Both Plaintiffs and Defendants Appeal to Colorado Supreme Court

Plaintiffs Gary R. Justus et al and defendants State of Colorado et al have appealed the Colorado Court of Appeals decision that declared that Colorado PERA retirees have a contract that includes their annual cost-of-living (COLA) increases, albeit for very different reasons! Plaintiffs’ attorneys filed Nov. 20 and defendants’ attorneys filed the next day.

Plaintiiffs seek to have the Supreme Court decide “Whether, in a case involving public sector employees’ rights to a cost-of living adjustment (“COLA”), the Court of Appeals wrongly ruled that aspects of Police Pension and Relief Board of the City and County of Denver v. McPhail, 139 Colo. 330 (1959), and Police Pension and Relief Bd. of City and County of Denver v. Bills, 148 Colo. 383 (1961), are no longer good law because, contrary to those cases, there can be no Colorado Constitution Contract Clause violation even for persons already retired or eligible to retire so long as the defendant public entity shows that impairment of the employees’ rights is “reasonable and necessary to serve a significant and legitimate public purpose.

Defendants ask the Supreme Court to decide “( 1) Whether Colorado Public Employees’ Retirement Association (“PERA”) members have contractual rights to the cost-of-living adjustment (“COLA”) formulas in place at their respective retirements for life without change. (2) Whether SB 10-1, which adjusted COLAs to their current level of two percent compounded annually, was constitutional because it (a) did not substantially impair contractual expectations and was reasonable and necessary to ensure the pension funds’ long-term viability, and (b) was not a regulatory taking.”

That this case would eventually be appealed to the Colorado Supreme Court was both expected and sought by all parties due to the precedent that Senate Bill 10-001 created in reducing COLA contractual benefits for retirees and those eligible to retire. The two briefs filed this week can be found at www.SavePERACOLA.com/resources.

It has been two years and eight months since PERA first failed to pay its full contracted COLA to retirees. The current per cent deficit is 6.83%. Support this legal effort at PayPal by clicking   .

About these ads

133 Responses to Both Plaintiffs and Defendants Appeal to Colorado Supreme Court

  1. Al Moncrief says:

    COLORADO PERA PENSION MISMANAGEMENT CRITICIZED BY U.S. GENERAL ACCOUNTABILITY OFFICE (GAO.)

    The United States General Accountability Office (GAO) has released a report to Congress that, in part, condemns the Colorado Legislature’s failure to pay for contractual Colorado PERA pension benefits that have been enacted by the Legislature (that is, meet actuarially required pension contributions, ARC.)

    The report, “State and Local Government Pension Plans: Economic Downturn Spurs Efforts to Address Costs and Sustainability, (GAO-12-322)” also notes that the Colorado Legislature has cut “guaranteed” Colorado PERA pension COLA benefits, and that prospective public pension reform alternatives are available to public pension plan sponsors.

    Making a contractual offer to a party, failing to take reasonable steps to meet your contractual obligation while other parties act in reliance on that contract, then attempting to escape your contractual obligation . . . this is, without question, mismanagement of a public pension system.

    GAO report: The Colorado Legislature Has Increased Colorado PERA Pension Benefits Without Paying for These Benefits:

    “This was also the case in California and Colorado where pension benefit increases in the late 1990s and early in the 2000s helped drive liabilities higher.”

    Denver Post editorial page editor Vince Carroll in the July 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 . . .”

    Silver and Gold Record on Governor Owen’s “Fire Sale” bill, HB00-1458:

    “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

    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. 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? 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? Now that Colorado governments have benefited from lower labor costs as planned by Governor Owens, why should Colorado courts allow these governments to renege on their contractual offer to government workers?

    GAO report: In 2010, the Colorado Legislature Cut the “Guaranteed” Colorado PERA COLA Benefit:

    “In the case of Colorado, the state recently reduced postretirement COLAs for future, current, and retired members. According to plan documents, most plan members, who are not covered by Social Security, had previously been GUARANTEED an annual postretirement COLA of 3.5 percent, but the recent legislation eliminated the COLA for 2010 and capped future COLAs at 2 percent.”

    Legislative History of the “GUARANTEED” PERA COLA Benefit:
    March 24, 1993 (1:32 PM – 2:28 PM):

    Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature’s House Finance Committee in regard to the “automatic” PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA “adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”. Rob Gray characterizes the “automatic” PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “GUARANTEED,” “now and in the future.”

    Kim Natale, Chairman, Colorado PERA Board of Trustees, February 15, 2002; March 2002, Colorado PERA Member Update:

    “As a comprehensive retirement plan, PERA benefits are GUARANTEED for life.”

    http://www.copera.org/pdf/Newsletters/MemberUpdate3-02.pdf

    From PERA Legislative Update, February 2006:

    “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

    “PERA members hired January 1, 2007 or later, called PERA Centennial, no GUARANTEED annual increase after retirement.”

    http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

    GAO report: Prospective Public Pension Reform, (Creation of New Benefit Tiers), Takes Time, but is Effective at Reducing Unfunded Pension Liabilities.

    “As we have reported previously, provisions in state constitutions, statutes, or recognized legal protections under common law often protect pensions from being eliminated or diminished for current or retired members. Thus, some state and local governments change benefits by creating a new tier or plan that applies to new employees hired only after the date of the change, and sometimes also to newer employees who are not yet vested. It takes time for these new employees with less expensive pension benefits to become a significant portion of the workforce, delaying for a decade or more any significant reductions in plan liabilities. Over the long term, however, these benefit reductions can reduce pension liabilities and consequently lower actuarially required sponsor contributions.”

    Colorado PERA Board Trustee, Judge 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.”

    Link:

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

    Colorado PERA Executive Director Meredith Williams in the August 13, 2005, Pueblo Chieftain:

    “The liabilities of the system, frankly, will be paid out over multiple decades, and we’re talking 70 or 80 years. We’re kind of designed for the long haul and we know we’re going to experience ups and downs in the marketplace.”

    Link to complete GAO Report:

    http://www.gao.gov/assets/590/589043.pdf

    Here’s another recent report I found interesting : The Center on Budget and Policy Priorities, “Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm,” Center on Budget and Policy Priorities.

    (“The Center on Budget and Policy Priorities [CBPP] is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.”)

    CBPP report:

    “States and localities devote an average of 3.8 percent of their operating budgets to pension funding. In most states, a modest increase in funding and/or sensible changes to pension eligibility and benefits should be sufficient to remedy underfunding. (The $700 billion figure implies an increase on average from 3.8 percent of budgets to 5 percent of budgets, if no other changes are made to reduce pension costs.) However, in some states that have grossly underfunded their pensions in past years and/or granted retroactive benefits without funding them — Illinois, New Jersey, Pennsylvania, Colorado, Kentucky, Kansas, and California, for example — additional measures are very likely to be necessary.”

    (My comment, as we have seen, numerous prospective public pension reform options are available to the Colorado General Assembly. These reform options, such as the prospective reform option adopted by the Colorado Legislature last year for Colorado county government pension systems in SB12-149, are “less drastic” than the breach of fully-vested Colorado PERA retiree pension contracts in SB10-001.

    Jennifer Paquette, Colorado PERA Chief Investment Officer, in the May 22, 2011, 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.”)

    CBPP report:

    “Some states — such as Illinois, New Jersey, and Pennsylvania (and to a somewhat lesser extent Colorado, Kentucky, Kansas, and California) — have skipped or reduced deposits to trust funds and/or expanded future pension benefits without providing the commensurate funding.”

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

    Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

  2. Al Moncrief says:

    TRUTHOUT: ILLINOIS PLUTOCRATS MANIPULATE STATE BOND RATINGS TO ESCAPE PUBLIC PENSION CONTRACTS, LOWER THEIR TAX BURDEN.

    The Illinois Legislature is currently debating potential reform of its public pension systems. Like Colorado, Illinois has traditionally failed to pay its public pension bills. Like many Colorado politicians, many Illinois politicians are contemplating various means of escaping accrued public pension debt. A recent article in Truthout exposes the surreptitious efforts of those conspiring to break public pension contracts to rig the “pension default” game.

    http://truth-out.org/opinion/item/17917-bombshell-plutocrats-brazenly-collude-to-hurt-state-economies-and-screw-working-people

    Truthout:

    “These days, many Americans walk around feeling like no matter how hard they work, how much they manage to save or how carefully they plan for the future, the game is rigged against them. They suspect that behind closed doors, CEOs and Wall Street honchos are eagerly scheming to rip them off.”

    “Their worst fears of corruption and collusion just came true in Illinois, where corporate titans were caught red-handed in the act of Rigging the Game.”

    (My comment: This Truthout article exposes a representative of an Illinois business interest lobbying group, the Civic Committee of the Commercial Club of Chicago, [former Illinois Attorney General Ty Fahner] boasting of “working to scam the Illinois bond rating.”)

    Truthout:

    “Fahner has tried a number of dirty tricks to attack pensions in his career. But his most recent admission is absolutely breathtaking in its brazenness: He boasted of working to scam the Illinois bond rating.”

    (My comment: As I understand it, Ty Fahner admits [on video] that his organization has contacted the three large bond rating agencies in the U.S., Fitch, Moody’s and S&P, and encouraged the agencies to downgrade their investment ratings of Illinois state debt. Arguably, such downgrades provide ammunition to attack public pensions in Illinois.)

    Link to the video:

    http://preaprez.wordpress.com/2013/08/01/the-smoking-gun-in-this-video-the-civic-committees-ty-fahner-admits-he-colluded-with-the-bond-rating-agencies-to-destroy-illinois-pensions/#comment-35033

    Truthout:

    “During Fahner’s talk to the Union League Club, an unidentified person in the audience suggested that pressuring credit agencies to rig the state bond ratings in order to attack pensions might be a jolly good idea. Fahner gleefully replied that he had already thought about that — and his group has tried it.”

    “Audience member: ‘Maybe sometimes you gotta be irresponsible to be responsible. If a political solution really doesn’t produce a favorable outcome, maybe you really need a market solution. And a market solution, I don’t mean bankruptcy, I mean actually talking down the state rating even further so the state’s bonds essentially become below investment grade. And it drives up the borrowing cost to the state and all of us to a significant level enough that you really feel the public pressure…’”

    “Fahner: ‘The Civic Committee, not me, but me and some of the people that make up the Civic Committee… did meet with and call – in one case in person – and a couple of calls to Moody’s and Fitch and Standard & Poors, and say, How in the hell can you guys do this?’”

    “Fahner went on to take credit for downgrades to Illinois credit ratings, saying, ‘If you watch what happened in the last few years, it’s been steadily down.’”

    “Check out the video at minutes 46:30 to 49:43 for the full remarks on the ratings scam:

    Fahner: ‘Civic Committee helped jaw down state’s bond rating.’”

    (My comment: Inexplicably, the credit rating of the State of Colorado has actually been upgraded by S&P in the last decade in spite of the state’s [and SB 10-001 proponents’] claims of a PERA financial “crisis.” Colorado is in a financial crisis? Colorado’s bond ratings have been upgraded? Doesn’t make sense does it?

    S&P has upgraded Colorado’s credit rating from AA- to AA.
    Colorado’s S&P rating in 2012: AA
    Colorado’s S&P rating in 2009 and 2010 at time of contract breach: AA
    Colorado’s S&P rating during 2002 to 2006: AA-

    Link:

    http://www.pewstates.org/projects/stateline/headlines/infographic-sp-state-credit-ratings-20012012-85899404785

    Thankfully, Colorado’s PERA “financial crisis” has not yet prompted the Colorado General Assembly to propose abrogating Colorado’s contracts with corporations, or defaulting on Colorado bonds held by corporate interests [debts owed to corporations are a much higher priority than state debts owed to PERA peasants.])

    Truthout:

    “Fahner, a top GOP fundraiser, can’t abide the notion that teachers, firefighters, nurses and other public workers in the state of Illinois can still expect a decent retirement. Not a luxurious retirement, mind you — the average pension is $32,000 a year, and most state employees will not receive Social Security. But even a modest retirement for hard-working people is too much for today’s fatcats.”

    Truthout:

    “Fahner is part of a virulent strain of public raiders and economic crackpots who have become dominant in the Republican Party (and increasingly among the Democrats, too) who are hell-bent on destroying unions and attacking public employees. Ultimately they wish to privatize everything and reduce their tax responsibilities down to nothing.”

    (My comment: As we have seen in Colorado, many Colorado Democrats have also conspired to break Colorado PERA pension COLA contractual obligations. Even Colorado public sector unions have joined the plutocrats in attempting an unconstitutional taking of contracted PERA retiree COLA benefits. Of course, such a taking from PERA retirees [who no longer pay union dues] will help minimize future pension contributions from active PERA members [who do pay union dues]. Follow the money. In some states, public sector unions defend contractual public pension rights, obviously Colorado is not one of those states.

    SB10-001 was a policy error of epic proportions on the part of Colorado public sector unions. For a short-term gain, if they are successful in breaking Colorado PERA pension contracts, they will leave their members without contracted inflation protection for life. If you believe that the Colorado Legislature will not extract every red cent from the PERA trust funds to the extent permitted by Colorado courts, you are sadly mistaken.)

    Truthout:

    “That’s why Fahner has declared war on pensions and is promoting a pension crisis in order to justify it. He has called for cost of living cuts, raising the retirement age, capping pension earnings and shifting the cost of the pension obligation of teachers to local school districts, many of which are too poor ever to pay. He styles himself as a savior who wants only to protect the public from debt, when in reality he is a brutal plutocrat who will stop at nothing to line his pockets at public expense and reduce his and his friends’ taxes.”

    (My comment: As we have seen, many in Colorado have also promoted the idea of a “pension crisis” in order to justify the breach of Colorado PERA pension contracts. Obviously, in spite of the Colorado Legislature’s failure to pay its full PERA pension bill for a decade, no such PERA “pension crisis” exists in Colorado. At the time of the Colorado PERA pension contract breach in 2010, the combined funding ratio of the Colorado PERA trust funds was 69 percent. The PERA funding ratio has been as low as 54 percent in the past and yet there was no perceived “pension crisis.”

    Silver and Gold Record:

    “One attendee asked if there was any similar controversy in the 1970s, when PERA’s unfunded liability went as low as 54.7 percent. [Colorado PERA Executive Director Meredith] Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.”

    https://www.cu.edu/sg/messages/5245.html

    States that face a public pension “crisis,” states that are unable to meet their contractual public pension obligations, are not able to voluntarily pay off $700 million in local government legacy pension debt that IS NOT their contractual obligation [$142 million of this appropriation at the 2013 Colorado legislative session.]

