FoP Updates
Stapleton Case Decided; Judge Agrees with Board
The Denver Post reported on April 4, 2012, that Denver District Judge Edward D. Bronfin has decided that Colorado State Treasurer Walker Stapleton is not entitled to information he requested about the state pension system's highest-paid beneficiaries. The Judge agreed with the PERA Board's position that the Treasurer is not entitled to "unlimited, unfettered access" to the files of PERA members and benefits. Stapleton wanted data about the top 20 percent of beneficiaries, including their annual retirement benefits, retirement age, last five years of salary, employer, and zip code.
Another Bill Postponed Indefinitely
HB 1142 - the bill to expand DC plan choice to all new PERA members and all non-vested members - was postponed indefinitely this morning (March 23) in the House Appropriations Committee. The sponsor of the bill Rep. DelGrosso requested this action be taken. We are pleased that our efforts have been successful; this would have been very costly to the PERA trust fund.
In other action, HB1150 - the bill to change the HAS formula to seven years - has been assigned to the Senate Finance Committee but no hearing date has been set. This bill already passed the House. See info below.
Three Petitions for Initiatives Filed (March 12, 2012) Three petitions were filed on Friday, March 9, 2012, that could result in ballot initiatives. They include transparency of PERA information, reorganizing the Board of Trustees (reducing the Board to nine members with the state auditor and state treasurer and only two members or retirees from the defined benefit plan) and placing PERA under the administrative oversight of the State Budget & Planning Office. We will work with the Coalition for Retirement Security and provide those on email with us with more information. The petitions seek to be placed on the November 6, 2012, ballot. These would not be changes in the State Constitution but rather in state law and would be effective January 1, 2013, if passed by the electorate (totally irrational). The petitions were submitted by Karen Stauffer and Carol Baum, both of Lakewood, Colorado, and are pending a Review and Comment Hearing before the staff Legislative Council and the Office of Legislative Legal Services scheduled for March 23, 2012 at 10:00am. http://www.leg.state.co.us/LCS/Initiative
Two Bills Still in Play in House (Mar. 12, 2012)
Of nine bills introduced into the 2012 General Assembly that involve PERA in some way; five have been defeated, one was withdrawn by the sponsor, two passed the House Finance Committee on March 1, and one is pending further action in Committee. Here is the status of the bills.
House Bill 1142– DC Plan Option for PERA Members - Oppose
Sponsor: Rep. DelGrosso (R-Loveland)
Status: Passed out of HFC on party-line vote, on March 1; assigned to House Appropriations Committee; hearing on Friday, March 16 (no testimony taken so we need to email the Committee members to oppose the bill). This bill would immediately affect the fiscal security of the PERA trust funds. If fewer people were participating in PERA's defined benefit plans the existing liabilities would have to be paid by fewer people which would result in escalated employer contribution rates.
Originally, HB1142 would have expanded the option to enroll in the defined contribution plan instead of the defined benefit plan to all PERA members. Currently only new State and some new college employees may choose between DC and DB plans. HB1142 was amended in the House Finance Committee to provide choice to only new PERA members in all divisions. Testimony ran about three hours. Only the sponsor and the State Treasurer spoke in favor of the bill and seven people spoke in opposition to the bill.
There are many reasons to oppose this bill. The proponents said it was a “pro-choice” bill but testimony from a PERA retiree said it wasn’t about “choice but a national agenda to kill defined benefit plans,” despite the fact that the cost to invest/manage is three times greater with a DC plan. These legislators continue to try to whittle away at the PERA DB membership, thus the fund is negatively impacted.
Also, NO private employer provides this kind of choice between retirement plans so why should public employers be forced to do it? “Choice” adds workload (thus cost) for employers and PERA; if there is a choice, members must be educated on that choice so they can make an informed decision. Also, DC participants have no disability benefits or survivor benefits. What happens if a new member who has chosen the DC plan becomes disabled? Since PERA members do not have Social Security, this leaves a hole in the safety net.
Let your legislator know that you do not support this plan!!
