July 31, 2013 01:53 PM UTC

Vince Carroll: Governor Owens Pulled a Boner, Congressman Coffman Benefited.

• 0 Comments
• by: PolDancer

Here's Denver Post editorial page editor Vince Carroll in today's (7-31-2013) Denver Post: "The administration of Gov. Bill Owens, in a major blunder, lobbied for the (Colorado PERA) fire sale as a shortsighted way to encourage early retirement . . ."

This action by Governor Owens (and the failure of the Colorado Legislature to pay its full PERA bills [ARC] for the last decade are largely responsible for the decline in Colorado PERA's funding ratio from 105 percent at the turn of the century, to the high 60s in the last decade.

The Colorado Legislature is now trying to raise Colorado PERA's funded ratio (pay off Colorado state and local government debt) by taking money from old people (SB10-001)  . . . breaking Colorado PERA retiree pension contracts.  Should all Colorado PERA retirees sit back and let the State of Colorado break their public pension contracts because of a Bill Owens screw up?  We're old, not stupid.

Governor Owens sold Colorado PERA service credit at less than full actuarial cost in order to encourage the older, "more expensive" state and local government employees to retire and be replaced by cheaper labor, effectively pushing labor costs onto the Colorado PERA pension trust funds.  Colorado governments have saved billions as a result of Governor Owen's and the Legislature's contractual Colorado PERA service credit offer.  Now that these governments have taken their benefit from the Bill Owen's PERA cost-shifting plan, why should they be allowed to break their PERA pension contracts?  That is, their PERA COLA contractual obligations?

Only a fraction of Colorado PERA retirees participated in Bill Owen's PERA early retirement offer.  Why should all Colorado PERA retirees relinquish their contractual public pension rights?

For that matter, I'm surprised that we have not yet seen these people who bought years of service credit in the Colorado PERA pension plan also file a lawsuit (as have Colorado PERA retirees over the SB10-001 COLA-taking.)  (I think they have six years to file under Colorado contract law's statute of limitations?  2016?)

Here's the statute under which these service credit purchases were made:

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

When Colorado PERA members sent thousands of dollars to the State of Colorado under this PERA contractual offer (many taking the money from other retirement accounts) they believed Colorado PERA's offer and the statute's language that the benefits provided by this service credit purchase will include the COLA applicable under their contract.  There is no language in this statute about the state later retroactively lowering the COLA benefit that was purchased.  As Greg Smith at Colorado PERA has told us, the Legislature has never reserved the right to make retroactive changes to the PERA pension plan.

August 17, 2005, Rocky Mountain News:

“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.”

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

"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/

(My comment: Vince, you are a conservative. Conservatives support the sanctity of contracts in the U.S.A. [outside of bankruptcy.]  The free market rests upon this sanctity of contracts.  Conservatives vigorously defend the U.S. Constitution and its Contract Clause.  Why have we not seen a Vince Carroll column condemning the breach of Colorado PERA pension COLA contractual obligations?  You claim to seek truth, seek it and damn the torpedoes!

Vince, last year, when the Colorado Court of Appeals reversed and remanded the case Justus v, State to the Denver District Court, confirming the contractual nature of the Colorado PERA COLA benefit, why did your paper call this reversal a "win" for Colorado PERA?  It doesn't make sense does it?!  Colorado PERA has (conveniently) argued in court (the contrivance) that the PERA COLA is not their contractual obligation.  Why would Colorado PERA consider a reversal of the Denver District Court's decision on that point a win for PERA?  Let's face it, your reporter simply parroted PERA propaganda.  Suck it up and publish a (belated) correction to this Denver Post story by Tim Hoover.  Protect journalistic integrity!

Denver Post, October 12, 2012:

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

Why not a Vince Carroll column condemning that ridiculous contrivance of PERA's lawyers that a COLA benefit partly earned, and partly purchased under the PERA statutory contract is not actually part of the PERA pension?  If not, then what is it?  A gratuity?  Gratuities are forbidden under the Colorado Constitution.

Is the mortgage interest rate I pay not part of my mortgage contract?  Now that rates have risen does my mortgage company have the right to retroactively hike the mortgage rate in my mortgage contract?)