    In Colorado, corporations have also joined the effort to claw back earned, contracted compensation from the middle class. To me, this doesn’t make sense. Corporate America could not function without the sanctity of contractual obligations. Here we have corporate lobbyists listed on the website of the Colorado Secretary of State as having supported SB10-001 in 2010, the bill that broke the contracts of Colorado PERA pensioners, a bill that takes the property of Colorado’s elderly to keep taxes low in the state with the lowest per capita state tax burden in the nation:

    Peter Kirchhof – Colorado Concern – supporting
    Janice Sinden – Colorado Concern – supporting – (http://www.coloradoconcern.com/, Colorado Concern is a business organization. Denver Mayor Hancock has selected Janice Sinden to be his Chief of Staff.)

    Link: http://www.coloradoconcern.com/index.html

    From the Colorado Concern website:

    “Colorado Concern’s membership now includes 100 CEOs and business and community leaders from across the state.”

    The Colorado Concern Board of Directors:

    “Joe Blake – Chancellor Emeritus, CSU System
    Dr. Ted Clarke, MD – Chairman and CEO, COPIC
    Steve Farber – President, Brownstein Hyatt Farber Schreck
    Pat Hamill* – Chairman and CEO, Oakwood Homes
    A. Barry Hirschfeld – President, A B Hirschfeld & Sons
    G. “Buck” Hutchison – President and CEO, Hutchison Western
    Bill Hybl – Vice Chairman, Broadmoor Hotel
    John Ikard* – President and CEO, FirstBank
    Walt Imhoff – Retired Managing Director, Stifel Nicolaus & Co.
    Walter Isenberg – President and CEO, Sage Hospitality
    Don Kortz – Chairman of the Board, Fuller Real Estate
    David McReynolds – President, Columbine Health Plan
    Larry A. Mizel – Chairman and CEO, M.D.C. Holdings, Inc.
    Kay Norton* – President, University of Northern Colorado
    Kathryn Paul – President and CEO, Delta Dental of Colorado
    Blair Richardson – Managing Partner, Bow River Capital Partners
    Dan Ritchie – Chairman and CEO, Denver Center for the Performing Arts
    Dick Robinson – Co-CEO, Robinson Dairy, Inc.
    Richard M. Sapkin – Managing Principal, Edgemark Development, LLC
    Sylvia Young – President and CEO, HealthONE”

    Truthout:

    “Illinois has real problems. However, Fahner desperately hopes the public will not catch on to the fact that states are having difficulty paying out pensions because of the lack of revenue caused by a Wall Street-driven financial crisis and the deep recession it set off, regressive taxes, and the myriad bond scams financiers have already inflicted on states, cities, towns, and municipalities which have triggered funding crises for pensions and other programs. (See ‘How Wall Street Fraudsters Plunder Public Finances, And 5 Ways to Fight Back.’)”

    “As the audience member correctly adduced, pushing down the bond rating is a great way to screw workers, the state and taxpayers. Pension funds buy bonds, often from the state, to stay financially healthy. In order for the pension fund to buy the bond, it must have a passing grade. If the grade is lowered, say from A to B, the price of the bond goes down, and the pension fund will suffer a loss. If the bond rating is dropped below a minimum standard, then the pension fund must sell the bond, and take a much bigger loss.”

    “Lowering the bond rating also has the effect of artificially inflating the interest rates that bond holders must pay on future bonds, making them more expensive to buy and reducing the state’s ability to borrow. The basic idea is to manufacture a crisis by financially starving pension funds. Fahner & Co. know this will put political pressure on Illinoisans to take away worker pension benefits.”

    (My comment: The Colorado Legislature has also manufactured its Colorado PERA pension “crisis.” It has accomplished this by habitually underfunding the PERA pension [failure to pay the ARC], cutting PERA pension contributions over the last 20 years, shifting labor costs from PERA-affiliated employers to the PERA trust funds [Bill Owens PERA service credit "fire sale,"] cutting state tax receipts beyond that even required under the TABOR amendment, ensuring that Colorado is a “tax haven,” inserting a ridiculous and unnecessary “100 percent PERA funding threshold requirement” into the PERA statutory contract through SB10-001, slashing PERA’s maximum amortization period from 60 years to 30 years [over the last 15 years,] using public resources for copious corporate welfare, and even granting access to the PERA trust funds for more corporate welfare.)

    Truthout:

    “CEOs think nothing of willingly and knowingly screwing the bond rating and economic standing of their home state in order to enact their anti-worker philosophy and fatten their own bank accounts.” “Committing economic treason against fellow citizens and taxpayers is simply a matter of course for today’s American plutocrats.”

    Truthout:

    “The state attorney general should immediately open an investigation into whether any members of Fahner’s group sold bonds before the downgrades, based on their conversations. That is plainly insider trading. Everyone who held bonds at the time of the downgrades also took a loss. Attorneys general and treasurers in other states whose portfolios took a hit should also consider suing, given that political pressure seems to have played a role in causing their losses.”

    Truthout:

    “It’s time for the trustees of the pension funds to stand up for those whose interests they are charged with protecting, and not shrug off one more crime against the public interest that reduces pensions for working people.”

    (My comment: Fat chance of PERA trustee advocacy for PERA retirees happening in Colorado. In 2010, Colorado PERA Board trustees were persuaded to support the breach of the fully-vested pension contracts of Colorado PERA retirees. The trustees used PERA trust fund assets that belong to PERA retirees to pay for political and lobbying campaigns to break those retiree’s pension contracts.

    Our Colorado PERA Board trustees are in the pocket of corporate interests. Note that the trustees have recently granted corporate access to the Colorado PERA trust funds for corporate welfare. Is the provision of corporate welfare through PERA’s “Colorado Mile High Fund” in conformance with the fiduciary obligation of the Colorado PERA Board of Trustees to act “for the exclusive purpose” of providing PERA pension benefits? How does this scheme guarantee improved investment performance for this tranche of the PERA trust funds for beneficiaries

    If Colorado businesses are so desperate for capital why do these businesses not take advantage of available historically low market interest rates? Is it simply the case that these businesses are considered too great a risk by private lenders? This risk must be assumed by the beneficiaries of a public pension fund? Public pensions should invest in businesses that the private sector won’t touch?

    If the geographical restriction of PERA Trust Fund investment options is a prudent investment philosophy will the PERA Board please explain why this policy has not been in place at Colorado PERA for decades? Why the artificial, geographical restriction of investment options is summarily rejected by securities industry professionals?

    How did the PERA Board go about determining the geographical investment boundaries that offer the greatest risk/reward potential for the investment our funds? What analysis was conducted? What advantages did Colorado’s borders offer over limiting investment of the funds to venture capital or private equity opportunities in Massachusetts? California? Australia?

    Complete PERA “Colorado Mile High Fund” propaganda available here:

    http://www.copera.org/pera/about/latestnews.htm#ColoradoFund

    Complete Truthout article available here:

    http://truth-out.org/opinion/item/17917-bombshell-plutocrats-brazenly-collude-to-hurt-state-economies-and-screw-working-people

    Support contractual public pension rights and the rule of law in Colorado. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

  3. Al Moncrief says:

    SAL PACE, THANK YOU FOR OPPOSING THE BREACH OF COLORADO PERA PENSION CONTRACTS AND SUPPORTING THE RULE OF LAW IN COLORADO!

    Sal Pace is on the right side of Colorado history. Sal Pace is an elected official who actually has integrity. Sal Pace is the future of Colorado Democratic politics.

    In 2010, when 27 hired Colorado statehouse lobbyists successfully persuaded many of his peers to trash the Colorado Constitution, Sal Pace told them to piss off. Former Colorado House Minority Leader Sal Pace (currently a Pueblo County Commissioner) deserves recognition for standing on principle while many sold out.

    In 2010, twenty-seven lobbyists attempted to force feed House Democratic Leader Sal Pace a legal contrivance that would allow Colorado governments to escape their accrued pension debts.
    Twenty-seven lobbyists preyed on the ignorance (by design) of Colorado state legislators on the question of Colorado public pension contractual rights.

    Twenty-seven lobbyists tried to coerce Sal Pace into violating his oath of office.

    He showed them the door.

    In 2010, self-interested hired guns succeeded in persuading a majority of Colorado legislators to pay off accumulated Colorado state and local government debt by taking money from elderly Coloradans . . . pushing the debts of all Colorado taxpayers onto a small subclass of Colorado pensioners.

    This act diminished our state. It was immoral. It was unconstitutional. It will not stand.

    Thanks also to the following Colorado House Democrats who refused to violate their oaths of office to uphold the Colorado Constitution in 2010: Representatives McFadyen, Merrifield, Massey, Weissman and Primavera. When the pressure was intense, you kept your integrity.

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

    The Pueblo Chieftain quoted from Sal Pace’s website in February 2010:

    “‘I voted against the proposal because I don’t believe that the problems with PERA need an immediate fix and the solutions proposed unduly placed a burden on our seniors,’ Pace said in a statement on his Web site Tuesday.

    Pace noted the high concentration of PERA enrollees in Pueblo and said projections that PERA would be insolvent within 20 years don’t take into account the possibility that the slumping economy will rebound, and that a target date for solvency of 50-60 years from now (which before SB1 had been the goal) ‘would be less onerous and more fair.’”

    http://trsbaudit.wordpress.com/

    Precisely, simply moving this “maximum amortization period” back to 60 years (where it was 15 years ago, would have taken the pressure off of the PERA trust funds. Why should we break PERA contracts to pay off PERA debts in 30 years, when these obligations are due over the next 60-70 years? (That is, 70 years, for brand new PERA hires.) Dozens of “less drastic” PERA pension reform options were ignored by the Colorado Legislature in 2010.

    2006

    SB 06-235
    - Reduced PERA’s statutorily prescribed “maximum amortization period” (MAP) from 40 years to 30 years. (In 1997, the PERA MAP was set in law at 60 years.)

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

    Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

    • Deborahapy says:

      Al Moncrief, can you explain this:

      “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?)”

      Does the current lawsuit distinguish between cola increases for actual years worked vs years of service credit bought? As one who worked for 20 years and also mortgaged our house to buy additional service credit, I had assumed that both “kinds” of years earned the exact same kind of benefit and were both included in this lawsuit.

      If this is not true, then we should address it before it is too late. Could you clarify?

      Thank you for your indefatigable pursuit of justice.

      • saveperacola says:

        The lawsuit makes no distinction between earned service credit and purchased credit. You may read all of the briefs that have been filed with the courts by clicking on the Resources tab above. PERA and Colorado have already shorted retirees over 8% of their 2013-14 monthly benefit. This lawsuit is about very large numbers of dollars that we worked for and earned. Where is the outrage from retirees? If PERA and Colorado wins (sic, they are one in the same), then they can legally reduce our 2% down to whatever the legislature wishes–even to zero %! At what point is it too much?

      • Robert says:

        I believe the point Al is making is that should our challenge fail due to “fiscal emergency” standards, then a second suit should have been filed that addressed purchased service credit only. Even a fiscal emergency should have no effect on the terms of purchased service credit agreements since that was essentially a purchased annuity.

      • Al Moncrief says:

        Hi Robert, I agree with the comment from saveperacola. The current lawsuit makes no distinction between service credit (earned or purchased) by PERA members retired at the time of the PERA contract breach. But, it’s an interesting distinction you make. The PERA retirement benefit in its totality (contracted base benefit and contracted COLA/ABI) is both an earned and purchased annuity (PERA member labor and decades of contributions.) Colorado PERA service credit, on the other hand, is of course a purely purchased annuity benefit. Is there a legal distinction between the two? They are both contractual obligations.

        Without doubt, a large number of current PERA retirees took advantage of Governor Bill Owen’s PERA service credit purchase offer, sent the state thousands of dollars, and retired based on their reasonable expectation that Colorado PERA-affiliated governments would perform under their contracts. In accordance with Governor Owen’s intent, Colorado governments benefited from the service credit sale through lower labor costs (by design, older, more expensive employees were prompted to move out of the workforce.) Now that these governmental entities have benefited under that contract, they want to renege on their obligations to other parties.

        Since Vince Carroll addressed PERA service credit purchases in his column, in my response to the Carroll column, I pointed out that both the service credit purchase provision in the PERA statutory contract, and the PERA COLA provision in the PERA statutory contract use the language “SHALL.” I had not taken it as far as you do, any retired attorneys who were PERA members care to opine?

        In 2010, lawyer/lobbyists forced a legal contrivance down the throats of Colorado legislators. Unfamiliar with Colorado public pension case law, a majority of legislators swallowed the propaganda. No drama, but this legal fiasco has truly diminished our state. It threatens the foundations of our government. Can the Colorado General Assembly simply discard protections in the Colorado Constitution when convenient? If so, what distinguishes us from countries where anarchy prevails? Hang in there. Much of the Colorado political, legal and lobbying establishment is arrayed against us. They really want to take our property.

        Al

      • Al Moncrief says:

        Robert, here is a simple way for the Colorado Supreme Court to clean up this mess. The court should grant cert, and quickly strike, as a question of law, the COLA provisions of SB10-001 (as facially unconstitutional.) The COLA is “pension,” and is a contractual obligation. The court should then encourage the General Assembly to submit an interrogatory (through Hickenlooper) seeking guidance on the constitutionality of potential pension reform alternatives.

        The Leadership of the General Assembly should send this interrogatory to the court for clarification on the following points:

        To what extent can the Colorado General Assembly increase employee contributions to address unfunded pension liabilities?

        To what extent can the General Assembly alter the PERA pension multiplier on a prospective basis? (i.e., without impacting previously accrued PERA pension benefits.)

        The General Assembly should then appoint an interim study committee that is limited to consideration of reforms that the court deems constitutionally permissible in its response to the interrogatory. (This interrogatory should have been submitted in 2009.) The General Assembly should price out these reforms using multiple independent actuaries. The General Assembly should not again relinquish its policy-making authority to outside parties. The General Assembly should enact these legal, prospective pension reforms, restoring PERA’s funding ratio to an 80 percent (well-funded) position in the coming decades, honoring existing contracts. The 100 percent threshold in SB10-001 is absurd and unnecessary.

        The fact that PERA’s funding ratio will fall during this year is irrelevant, PERA’s accrued pension debt will be paid out over the next 50-60 years. (As Judge Casebolt has informed us, PERA can pay benefits for decades with current resources.) Thoughts?

      • Al Moncrief says:

        Robert, it’s interesting that if you look at the definition of the term “base benefit” in the Colorado PERA statutes, prior COLA adjustments have been periodically included in the definition of “base benefit.” So, how can PERA argue that the PERA “base benefit” is a contracted benefit, but the COLA benefit is not a contracted benefit, when Colorado law includes prior COLA adjustments in the very definition of “base benefit”? Doesn’t make sense does it?

