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

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

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

February 23, 2010

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

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

February 26, 2010

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

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

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

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

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

March 17, 2010

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

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

March 19, 2010

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

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

May 10, 2010

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

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

June 3, 2010

Colorado Supreme Court Chief Justice Mary Mullarkey announces retirement.

http://www.denverpost.com/ci_15221861

June 23, 2010

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

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

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

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

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

July 26, 2010

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

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

August 2, 2010

Ritter Administration Letter to GASB on contractual public pension obligations:

“COSC agrees that an obligation exists since the government entity has entered into a duty, contract, or promise to provide compensation in the form of benefit payments during retirement; and furthermore, we agree that this obligation is a present obligation to the extent that the benefits owed have already been earned through past services, and are legally enforceable once vesting provisions have been met.”

“In Colorado, a class action lawsuit has been filed challenging recently passed statutory reductions in annual COLA increases which for an average member would result in $165,000 of reduced benefit over a 20 year period.”

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

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

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

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

August 10, 2010

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

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

August 16, 2010

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

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

August 22, 2010

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

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

August 30, 2010

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

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

“Sincerely, Jean E. Dubofsky.”

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

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

September 8, 2010

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

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

September 28, 2010

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

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

October 18, 2010

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

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

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

November 22, 2010

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

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

2011

January 7, 2011

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

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

January 18, 2011

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

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

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

February 2011

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

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

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

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

February 2011

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

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

February 2011

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

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

February 14, 2011

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

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

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

February 17, 2011

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

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

February 17, 2011

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

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

February 18, 2011

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

March 5, 2011

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

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

March 31, 2011

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

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

April 12, 2011

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

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

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

April 17, 2011

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

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

May 22, 2011

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

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

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

May 29, 2011

Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

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

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

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

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

June 2011

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

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

June 24, 2011

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

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

September 13, 2011

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

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

October 26, 2011

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

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

2012

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

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

January 2012

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

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

February 4, 2012

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

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

February 21, 2012

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

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

February 27, 2012

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

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

March 6, 2012

Florida Circuit Court: “All indications are that the Florida Legislature chose to effectuate the challenged provisions of SB 2100 in order to make funds available for other purposes.”  “The elimination of the future COLA adjustment alone will result in a 4 to 24% reduction in the plaintiffs total retirement income. These costs are substantial as a matter of law.”  “If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”

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

March 6, 2012

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

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

March 7, 2012

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

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

March 13, 2012

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

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

March 28, 2012

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

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

March 28, 2012

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

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

April 6, 2012

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

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

May 16, 2012

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

June 26, 2012

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

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

August 8, 2012

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

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

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

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

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

October 11, 2012

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

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

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

December 23, 2012

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

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

2013

February 15, 2013

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

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

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

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

March 7, 2013

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

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

March 8, 2013

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

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

March 18, 2013

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

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

April 2, 2013

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

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

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