House Bill 1150: Change in HAS Calculation. – Oppose
Sponsors: Rep. Priola (R-Henderson) and several other Republican representatives and Sen. Lambert (R-Colorado Springs)
Status: First hearing in the House Finance Committee was on Feb. 23. It was laid over so the sponsor could prepare amendments at the urging of the Committee chair. On March 1, Rep. Priola proposed an amendment (which passed) that applies the bill to new employees after January 1, 2013, and non-vested members only. The Bill passed out of committee on a party-line vote (7 – 6). It went to the House Floor and on March 9 was amended, deleting all non-vested members from the provision, and the bill passed 2nd reading. It was laid over on March 12. Let your legislators know that you do not support this legislation.
This change in benefits is not necessary. PERA is on its way to 100% funding with the current benefits within 30 years as a result of SB10-01. While the State Treasurer said this would help the fund because PERA would pay out less, this is bogus since it would only affect employees who retire 30 years down the road…after the fund has reached fully-funded status. The State Treasurer once again talked about how he did not think (think – no evidence or supporting data presented) that PERA could achieve 8% rate of return.
The bill reduces the retirement benefit of those it would apply to by 6% to 11% with no change in contributions. As a result, it would be likely that this drastic change in HAS would encourage new members who have a choice between the DB and defined contribution plan to choose the DC plan, thus negatively impacting the PERA State Division trust fund.
Also, we don't want to decrease retirement benefits for new hires who would already face paying more and retiring later in life because of changes made with Senate Bill 1 in 2010. We do not want to add another decrease in benefits to these new hires unless we believe it is absolutely necessary, which we don't. We believe Senate Bill 1 put PERA on the path to being fully funded in 30 years and until we see something that changes that projection we believe we need to hold this course and let Senate Bill 1 work. On the other hand, HB 1142 would immediately affect the fiscal security of the PERA trust funds.
House Bill 1179 – Change in the PERA Board Composition: We Oppose…even when the amendments come. STILL ON HOLD in Committee as of March 12 but only 24 hour notice is needed to add a bill to a hearing.
Sponsor: Rep. Jim Kerr (R-Littleton); no Senate sponsor at this time
Status: Testimony given to House Finance Committee on Feb. 23; bill was laid over at the suggestion of Committee chair Rep. DelGrosso to the sponsor that he might want to consider some amendments. In other words, there were not enough votes to get this bill passed as written. NO Amendments Announced As Of March 12.
How many times do we need to fight this bill? Testimony was given by Rep. Kerr who wants to see the underlying direction of the Board change. In so many words, he said that the Board was too “pro-defined benefit” plan. Similar bills have come up in the legislature many times before. Currently, three of the Trustees are appointed by the Governor. The bill would replace four more elected trustees with four Governor appointees, resulting in seven appointed Trustees plus the State Treasurer who is elected by the taxpayers. Thus, non-elected members of the Board would be the majority. The trust fund belongs to the membership, not the taxpayer, thus the membership should be the ones deciding who the Trustees are. One study shows that appointed-trustee Boards do not get as good a rate of return on investments as elected-trustee Boards. See below for other reasons to oppose.
The following bills have been defeated.
House Bill 1250 – Change Health Care Program Contribution Amount and Eliminate Medicare Subsidy. Opposed. Killed by sponsor.
Sponsors: Rep. Holbert (R-Parker) and Sen. Harvey (R-Highlands Ranch).
Status: Sponsor asked that the bill be Postponed Indefinitely (i.e. killed).
This bill would (a) eliminate the health care program subsidy for all with Medicare coverage, (b) change the amount employers pay to PERA from 1.02% of pay to $230 per retiree not on Medicare coverage, (c) and would eliminate all additional subsidies PERA now pays for those retirees on Medicare coverage who do not have Part A coverage. This bill would essential cause the demise of the PERACare program.
See stories in Denver Post on Feb. 23 and Feb. 24.
Senate Bill 16 – Swap for Local Government Contributions --Opposed - Killed in Senate Finance Committee on Jan. 30, 2012. Bill would let Local Government Division employers shift up to 2.5% of required payments to the employees. We oppose any swapping structure where contributions are shifted from employer to employee since they jeopardize the fiscal stability of PERA over time. Employee dollars are only worth about 80 cents of the employer dollars because employee dollars can be taken out of PERA by a member when they leave employment whereas most of an employer dollar cannot. Rather, we support the principle of shared sacrifice used in Senate Bill 1 in 2010. Swapping a sacrifice from the employer to the employee destroys the principle of shared sacrifice. The bill also created inequity among employers in that division since an employer that did not opt to swap contributions would subsidize other employers within the Division inequitably by paying more towards the unfunded accrued liability.