Silver and Gold Record:

"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

Silver and Gold Record:

“An early retirement bill working its way through the General Assembly may be a true win-win situation: a good early retirement incentive for classified employees, increased health insurance contributions from employers and substantial savings for state government.” “Last week, Rep. Doug Dean (R-Colorado Springs) introduced HB 1458, which would modify retirement benefits for members of the Public Employees’ Retirement Association (PERA).”

https://www.cu.edu/sg/messages/2229.html

Comment in the Post:

"In 2003, Gov. Owens went after it, but was thwarted by the AG's opinion that the state could not walk away from contracts.  So that administration took a different tack by offering early retirement buy-outs and reduced rates to purchase service credit."  "Granted the slide (in PERA's funding ratio) was accelerated by the economic downturn, but it began when the state figured out how to supplement the general fund by raiding PERA."

http://www.denverpost.com/legislature/ci_16159422

From Friends of PERA:

“Benefits are approved by the Legislature and enacted by the Governor. 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.”

“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.”

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

Governor Bill Owens, 2006 State of the State address:

"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.”

Link:

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

Colorado Treasurer Walker Stapleton on Amy Oliver:

" . . . these Republican lobbyists unfortunately, are willing to trade what I believe should be their economic principles and values for their livelihood as lobbyists and they go down to the Capitol and convince legislators to vote a certain way against any PERA reform measures, which is why this issue really is an issue, and I’m sure I made myself really popular by just saying that.”

Amy Oliver responds: “Well, and I’m going to name the lobbyist, because I’ve named that lobbyist before, and that’s Mike Beasley, who used to be a Bill Owens staffer.  He was the Legislative Liaison, and he is the lobbyist for PERA.”

http://www.1310kfka.com/audio/amy060612hr2.mp3

January 18, 2006, Rocky Mountain News:

“We believe lawmakers already have that authority, but PERA disagrees.  It insists benefits can’t be cut for current retirees and employees, and claims court decisions uphold that view.”

http://m.rockymountainnews.com/news/2006/jan/18/no-time-to-lose-on-pera-reform/

"History of Colorado PERA Legislation," link:

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

Back to Vince Carroll:

"Is it hypocritical for a politician who receives a state pension to push for reform of federal pensions?  Not in my book, but apparently not everyone agrees — at least based on reaction to news that Republican Rep. Mike Coffman pulls down $55,547 in a Colorado state pension."

(My comment: It is hypocritical for a politician [Coffman] to complain about Colorado PERA's funding ratio [69 percent at the time of the Colorado PERA pension contract breach in 2010] and ignore the fact that military pensions have a ZERO percent funding ratio?  This might be particularly hypocritical if that politician is also receiving a military pension.  Coffman's condemnation of public pension funding levels reminds me of Hillman's condemnation of agri-welfare.  Come clean Coffman, are you also a receiving a military pension?)

Vince Carroll:

"Even the original article on Coffman's pension, which appeared in the National Journal, implied that he was somehow less than forthcoming when urging his colleagues to abolish congressional pensions while failing to volunteer that he's already cashing government retirement checks."

(My comment: Is Coffman Colorado's unparalleled champion of personal public pension benefit acquisition?)

Vince Carroll:

"But of course Coffman didn't go back to work for the same employer. He moved to a different level of government — one that oversees pension systems that collectively have built up an unfunded liability of trillions of dollars."

(My comment: Public pensions in the USA consume less than three percent of all state and local government expenditures, such a burden!

“The percentage of all state and local government spending on pensions has hovered around three percent during the last decade.”

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

How is the fact that state and local governments have not "banked" the three percent of future revenues needed to support their public pension debt a "crisis," while the fact that state and local governments have not banked the 97 percent needed for all other future public expenditures is not a "crisis."  Doesn't fit the political agenda does it?

State and local governments in the U.S. have three times as much bonded debt as they do public pension debt.  How is it that public pension debt (900 billion?) is such a burden while all other state and local government debt (300 percent greater debt) is not a burden?  ($2.8 Trillion according to the U.S. Census Bureau.)

http://ballotpedia.org/wiki/index.php/Bond_issue

http://www.census.gov/compendia/statab/2012/tables/12s0439.pdf)

VINCE CARROLL: SIZE MATTERS.

