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Colorado PERA officials on “Actuarial Necessity.”

Colorado PERA General Counsel: “We understand that some of these (PERA pension reform options) may not be legal.”

Defendant Colorado PERA Blames Co-defendant State of Colorado for underfunding the pension in the last decade.

The opinions of Colorado PERA officials on the subject of the constitutionality of reducing fully-vested PERA retiree pension benefits have shifted over the last decade.  Colorado PERA’s positions on this subject have shifted from pronouncements that such an act on the part of the General Assembly would be illegal, to pronouncements that such acts “seem” to be illegal, to statements (after the beginning of the PERA campaign to breach retiree contracts) that, yes, these rights are contractual, however; the General Assembly can break its contracts if they can find some “actuarial necessity.”  PERA officials add, however; that this “finding of actuarial necessity” has only happened once as far as they can see.  PERA officials also note that the Colorado General Assembly has not reserved the right to make such retroactive changes in pension contracts, and that the courts have set a “high burden” for permitting such breaches of contract.

In 2010, it was simply more politically viable for the State of Colorado to breach its pension contracts than to meet its contractual obligations.  Why are we having a discussion about breaching public employee contracts rather than having a discussion about breaching Colorado’s corporate contracts?  Well . . . corporations have money, power and lawyers.  Certainly Colorado corporations have more of these assets than do Colorado PERA retirees who are elderly, (oftentimes in ill health), and rightly focused on enjoying their remaining years after serving Colorado governments for decades.

Now, to “actuarial necessity”:

In recent years, the Colorado Legislature has asked Colorado PERA administrators for their thoughts on the subject of “actuarial emergencies.”

http://www.denverpost.com/news…

JANUARY 5, 2009 PERA JBC DOCUMENT – WHAT IS ACTUARIAL NECESSITY?

For example, the Colorado General Assembly’s Joint Budget Committee met on the afternoon on Monday, January 5, 2009, and they put this question regarding “actuarial emergencies” to Colorado PERA administrators.  

A JBC document (link below) provides the specific language of the question put to Colorado PERA administrators (question #54):

“54.  Has PERA discussed what constitutes an actuarial emergency?  At what funding level would this occur?  Is declaring an actuarial emergency the only way the Association can support increasing the employee contribution to help address the unfunded liability?  Is declaring an actuarial emergency more feasible now given the financial crisis and the drop in PERA’s market valuation?

Question #58 on this document is also interesting: “Using the ARC methodology, what is the total percentage contribution, employer and employee, that PERA needs to fully fund its obligations?”

See Questions #54 and #58 on this Joint Budget Committee document:

http://www.state.co.us/gov_dir…

Sadly, I cannot find the document in which Colorado PERA provides written responses to these January 5, 2009 JBC questions on either the website of the Joint Budget Committee or Colorado PERA’s website.  (Colorado PERA invariably provides written responses to questions posed by the JBC, so the document surely exists.)  Nor is the recording of the PERA officials’ verbal responses to these questions available on the web.  I suppose that one must go to the trouble of seeking out the recording of this hearing at the Colorado State Archives in order to “discover” the opinions of Colorado PERA officials relating to “actuarial necessity” in January of 2009.  Alternatively, one could simply request the document from the “transparent” organization itself, Colorado PERA.  Until we can hear Colorado PERA’s responses to this direct question on “actuarial necessity” put at the January 5, 2009 JBC meeting we’ll have to content ourselves with our existing collection of statements on this subject by PERA officials and other interested parties during the last eight years.

DECEMBER 22, 2008 PERA JBC DOCUMENT – LEGISLATURE CANNOT REDUCE FULLY-VESTED RETIREE PENSION BENEFITS.

Colorado PERA officials have touched on this subject of actuarial necessity in other written responses provided to the Joint Budget Committee.  Some of these documents are available on the internet . . . here’s one:

This December 22, 2008 Colorado Joint Budget Committee document (page 21) provides Colorado PERA officials’ understanding of the 2004 Colorado Attorney General’s opinion relating to Colorado contractual public pension rights:

http://www.state.co.us/gov_dir…

According to Colorado PERA officials, “The AG further concluded that, 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.”