        FROM HB93-1324:

        24-51-101. Definitions. As used in this article, unless the context otherwise
        requires:

        (6.5) “BASE BENEFIT” MEANS THE INITIAL BENEFIT FOR A BENEFIT WHICH BECOMES EFFECTIVE AFTER MARCH 1, 1993. FOR A BENEFIT WHICH BECAME EFFECTIVE ON OR BEFORE MARCH 1, 1993, “BASE BENEFIT” MEANS THE TOTAL BENEFIT PAYABLE AS OF FEBRUARY 28, 1994, INCLUDING THE SUM OF THE INITIAL BENEFIT, ACCUMULATED ANNUAL INCREASES, AND COST OF LIVING INCREASES.

        FROM 00-1458:

        (6.5) “Base benefit” means the initial benefit for a benefit which becomes effective after [STRIKE March 1, 1993] MARCH 1, 2000. For a benefit which became effective on or before [STRIKE March 1, 1993] MARCH 1, 2000, “base benefit” means the total benefit payable as of [STRIKE February 28, 1994] FEBRUARY 28, 2001, including the sum of the initial benefit, accumulated annual increases, and cost of living increases.

        FROM SB10-001:

        24-51-101. Definitions. As used in this article, unless the context otherwise requires and except as otherwise defined in part 17 of this article: (6.5) “Base benefit” means the initial benefit for a benefit which THAT becomes effective after [STRIKE March 1, 2000] MARCH 1, 2009. For a benefit which THAT became effective on or before [STRIKE March 1, 2000] MARCH 1, 2009, “base benefit” means the total benefit payable as of [STRIKE February 28, 2001] JUNE 30, 2010, including the sum of the initial benefit, accumulated annual increases, and cost of living increases.

  4. Al Moncrief says:

    VINCE CARROLL: GOVERNOR OWENS PULLED A BONER, CONGRESSMAN COFFMAN BENEFITED.

    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.

    Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

  5. Chris Dugan says:

    “Dismantling the Social Contract:
    The Disastrous Consequences of Raiding Public Pensions”
    by DARWIN BOND-GRAHAM

    http://www.counterpunch.org/2013/07/30/the-disastrous-consequences-of-raiding-public-pensions/

  6. Al Moncrief says:

    SAVE PERA COLA FRIENDS . . . TELL YOUR STORY! HOW DID IT ALL GO DOWN? WE WANT TO KNOW THE TRUTH!

    “I have no doubt that the nation has suffered more from undue secrecy than from undue disclosure. The government takes good care of itself.” ― Daniel Schorr

    In 2010, the Colorado Legislature passed a bill that, for the most part, ignored prospective reform of the Colorado PERA pension system, and generated 90 percent of the cost savings in the pension reform bill (SB10-001) by retroactively taking up to 42 percent of contracted PERA COLA benefits. (That is, the inflation protection due under Colorado PERA pension contracts.)

    Were you involved with the development of SB10-001 in 2009/2010? Tens of thousands of Colorado PERA retirees want to know the whole story. They deserve to have the whole truth! As it stands, they only have a murky sketch of what went down in 2009/2010. PERA retirees own a good part of the Colorado PERA trust funds, and they paid into the PERA trust funds for most of their lives. They should have complete information about this bill (SB10-001) that, if unchecked, will inexorably lower the quality of their lives in order to keep Colorado taxes low. Let’s have complete transparency in Colorado government.

    (I, for one, would find the full back-story on the 2009/2010 PERA COLA-taking fascinating.)

    During debate on SB10-001, on the floor of the Colorado Senate, we heard that “this was a deal cut before this body met.” So, how was the SB10-001 “deal” cut?

    Who gets to claim credit for coming up with the original proposal to take PERA COLA benefits? Who brought the idea to the PERA Board? How did the board react initially? Who was not “on-board”? How did the PERA Board address the obvious constitutional questions? Were objections raised by PERA’s legal staff? How difficult was it achieving board unanimity? What persuaded the trustees to run with the COLA-taking plan? What objections were raised by board members? Did the idea of a prospective reduction of the PERA pension multiplier ever come up? If so, why was this idea dismissed? Did the union’s representatives resist going in that direction?

    Why did the PERA Board opt against limiting PERA reform to the creation of new tiers as was their historical practice? What options for the creation of new tiers were priced out by actuaries?
    What were the early conversations about the COLA-taking idea? Why were so many prospective public pension reform options excluded? (It was pointed out at PERA’s Denver “Listening Tour” meeting that only a few reform options on the table impacted those who actually owe the PERA debt, i.e., PERA-affiliated employers.)

    Who dissuaded Legislative Leadership from submitting an interrogatory (through Ritter) to the Colorado Supreme Court on the constitutionality of the developing SB10-001 proposal? We know that the PERA Board wanted to send this interrogatory to the Supreme Court, why were PERA’s lobbyists not able to make this happen? Did Legislative Leadership shut it down?

    How was Governor Ritter, an attorney himself, persuaded to make the COLA-taking attempt? What did he have to say about the adverse Colorado public pension case law?

    How was the decision made to hire the Dubofsky law firm to create the legal opinion rationalizing the COLA taking? Who had the idea to hire Dubofsky? Was her firm hired for legal expertise in this area of the law or for other reasons?

    How did Colorado PERA’s lobbyists (including any of Senator Shaffer’s “bad lobbyists”) go about persuading the members to support SB10-001?

    We know that certain lobbyists were assigned to target various caucuses at the Legislature, how did lobbying strategies differ for each caucus?

    Former Colorado legislators involved in SB10-001′s development, how were you lobbied? What was your role? Why were you convinced or unconvinced that SB10-001 was a real solution?
    When did Colorado PERA officials first anticipate that they would have to fight a court battle to take the COLA benefit? Why was the decision made to proceed considering the significant legal battle ahead?

    Who had the idea to put the “request” for the PERA Board to develop pension reform recommendations into SB09-282 at the end of the 2009 session? Did the PERA Board really “ask itself” to make these recommendations by having its lobbyists place that language into SB09-282? Who filed the amendment request with legislative staff? A PERA lobbyist? Senator Penry? Did a lobbyist take this idea to Senator Penry?

    Did PERA’s lobbyists coach Senator Penry on strategy to enact the SB10-001? Did they warn him against making public statements that the COLA was contractual, (happened.) Was PERA’s legal strategy to take the COLA unsettled at that point in time? Why did PERA go forward with the COLA-taking attempt if the legal strategy was unsettled? PERA officials had the Dubofsky opinion in hand, was there a debate over attempting to use “actuarial necessity,” or Dewitt? Why did we hear Senator Penry talking about “actuarial necessity” rather than Dewitt at the beginning of the 2010 session?

    Why did PERA submit a written document to the JBC stating that the COLA was a contractual obligation prior to the attempt to take it?

    Which state legislators were unhappy about having PERA run the COLA-taking show? Who originated the idea to have PERA pension reform recommendations developed outside of the Colorado legislative process? In most states, the members of the state legislature are educated about public pension administration and contractual obligations, then the state legislators actually make the policy decisions. In most states, it is the elected state legislators who debate and determine public pension policy. Why did Legislative Leadership agree to have this entire process moved outside of the Colorado legislative process? What advantages did moving the pension reform debate outside of a normal public policy-making process offer the various interested parties?

    What is special about this policy area, Colorado public pension policy, that it should be developed outside of the legislative process? Too complex for state legislators to grasp? How do other state legislatures manage to debate public pension reform options in open legislative hearings? How many arrange to have a “deal cut” with union lobbyists and then ignore all other reform options?

    How much of the ultimate 2010 PERA reform legislation was actually finalized by the Colorado PERA Board of Trustees in Executive Session?

    Former Colorado PERA staffers, remember, you were employees of a “transparent” organization. Be transparent, what’s the real story? What “deals” were cut? Who were the players in that “smoke-free” room?

    What instructions were provided to Colorado PERA’s actuaries during consideration of pension reform alternatives in 2009/2010? Why do PERA’s actuaries feel compelled to continue to point out in PERA CAFRs that the 100 percent funded ratio in SB10-001 is a “MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS”? Don’t they know that this harms the case for the bill? Did they suggest an 80 percent threshold as a more “reasonable” breach of PERA COLA contractual obligations? How was the decision reached to “go big” and seek a 100 percent funding ratio threshold in SB10-001?

    Why has the PERA Board had a practice of limiting the PERA trust fund’s funding ratio to 90 percent in the past? Was this official board policy? When was this policy scrapped? Did this board policy come up during the discussion of placing a 100 percent funded ratio threshold into the PERA statutory contract?
    Why did Meredith begin job hunting in the months after SB10-001 was enacted? Did he just need a change of scenery? Was he fully on-board with the COLA-taking plan?

    In light of his past comments supporting PERA COLA contractual rights, how was Greg Smith brought on board?

    What were the roles of Colorado’s public sector unions and the Colorado Coalition for Retirement Security in developing the COLA-taking plan?

    Why were PERA’s lobbyists unable to kill SB12-149 at the 2012 legislative session? Why were PERA’s lobbyists or staff unwilling to put a pension funding threshold into SB12-149? How was Senator Steadman able to rationalize sponsoring a bill that honored the vested contracts of Colorado county government retirees, SB12-149, after having supported SB10-001 breaking Colorado PERA retiree pension contracts?

    Who has lobbied the Legislature to finish paying off $700 million in local government legacy pension debt (Old Hire Fire and Police pensions) before the SB10-001 case is completed? Local government lobbyists perhaps?

    During the meetings at which SB12-149 was developed did Cindy Birley make the case that prospective reform of Colorado pensions under Colorado case law was much more likely to pass court muster? What compromises were PERA’s lawyers/lobbyists able to achieve in the developing SB12-149?

    I think it was critical that Colorado PERA retirees decided to defend their PERA COLA benefits in court in 2010. I see that lawyers for the City of San Jose are arguing in court that, since city employees have agreed to increases in their pension contribution rates in the past, further increases in those contributions are now permissible. The lawyers make the argument that contributions can be increased, since the employees “cannot waive a legally protected vested right.” My take-away is that public employees who do not defend their contractual pension rights in court, public employees who compromise, will eventually see lawyers for public pension plan sponsors arguing in court that those rights are not vested. What is not nailed down will be taken.

    Words of wisdom: “Sunlight Is the Best Disinfectant,” U.S. Supreme Court Justice Louis Brandeis.

    Let the world know what really happened with the 2010 Colorado PERA COLA-taking. Post the real story on the Save Pera Cola Facebook page, or post it anonymously on ColoradoPols if that is your preference, or send it anonymously to saveperacola.com. In any event, let’s have the whole unadulterated truth! We only live once, let’s seek truth while we have the chance!

    Do your part to support contractual public pension rights in Colorado, contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

    http://saveperacola.com/

  7. Al Moncrief says:

    COLORADO PERA’S EXECUTIVE DIRECTOR DROPS A LOAD OF PROPAGANDA ON THE DENVER POST.

    There is a pervasive stench about the 2010 Colorado PERA pension contract breach conspiracy.

    Where to begin?

    Today’s Denver Post (July 27, 2013) includes an editorial by the Executive Director of the Colorado PERA pension system, Greg Smith, attempting to defend the Colorado Legislature’s 2010 breach of state and local government contractual obligations.

    http://www.denverpost.com/opinion/ci_23740082/what-detroit-could-have-learned-from-pera

    Why does Colorado PERA’s Executive Director, Greg Smith, continue to defend this breach of the contracts of the State of Colorado? The organization that he represents, Colorado PERA, has more than 200 employees. Many of these employees have worked in public pension administration for decades. They know perfectly well that accrued public pension benefits in DEFINED benefit pension plans are contractual obligations of public pension plan sponsors. Unlike most members of the Colorado Legislature, many members of the Colorado PERA staff have actually read Colorado’s public pension case law, public pension legal theory, and the recent (2012) Colorado Court of Appeals ruling confirming the contractual status of Colorado PERA COLA benefits.

    These employees know that their employer, Colorado PERA, is attempting to base the breach of Colorado public sector pension contracts on a fiction, a contrivance. These employees know that the contrivance (PERA’s recently developed argument that the “automatic” PERA COLA is not a contractual obligation) . . . is a crock.

    When the boss feels compelled to regularly spout propaganda that the rank and file knows is a crock, many employees find that quite embarrassing. It embarrasses the employees of Colorado PERA, and it is embarrassing to the State of Colorado. It is embarrassing that Colorado, the 15th wealthiest state in the nation is attempting to break its contracts to minimize taxes in the state. It is embarrassing that, in 2010, a majority of the members of the Colorado Legislature, decided to try and pay off state and local debts by taking money from old people. That action was sick, immoral, unjustifiable. Public pension funds can be legally bolstered with PROSPECTIVE pension reform that does not break pension contracts, such as SB12-149 adopted by the Legislature last year. In 2010, the first choice of Colorado PERA and the Colorado Legislature was breach of fully-vested Colorado PERA retiree pension contracts.

    Why does Greg Smith continue to support the breach of the contracts of the State of Colorado? In my opinion, it’s because he simply screwed up in 2009, and now he’s trapped. He was the General Counsel for Colorado PERA before, and during the 2010 pension contract breach in SB10-001. It was his job to steer the Colorado PERA Board clear of this legal fiasco. He failed.

    When, as I suspect, one or more sharp attorneys (you know who you are) for Colorado public sector unions showed up armed with a ridiculous legal contrivance to unload the debts of PERA-affiliated employers onto PERA retirees, Smith should have stood his ground, shown them the door, warned the PERA Board of Trustees, and performed his fiduciary duty regardless of the consequences. But, it appears that he caved, and joined the conspiracy. We can’t know the extent to which Greg Smith objected to the proposed PERA contract breach prior to caving, since such discussions at the “transparent” organization Colorado PERA are conducted in Executive Session.

    Instead of shopping for a law firm (Dubofsky) that would create a legal opinion attempting to justify the taking of the contracted pension COLA benefit in early 2009, Greg Smith should have been informing PERA employer lobbyists that shoring up the pension plan may very well involve altering the rate of FUTURE accrual of PERA pension benefits, that is, the multiplier.

    But, it’s too late now. Greg Smith had his chance to aggressively defend Colorado PERA pension contracts in 2009/2010, as has been his practice historically, but instead, he appears to have joined the conspiracy. Was he forced to hop on the PERA contract breach bandwagon as a condition of employment? Did Meredith Williams begin looking for a new job shortly after the PERA contract breach in order to escape an environment where ethics were being casually tossed in the trash bin? (Meredith was seeking a job in Texas in the months following the PERA contract breach.) Did Greg see a Meredith Williams rift with the PERA Board over the breach as his opportunity to ascend to Executive Director? He just had to play along with the PERA contract breach? PERA retirees want to know the truth.