Senate Bill 82 – Delays Retirement Eligibility for New Hires to Social Security Ages. CCRS Opposed – Killed in Sen. Finance Committee on Feb. 7. Sponsor: Sen. Harvey (R-Highlands Ranch). SB 82 would have made employees hired after January 1, 2013, eligible for PERA retirement when Social Security allows beneficiaries to receive their first benefit. It would have changed the ability for someone to apply for reduced service eligibility – they wouldn’t be able to apply until they are old enough to receive a Social Security benefit.
Senate Bill 119 - Opposed -Concerning PERA Sustainability. Killed in Sen. Finance Committee on Feb. 7. Sponsors: Sen. Neville (R-Littleton) & Rep. Holbert (R-Parker). Bill would have required the Board of Trustees to reduce benefits anytime the unfunded liability amortization period exceeds 30 years for a division. The bill would have taken away the decision making from the General Assembly on benefits and would have damaged the ability of members to plan for a stable retirement.
Senate Bill 84 Concerning Confidentiality of Information for some PERA retirees –CCRS Opposed – Killed in Sen. Finance Committee on Feb. 14. – Sponsors: Sen. Swalm (R-Centennial) & Rep. Lambert (R-Colorado Springs). This bill would have made public the following information retained by PERA about elected officials and cabinet members: name, position held, salary amount, amount of employer and employee contributions paid, age of retirement, highest average salary, and amount of benefits paid.
Senate Bill 136 Concerning State Personnel Compensation Report – CCRS Opposed – Killed in Sen. Finance Committee on Feb. 14. This bill would have changed the annual compensation report by the State Dept of Personnel to a two-year report and include “retirement benefits” in it. There are a number of administrative reasons to oppose this bill including lack of guidance and definition of what to compare and how, lack of a fiscal note to show what the cost would be for the survey, and inability to locate a third party vendor to compare the results.
House Finance Committee
| Rep. Brian DelGross | brian@briandelgrosso.com |
303-866-2947 |
| Rep. Keith Swerdfeger | keith.swerdfeger.house@state.co.us |
303-866-2905 |
| Rep. Cindy Acree | cindy.acree.house@state.co.us |
303-866-2944 |
| Rep. Don Beezley | don.beezley.house@state.co.us |
303-866-4667 |
| Rep. Kathleen Conti | kathleen.conti.house@state.co.us |
303-866-2953 |
| Rep. Dickey Hullinghorst | dl.hullinghorst.house@state.co.us |
303-866-2915 |
| Rep. Janak Joshi | janak.joshi.house@state.co.us |
303-866-2937 |
| Rep. Daniel Kagan | repkagan@gmail.com |
303-866-2921 |
| Rep. John Kefaulas | john.kefalas.house@state.co.us |
303-866-4569 |
| Rep. Jeanne Labuda | jeanne.labuda.house@state.co.us |
303-866-2966 |
| Rep. Beth McCann | beth.mccann.house@state.co.us |
303-866-2959 |
| Rep. Dan Pabon | dan.pabon.house@state.co.us |
303-866-2954 |
| Rep. Spencer Swalm | spencer.swalm.house@state.co.us |
303-866-5510 |
Status of Two Lawsuits Against PERA(11/15/11)
Here’s a brief summary of the two lawsuits of interest filed against PERA.
- Suit filed against PERA in February 2010 by a group of retirees opposing passage of Senate Bill 1 which reduced the cost of living formula for benefit recipients: In June 2011, Judge Robert Hyatt dismissed all of the Plaintiff's claims. The plaintiffs filed an appeal with the Court of Appeals in July 2011. In his ruling, the judge agreed with PERA that the COLA benefit at the time of retirement is not a contractual benefit. Since it had been changed so many times over the last 40 years, he said no one should have expected a set amount for life. He also said the pension benefit is a contractual benefit and underlined "is" in his ruling.