The words of these PERA administrators (“cannot be reduced”) seem to cover many bases, including any consideration of “actuarial emergencies” as a means to break public pension contracts.

Here is the complete excerpt of the December 22, 2008 response of Colorado PERA officials:

“In addition to the need for detailed actuarial studies before making any significant adjustments, PERA referenced an Attorney General opinion from November 18, 2004, related to potential limitations that exist upon the Legislature’s ability to reduce the capacity of current employees to earn additional retirement benefits or to increase the percentage of current employees’ wages contributed to PERA.  The AG opinion concludes that the rate and amount of retirement benefits may qualify as a partially vested pension right protected by the contract clause of the constitution.  According to the AG, an adverse change to a partially vested pension right is lawful only if it is balanced by a corresponding change of a beneficial nature, a change that is actuarially necessary, or a change that strengthens or improves the pension plan.  The AG further concluded that, 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.  Finally, the AG stated that the percentage of wages that employees contribute to PERA may qualify as a contractual right protected by the constitution, but that this legal conclusion is not certain.”

Further, Greg Smith, Colorado PERA’s General Counsel told us in a Denver Post article from November 30, 2008:  “The attorney general’s opinion seems clear that fully vested employees – those retired or with enough years of service to retire – cannot see any benefits reduced, including cost-of-living adjustments.”  

(Link: http://www.denverpost.com/news…

It is only after commencing their campaign to breach PERA retiree pension contracts that Colorado PERA officials began singing a different tune – arguing that they could breach fully-vested PERA retiree pension contracts if they had “actuarial necessity.”

A PERA document provided to the JBC on December 16, 2009 states that the PERA COLA benefit IS a contractual obligation of PERA, “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

Link:

http://www.kentlambert.com/Fil…

(In light of these PERA statements over the last few years, their behavior is very strange.  Since Colorado PERA administrators and trustees agree that the PERA COLA IS a Colorado PERA and PERA-employer contractual obligation, and the Colorado Court of Appeals has recently ruled just that  . . . that the PERA COLA is indeed such a contractual obligation, why did Colorado PERA bother appealing this Court of Appeals ruling to the Colorado Supreme Court?)

MARCH 11, 2009 PERA JOINT FINANCE COMMITTEES DOCUMENT – LEGISLATURE HAS NOT PAID ITS ACTUARIALLY REQUIRED CONTRIBUTIONS.

On March 11, 2009, Colorado PERA officials assured members of the General Assembly’s Joint Finance Committees that: “The formal Attorney General (opinion) dated November 14, 2004 seems to suggest that employers have a contractual obligation to provide the promised benefits.”  (See link to the kentlambert.com document provided below.)

This PERA material submitted to the Joint Finance Committees is quite interesting.  In it, Colorado PERA officials warn of coming inflation on page 7: “The recent government stimulus and spending commitments have the potential to be inflationary in the future.”

(So, PERA officials expect to see inflation in the coming years?  That explains the decision of the PERA Board of Trustees to recommend cutting the contracted inflation protection of PERA retirees.  Does the PERA Board hope to simply inflate away the value of fully-vested PERA public pension contracts?)

Defendant Colorado PERA Blames Co-defendant Colorado General Assembly for Pension Underfunding.

On page 8 of the March 11, 2009 Joint Finance Committees document we find a stunning PERA statement.  In spite of the PERA Board’s past policy to underfund the PERA pension by ten percent (maintain a 90 percent funding cap, as we have seen) Colorado PERA officials place blame on the Colorado General Assembly for its failure to properly fund the pension.  On page 8, Colorado PERA officials deny culpability for the underfunding, they write: “PERA has continually informed the General Assembly about contribution deficiencies based upon the actuarially required contribution rate using a 30-year amortization period on unfunded liabilities.”

On page 3 of the document, PERA officials place more blame on the General Assembly: “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.”  (The General Assembly enacted all of these changes to the PERA statutes.)

Five months later, on August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith reinforced PERA’s position blaming 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.”

Link:

http://www.copera.org/pera/abo…

I also found this PERA statement on page 6 of Joint Finance Committees document of interest: “PERA has increased its level of cash during the financial crises.”  So, our PERA investment professionals sold securities at the bottom?  What did this decision ultimately cost the PERA trust funds in the following years?