    Taking money from old people to pay off state and local government debts, breaking the contracts of people who have dedicated their lives to public service, ignoring prospective, legal pension reform alternatives that have been adopted across the nation, conspiring with union officials to minimize future contributions from their active dues-paying members (follow the money) through breach of contract, all of this is manifestly immoral.

    Let’s spread Greg Smith’s latest Colorado PERA propaganda piece from the July 27, 2013 Denver Post out on the table for dissection. This new Colorado PERA propaganda piece is entitled: “What Detroit could have learned from PERA,” and is it ever rich!

    Greg Smith in the July 27, 2013 Denver Post:

    “The PERA board’s proactive recommendation called on members to pay in more of their salaries and retirees to take modest reductions to their benefits. These decisions were painful, but necessary. PERA members and retirees shoulder 90 percent of the burden to restore PERA to financial stability and ensure a solid, modest retirement for Colorado’s public employees.

    (My comment: Incredibly, here, Colorado PERA’s Executive Director, Greg Smith, has written and published a claim that SB10-001, resulted in PERA retirees taking a “modest reduction to their benefits.” The mendacity of this claim is shocking, to the point that Smith appears to be delusional.

    Depending on the number of years that a PERA retiree remains alive, the provisions of SB10-001, illegally seize 30 to 40 percent of total, earned, accrued contracted PERA retiree pension benefits. Greg Smith is attempting to minimize the extent of the “crime” I perceive. Under SB10-001, some Colorado PERA retirees who live long enough will lose more than half of their contracted benefit. If half of Smith’s 401K balance were seized by the State of Colorado, would he find that taking “modest”?

    The Ritter Administration on the “modest reduction” resulting from the 2010 Colorado PERA pension contract breach:

    “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.”

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

    [Recall that Governor Ritter signed SB10-001 breaking PERA pension contracts.]

    I find that the “2/2/2″ descriptor that was used in Colorado PERA’s original contract breach propaganda nicely illustrates the deception that is the foundation of SB10-001. Colorado PERA’s idea of “shared sacrifice” under their “2/2/2″ plan was that pension plan contributions be increased by two percent, while PERA retiree contracted COLA benefits be diminished by 42 percent, that is, (from 3.5 percent to 2 percent.) Pension contributions raised by two percent, contracted pension COLA benefits slashed by 42 percent. Greg, PERA retirees are old, but they are not stupid.

    As PERA officials and the sponsors of SB10-001 have bragged repeatedly, 90 percent of the cost-shift in SB10-001 was pushed onto Colorado PERA retirees. Was the idea that these old people were not paying attention? Too sick or preoccupied to fight for their constitutional rights? A subclass that did not deserve equal rights under the Colorado and U.S. constitutions?)

    Greg Smith in the July 27, 2013 Denver Post:

    “It is my firm belief that other cities, states, and our national government need to take the steps we took in Colorado to ensure that all Americans have a secure retirement.”

    “It’s good public policy and, as we’ve demonstrated in Colorado, it makes sense for our economy.”

    (My comment: In my opinion, this is what we are hearing from Greg Smith, it is his “firm belief” that other cities and states need to break their public pension contracts like Colorado PERA. Contract breach is “good public policy.” Colorado PERA officials have been hoping that many other states would join them in attempting a public pension COLA theft. Where a “crime” is ordinary, the conscience of the “criminal” is assuaged.

    I also note that Greg Smith has changed his tune since embracing pension contract breach, it looks like this “good public policy” that should be emulated by other states was quite recently considered by Greg Smith to be breach of contract.

    Greg Smith in the Denver Post: “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/ci_11105271#ixzz0eEZGoxly

    Colorado PERA in a written document, to the Colorado General Assembly’s Joint Budget Committee 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/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf)

    Greg Smith in the July 27, 2013 Denver Post:

    “Coloradans are known for their willingness to step up and find solutions to problems. So, as the country was beginning to feel the effects of the recession several years ago, PERA, the retirement plan for most of Colorado’s public employees, was one of the first such plans in the country to recognize that our long-term sustainability was in jeopardy.”

    (My comment: Greg, give it up, you don’t get to break public pension contracts in a recession. Public pension contracts were upheld even during the Great Depression. Public pensioners bear no market risk in their defined benefit pension plans, for God’s sake ask your staff!

    Greg, it was not “Coloradans” who stepped up and proposed the breach of Colorado PERA pension contracts. It was public sector union officials, members of the Colorado PERA Board of Trustees, Colorado PERA pension administrators, lobbyists hired by PERA-affiliated employers looking to cut their debt, uniformed politicians, and easily manipulated politicians.

    Greg, in spite of the fact that 27 lobbyists joined forces to break Colorado PERA pension contracts in 2010, in spite of the fact that public sector unions and many members of both political parties conspired to break PERA pension contracts, in spite of the fact that many in the Colorado Legislative Branch and the Colorado Executive Branch and numerous corporate interests sought to break PERA pension contracts, just three “No” votes in the House of Representatives would have killed SB10-001. The assembled lobbying juggernaut barely squeaked out a win in the House in 2010. What does that tell you?

    It tells me that many members of the Legislature refused to casually discard their oaths of office, refused to disgrace the Legislature and the Colorado Constitution, knew what was happening (“a deal cut before this body met,”) and rightly wondered why the Legislature had abdicated its policy-making authority in this area to self-interested lobbyists, and pension administrators. Examples: Weissman, DelGrosso, Pace . . .

    All of these political, legal and lobbying resources were brought to bear and yet SB10-001 just barely squeaked through. Greg, why was it so difficult for the Legislature to adopt this “good public policy” that you refer to?

    The extent of the power of Colorado PERA’s hired lobbyists is interesting to me. PERA’s hired lobbyists conspiring with PERA-employer lobbyists were ultimately able to push SB10-001 through the legislative process in 2010 . . . some lobbying strength there. On the other hand, PERA’s lobbyists were not able to kill SB12-149, the bill that enacted PROSPECTIVE, legal public pension reform for Colorado county governments in 2012, a “less drastic” alternative to contract breach.

    Colorado PERA administrators and the Colorado Coalition for Retirement Security wanted this bill, SB12-149, postponed indefinitely, since it hurts their case for the PERA COLA pension contract breach. But, they couldn’t pull it off. This is evidence of the limits of Colorado PERA’s lobbying power.

    While we are on the subject of PERA lobbyists, please explain what the co-prime sponsor of SB10-001, Senator Brandon Shaffer, intends by labeling PERA’s lobbyists “bad lobbyists”? It would be very interesting to have full disclosure of all of the political machinations that went on behind the scenes while the SB10-001 scheme was developed, finalized and implemented. Who are PERA’s “bad lobbyists”? They got the job done, why are they “bad”?

    Senator Brandon Shaffer, co-prime sponsor of SB10-001:

    “PERA is very good at crunching numbers, but they’re terrible at getting their message out. 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.”

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

    Greg Smith in the July 27, 2013 Denver Post:

    “That’s when, in 2010, the PERA Board of Trustees recommended to the Colorado General Assembly that a plan was needed to ensure PERA’s financial health for the long term.”

    (My comment: Greg, I notice that PERA is no longer claiming that the Colorado General Assembly requested that the Colorado PERA Board of Trustees develop and present pension reform recommendations. Is this because PERA lobbyists were actually responsible for putting this “request” into statute? Did PERA lobbyists take this request to the Legislature’s Legal Services office and request that the amendment be drafted? Or, did PERA lobbyists plant this idea in Senator Penry’s head?

    I can see that, if PERA lobbyists actually originated the idea to place this “request for pension reform recommendations” from the PERA Board into statute, the claims made in PERA legal briefs that the Colorado General Assembly “mandated” such pension reform recommendations by the PERA Board appear misleading and disingenuous. Why would PERA submit such a brief to a court knowing of this misrepresentation?

    Was this all part of an effort to make the preordained breach of PERA COLA contractual obligations appear to be the result of a thorough, fair deliberative process by the PERA Board? Why did the PERA Board not insist that the Legislature conduct its own hearings and due diligence, instead of abdicating its policy-making authority? The PERA Board, administrators and union officials did not want the members of the Legislature to be educated on this topic? This would have hindered the contract breach? Who persuaded Legislative Leadership to play along?

    Greg Smith in the July 27, 2013 Denver Post:

    “This shared sacrifice between members, retirees, and employers cut nearly $9 billion in future liabilities in 2010 alone.”

    (My comment: Greg, you are an attorney. You know that a sophomoric argument for “shared sacrifice” is not a license to break contracts. Should all existing contracts in the USA be scrapped when one party expresses a desire to retroactively change contractual terms for a “shared sacrifice.” Again, a crock. If I walked into a bank and asked for a shared sacrifice, they would lock me up.

    If public sector unions had decided to break PERA contracts by taking the entire PERA COLA benefit in 2010 your “savings” might have been $30 billion. Why didn’t you choose to “save” the taxpayers $30 billion if you had the opportunity? I’m sure they would have appreciated that more than a mere $9 billion savings.

    Greg, you point out that significant savings for some parties to a contract can be achieved through breach of contract. Tremendous demand for your legal skills certainly exists among debtors in the United States.

    Greg, if a private insurance company sold your mother an annuity with a COLA provision, and later notified her that, due to the need for discretionary expenditures at the insurance company, they intended to unilaterally reduce the COLA provision in your mother’s annuity contract, I think we would see you pop a vein!

    Greg Smith in the July 27, 2013 Denver Post:

    “We now live in a world that is constantly changing, and requires us to continuously adapt to new circumstances.”

    (My comment: Well, Greg, the world may be changing, but the contract clauses in the U.S. Constitution and in the Colorado Constitution have not changed.)

    Greg Smith in the July 27, 2013 Denver Post:

    “We (PERA) are a not-for-profit economic engine that is adaptive, innovative, and consistently delivering value to Colorado’s largest workforce.”

    (My comment: Colorado PERA is not a “not-for-profit” entity. Colorado PERA is a governmental agency. Colorado PERA is an arm of Colorado state government, an “instrumentality of the state.”)

    Greg Smith in the July 27, 2013 Denver Post:

    “There are a lot of important lessons in the sad news of Detroit’s serious economic woes.” “It will take time for that city to work its way back toward recovery, but it’s hard not to think that such a crisis could have been averted if they had taken action sooner.”

    (My comment: I find it alarming that the leader of our state’s largest public pension system, Greg Smith, is not above using a distressed Detroit to bolster his Colorado PERA contract breach propaganda. Detroit’s public pensions are relatively well-funded at 87 percent and 96 percent funded levels. Detroit is trying to break its public pension contracts in bankruptcy. Detroit’s unfunded public pension liabilities represent about $2.5 billion of Detroit’s estimated, total $18 billion debt. The unfunded pension liabilities of the Detroit pension plans are due over the next 50-70 years. This debt will be paid out incrementally over many decades. It is not due tomorrow.

    “Public pensions are not part of Detroit’s problem. In fact, its public pensions are well funded – over 96 percent for the Police and Fire plan and over 87 percent for other city employees.”

    http://www.ncpers.org/Files/NCPERS%20Response%20to%20Bloomberg.pdf)

    Greg Smith in the July 27, 2013 Denver Post:

    “I can’t underscore enough the importance of this proactive, bipartisan, collective effort, especially as Detroit looks to shed its retirement obligations through bankruptcy.”

    (My comment: Greg, Detroit is a municipality, it is eligible to address pension obligations in bankruptcy. Colorado PERA is attempting to shed its pension obligations outside of bankruptcy. There is a world of difference. Detroit is in a poor financial condition, although its public pension plans remain quite well-funded. Colorado is the 15th wealthiest state in the nation. The Colorado Legislature has just completed [last session] paying off $700 million in local government pension obligations that ARE NOT the contractual obligation of the State of Colorado, while ignoring its own PERA pension debts [failing to pay the full PERA pension ARC for a decade.] The support of Colorado PERA pensions consumes three percent of all Colorado state and local governmental expenditures, such a “burden.” Further, as you know, state governments cannot file bankruptcy under federal law.)

    From the July 27 Detroit Free Press:

    “Michigan Attorney General Bill Schuette announced this morning that he will defend the state’s constitutional protections of public pensions in Detroit’s historic bankruptcy filing.”

    “Michigan’s constitution, Article 9, section 24, is crystal clear in stating that pension obligations may not be ‘diminished or impaired,’ Schuette said. As attorney general, I will defend the rights of Michigan citizens and defend the Constitution of the State of Michigan.”

    http://www.freep.com/article/20130727/NEWS15/307270059/Michigan-AG-to-defend-public-pensions-in-Detroit-s-bankrputcy-filing

    Greg Smith in the July 27, 2013 Denver Post:

    “One can’t help but wonder if Detroit had been more proactive about finding common-sense solutions for public employees, retirees and taxpayers, perhaps its future would look more like ours.”

    (My comment: To me, it looks like Greg Smith is attempting to conflate Detroit’s financial predicament, of which public pension unfunded liabilities are a small part, with Colorado’s financial condition. It appears that he does so in an attempt to somehow justify the breach of Colorado PERA pension contracts.
    Again, Detroit is a municipality attempting to alter its well-funded public pension plans in bankruptcy. Colorado is attempting to break public pension contracts outside of bankruptcy, and of course, state governments cannot declare bankruptcy under federal law.

    Is breach of contract a “common sense” solution? It sounds like a temporary solution to me, kicking the can. Is taking a third or more of Colorado PERA retiree contracted benefits a “common sense” solution? We know that the PERA contract breach was not “reasonable,” nor was it “necessary.”

    Greg, in my opinion, “your future” will include an opportunity to watch the enactment of PROSPECTIVE Colorado PERA pension reforms that you should have insisted upon before the Colorado PERA Board of Trustees in 2009.)

    Here’s a bit more from Colorado PERA’s Executive Director Greg Smith:

    Senate Finance January 29, 2010, Greg Smith:

    “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

    RMN, August 17, 2005:

    “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/

    RMN, February 21, 2004:

    “PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that’s not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.”

    PERA Trustee Casebolt at the Colorado PERA “Listening Tour,” August 11, 2009, there’s plenty of cash to pay current PERA benefits:

    “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.”

    Link:

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

    RMN, August 17, 2005, Greg Smith:

    “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: Let’s have a look at this Smith briefing paper, surely the “transparent” organization Colorado PERA will make a copy available.)