- Suit filed against the Board of Trustees by State Treasurer Walker Stapleton in his effort to obtain information that the Board believes is confidential: In June 2011, Stapleton requested for details about the top 20 percent of PERA retirees based on benefit amount; he gave no reason for wanting the information; he did not request names or specific addresses but wanted former employer, benefit amount, zip code, salary, and other information. The Board directed staff not to provide the information. To assemble this information would have required many months of employees' time. PERA subsequently issued a fact sheet on retiree benefit payments that showed less than 1% of the retirees receive an annual benefit of more than $100,000 per year. This fact sheet did not satisfy Stapleton and he filed the lawsuit in District Court in September 2011. In October 2011, PERA filed a claim asking the Court to advise PERA on what member information it can lawfully provide Trustees.
State Treasurer continues assault on PERA: (11/15/11)
State Treasurer Walker Stapleton continues his assault on PERA’s defined benefit plan. His speaking schedule took him throughout the state over the summer where he gave a very one-sided, and not fully accurate view of PERA. He continues to assert that the PERA assumed investment return 8% is unattainable and ignores the PERA average of 9% over the last 25 years. In a television interview he chided PERA for having some 25% of assets in Fixed Income stating that the return would only be 2% or 3% -- he needs to check his facts: the PERA Fixed Income Return in 2010 was 7.8% and for the three year period it was 6.9% per year.
Stapleton also appeared on at least one bogus investment radio show (which was nothing more than an infomercial for an investment program) where he referred to PERA as a “Ponzi Scheme” while the host hyped annuity products that guarantee a 7% return (after taxes and investment fees).
Stapleton wants local governments to have the authority to raise the rates of their employees’ contributions to PERA, supporting a bill which died in committee during the last legislative session. The bill would allow local entities to "swap" some of their contribution costs with their employees on a city by city basis. Of course, this would be damaging to the Local Government Trust Fund integrity and stability. The value of a member’s dollar going to PERA is not as great as the employer’s dollar, since the member may refund his dollar and would only receive a portion of the employer’s dollar. The trust fund is a pooled investment and contributions by employers should be of equal value.
Why is 8 percent annual rate of return reasonable? (11/15/11)
- PERA has access to types of investments that an individual person does not, such as private equity markets, timberland, etc., which has had higher rates of return (20.9% in 2010).
- PERA is tax exempt – taxes are paid by the retiree upon receipt of the benefit, thus taxes are not reducing the PERA return.
- Some 60% of the PERA investments are managed by professional staff “in-house”, thus reducing the overall investment cost to PERA. PERA’s expense ratio is less than 0.4% total including administration and investment fees, far below most corporate investment expenses of 1% to 1.5%.
- 8% rate of return assumption is the median for public pension plans.
- For seven of the last eight years the return has been greater than 8%.
- For 14 of the last 20 years the return has been greater than 8%.
- Of 125 large public plans, about two-thirds have an assumption of at 8% or higher.
- 61 of 85 large private employer funds have investment assumptions of 8% or higher.
Some Facts About PERA – As of July 31, 2011(11/15/11)
- Total PERA membership: 478,800. (including 22,000 Denver Public Schools members who became part of the PERA in January).
- Oldest PERA benefit recipient = 106.
- 61 benefit recipients over the age of 100.
- 64% of benefit recipients are over the age of 65.
- About 2.7% of benefit recipients are under age 55.
- 2010 pension payments totaled more than $3.1 billion.
- About 90% of retirees are Colorado residents.
- Total 2010 employer contributions (often referred to as taxpayer dollars) were $798 million. So, for every employer dollar sent to PERA in 2010, the pension fund paid out nearly $4 to benefit recipients.
- About 19% of the total pension fund value came from employers (taxpayers) while 60% came from investment returns and some 21% came from the members contributions and payments.
- Total assets for all divisions equaled more than $38.7 billion at the end of 2010.
- Investment return in 2010 was 14%.
- Investment return in 2009 was 17%.
- Avg. annual investment return for 25 years = 9%.
Pension News from Around the Country (11/15/11)
- In 2011, 26 states enacted significant changes in public pension plans by June 30.