Here’s the link to the Joint Finance Committees document:

http://www.kentlambert.com/Fil…

AUGUST 11, 2009 COLORADO PERA TRUSTEE CASEBOLT COMMENTS – PERA IN “NO IMMEDIATE DANGER.”

Further insights into the opinion of Colorado PERA officials on “actuarial necessity” may be gleaned from the comments of Colorado PERA Board Trustee Casebolt.  Trustee Casebolt assured PERA retirees present at the August 11, 2009 Colorado PERA Denver “Listening Tour” meeting that: “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.”

(Colorado PERA Trustee Casebolt told us of his belief that PERA “faces no immediate danger.”  How is it possible that an organization facing “no immediate danger” might be in an “actuarial emergency?”  For that matter, how is it possible that the 15th wealthiest state in the nation, with one of the lowest tax burdens in the nation, experiencing one of the fastest post-recession recoveries among the states might be in an “actuarial emergency”?)

Link:

http://www.copera.org/pera/abo…

AUGUST 11, 2009 COLORADO PERA GENERAL COUNSEL COMMENTS – SOME OF OUR PENSION REFORM PROPOSALS “MAY NOT BE LEGAL.”

Colorado PERA’s General Counsel Greg Smith also expounded on “actuarial necessity” during the August 11, 2009 Colorado PERA Denver “Listening Tour” meeting.

Greg Smith’s words:

“Also important is that there are constitutional limitations . . . on what the General Assembly can do with regard to benefits.”

“There’s always a big question in everybody’s mind . . . Well, what is actuarial necessity?  I wish I could answer that question for you, it’s not that I haven’t tried, not that we haven’t researched it.”

“In fact, Colorado has one of the only cases in the union that actually found a cut in benefits was acceptable due to actuarial necessity.”  “And, in that case, what the court found was, well, since the system was completely out of money, had no money, it was paying its benefits out of current contributions with no reserves, out of current operating capital.”

“So, we have to look at what component parts can we address and adjust to meet this gap, and to fill this gap.”  “We have several slides and they essentially track the lines on the feedback form that each of you have in front of you . . . and remember that we understand that some of these may not be legal, some of them may not be politically viable, but everything is on the table at this point in time, everything is being considered by the PERA Board in order to come up with a comprehensive plan to fill the gap.”

(My comment: Why did the Colorado PERA Board of Trustees put pension reform options on the table when they questioned the constitutionality of these pension reform options?  After hearing of the doubts that Colorado PERA officials had regarding the constitutionality of their pension reform proposals why did the nine members of the Colorado General Assembly who were present at this August 11, 2009 meeting and heard these doubts expressed fail to seek an interrogatory to the Colorado Supreme Court for clarity prior to enacting SB 10-001?)

JANUARY 10, 2010 SB 10-001 CO-PRIME SPONSOR COMMENTS: PERA COLA PENSION RIGHTS ARE CONTRACTUAL, WE MUST TRY TO USE THE RECENT MARKET VOLATILITY TO BREACH PERA PENSION CONTRACTS.

Senator Josh Penry (who was the co-prime sponsor of SB 10-001) had his own thoughts on the subject of “actuarial necessity.”

Link:

http://www.9news.com/rss/story…

On January 10, 2010, Senator Penry (who was Senate Minority Leader at the time) was a guest on the 9 News “Your Show” program with Adam Schrager.  About 9 minutes into this show a caller (Julian Graham) asks: “How can this occur when there is an AG opinion currently in effect that states PERA rules and regulations are considered to be a contract?”  

Adam Schrager then asks Senator Penry: “Can you do this legally?”

Senator Penry responded: “We can.  What the courts have said, what the case law and the opinions have said is you can’t.  It is a contract, unless there is actuarial necessity.”  “What the courts have said from a legal standpoint, as long as there is actuarial necessity, as long as there’s a bona fide emergency it’s OK.”  “We’re talking about a 2 percent increase year to year.  I don’t know anyone in the private sector who has seen their 401K increase by 2 percent.”