    Greg Smith at 2010 PERA Shareholder meeting – YouTube video 10-11 minutes into the video.

    “We need to know the answer of whether this action was constitutional.”

    (My comment: Then why did the Colorado PERA Board not insist that an interrogatory be sent to the Colorado Supreme Court? Would have rocked the boat?)

    Colorado PERA active and retired members, support public pension contractual rights in our state. Colorado is better than breach of contract. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

  8. Al Moncrief says:

    MONTANA RETIREE COLA-THEFT LAWSUIT PROGRESSING. COLORADO PERA RETIREE COLA-THEFT LAWSUIT CERT PETITION PENDING.

    Like contracts offered by Colorado’s largest public pension system, Colorado PERA, Montana public pension system contracts include an “automatic,” annual cost-of-living adjustment (COLA). In Montana, the automatic pension COLA benefit is called the GABA, “guaranteed annual benefit adjustment.”

    Also like Colorado, a majority of legislators in Montana have decided to try to escape the state’s public pension contractual obligations by taking the pension COLA benefit in state legislation. Although Montana’s Governor and attorneys for the Montana Legislature believe that the breach of Montana retiree pension COLA contracts is unconstitutional, Montana’s Governor opted to sign the bill taking the COLA benefit in order to enact the balance of the pension reform bill.

    In Colorado, Governor Ritter supported the breach of Colorado PERA retiree pension COLA contractual obligations in 2010 (as does Governor Hickenlooper) and the Colorado Legislature did not bother asking their own attorneys for an opinion on the constitutionality of the “pension default” bill, SB10-001. It is odd; however, that Colorado legislators are making this attempt in light of the fact that attorneys at the Colorado PERA pension system have confirmed in testimony before the Legislature that the PERA COLA benefit is a PERA contractual obligation:

    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

    COLA benefits are included in public pension contracts to slow the erosion of the purchasing power of pensioners during their remaining years. “Automatic” public pension COLA benefits are contractual obligations of public pension plan sponsors, identical to contractual COLA provisions in annuities that are sold by private insurance companies. Purchased annuity COLA benefits in the private sector:

    “One way to address this problem is by purchasing a cost-of-living adjustment (COLA) option with the immediate annuity. The COLA option increases the dollar amount of future payments to keep up with inflation, with the goal of preserving the buying power of the immediate annuity payments.”

    http://www.myretirementpaycheck.org/savings-investments/immediate-annuities.aspx

    No attorney for a private insurance company is brazen enough to argue in court that the insurance company should have the right to break contractual COLA provisions in annuities that the insurance company has sold, simply because the insurance company is a party to other annuity contracts with varying COLA provisions.

    Colorado PERA and Montana COLA benefits are “automatic” COLA benefits as opposed to “ad hoc” COLA benefits:

    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

    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 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

    State legislators in a half-dozen states have decided to attempt a breach of retiree public pension contracts:

    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

    On October 11, 2012, the Colorado Court of Appeals confirmed the contractual, “automatic” nature of the Colorado PERA COLA benefit. Colorado Court of Appeals 2012 decision in the case 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

    MONTANA RETIREES ON THE STATUS OF THEIR COLA-THEFT LAWSUIT.

    The Association of Montana Retired Public Employees, supported by Montana public sector unions, is preparing to file their lawsuit contesting Montana’s breach of public pension contracts. Here’s a link to the latest AMRPE newsletter:

    http://www.amrpe.org/wp-content/uploads/2012/12/Newsletter-May-2013.pdf

    Excerpts:

    “AMRPE needs your help. We will file a lawsuit over the provision in HB 454 that lowers the 3% Guaranteed Annual Benefit Adjustment (GABA) to 1.5% or even lower. AMRPE believes this action is in violation of the contract clause in our state and federal constitutions.”

    “House Bill 454 was introduced at the request of the Governor’s office and originally provided that employers and employees would contribute an additional 1% of salary to the fund. It also included the unallocated portion of the coal severance tax, as well as a portion of the interest earned on the coal severance tax trust fund. AMRPE was the first to propose the use of coal severance tax revenues to help the various pension funds become actuarially sound (House Bill 632 in 2011 and HB 382 in 2013 Legislative Sessions). As introduced, this session’s HB 454 assisted in making the PERS system actuarially sound. It initially did not contain provisions to modify the GABA.”

    “The AMRPE board has retained the law firm of Browning, Kaleczyc, Berry and Hoven to represent us in this important legal undertaking.”

    “While the monies from the coal tax certainly help, the bottom line is that by reducing the GABA, retirees are carrying the biggest burden in making the fund actuarially sound. This is clearly a breach in the employment contract and is constitutionally suspect.” “Your Association has decided to legally challenge the provisions of HB 454 that reduce the GABA in court, and we will need your help in doing so. We will have our day in court . . .”

    (My comment: the Montana Legislature’s taking of the GABA benefit will cost a Montana retiree with a $12,000 annual contracted pension benefit a total of $135,000 if they manage to live for the next 30 years, or $88,000 if they can only squeeze out another 25 years.)

    “Your AMRPE Board of Directors has voted to pursue litigation against the State of Montana over the Guaranteed Annual Benefit Adjustment reduction included in HB 454. The reduction harms and places the brunt of the pension fix on the backs of PERS retirees. We feel this is a direct violation of our Contract Rights specified in Montana Law, 19-2-502(2) MCA which states:

    “Benefits and refunds to eligible recipients are payable pursuant to a contract as contained in statute. The contract is entered into on the first day of a member’s covered employment and may be enhanced by the legislature. Unless specifically provided for by statute, the contract does not contain revisions to statutes after the time of retirement or termination of membership.”

    MONTANA PUBLIC SECTOR UNIONS TO SUE OVER PENSION COLA THEFT. (COLORADO’S UNIONS SUPPORTED THE TAKING OF THE COLORADO PERA COLA BENEFIT FROM PERA PENSIONERS.)

    MEA-MFT:

    “We keep getting calls and emails asking if MEA-MFT is in fact going to litigate legislated amendments seriously truncating and delaying Guaranteed Annual Benefit Adjustments or GABAs in PERS and TRS.”

    “The answer is YES!”

    “MEA-MFT is right now working with other advocate organizations representing current and future retirees on a common, comprehensive legal challenge to the legislature’s GABA attacks. We have retained counsel. We are developing compelling legal arguments. We are vetting possible plaintiffs. We will file when it is the right time to file. And we expect to win.”

    From helenair.com:

    “The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees.”

    “The state’s largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes.”

    http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

    Eric Feaver, President, MEA-MFT:

    “There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)”

    MONTANA GOVERNOR: THE COLA TAKING IS UNCONSTITUTIONAL.

    From helenair.com:

    “In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality.”

    “‘We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,’ Villa said. ‘It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.’”

    http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

    Montana pensioners:

    “The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a ‘deal’s a deal’ only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?”

    “The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA.”

    “Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees.”

    (My comment: Again, Montana and Colorado have “automatic” public pension COLA benefits rather than “ad hoc” COLA benefits.)

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    Colorado PERA active and retired members. Support public pension contractual rights in the USA. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  9. Al Moncrief says:

    DOES QUAKER HICKENLOOPER’S SUPPORT FOR THE BREACH OF PERA PENSION CONTRACTS COMPORT WITH QUAKER VALUES?

    AS A BUSINESSMAN, HOW IS IT THAT HICK DOES NOT UNDERSTAND THE CONCEPT OF CONTRACTS?

    Is just does not compute.

    Apparently, Quakers do not traditionally embrace contractual relationships, Dr. Emma Lapsansky-Werner, Emeritus Professor of History, University of Pennsylvania:

    “It is helpful to provide context by pointing out that even while eschewing formal contracts, Friends have shaped their theology and behaviors around what might be described as contractual premises.”

    http://law.hamline.edu/files/Lapsansky.Rev_..pdf

    http://www.haverford.edu/faculty/elapsans

    (Note that many branches of Friends exist today, and that belief in the sanctity of contracts, or whether one should become a party to a contract may vary among these branches. Also, in case you’re curious Wynkoop patrons, Teetotalism among Quakers is a myth.)

    Hickenlooper has identified himself as a Quaker:

    “In 2010, Hickenlooper told the Philadelphia Inquirer that he and Thorpe attend Quaker meetings and try to live by Quaker values.”

    http://en.wikipedia.org/wiki/John_Hickenlooper

    “Back on the bus, Hickenlooper credits this approach to his Philadelphia roots. ‘We go to Quaker meeting three times a week,’ he said of himself and his wife, author Helen Thorpe. ‘My great-grandparents were Quakers. And I tried to take that ethic into business. Quaker honesty, Quaker mindfulness, that effort to build community across differences. . . . I get that from my Philly background.’”

    http://articles.philly.com/2010-10-27/news/24953518_1_colorado-governor-wynkoop-brewing-denver-s-lower-downtown

    As is common among the population as a whole, my guess is that most Friends respect existing contracts and believe that the failure to meet one’s contractual obligations is immoral. But, can the traditional aversion of Friends to enter into contractual relationships help explain Hickenlooper’s lack of respect for Colorado PERA pension contracts? How does Hick’s support for the breach of the contracts of the State of Colorado constitute “Quaker honesty”?

    HICKENLOOPER: Break Colorado PERA retiree pension contracts, seize contracted, accrued, PERA pensioner benefits:

    “Hickenlooper told the group that changes two years ago seeking to sustain the Public Employees’ Retirement Association were insufficient . . .”. ‘I personally think that we probably should go further,’ Hickenlooper said. He said options the state could consider include reducing inflation adjustments for retirees, raising the retirement age for new hires and averaging employees’ last five years of earnings to determine pension payments rather than the last three years.”

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

    HICKENLOOPER ON LAST WEEK’S MIKE ROSEN SHOW: Break Colorado PERA retiree pension contracts.

    Every month, Mike Rosen has Governor Hickenlooper as a guest on his radio program. Last week, during a discussion of the public education ballot measure that may make this Fall’s general election ballot, Hick repeated his call to break Colorado PERA retiree public pension contracts (July 11, 2013 – 10:00 AM Mike Rosen Show, 20 minutes into the discussion):

    “I’m all for sitting down and figuring out the calculus of . . . at what point, if 8 percent is too high an expectation for PERA, is there a trigger at which point we say all right, then we have to lower the inflation rate of the money we pay to retirees or one of these other electric Third Rails, but what is that trigger?” “That’s a separate argument though . . .”

    Hickenlooper on the relationship of the education funding ballot proposal to PERA funding:

    “There is no lump sum subsidy of PERA anywhere in this.”

    Mike Rosen: “I didn’t say there was.”

    Link:

    http://www.850koa.com/pages/mikerosen.html

    Hick, you never wanted to be a “politician,” but you are certainly behaving like one. Why do you believe that you can break the contracts of a small group of Colorado’s residents with impunity? Are these people just part of a subclass of Coloradans who have no constitutional rights? Or, have you simply not taken the time to study public pension legal theory and case law? Have you read the work of public pension legal scholar Professor Amy Monahan of the University of Minnesota? Put some time into it prior to advocating breach of PERA pension contracts.

    HICKENLOOPER: Seizing CORPORATE property is a “taking,” how about PERA member property?

    When government regulates mineral development, Hickenlooper believes that regulation is an illegal taking of private property. When government takes property from PERA members by breaking their pension contracts, Hick thinks that’s just hunky-dory:

    “When you ban fracking, you’re telling all those people that paid their money, their savings, their investments to get their mineral rights now they’re being taken away,” Hickenlooper said to The Coloradoan. “That’s called a taking.”

    http://www.huffingtonpost.com/2013/03/07/hickenlooper-says-state-w_n_2828221.html?utm_hp_ref=denver

    2012 Colorado Court of Appeals Decision on PERA Member Property Rights:

    Last Fall the Colorado Court of Appeals reversed a Denver District Court ruling on PERA retiree’s Takings Clause claim in the Colorado PERA retiree pension lawsuit, Justus v. State. On page 36 of its decision remanding the case to the Denver District Court, the Colorado Court of Appeals restores the plaintiff’s Takings Clause claim and cites the case Lynch: “contract rights can constitute property interests protected by the Takings Clause.”

    HICKENLOOPER: Use Colorado PERA Member Trust Funds for Corporate Welfare.

    “He (Hickenlooper) said the state could raise $100 million from investors and securitize about $50 million from the Public Employees Retirement Association to provide the loans. ‘We would only use a small part of state retirement funds. It would have to be run like a business. This would provide access to capital they can’t get now,’ Hickenlooper said.”

    http://csbj.com/2010/10/13/hickenlooper-considering-tapping-pera-for-loans/

    Hold the phone, why should Colorado PERA members who own the Colorado PERA pension trust funds assume risk that the private sector won’t touch? How is it the responsibility of Colorado PERA members to meet a private financing need that is not being met by the private sector? How is it the responsibility of PERA members to provide loans to corporations in an artificially limited geographical area? How is that the highest and best use of their trust funds? Hick, do you simply not care about the property of this lowly caste of Colorado residents?

    As fiduciaries, members of the Colorado PERA Board of Trustees should have no responsibility to provide corporate welfare. Why don’t these businesses try a bank loan? Too risky for the banks?

    Colorado PERA statutes:

    “As fiduciaries, such trustees shall carry out their functions solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law.”

    Comment from saveperacola.com, Hick has an “imperious CEO mentality,” (from “Deborah”):

    “Hickenlooper appears to have little concept of the state’s legal and moral obligations to the people who have worked long and hard to provide critical services to the people of Colorado. His CEO mentality that assumes he can sweep away anything he decides upon, at our expense, is imperious, undemocratic and dangerous.”

    BUSINESSMAN HICKENLOOPER: Break the State’s Contracts.
    Hickenlooper has years of experience in business. He is successful businessman. He holds a graduate degree. He considers himself qualified to sit in the United States Senate (Ritter rejected him for Bennet.)