- In 2010, 21 states enacted some changes in public pension plans.
- Six states have adopted legislation changing post-retirement benefit increases that affects people already retired and active employees.
- 12 states have enacted greater restrictions on a retirees’ ability to return to work.
- 15 states reduced early retirement provisions, but only four of those affect current employees.
- 12 states enacted longer vesting periods.
- There is a trend to reducing the employer contributions and increasing the employee contributions to the pension plan.
Overview of 2011 Legislation
Legislation in 2011 was again dominated by anti-defined benefit legislators, even though most of the bills introduced have been heard before and were defeated. Here is a list of the bills and their status.
House Bill 11-1008 - Change in PERA Board Composition (later changed to HB 1248)
Sponsors: Rep. Jim Kerr (R-Littleton) & Sen. Ellen Roberts (R-Durango). This bill was identical to the bill that Rep. Kerr introduced in 2010 that was defeated in committee. PERA and FOP opposed the bill. It would have replaced 5 elected trustees with 5 appointed trustees, making the majority of trustees gubernatorial appointees and having restrictions on who could serve.
Feb. 2: Rep. Kerr introduced the bill in the House Finance Committee but withdrew it immediately stating it “could not be modified” as written. (He did not have the votes to get it passed as it was.) Later that day, he announced a replacement bill: HB1248.
March 2, the House Finance Committee voted 7-6 to send HB1248 to the House floor for consideration. This bill proposed to reorganize the PERA Board of Trustees, resulting in six appointed “outside” trustees, eight elected trustees from the PERA membership, the state treasurer, and a non-voting trustees from the Denver Public School members. The current board has three appointed appointees and 11 elected members, plus the treasurer and DPS representative.
Kerr believes that the Board should have non-PERA trustees to look after the “taxpayers investment” in PERA. Treasurer Walker Stapleton testified in support of the bill, saying, “This is not a critique of PERA’s current board. What it is about is ensuring diversity.”
A few PERA retirees and board chair Carole Wright testified to oppose the bill, saying they fear the change would politicize the Board. Apparently, that struck a chord with Rep. Spencer Swalm, R-Centennial. “The question is which composition of the board is best to resist political pressures. I’m not sure appointees are the best ones to do that,” he said. Swalm voted yes on passage of the bill but specified that was “only for now.” Rep. Keith Swerdfeger, R-Pueblo West, also voted yes and also said “only for now.” The committee spent nearly three hours hearing testimony.
March 8: The bill was scheduled for a second reading in the House but was laid over. (A third reading vote passes the bill to the Senate.)
March 11: The bill passed second reading
March 18: The bill was debated and referred to the House State, Veterans and Military Affairs Committee without a vote (apparently the proponents did not have the necessary 33 votes). Kerr is the chair of that Committee. For the next six weeks, the bill was scheduled for hearing numerous times only to be pulled off at the last minute. The Legislature ended with the bill never coming up again. (What an absolute waste of the taxpayers’ money and the legislators’ time! It takes staff time to prepare the bill, change it, cancel it, rewrite it, etc. This sponsor should be called on the carpet for wasting time and money.
Reasons We Opposed HB1248 and any bill that proposed to change the PERA Board Composition:
- State law defines the role of a trustee as a fiduciary is to serve solely in the best interests of the members and benefit recipients of PERA, the people who own the fund. When the taxpayer dollars arrive at PERA, they cease being taxpayer dollars, but are part of the trust held in common for the members and retirees. Consequently, these are the people who should decide who they want as their trustees.
- There is no evidence or example of the Board not considering the interests of the taxpayer.
- Even if there was some stake in the fund to the amount that the taxpayers contributed, that is only 20% of the fund…the other 80% comes from the investment returns and the members contributions. The Board is already comprised of 20% of the Trustees being appointed.
- How did the sponsor conclude that taxpayers would be better off? He has not shown that the elected trustees have been irresponsible or that they have made any flawed decisions or that they do not take into consideration the taxpayers of the state.
- The elected trustees do not have a conflict of interest. They do have a vested interest in the fund, and research has shown that funds with beneficiaries as trustees result in higher rates of return than when the trustees are appointed. Warren Buffet once said that it was better to have trustees on Boards who had “vested interests” because they “have got skin in the game.” They are responsible for their own investments and that of their friends and oftentimes family members.