(My comment: Senator Penry made these remarks ten days into the year 2010.  During 2009, the S&P 500 total return was approximately 26 percent.  401K accounts that were at all invested in equities in 2009 had a pretty impressive return.  See this link:

http://performance.morningstar…

More from Senator Penry:

“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.”

Link:

http://www.leg.state.co.us/Cli…

FALL 2005 COLORADO PERA DOCUMENT – A 59.6 PERCENT ACTUARIAL FUNDED RATIO IS NOT A “CRISIS.”

According to Colorado PERA, even a PERA actuarial funded ratio as low as the 50s or 60s is not a crisis.

From, PERA Shareholders Meeting Presentation, Fall, 2005 document:

“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.”

(My comment: In 1975, Colorado PERA’s actuarial funded ratio was 59.6 percent.  See page 3 of this Legislative staff document:

http://www.colorado.gov/cs/Sat…

Also, PERA repeated these assertions in its “PERA Update – Spring 2006” document – page 4, at this link:

https://www.copera.org/pdf/Mis…

Page 4 of this document has the History of Funding ratio chart and the following quote from PERA: “See that PERA’s (actuarial) funded status was lower (61.5 percent) 30 years ago than what it is now. You may recall that there was no perceived “crisis” in PERA’s funded status in 1975.”)

DECEMBER 17, 2009 JBC CHAIRMAN COMMENTS: IS THE LEGISLATURE CHANGING STATUTORY PENSION PARAMETERS TO CREATE “ACTUARIAL NECESSITY”?

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

(Yet, the U.S. Supreme Court has already ruled that states cannot breach their contractual obligations in order make discretionary expenditures.  In 1977, the U.S. Supreme Court (in U.S. Trust Co, 431 U.S.) clarified that state attempts to impair their own contracts, ESPECIALLY FINANCIAL OBLIGATIONS, were subject to greater scrutiny and very little deference because the STATE’S SELF-INTEREST IS AT STAKE. As the court bluntly stated:

“A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. 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 . . . Thus, a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors.”)

COLORADO PERA GENERAL COUNSEL’S 2005 LEGAL BRIEF: COLORADO COURTS HAVE SET A “HIGH BURDEN TO MEET THE NECESSITY THRESHOLD,” COLORADO HAS NOT “RESERVED ITS POWER” TO ALTER PENSION BENEFITS RETROACTIVELY.

The opinions of Colorado PERA General Counsel Greg Smith, and Assistant Colorado Attorney General Heidi Dineen relating to the contractual nature of Colorado public pension benefits were covered in an August 17, 2005 Rocky Mountain News article:

“One of the few cases that allowed benefit cuts because of actuarial necessity was for a plan in far worse shape: the Denver fire and police pension plan.  (PERA General Counsel) Smith’s legal brief said the plan accumulated $500 million in liabilities by the late 1970s with no funds to pay the obligations. This ‘pay as you go’ practice was unsound and met the definition of an emergency, the courts decided.”

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

“His 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.”

(My comment: The Colorado PERA General Counsel’s legal brief described in this Rocky Mountain News article would make fascinating reading!)

The August 17, 2005 Rocky Mountain News article includes a few comments from Assistant Colorado Attorney General Heidi Dineen.  (Recall that Heidi Dineen’s name is on the 2004 Colorado AG opinion stating that fully-vested Colorado PERA retiree pension benefits are inviolate.)

The Assistant Colorado Attorney General Dineen believes that the Colorado General Assembly may legally raise the contribution rates of Colorado PERA-affiliated employers and active PERA members.  

From the August 17, 2005 Rocky article:

“Dineen looked instead to the PERA state statute that says, ‘Upon recommendation of the board, and with the advice of the actuary, the employer or member contribution rates for the plan may be adjusted by the General Assembly when indicated by actuarial experience.'”

“Said Dineen: ‘In my opinion, it’s right there in the statute.  Other states have increased their contribution rates without litigation, but I tell you, it’s not popular.'”

(Let’s add this Dineen idea to our quickly expanding list of “less drastic” alternatives to the breach of fully-vested PERA retiree pension contracts.)