"There is, however, one thing about Coffman's pension that does deserve more attention: its size. Coffman spent about 20 years in state government, first as a relatively low-paid state lawmaker, then as a low-paid state treasurer and finally as a low-paid secretary of state (salaries for Colorado's statewide elected offices rank among the lowest in the nation)."

"Coffman topped out at $68,500. That means his pension is currently nearly 81 percent of his highest state salary. And while pensions provided by the Colorado Public Employees' Retirement Association (PERA) are certainly generous compared to Social Security or almost any of the dwindling array of private plans, they're not typically that generous. What gives?"

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

A comment from the Post:

"Mike Coffman's career has been carefully and artfully planned to collect as many government pensions as possible.  Indeed, there is no mention in his Wiki biography of any substantial private sector employment, but I assume he'll probably end up with at least the required 40-quarter minimum … perhaps mostly from 1983 to 1989."

"According to Wiki, Coffman's military career, mostly Army and Marine reserves (1972 to 1994), started at the age of 17 in 1972.  He transferred from Army Reserve to active duty in the Marines in 1979, and then his status changed to Marine Reserves in 1983 until 1994.  He spent close to a year in Iraq on active duty.  When you tabulate all the years, it's a little over the magical 20 years for a military pension.  May I add, he served honorably."

"Coffman spent about 14 years in Colorado state government (1989 to 2009) in both the House and Senate, and also as Treasurer and Secretary of State.  In order to get his $55K PERA benefit, I'm guessing he bought close to 15 years of service credits to get him close to the magical 30 years for a full state PERA pension."

"Up to about 20 years ago, PERA allowed military service time to be used in purchasing service credit, so since Coffman started state service in 1989 (prior to the rule change), I assume he was allowed to use his military time in purchasing PERA service credits.  This practice is currently not permitted under revised PERA rules."

"Coffman is in his third term as US Congressman (2009 to present), so he has met the minimum 5 year requirement for a Congressional pension.  He is currently in a heated campaign for a fourth term in CD-6."

"Between 1983 (start of Marine Reserves) and 1989 (elected to state House), he may have had private sector employment toward the necessary 40-quarters (10-years) for a future Social Security benefit."

"So, Coffman will be collecting three pension checks, along with a *reduced Social Security check (* a consequence of collecting a state pension benefit) … not bad."

"Nothing wrong with Coffman's financial planning skills, but he has a tendency to want to close the gate (or reform) after he's entered, as evidenced in his interest in PERA reform and his recent interest in reforming the scandalous congressional pension program right after he became vested in both state and congressional pensions."

Vince Carroll:

"There are many PERA beneficiaries like Coffman who bought years of service — often at a very advantageous discount — and who now receive pension checks larger than you would expect based upon the span of their careers.  A large number of those transactions occurred over a three-year period a decade ago, when PERA conducted what one executive called, in retrospect, a 'fire sale' on the service credit," according to a 2005 analysis by the Rocky Mountain News."

VINCE CARROLL ON BILL OWENS MISMANAGEMENT OF COLORADO PERA.

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

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

(My comment: Colorado PERA officials did nothing while Owens and the Legislature raided the PERA trust funds a decade ago to lower personnel costs.  Colorado PERA officials meet three times each year with state legislators for "PERA updates."  If you listen to these legislative hearings you will see that Colorado legislators are not sufficiently sophisticated to oversee Colorado PERA . . . this is by design.  State legislators who know little of public pension administration and contractual obligations are easily manipulated by PERA lobbyists.  For a decade, Colorado PERA officials have said (quite little) at these legislative meetings about the Legislature's failure to pay its PERA bills.  This practice continued at the most recent PERA meeting with the State Audit Committee.  The Legislature again, this year, failed to pay its full PERA pension bill [ARC], but this failure was ignored by state legislators.  As fiduciaries, Colorado PERA officials should emphatically and regularly point out that the Legislature must pay its actuarially required contributions.  Instead, they are complicit in the decline of PERA's financial status, and now conspire to break Colorado PERA pension contracts.

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