- Over the years, the trustees have worked with the governor and legislature to reduce the contribution rate that employers pay to PERA, thus reducing taxpayer dollars going into the fund, when prudent based on the funding level of the trust. For many years in the 1980s and 1990s, the contribution rate to the pension fund by the state and schools was lower than at least 45 other states and was about 25 percent lower than the national average of private businesses in the U.S. Chamber of Commerce.
- The elected trustees are qualified, e.g. among the 11 elected trustees they hold 26 degrees. Ten of the 11 have Master’s degrees, two have law degrees, one has a doctorate and another is working on his doctorate, and one is a CPA.
- The trustees do not need to have all of the expertise they need within themselves. Rather, the Board studies modern pension portfolio management and hires experts with differing views to help them decide how to obtain the optimal rate of return.
- The investment direction of the Board has resulted in an average rate of return over the last 25 years of 9.3%, despite the difficult two periods in this decade when the investment markets had sharp downturns. Nothing the elected Trustees or any appointed trustee could do would have prevented the two periods of negative returns.
- Would having more appointed trustees politicize the Board? The law says there should be a balance between the two major parties, but it says nothing about “non-affiliated” trustees. It is quite easy to resign from a party a become an “independent”.
- Would having “so-called” experts sit on the Board result in their thinking that they do not need to use outside resources. Having a governor appoint a person who has been in banking or some other specialty does not assure us that we will get a better qualified individual than our elected trustees. Look at all of the banks and businesses that have failed in recent years.
- The elected trustees are definitely can make tough decisions that would be detrimental to themselves personally. Consider SB 1 in which the cost of living increase was eliminated for one year and greatly reduced for subsequent years.
- The provision in the bill that some of the elected trustees must be at least 15 years from retirement eligibility, meaning ages 35 or 40 in most cases, would weaken the Board by limiting who may run for the trustee position. This also smacks of age discrimination and could be a violation of the law.
- Elected trustees are not paid. Appointed trustees are paid.
- Finally, the Board does not make the decision on what the PERA benefits are or what the contribution rates will be. That is the responsibility of the General Assembly and the Governor. The taxpayers have 101 individuals who represent them, of which 2/3 are not members of the PERA defined benefit plan. So, if there needs to be balance on the Board shouldn’t there be balance in the legislature?
- We all know what the real purpose is for this bill…to weaken the Board’s representation of the members of PERA.
- The sponsor and those who have voted for this bill in committee often call for “less government” and here we have them supporting more government involvement. How ironic!
SB 11-76 – Continuation of Contribution Rate Swap Through June 30, 2012
The Joint Budget Committee proposed legislation to continue a contribution rate swap that began with Senate Bill 10-146 for one year, whereby State and Judicial members paid 2.5% of salary more to PERA since July 1, 2010, and the state has paid 2.5% of salary less. If continued for another year (FY 2011-2012), the state budget estimated saving $55 million.
SB76 was sponsored by the entire JBC with Sen. Pat Steadman (D-Denver) and Rep. Jon Becker (R- Fort Morgan) as prime sponsors. State employees again got slammed as the bill passed the General Assembly and was signed into law by the governor.
Reasons FOP Opposes: A contribution swap harms the actuarial funding of PERA because some employees will end employment each year and withdraw their contributions along with a 50 percent match. Employer contributions remain in the trust fund. Therefore, employer contributions are more valuable for funding PERA than member contributions. This bill was an actuarial loss for PERA of an estimated $6.6 million for one year. PERA also believes there are significant constitutional issues with the swap provision.
Senate Bill 11-74 - Authorizing Contribution Swap for School, DPS, and Local Government Division Employers (and any bill proposing a rate swap).
This bill was defeated in committee. It was similar to SB 76 and was sponsored by Sen. Kent Lambert (R-Colorado Springs) and Rep. Jim Kerr (R-Lakewood). The contribution swap would have been effective for one year only or for multiple years, depending on the decision of the governing board of the school district or local government employer.