First off, I want to say that I support bringing the salaries of Colorado state department heads up to a reasonable level, comparable with their peers in other states. Also, I recognize that the proposed salary hikes for Colorado politicians would not apply to current office holders.

There . . . I’m making a point to be scrupulously honest (as an example to the Colorado PERA Board of Trustees and PERA administrators) even if this complete honesty detracts from my argument. Unlike the Colorado PERA Board of Trustees, I am forgoing the opportunity to misrepresent by omission. More on that later.

Today’s Denver Post is reporting that state politicians are considering legislation to hike salaries and provide cost-of-living increases for . . . state politicians.

Link to Denver Post article:

http://www.denverpost.com/ci_2…

“Democratic state Sen. Pat Steadman plans to carry legislation next session to hike salaries for the executive branch, but he hasn’t yet decided whether to include a pay raise for state legislators, who earn $30,000 annually. ‘I’m still considering how far to go with this, but at the minimum I am looking at raising the pay of the five constitutional officers,’ the Denver lawmaker said.”

“‘Something needs to be done,’ (Colorado Attorney General) Suthers said. ‘We’re not just low anymore. We’re off the radar.'”

“And Steadman said he plans to craft the bill so that office-holders who win re-election in 2014 wouldn’t be eligible for the raise either. Only successful challengers and the new attorney general would get the pay increase.”

“Hickenlooper’s spokesman, Eric Brown, said the governor is ‘generally supportive of salary increases for the next office-holders, particularly the attorney general.'”

“State Sen. Ted Harvey, R-Highlands Ranch, said he would support a raise for the executive branch because members are ‘woefully undercompensated,’ but he doesn’t support an increase for legislators.”

(My comment: For the record, Senator Harvey opposed the breach of Colorado PERA pensioner contracts on the Senate floor during the SB 10-001 debate. Senator Harvey’s words: “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.”)

Back to the Denver Post article:

“But former state Sen. Dave Schultheis said it’s time. The Colorado Springs Republican, known for his conservative fiscal positions, has long advocated that legislative pay be boosted and tied to cost-of-living increases.” ‘These legislators are sacrificing quite a bit as it is, being away from their families,’ he said. ‘Having the pay remain at the 1999 level is not appropriate.'”

(My comment: It means something that former State Senator Dave Schultheis supports salary COLAs for state legislators. Schultheis is the “conservative’s conservative” [I mean that in a good way].

Although this argument to bring public office salary levels up to par may have merit . . . the timing of this proposal is ludicrous. It is completely insensate and rather poor form to propose discretionary increases in the salaries of state politicians WHEN THE STATE IS IN BREACH OF CONTRACT!

It’s like going out to buy that 50-inch flat screen at WalMart, when you’ve just missed your mortgage payment.

Are Colorado legislators unaware that the State of Colorado is in breach of public pension contracts? It seems so. FYI, legislators, as I write this blog post the State of Colorado is in Breach of Contract. Legislators, the Colorado Court of Appeals recently held the following: “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.” In the cases McPhail and Bills, the Colorado Supreme Court “found a contractual right based on members’ provision of services and contributions to the retirement fund.”

As a member of the General Assembly’s Joint Budget Committee, Senator Steadman should be aware of the state’s contract breach and act accordingly. He seems to have no recognition of the distinction between mandatory expenditures to meet the state’s contractual obligations, and discretionary expenditures by the General Assembly.

While the State of Colorado is in breach of contract, the General Assembly should not continue to make annual $100 million discretionary grants for property tax relief. Over the past two decades the General Assembly should have been adequately funding contractual PERA pension obligations instead of pumping ONE-HALF BILLION DOLLARS into local government pensions that are not the obligation of the State of Colorado, not the state’s responsibility at all. I realize that Colorado voters and the General Assembly have decimated the state’s revenue base over the past two decades, but Colorado voters cannot empower the General Assembly to violate the Colorado and U.S. constitutions. As we shall see shortly, (tomorrow maybe) even Colorado PERA administrators blame their co-defendant General Assembly for the mismanagement of PERA public pension obligations.

Now, back to the “honesty” of the organization, Colorado PERA.