    “In a brief interview, Hickenlooper touted his experience as a business owner and his time as mayor as pluses for Gov. Bill Ritter to consider when weighing whom he should appoint to replace Sen. Ken Salazar, who has been nominated for secretary of the Interior Department.”

    http://www.denverpost.com/newsheadlines/ci_11292904

    Hick’s business acumen:

    “Hickenlooper has been an advocate of bringing the experience of business leaders into government service and has reached out to the business community through events which bring together executives government, education, and corporate sectors such as The IT Summit’s IT Conferences.”

    http://en.wikipedia.org/wiki/John_Hickenlooper

    “He praised Hickenlooper’s ‘lack of cynicism, his businessman’s belief that government can be honest, smaller, and still serve people.’”

    http://articles.philly.com/2010-10-27/news/24953518_1_colorado-governor-wynkoop-brewing-denver-s-lower-downtown

    “John Straayer, professor of political science at Colorado State University, said, ‘John’s business background makes the business community comfortable.’”

    http://articles.philly.com/2010-10-27/news/24953518_1_colorado-governor-wynkoop-brewing-denver-s-lower-downtown

    It just doesn’t add up. Businessmen support the sanctity of contracts. Corporate America could not function without a general acceptance of the sanctity of contracts. I am confident that, throughout his life, Businessman Hickenlooper has demanded that contracts to which he is a party be honored. Does Hickenlooper possess some category of constitutional rights that are superior to those possessed by Colorado PERA retirees?

    Not all Governors support the taking of accrued public pension benefits from elderly public pensioners. From Pennsylvania Governor (of the Quakers) Tom Corbett’s 2013 State of the State:

    “Resolving our pension crisis will be the single most important thing we do for decades to come. I will not allow any cuts to any benefits of our retirees.”

    “Let me repeat that: no cuts to any retiree benefits. They earned their retirement. They earned their guaranteed security.”

    “Nor will I allow any pension dollars already earned by any current employee to be diminished in any way.”

    http://www.governing.com/news/state/pennsylvania-corbett-2013-speech.html

    Republican 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

    Even the Terminator knows that public pension contractual obligations cannot be unilaterally terminated. Republican Governor of a state with serious financial problems, California Governor Schwarzenegger, January 6, 2010, State of the State address: “Now, for current employees these pensions cannot be changed, either legally or morally. We cannot break the promises we already made. It is a done deal.”

    As we have seen, the State of Colorado has not paid its bills for a decade; instead, the Colorado Legislature has placed expenditures for state programs on a “credit card.” The Colorado Legislature has funded state programs for the last ten years by borrowing from the state pension trust fund, Colorado PERA.

    But, the Colorado PERA pension trust funds are not the property of the State of Colorado. These trust funds are owned by the beneficiaries of the trust, active and retired workers who have paid into the PERA pension system. Having failed to pay its Colorado PERA pension bills, and racked up its debt, the Colorado Legislature is seeking to push this debt onto others. Apparently, Governor Hickenlooper would like to join a majority of Colorado legislators in this effort. In 2010, the Colorado Legislature enacted a bill SB10-001, that breaks Colorado PERA retiree pension contracts, taking their earned, accrued, “fully-vested” public pension benefits to pay off the state’s debt.

    Colorado PERA active and retired members, we live in a state where many representatives of the Executive and Legislative branches do not respect our contracts, or our property. They ask that the Judicial Branch of Colorado state government join them in setting aside the contract clauses of the Colorado and U.S. constitutions. They ask that the debts of the State of Colorado be shifted onto the backs of a relatively small group of the state’s elderly.

    We have arrived at this point. Only the Judicial Branch of the State of Colorado has the power to preserve justice in our state. Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  10. Al Moncrief says:

    HOW DO UNIONS RESPOND TO THE BREACH OF PUBLIC PENSION CONTRACTS?

    OREGON AFSCME: “WE’LL SEE YOU IN COURT.”

    COLORADO AFSCME: WE’LL HELP YOU BREAK OUR FORMER MEMBER’S PENSION CONTRACTS.

    In 2010, Colorado AFSCME officials supported SB10-001, a bill that took accrued, “automatic” public pension COLA benefits from their retired union “brothers and sisters,” breaking these retiree’s pension contracts. Note that retired union members pay no union dues, and the breach of retiree pension contracts can reduce the level of pension contributions needed from active union members. Does this explain Colorado AFSCME’s support for the breach of public pension contracts in SB10-001? If so, is this an acceptable public policy position, supporting the breach of the contracts of former union members to minimize costs for current members? From my perspective such a policy is patently immoral.

    Colorado AFSCME’s support for the bill that broke Colorado PERA retiree pension contracts in 2010 is recorded on the Colorado PERA website at the following link:

    “In Colorado, Senate Bill 1 passed with the support of . . . AFSCME Colorado . . .”.

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

    On October 11, 2012, the Colorado Court of Appeals confirmed the contractual, “automatic” nature of the PERA COLA benefit. Colorado Court of Appeals 2012 decision in the case 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

    So, how have Oregon AFSCME officials responded to a recent breach of the pension COLA contracts of their retired union brothers and sisters? We see Oregon AFSCME filing a lawsuit to protect the accrued, contracted, pension COLA benefits of retired union members.

    What do Colorado AFSCME and Oregon AFSCME have in common? Does the parent organization for AFSCME lack uniform standards for supporting the contractual rights of their union members? Is it acceptable to the AFSCME parent organization that one union local aggressively protects public pension COLA contracts, while another union local supports legislation taking contracted pension COLA benefits?

    It should be noted that 90 percent of the cost-shift in the 2010 legislation, SB10-001, was directed at Colorado PERA retirees in the PERA pension system. Colorado PERA officials were asked during their 2009 “Listening Tour” campaign (seeking to break PERA contracts) why the pension reform options under consideration placed such an enormous burden on the parties who DO NOT OWE the pension debt (retirees), rather than on the PERA employers who actually DO OWE the pension debt.

    Oregon AFSCME:

    ‘WE’LL SEE YOU IN COURT’ — Our own inimitable Mary Botkin had the quote du jour June 27 in her testimony on SB 857 before the Senate Finance and Revenue Committee. After Gov. John Kitzhaber and several business groups testified in favor of the measure that would take another chunk out of PERS members, Botkin, Council 75′s longtime PERS lobbyist, led the opposition. Her blunt assessment — “We’ll see you in court” — was picked up by the Associated Press and appeared in newspapers and other media outlets across the state.

    [Botkin’s assessment was spot on, because the PERS Coalition’s legal challenge to SB 822, the initial PERS ‘reform’ legislation passed early this session, was filed Monday (July 1).”

    http://www.oregonafscme.com/?zone=/unionactive/view_page.cfm&page=E2Dlerts

    From oregonafscme.com:

    “AFSCME and the PERS Coalition have filed suit with the Oregon Supreme Court to overturn Senate Bill 822, the PERS reform legislation passed earlier this year by the 2013 Oregon Legislature.”

    “While the lawsuit was filed on behalf of 13 specific plaintiffs, any decision rendered by the court would impact all PERS members.”

    “SB 822 addressed two main issues that AFSCME is fighting. The measure dropped retirees’ annual cost-of-living adjustments, or COLAs, from a straight 2 percent across-the-board to a four-tier system that sees retirees receiving 2 percent for their first $20,000 of retirement income, 1.5 percent for the next $20,000, 1 percent for the following $20,000 and 0.25 percent on any PERS retirement income above $60,000. SB 822 also removes a tax offset for retirees who live out-of-state.”

    “PERS Coalition lead attorney Greg Hartman says the underlying basis for the legal challenge is that the Legislature both impaired and breached retirees’ contracts via SB 822, under both state and federal constitutional guarantees. Simply put, you can say that the legislation is ‘unconstitutional,’ that it’s an ‘impairment of contract’ or that it’s a ‘breach of contract’ — all three terms are correct in this instance, said Hartman.”

    “The 120-page lawsuit document seeks 12 different ‘claims for relief’ ranging from both impairment and breach of contract under the Oregon and United States constitutions to ‘unauthorized takings.’”

    “Hartman says while the filing document may be complex, the underlying premise is simple. ‘A promise is a promise,’ says Hartman. ‘In this case, it’s a contract promise. Members were told that if you accept this employment offer and fulfill your end of the bargain, this is what you’ll get in return. The employees did their part, and now the state is forcing PERS to renege on their part. That’s what this is all about.”

    “SB 822 contained a provision that directed any legal challenge immediately to the Oregon Supreme Court, thereby shortening the amount of time needed for a decision. Even so, it will likely be 18 to 24 months before the high court issues its verdict.”

    http://www.oregonafscme.com/index.cfm?zone=%2Funionactive%2Fview_article.cfm&HomeID=295779

    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

    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 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

    AFSCME’S PARENT ORGANIZATION SUPPORTS CONTRACTUAL RIGHTS TO “AUTOMATIC,” ACCRUED PUBLIC PENSION COLA BENEFITS . . . SO, WHY IS COLORADO AFSCME SUPPORTING THE BREACH OF PENSION COLA CONTRACTS?

    Note that AFSCME’s national, parent organization has a clear position on the contractual nature of “automatic” public pension COLAs. On September 17, 2010, AFSCME sent a letter (Letter of Comment #103) to the Governmental Accounting Standards Board (GASB) addressing proposed changes to state and local public pension accounting and financial reporting. The AFSCME “comment letter” is available here:

    http://www.gasb.org/cs/ContentServer?site=GASB&c=Page&pagename=GASB%2FPage%2FGASBSectionPage&cid=1176157376653

    Here are a few excerpts from the letter that I find particularly pertinent to the Colorado General Assembly’s attempted taking of the contracted PERA retiree “automatic” COLA benefit:

    “AFSCME agrees with the GASB view expressed in Chapter 2: ‘that for accounting and financial reporting purposes, an employer has an obligation to its employees for pension benefits by virtue of the employment exchange, and this obligation is not satisfied until the defined pension benefits have been paid to the employees or their beneficiaries when due.’”

    “Our disagreement arises where GASB intends to project the cost of ad hoc COLAs. The reason pension plans utilize ad hoc COLAs, as opposed to automatic COLAs, is so that they can make a decision about whether or not the COLA can be funded on a regular basis.”

    (My comment: Here AFSCME recognizes the distinction that is made in public defined benefit pension administration between “ad hoc,” i.e., “discretionary” COLA benefits and “automatic” pension COLAs, i.e., COLA benefits that are a contractual obligation of public pension plans and their employer-affiliates.)

    “We also have concerns with the added subjectivity that arises when determining whether facts and circumstances exist to conclude that ad hoc COLAs are not substantively different from automatic COLAs. Actuaries and accountants should not be required to guess at future employer decisions.”

    (My comment: If one skims through all of the comment letters that have been sent to GASB on this subject of state and local public pension accounting and financial reporting it is interesting to note that there is no debate at all regarding the contractual obligations of public pension plans and their employer-affiliates to pay “automatic” pension COLA benefits. The debate in these GASB comment letters surrounds the degree to which public pension plans are contractually obligated to meet long-standing “ad hoc” pension COLA promises and expectations.)
    This GASB comment letter was submitted by:

    “Steven Kreisberg, Director of Collective Bargaining and Health Care Policy, AFSCME.”

    From seattlepi.com:

    “Ore. public employee unions challenge pension cuts.”

    “As expected, public employee unions have filed a legal challenge to the Oregon Legislature’s effort to cut benefits for retired public employees.”

    “The Oregonian reports (http://bit.ly/12HuHYd) that a coalition of unions has petitioned the state Supreme Court to review Senate Bill 822, which has been signed by Gov. John Kitzhaber.”

    “The bill reduces cost-of-living increases for people who get benefits under the Public Employee Retirement System.”

    http://www.seattlepi.com/?controllerName=search&action=search&channel=news&search=1&inlineLink=1&query=%22Public+Employee+Retirement+System%22

    From oregonlive.com:

    “PERS cuts challenged by Oregon union coalition.”

    “The first legal challenges have been filed against the Oregon Legislature’s effort to cut benefits for retired public employees.”

    “A coalition of public employee unions has petitioned the state Supreme Court to review Senate Bill 822, which passed both chambers and has been signed by Gov. John Kitzhaber. Two retirees who now live outside the state also have asked for a review.”

    “The bill reduces cost of living increases for people who get benefits under the Public Employee Retirement System. It also cuts benefits for PERS members who live out of state and don’t pay Oregon income taxes.”

    “The main challenge, filed by Portland attorney Greg Hartman, contends the changes amount to an unconstitutional breach of contract. It asks the court to appoint a special master to hear evidence and make fact-findings for the court to review. It further asks the court to declare SB 822 unconstitutional in part or in its entirety.”

    http://www.oregonlive.com/politics/index.ssf/2013/07/pers_cuts_challenged_by_oregon.html#incart_river_default#orpol#orleg#pers

    From NW News network:

    “Attorney Greg Hartman filed the suit on behalf of 13 current and past employees of state and local governments in Oregon. He says the public pension cuts signed into law in May violate the Oregon Constitution. ‘When the legislature made a contract, they stated very specifically in the statute that people were entitled to get a COLA, a cost of living increase, in a certain amount.’”

    “The new pension law cuts that amount for people with annual pensions above $20,000. Lawmakers said the cuts were needed to reduce expensive pension costs for state agencies, schools and local governments.”

    “Separately, two other retired public employees have also filed lawsuits to overturn the law.”

    http://nwnewsnetwork.org/post/union-backed-lawsuit-seeks-overturn-pension-cuts

    Incredibly, Oregon state legislators (in breaking public pension COLA contracts) ignored the advice of their own attorneys. Prior to acting, the Oregon Legislature requested an opinion on a proposal to take back accrued public pension COLA benefits from their in-house legislative attorneys, the Oregon Legislative Counsel. Here is the February 4, 2013 response of Oregon’s legislative attorneys:

    “You asked about the legality of a proposal to limit the cost-of-living adjustment (COLA) to service retirement allowances of retired members of the Public Employees Retirement System (PERS) by applying the COLA only to the first $24,000 of annual benefits. The proposal would amend ORS 238.360, which has long required that PERS make annual adjustments to service retirement allowances based on changes to the cost-of-living as reflected in the Consumer Price Index.”

    “Based on recent Oregon Supreme Court precedent, we conclude that an attempt to limit the COLA in this way would be found to be a violation of the contract rights of the members.”

    “The Oregon Supreme Court has found several times that the 1953 law establishing PERS created a contract between public employers and public employees.”

    “The court stated several times in Strunk that there is a contract right to the COLA. For example, the court found that:

    ‘We note that the status of the law is particularly clear with regard to retired members, and there can be little question that the COLA is a fully accrued benefit for a member who has retired.’”

    Here is a link to the complete February 4, 2013 opinion of the Oregon Legislative Counsel:

    http://media.oregonlive.com/politics_impact/other/LC%20Opinion.pdf

    Colorado PERA active and retired members, help put an end to the cavalier treatment of your PERA pension contracts by politicians, pension administrators and public employers. Defend public pension contractual rights and the rule of law in Colorado by contributing at saveperacola.com. “Friend” Save Pera Cola on Facebook!