Reasons FOP Opposed: The actuarial loss to PERA would total over $200 million if all employers decided to implement a permanent 2.5% of salary contribution swap. If some employers implement the swap and other employers in the same division did not (which was allowed for in the bill), that would create an actuarial subsidy in favor of employers who implement the swap. Friends of PERA opposed this bill.
Also, we all learned what shared sacrifice was during the 2010 session by accepting the changes via Senate Bill 1 that were required to make PERA sustainable. We maybe didn’t like the changes but we knew they were needed to help PERA provide its members with long-term retirement security. Now, some legislators (less than a year after passage of the shared sacrifice SB001 legislation) tried to undermine that shared sacrifice. SB 76 and 74 both meant that employees pay 2.5% more and the employers contribute 2.5% less. This isn’t shared sacrifice – it’s putting the burden all on PERA members. This amounts to a 2.5% cut in take-home pay and it undercuts the fiscal future of PERA because employee contributions are not worth as much when it comes to reducing PERA’s liabilities. Help us tell legislators that we won’t stand for a take-home pay cut that also destabilizes PERA.
Senate Bill 11-79: Authorizing Outsourcing of Classified School Employee Positions: This bill was defeated in committee. It would have required each school district with 10,000 or more students to conduct a review of its budget related to non-instructional support services (custodial, food, and bus services, grounds maintenance, printing, and technology repair) and to obtain bids from independent sources for these services. The district could have awarded a contract to the most competitive qualified bidder. Nineteen districts would have been eligible. PERA doesn’t have statistics on the number of employees in these districts who provide non-instructional services, and it is unknown how many of these positions might become private sector jobs if this bill were passed. However, PERA’s funding projections assume that the number of school members will grow slowly over time, and that growth, along with the changes enacted in SB 10-1, will pay off the unfunded liability of both divisions within 30 years. If a significant number of school non-instructional positions are filled with workers who are not PERA members, that would extend the amortization period and could reduce the long-term soundness of the School Division and DPS Division trust funds. Sponsors were Sen. Nancy Spence (R-Centennial) and Rep. Tom Massey (R-Poncha Springs).
2010 Legislation
The 2010 legislative session ended with a major PERA bill passing and several other bills being defeated.
SB 001: Gov. Ritter signed a major PERA reform bill into law on Feb. 23, 2010. The bill made many changes to PERA including increasing contributions and altering benefits. The bill was a response to a long term solution for PERA’s sustainability when the fund was faced with a large underfunding due to the dramatic investment losses as the result of the economic downturn in 2008. (Main Sponsors: Sen. Brandon Shaffer, D-Longmont; Sen. Josh Penry, R-Grand Junction, and Rep. Andy Kerr, D-Jefferson County). PERA supported this legislation as did most organizations such as FOP.
HB 1207: Defeated March 2, 2010. FOP opposed. This bill would have:
- Replaced PERA's defined benefit plan with a defined contribution (DC) plan
- Allowed current members to transfer to the DC plan
- Cut PERA funding
- Raised member contributions to 10%
- Made numerous other changes in the DB plan.
(Sponsor was Rep. Kevin Lambert, R-Longmont) CU professor Dr. Barry Paulson, a researcher for the Independence Institute, was the only individual who testified in favor of this bill. Dr. Paulson claims that PERA is too expensive for the taxpayer, even though as a CU faculty member, he received roughly 40 percent more in employer contributions to his pension plans.)
HB 1153: Defeated on Feb. 11, 2010. FOP opposed this bill. It would have changed the composition of the PERA Board of Trustees so the Board would have 8 political appointees and only six elected trustees from the membership versus the current 11 elected and four appointees/ex officio trustees.
Colorado Coalition for Retirements Security:
Friends of PERA is one of the members of the Coalition; others include Colorado WINS, CEA, and CSPERA. The Coalition lobbies the State Legislators to protect PERA member interests. See www.securePERA.org. We encourage you to sign up for their emails!
NIRS Report Reveals Role of Pensions in Reducing Poverty
Defined benefit pension income plays a critical role in reducing the risk of poverty and hardship for older Americans. Poverty rates among older households lacking pension income are about six times greater than those with such income. The study finds that pensions reduce – and in some cases eliminate – the greater risk of poverty and public assistance dependence that women and minority populations otherwise would face.