The PERA Board recently submitted an appeal brief to the Colorado Supreme Court in the case Justus v. State. In my opinion, this appeal brief includes a number of attempts to deceive the Colorado Supreme Court. For convenience, I summarize this deceit below – presenting what I consider to be the ugliest of the Colorado PERA attempts to deceive the Colorado Supreme Court (apologies to those of you who are already very familiar with these PERA attempts at deception.)

The Colorado PERA “Market-Based” Pension Statistics Deception:

In their Colorado Supreme Court brief, Colorado PERA fails to identify the funded ratios they cite as “market-based” funded ratios. I believe that Colorado PERA representatives hope to misdirect the Colorado Supreme Court by diverting the court’s attention away from the “actuarial funded ratios” that PERA administrators have used historically and that are employed in SB 10-001, the subject of the current litigation.

See page 3 of this legislative memorandum for some historical perspective on PERA’s funding status:

http://www.colorado.gov/cs/Sat…

I believe that it is Colorado PERA’s intent to use “market-based” funded ratios to exaggerate the financial condition of the Colorado PERA trust funds in an attempt to bolster their case for the breach of PERA pensioner contracts. I consider Colorado PERA’s use of “market-based” funded ratios an attempt to mislead the Colorado Supreme Court, hindering its efforts to find the truth.

Note: Colorado PERA representatives should tread carefully here . . . Colorado Supreme Court rules state that “There are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.”

The Colorado PERA “COLAs as Unchangeable” Red Herring:

A second deception that I believe is present in the Colorado PERA Supreme Court brief is PERA’s continued use of its “COLAs as unchangeable” red herring from its earlier court briefs. PERA administrators and trustees know quite well that Colorado PERA pensioners have never claimed that their COLA benefits are “unchangeable,” rather PERA pensioners have objected to the REDUCTION of their contracted COLA benefits. PERA retirees suffer no harm when their COLA benefits are improved in statute.

This particular Colorado PERA tactic of deception has already been exposed by the Colorado Court of Appeals. In reversing the Denver District Court decision, the Colorado Court of Appeals specifically ordered the lower court to ignore PERA’s attempted deception.

From the Colorado Court of Appeals Decision: “We note, however, that plaintiffs contend that they have a reasonable expectation of an irreducible (not, as defendants assert, an unchangeable) COLA. Therefore, we direct the district court to consider whether there has been a substantial impairment with that in mind.” It is astonishing, but Colorado PERA still will not give up this particular line of deception.

Colorado PERA’s Implication that Current PERA Members Will Work Longer Under SB 10-001:

Representatives of Colorado PERA write in the Colorado PERA Supreme Court Brief: “Current and future employees will pay the highest rates in PERA’s history while working up to a decade longer before retirement.”

In my opinion, this Colorado PERA assertion in its Supreme Court Brief is indisputably designed to mislead the Colorado Supreme Court. Under SB 10-001, age and service requirements for PERA retirement eligibility were NOT altered for current vested employees. Age and service requirements were extended for future hires [notably, those to whom Colorado PERA has no contractual obligations]. Current PERA members will work not one day longer before retirement under the provisions of SB 10-001.

In my opinion, PERA representatives intend, in this sentence, to leave the reader with the impression that current, active, vested PERA members will work longer prior to achieving retirement eligibility under SB 10-001. That is simply untrue.

From PhillyBurbs.com:

” . . . it appears the governor will push the General Assembly to enact pension reform that impacts workers who are currently enrolled in the system.”

“Corbett said in a recent press conference that he believes it is legally possible to limit the reduction to future benefits that employees have yet to accrue.  For example, he said the ‘multiplier’ – a percentage applied to an employee’s years of service and final average salary to produce his or her retirement benefit – could be reset at a lower rate for the latter part of the employee’s career.  ‘You can cut the multiplier for folks going forward even if they (are) vested … because they still have the benefit of that period that they had the multiplier,’ Corbett said. ‘Legally, can you do that? I believe you can.'”

Governor Corbett’s proposal is a public pension reform advocated by pension scholar Professor Amy Monahan of the University of Minnesota School of Law in her paper “Public Pension Plan Reform: The Legal Framework.”