    • saveperacola says:

      Mr. Moncrief is certainly correct in the contrasts with union support in Colorado he presents here. But there is one hidden and sinister aspect of the Oregon law that will affect all retirees (if they live long enough), even those receiving less than $20,000 per year. Over time, even the meager 2% per year increases will push retirees into the next tier and subject them to the lower percentages in that tier. Example: A retiree receiving just $12190 per year now will enter the next tier of a 1.5% annual COLA in 25 years (12190*1.02 raised to the 25th power.) A retiree receiving $17760 per year now will enter the next tier in just 6 short years. This hidden penalty will affect most current and future retirees, unless the formula is adjusted for inflation in the law. Colorado has a similar sinister formula in that the 1.5% reduction per year(from 3.5% to 2.0%) is both cumulative and compounded. Since 2010 and as of July 31, 2013 the Colorado PERA reduction has cost retirees 8.63% of their monthly benefit for July 2013-2014. This is perhaps why Mr. Moncrief repeatedly uses the phrase “COLA theft” in his comments.

  11. Al Moncrief says:

    THE COLORADO LEGISLATURE’S BREACH OF STATE CONTRACTS IN 2010 “SHOCKS THE CONSCIENCE.”

    PROFESSOR MONAHAN RELEASES NEW PAPER, “Understanding the Legal Limits on Public Pension Reform,” May, 2013.

    Professor Amy Monahan is the preeminent legal scholar in the United States on public pension contracts. “Amy Monahan is a professor and the Solly Robbins Distinguished Research Fellow at the University of Minnesota Law School.”

    In 2010, a majority of the members of the Colorado General Assembly voted to unilaterally change the terms of the statutory Colorado PERA pension contract, taking hundreds of thousands of dollars of total lifetime pension benefits due Colorado PERA retirees under their “fully-vested” PERA pension contracts. That year, a majority of the members of the Colorado Legislature were persuaded by lobbyists representing PERA employers (who actually owe the accumulated PERA pension debt) to eliminate 42 percent of COLA benefits PERA retirees are to receive under their Colorado PERA pension contracts. In 2010, lobbyists persuaded a majority of the members of the Colorado Legislature to push 90 percent of the costs of their PERA “reform” bill onto a small group of the state’s elderly.

    Colorado is a quite wealthy state. Colorado can afford to pay its debts. It is simply the case that many politicians and taxpayers in Colorado do not want to pay the state’s debts. Political careers are not built on reminding voters that they must meet the state’s accumulated debt obligations. Many Colorado politicians prefer breaking state contracts, and manufacturing legal contrivances as a means to escape legitimate Colorado public sector debts. They prefer taking money from Colorado PERA retirees who gave their lives in public service in order to avoid raising a fair and reasonable level of revenues to pay for public services already consumed (deferred PERA pension compensation). The Colorado legislative process is controlled by lobbyists to the extent that a majority of state legislators can be persuaded to support unconstitutional and immoral legislation. The bill that broke Colorado PERA retiree pension contracts in 2010 (SB10-001) is proof that lobbyists at the Colorado Legislature have the ability to persuade the members to violate their oaths of office. Only the Judicial Branch of Colorado government has the power to preserve justice in our state.

    The outright, brazen, unabashed breach of Colorado government contractual obligations in 2010 represents one of the most immoral and egregious acts in the history of the Colorado General Assembly, truly “shocking the conscience.” Colorado PERA retirees ask only that their legal rights under the Colorado Constitution be upheld.

    Decent Coloradans who support the rule of law are appalled by the Colorado General Assembly’s breach of public pension contracts in 2010. Decent Coloradans look at Colorado PERA’s public relations, political, and legal campaigns to abrogate state contracts and rightly feel disgust. Thus, it is not surprising to find the target of SB10-001, Colorado PERA retirees, suing the State of Colorado and demanding restoration of their rights under the Colorado and U.S. constitutions.

    Over the last few years, Colorado PERA retirees have gathered evidence revealing the rotten foundation upon which SB10-001 rests. Colorado PERA retirees have refuted the reams of PERA propaganda that was used to take contracted retiree pension benefits in 2010. Colorado PERA retirees have studied germane Colorado public pension case law and legal theory. PERA retirees have spent many hours with the following legal analyses of Professor Monahan:

    “Statutes as Contracts? The ‘California Rule’ and Its Impact on Public Pension Reform,” (Iowa Law Review article.)

    http://www.law.umn.edu/facultyprofiles/monahana.html

    (In this paper, Professor Monahan notes that the Colorado Supreme Court [and 12 other states] have adopted the “California Rule” as controlling in the establishment of contractual rights to public pension benefits.)

    “Public Pension Reform: The Legal Framework.”

    Professor Monahan: “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.law.umn.edu/facultyprofiles/monahana.html)

    Recently, (in May of 2013) Professor Monahan published yet another public pension legal analysis:

    “Understanding the Legal Limits on Public Pension Reform.”

    https://www.dropbox.com/s/cvzed3lmwt8t8v2/Understanding%20Pension%20Reform.pdf

    (I doubt that any members of the Colorado Legislature read Monahan’s work prior to voting to break Colorado PERA retiree pension contracts in 2010.)

    Colorado PERA-affiliated employers and Colorado PERA retirees are parties to a pension contract that provides a total defined benefit composed of a “base benefit” and an annual pension “escalator.” Under the terms of the Colorado PERA pension contract, at retirement, annuitants receive a significant percentage of their final salaries and an annual adjustment that happens to match Colorado PERA’s current, long-term inflation assumption. Hypothetically, if the Colorado PERA pension contract included terms paying a relatively low initial pension “base benefit” at retirement accompanied by a high fixed, “automatic” COLA escalator, then 90 percent of the total PERA pension benefit would derive from the COLA provision. Under such circumstances, would Colorado PERA’s attorneys argue that Colorado governments should be free to ignore their contractual obligations and take 90 percent of the value of a Colorado PERA retiree’s contracted retirement benefit by unilaterally slashing the COLA?

    No lawyer could make this argument with a straight face . . . that the State of Colorado should have the right to retroactively take 90 percent of a retired worker’s pension after they have completed 30 years of work for the state and made 30 years of uninterrupted PERA pension contributions, performing their obligations fully under their PERA pension contracts. If the State of Colorado were allowed to take such an action, the PERA pension contract would be meaningless, and the Colorado Constitution would be meaningless.

    So, why are Colorado PERA’s lawyers arguing that the State of Colorado should have the right to claw back 30 percent, or 40 percent of a retired worker’s total contracted pension benefit after it has been earned? Why are Colorado PERA’s lawyers arguing that the State of Colorado should be empowered to unilaterally slash 42 percent of a PERA retiree’s contracted inflation protection?

    Provision of an “automatic” public pension COLA in a statutory pension contract benefits members of the pension financially at retirement, just as they benefit financially from statutory terms providing the pension “base benefit.” A public pension automatic COLA is simply a means of delivering the total, contracted public pension benefit to a worker at retirement.

    Few attorneys for private insurance companies would bother arguing in court that their employer, the insurance company, should be able to ignore its contractual obligation to pay a contracted COLA in an annuity that the insurance company had sold. Do we see attorneys for private insurance companies arguing in court that, since the insurance company has sold many annuities in the past, and entered into many annuity contracts with COLA provisions, that the insurance company has the right to unilaterally reduce the contracted COLA rate in all contracts to which it is a party? Apparently, only attorneys representing public sector entities are so brazen as to suggest that courts sanction such self-serving, ridiculous contrivances. (I imagine that many of them can scarcely believe that they spent years in law school only to be compelled, as a condition of employment, to make preposterous and misleading arguments before a court of law.)

    Below, I provide a few excerpts from Professor Monahan’s new paper, “Understanding the Legal Limits on Public Pension Reform,” and my comments:

    Professor Monahan:

    “In place of the ‘gratuity’ approach, courts have, for the most part, adopted one of two legal theories to protect public pension benefits: the property interest approach or the contract approach.”

    (My comment, Marcucci [of the National Association of Public Pension Attorneys]: “Does your jurisdiction have an anti-gratuity clause in its constitution? If so, then almost by default there needs to be a contract component to pension benefits.” The Colorado Constitution’s “anti-gratuity” clause: Article 5, Section 34 of the Colorado Constitution prohibits the Colorado General Assembly from using public funds “for benevolent purposes to any person.” If the PERA COLA is a gratuity, it is unconstitutional.)

    Professor Monahan:

    “This policy brief will provide an overview of the various approaches that states take to protect public employee pensions, discussing first the protections that apply to employees who have not yet retired and then those that apply to already-retired employees. It concludes with a look at recent litigation in several states challenging public pension plan changes.”

    Professor Monahan:

    “The ability of state legislatures to make changes to the pension benefits of current employees varies dramatically by state. In some states, changes are relatively unrestricted, while in other states no detrimental changes can be made to either past or future accruals unless such changes are the least drastic means of achieving an important policy goal.”

    (My comment: On May 16, 2012, the Colorado General Assembly enacted a bill that represents one of dozens of available “less drastic” public pension reforms. The General Assembly enacted SB12-149, reforming certain Colorado county [administrative arms of the state] public pension systems and honoring the accrued public pension benefits of public sector workers who are members of those pension systems. The General Assembly adopted this PROSPECTIVE legislation two years after having retroactively taken accrued public pension benefits from Colorado PERA retirees.)

    Professor Monahan:

    “As a general rule, changes that are purely prospective (changes that affect not what an employee has already earned but solely what he will earn through future service) invite less judicial scrutiny than changes that affect an employee’s already-earned and vested benefits because prospective changes are considered less substantial impairments than changes to accrued benefits.”

    Professor Monahan:

    “Property Approach. To the extent that an employee’s rights in a public pension plan are considered property, those rights are protected under the 5th and 14th Amendments to the US Constitution from deprivation without due process of law.”

    (My comment: Both the U.S. and Colorado constitutions make public pension benefits a constitutionally protected property right. Due process requires the right to present evidence. Since, to date, Colorado courts have not permitted the case, Justus v. State, to go before a jury, Colorado PERA retirees have not been afforded this constitutional right to due process.)

    Professor Monahan:

    “Contract Approach. In many states, an employee’s right to public pension benefits is considered contractual, and therefore is protected against substantial impairment under both state and federal constitutions. This protection is provided by the Contract Clause of the United States Constitution, which states, ‘No State shall . . . pass any . . . Law impairing the Obligation of Contracts.’ Most state constitutions contain substantially similar language. As a result, once a court finds an employee’s right to her public retirement benefits to be contractual, it is generally unconstitutional for a state to take any action that substantially impairs the employee’s benefits.”

    (My comment: The Ritter Administration on substantial impairment of PERA retiree pension contracts [in a letter to the federal pension regulator GASB]):

    “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.”

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

    Professor Monahan:

    “In the pension context, courts typically find any decrease in the amount of retirement benefits to be a substantial impairment.”

    Professor Monahan:

    “In some states, the contract is considered to be formed on the employee’s first day of employment, thereby protecting the employee against any detrimental changes in her pension plan benefits from the moment she begins work. At the other end of the spectrum are states that find a contract to exist only once the employee has retired and begun receiving benefits under the plan.”

    Professor Monahan:

    “Somewhere in the middle are states that find a contract to exist once an employee has satisfied the minimum service requirements to receive a pension.”

    Professor Monahan:

    “In these states, courts are left to infer whether the legislature intended to create a contract when it passed laws granting public employees’ retirement benefits. They do so by examining the facts and circumstances of the case and often conclude that by providing retirement benefits that an employee can earn through performing services, the state has made a unilateral offer that the employee accepts through service, thereby creating a contract under traditional contract theory principles. Even this approach is relatively uncontroversial when it is used to protect benefits that an employee has already earned.”

    (My comment: Ritter Administration Letter to GASB [federal pension regulator] 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.”

    “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)

    Professor Monahan:

    “An impairment occurs if the action alters the contractual relationship between the parties and is substantial ‘where the right abridged was one that induced the parties to contract in the first place’ or where the impaired right was one on which there had been reasonable reliance.”

    (My comment: March 1, 2012, House Finance Committee, Representative DelGrosso: “The problem that we ran into with Senate Bill 1 . . . is that when they start adjusting things like the COLA . . . that’s where it opens us up to lawsuits, because people are like ‘hey, I’m five years away from retirement, I’m ten years away from retirement, I’m one year away, I am retired,’ and then we go and make changes that’s where we have lawsuits, because hey this a violating a contract . . . “)

    Professor Monahan:

    “Where a state is seeking to impair a contract to which it is a party, a reviewing court does not completely defer to the state legislature’s determination of what is reasonable or necessary under the circumstances.”

    (My comment: United States Supreme Court in U.S. Trust, “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.”)

    Professor Monahan:

    “For an action to be considered necessary, (1) no other less drastic modification could have been implemented at the time of the challenged change, and (2) the state could not have achieved its goals without the modification.”

    (My comment: 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.)

    The Colorado General Assembly’s incorporation of a 100 percent funding threshold into the Colorado PERA statutory pension contract was much stronger than necessary, not the “minimum change necessary,” thus SB10-001 does not meet the “necessity” standard. Dozens of other “less drastic” pension reform options were available to the General Assembly in 2010.)

    Professor Monahan:

    “Post-retirement changes to public pension benefits. While distinct differences exist among the states with respect to the legal protections they grant to public employee pensions preretirement, changes to a participant’s benefits once she has retired will be extremely difficult to make in any state. The difference between the legal approach to pre- versus postretirement changes is that once a participant is retired, she has by definition fulfilled her side of any bargain that has been made. In contract theory terms, the participant has accepted the offer of pension benefits through performance. The protection given to pensions in this context is analogous to the legal protections given with respect to promised salary.”

    (My comment: Colorado PERA in a written document, to the Colorado General Assembly’s Joint Budget Committee 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.”

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

    Professor Monahan:

    “In cases where COLAs are being reduced before retirement, they would typically be analyzed under either the property or contract approach outlined here, generally on the same terms as any other type of preretirement change. However, COLA reductions that affect already-retired participants are typically analyzed under a contract analysis because the participant has already satisfied all of the conditions necessary to receive a benefit.”

    Professor Monahan on Colorado’s Public Pension Lawsuit, Justus v. State:

    “In Colorado, retirees challenged actions by the state legislature that reduced the COLA retirees were eligible to receive. The plaintiffs included individuals who had retired under Colorado’s public employee retirement system at a time when there was a guaranteed 3.5 percent COLA in place.”

    Professor Monahan: The Denver District Court’s Initial Decision in Justus v. State was Surprising in Light of Colorado Public Pension Case Precedent.

    Professor Monahan:

    “The (Denver District) court’s ruling is surprising both because the court appeared to break from earlier Colorado decisions that found pension benefits to be contractually protected prior to retirement and because the change could be characterized as a retroactive change to benefits, which is the type of change that invites the most scrutiny under a contract clause analysis.”