Link to Monahan paper:

http://www.ncsl.org/documents/…

(My comment: Although the Monahan proposal may not pass court muster, it is certainly a “less drastic” pension reform proposal than Colorado’s breach of the public pension contracts of current retirees in SB 10-001.  The 17 lobbyists [many representing Colorado public sector unions] who pushed SB 10-001 through the legislative process for Colorado PERA hoped to avoid proposals that significantly affected current public employees.  The lobbyists hoped to accomplish this by breaking PERA contracts with PERA retirees, and pushing 90 percent of the costs of the pension reforms onto retiree shoulders.  [Yes, these pensioners are the retired union “brothers and sisters” of Colorado’s public sector unions.]  The PERA retirees just happened to be unrepresented at the Colorado Legislature, unorganized, and paying no dues to the public sector unions.  See how the world works?  

Colorado’s public sector unions may now have the distinction of being the only public sector unions in the history of the U.S. labor movement who have so egregiously betrayed their retired union members.  I can find no comparable treachery.  As we have seen, the sponsors of SB 10-001 and PERA officials have boasted in the press many times of the fact that they targeted PERA retirees with 90 percent of the costs of the 2010 pension reforms.)

Politicians Have Created the Public Pension Mess.

“State Rep. Todd Stephens, R-151, said he’ll look at any proposal for a potential fix, but would tread slowly with any plan that cuts benefits to current employees.  ‘It’s very important to remember it’s the politicians of both parties who created this mess, not the employees,’ he said.

(A quotation from the 2010 Colorado pension reform debate: “[Senator Penry] said several members of his caucus signed on as co-sponsors to show their support for reform.  ‘Republicans and Democrats created this mess and Republicans and Democrats are offering a real solution on this,'” Penry said.)

Link to SB 10-001 co-prime sponsor Senator Penry’s comment:

http://www.9news.com/rss/story…

“Using the example of 55-year-old workers who have done his financial planning ‘based on a promise made to them,’ Stephens said it would be ‘unfair to pull the rug out from them at this stage of the game.'”

“An attorney, Stephens said he’s read court opinions that ‘really frown on changing benefits.  It would be a big mistake for us to do that and have the courts throw it out three years later.  That would put us in a bigger hole.'”

(A quotation from the Illinois pension reform debate: ” . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

Gino L. DiVito, Tabet DiVito & Rothstein LLC, Chicago, ILL)

“State Rep. Madeleine Dean, D-153, said it would be ‘wrong’ and ‘a mistake’ to penalize employees when it was the government that didn’t fully fund the system because of strong stock market returns a decade ago.”

(My comment: As we have seen recently, the Colorado General Assembly has not been paying its public pension bills this decade.  The General Assembly has typically paid only 50 to 70 percent of its PERA pension “annual required contributions [ARC],” determined by PERA’s actuaries in the last decade for the PERA State and School divisions.  Colorado PERA officials testify every year before the Legislature’s Joint Budget Committee, Audit Committee and Joint Finance Committees.  My guess is that if one listened to tapes of the 30 meetings held with these legislative committees in the last decade, one would never encounter a statement from a PERA official reminding the General Assembly of its obligations to pay the ARC, or imploring the General Assembly to meet these contractual pension obligations.  In my opinion, this failure to implore the Legislature to meet its contractual pension obligations constitutes breach of fiduciary duty.)

“Pennsylvania State Education Association President Mike Crossey criticized the Keystone Pension Report for making a ‘scapegoat of working people who have contributed to their pensions.  It was (Pennsylvania public) EMPLOYERS that paid nearly nothing into the pension systems for a decade.'”

“Crossey blamed Corbett for ‘a conscious policy decision to provide over $800 million in corporate tax breaks, including the capital stock and franchise tax and bonus depreciation credit, which cost the state $760 million – more than the projected pension debt owed” in fiscal year 2013-14.”

(My comment: As we have documented, the Colorado General Assembly [and Colorado voters in 1992] have turned the state of Colorado into a tax haven.  We have breached the state’s public contracts in spite of the fact that Colorado is the 15th wealthiest state in the nation.  We are better than this.)

Link to full article:

http://www.phillyburbs.com/new…