    (My comment: In 2011, the Denver District Court held that “plaintiffs unarguably have a contractual right to their pension itself.” Further, the Denver District Court found that the Colorado PERA pension COLA provisions contain no “durational language” suggesting that a contract has been created, and that a pension provision requires a clear indication that the Legislature has intended to bind itself in a contractual manner.

    This 2011 Denver District Court finding begs the question, if the test of enforceability of a statutory pension provision is accompanying durational language or a clear statement of the intent of the Legislature to create a contractual obligation, then how did the Denver District Court go about determining that “plaintiffs unarguably have a contractual right to their pension itself” (i.e., the PERA ‘base benefit’)? The Colorado PERA statutes state that qualifying PERA members “shall” receive the PERA “base benefit” at retirement, language that is identical to the language providing the PERA COLA benefit. PERA statutes setting forth the benefit formula for service retirement state that the service retirement benefit “shall be calculated.” How is this identical language contractual for the PERA “base benefit,” yet NOT contractual for the PERA COLA benefit?

    How did the Denver District Court reach the conclusion that Colorado PERA “base benefits” are contractual without mentioning the most significant, on-point Colorado public pension case precedent, Bills and McPhail? What supported this legal conclusion? Was it simply pulled out of thin air?)

    Professor Monahan: Under Colorado’s Public Pension Contract Precedent, the Taking of a Colorado PERA Retiree’s Contracted COLA Benefit “Would Properly Be Considered Retroactive.”

    Professor Monahan:

    “For example, a participant who worked for the state from 2001 (when the 3.5 percent COLA was enacted) until 2010 (when the COLA was reduced) would have worked for nine years in exchange for the promise of a benefit that increased by 3.5 percent each year during retirement. If that COLA benefit is part of what an employee earns through services rendered, the change at issue in Colorado would properly be considered retroactive.”

    (My comment: Vickie Johnson, an attorney representing the Adams County Retirement Plan, testifying on the Colorado legislation, SB12-149: “Boards of pension plans have very limited options to improve the funded status of the plan.” “They could cut benefits, but for incoming employees . . . employees that haven’t been hired yet.” “Now, we’ve made clear that any modifications to benefits and age and service requirements shall not affect vested benefits already accrued. So, it won’t affect benefits that are already earned or benefits of retired members.” “When an employee begins working for a government entity that offers a pension, and the employee contributes to that benefit, the benefit offered to the employee is considered to be a contract right governed by the United States Constitution.” “As I said, in Subsection 3, we make clear in the proposed legislation that vested benefits already accrued, including the vested benefits of retirees, are not going to be touched.”)

    Professor Monahan:

    “In October 2012, the Colorado Court of Appeals reversed the trial court, finding that plaintiffs did have a contractual right to their COLAs but remanding the case for further consideration of whether the impairment of plaintiffs’ contract rights was nevertheless permissible because it was reasonable and necessary to serve an important public purpose.”

    “The case is currently pending before the Colorado Supreme Court.”

    Professor Monahan on Florida’s recent COLA-taking litigation:

    “In addition, the (Florida) plan was amended to eliminate the COLA for years of service earned after the date of amendment.”

    (My comment: Note that the proposed change to the public pension COLA benefit in Florida was to be implemented on a PROSPECTIVE basis.)

    Professor Monahan:

    “After finding that a contract existed that included the right to have a noncontributory plan and unchanged COLAs, the (Florida) trial court found it easy to conclude that the 2011 legislation was a substantial contract impairment that was not justified by an important public purpose.”

    Professor Monahan:

    “In addition, the court noted that the plan was operating ‘well above the 80% funding ratio recommended by experts’ and was regarded as one of the healthiest public pension funds in the United States.”

    (My comment: As we have seen, in spite of the fact that public pension plans are considered to be “well-funded” at an 80 percent actuarial funded ratio, and the fact that the Colorado PERA Board of Trustees has sought to cap funding of the PERA trust funds at a 90 percent funded ratio in the past, the Colorado General Assembly, in SB10-001, proposes to continue taking contracted COLA benefits from Colorado PERA retirees until an absurd 100 percent funding ratio is achieved. The lobbyists hired by Colorado PERA-affiliated employers became quite greedy in 2010.)

    Professor Monahan:

    “Although the state of Florida claimed to be facing a budget shortfall, the court noted that the legislature’s appropriations for 2011–12 left more than $1 billion in general revenue unspent for the year. The court further explained that a significant budget shortfall is insufficient to justify the changes, given that ‘other reasonable alternatives existed’ to preserve the contract. As the court explained, ‘All indications are that the Florida Legislature chose to effectuate the challenged provisions of Senate Bill 2100 in order to make funds available for other purposes.’”

    (My comment: Colorado is the 15th wealthiest state in the nation. The Colorado General Assembly has allocated $700 million for local government legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado. The General Assembly has done this while ignoring its own Colorado PERA pension debts. The Colorado General Assembly has made numerous $100 million dollar grants of discretionary property tax relief. The State of Colorado can afford to pay its PERA pension debts.)

    Professor Monahan:

    “The state appealed the decision to the Florida Supreme Court, which overruled the trial court and reiterated its prior holding that the statutory language protected only accrued benefits. Because the changes at issue were prospective in nature and did not impair what an employee had already earned, the court found the changes permissible.”

    (My comment: The Florida Supreme Court agreed that PROSPECTIVE changes to a COLA benefit are legal, RETROACTIVE takings of accrued public pension COLA benefits are unconstitutional.)

    Professor Monahan on Rhode Island’s Attempt to Take Contracted COLA Benefits:

    “Before deciding the contractual issue, the court importantly pointed out that pursuant to a prior decision of the Rhode Island Supreme Court, no separate analysis applies to a base pension benefit versus a COLA. Rather, the court explained, a ‘COLA and a pension are one and the same.’”

    (My comment: A COLA is simply a means of providing a contracted public pension benefit. A public pension plan sponsor could just as easily offer a larger monthly annuity payment with no COLA escalator provision.)

    Professor Monahan:

    “In analyzing the contractual issue, the court found that while the statute is not explicit about the existence of a contract, the facts and circumstances supported the finding of a contract. The court explained that the state offered to provide the benefits in return for service and that acceptance was supported by employees’ adequate consideration, creating an implied contract under standard contract theory. The court did note that while these employees have only partially performed (because they have not yet retired), it found their performance to be ‘substantial,’ thereby preventing the state from revoking its offer.”

    Professor Monahan:

    “The trial court judge who issued this ruling is the same judge who has been assigned to hear the legal challenges to Rhode Island’s major pension reform passed in 2011. There have been no rulings yet in that case, which the judge most recently ordered to mediation.”

    From Professor Monahan’s paper, “Public Pension 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.”

    Link to Monahan law article:

    http://www.law.umn.edu/facultyprofiles/monahana.html)

    On page 28 of this paper Professor Monahan notes that public pension retirees in Colorado have a “contract, at some time prior to eligibility for retirement,” but that the point in time at which this contractual right arises is “unclear” based on the case law. Further, Monahan writes “Colorado courts have held that prior to eligibility to retire, plan changes can be made if the changes ‘strengthen or better’ the retirement plan, or if they are actuarially necessary.”

    Professor Monahan in the article “Statutes as Contracts? The ‘California Rule’ and Its Impact on Public Pension Reform,” (Iowa Law Review article):

    “In the Colorado case, the district court was considering whether the state was permitted, as part of a broad pension reform effort, to reduce the cost-of-living adjustments (“COLAs”) previously granted to retirees. The plaintiffs included individuals who had retired under Colorado’s public employee retirement system at a time when there was a guaranteed 3.5% COLA in place. This COLA had been in place since 2001. Under the California Rule, it is clear that COLA reductions could not be made once a participant entered the system. However, the Colorado District Court held that the statute granting COLAs contained no clear and unambiguous evidence that retirees were entitled to an unchanged COLA for the duration of their benefits. In further support of its conclusion, the court highlighted the fact that COLAs had previously been changed (though not to a retiree’s detriment), and therefore those in the system could have no reasonable expectation of an unchanged COLA.”

    (My comment: Note that Professor Monahan points out that prior “changes” made to the PERA COLA did not harm PERA retirees . . . therefore those retirees could not be expected to contest such “improvements” to their contracted “automatic” PERA COLA benefit.)

    Professor Monahan expresses her surprise at the Denver District Court ruling:

    “The court’s ruling is surprising both because the court broke from the previously endorsed California Rule, under which it is clear that detrimental changes to the benefits of current employees are only permissible where they are offset with comparable new advantages, and because the change at issue is one that could be characterized as a retroactive change to benefits, which is the type of change that invites the most scrutiny under a contract clause analysis.”

    (My opinion: Here Professor Monahan states her “surprise” that the Denver District Court would render a decision that entirely disregards on-point, established Colorado public pension case law . . . a decision that represents an extreme departure from public pension case law in Colorado. Further, Monahan notes that the COLA taking was a “retroactive” diminution of fully-vested PERA retiree COLA benefits, and that such a taking “invites the most scrutiny under contract clause analysis.”)

    Professor Monahan at the February 22, 2013, the Ohio State University Moritz College of Law hosted a “Roundtable on Public Pension Reform.”

    http://moritzlaw.osu.edu/programs/capital-markets/roundtable-on-public-pension-reform-video-archive/

    Professor Monahan: Taking accrued retiree public pension benefits is the pension “reform” with the greatest legal risk. The U.S. Supreme Court tells us that public pension reforms must be the “least drastic” alternative in order to meet constitutional muster. Most public pension administrators consider automatic pension COLAs to be an accrued benefit.

    Professor Monahan:

    “I’m not aware of any case, where a court has said that once a participant has retired, and completed all of the necessary ingredients to receive a pension that that pension is not contractual.”

    “Even in some liberal states, once you’ve retired, you have a vested, contractual right to the benefit.”

    Professor Monahan on the relative legal risk of legislative enactment of various reforms to public pension systems:

    “I think it’s fair to generalize that there is a sort of risk hierarchy here.”

    “So, I’m going to start with the most risky and go down to the least.”

    Pension Changes Impacting:

    Public Pension Retiree Accrued Benefits

    ” . . . benefits being paid to retirees are the riskiest thing to touch.” “The idea is that they have completed their side of the bargain, and so any changes to those individuals usually get the highest level of scrutiny.”

    Active Pension Member Accrued Benefits

    “Next, is touching accrued benefits for people who haven’t retired. So, they’re still working, but you’re reducing what they’ve already earned to date. That’s also pretty risky. Basically, the analogy here is to salary. You can’t retroactively reduce someone’s salary. The court’s going to easily imply a contract here, for the same reasons reducing accrued benefits are risky.”

    Future Benefit Accruals

    “Future benefit accruals in most states, should be less risky.”

    (My comment: Note that the Colorado General Assembly adopted prospective changes to future benefit accruals of certain Colorado county government pension systems in 2012 [SB12-149]. The Colorado Legislature adopted these prospective pension reforms, honoring the accrued pension benefits of thousands of Colorado county government retirees two years after having retroactively seized accrued contracted public pension benefits of Colorado PERA retirees. In 2010, most members of the Colorado Legislature were unaware of Monahan’s “hierarchy of legal risk” of various public pension reform options. This lack of knowledge is attributable to the fact that, in 2009 and 2010, the Colorado Legislature permitted self-interested outside parties to develop public pension policy for the State of Colorado [through lobbyists].)

    New Hires

    “New hires are easy.”

    Professor Monahan on public pension COLAs:

    “I think that most people in the pension world, when they think of COLAs, think of it as part of the participant’s accrued benefit.”

    (My comment: “Automatic” public pension COLA benefits are fixed, contractual obligations of public pension plan sponsors. “Ad Hoc” public pension COLA benefits may be adjusted by pension plan sponsors as needed. Many critics of public pension systems in the U.S. are attempting to confuse the two types of COLAs to support of their efforts to break pension COLA contracts.)

    Professor Monahan on the “Reasonable and Necessary” standard to break public pension contracts:

    “That sounds like an easy test.” “It’s not.” “The U.S. Supreme Court tells us that it has to be the least drastic way of achieving the policy goal.”

    Professor Monahan:

    “Colorado is a closely watched case that’s been going on for awhile now. Colorado reduced COLAs. Most recent ruling there is the Appellate Court which just ruled that there is a contractual right to COLAs.”

    Colorado PERA active and retired members, support public pension contractual rights in Colorado. Read your Monahan and contribute at saveperacola.com! “Friend” Save Pera Cola on Facebook!

  12. Al Moncrief says:

    MOODY’S CONDEMNS THE FAILURE OF STATE’S TO PAY THEIR PUBLIC PENSION BILLS; THAT IS, “THE COLORADO PLAN.”

    From an article in yesterday’s Reuters:

    “The states that have the largest relative pension liabilities have at least one thing in common: a history of contributing less to their pension plans than the actuarially required contributions (ARC),” Moody’s said in the report, which looked at data for fiscal 2011.

    http://www.reuters.com/article/2013/06/27/usa-states-pensions-moodys-idUSL2N0F21RD20130627

    (My comment: The “actuarially required contribution” [ARC] is the amount of the annual pension payment that is necessary, according to actuaries, to keep up with newly accruing pension liabilities, and amortize existing pension liabilities.)

    As we have seen, Colorado has not paid its complete public pension (Colorado PERA) bills for many years. Since the Leadership of the Colorado Legislature has abdicated its public pension policy-making responsibility to self-interested lobbyists, most members of the Colorado Legislature are not even aware of the historical PERA pension underfunding.

    From the Moody’s report:

    “The largest accumulated liabilities most often reflect management decisions not to fund contributions at levels reflecting actuarial guidelines. Of the ten states with the largest pension burdens, six have been downgraded in recent years for the magnitude and management of their pension obligations, in part a reflection of persistent underfunding.”

    “In an effort to reduce current expenditures, states that underfund simply increase the portion of their liability that must be amortized, resulting in ever-greater ARCs that become even more difficult to meet. For this reason, funding history is an important credit factor.”

    “The states with the lowest ratio of ANPL to revenues also have little in common outside of a commitment to making full ARC payments to their pension plans.”

    “By contrast, for states with statutory contributions less than the ARC (My comment: Like Colorado) or for those who have underpaid for other reasons, the dismal performance of the asset markets in the last decade revealed how quickly such approaches could reduce the funding status of a pension plan.”

    Colorado has “already eaten its lunch,” now it wants to “skip out on the bill.”

    The State of Colorado and Colorado local governments are attempting to escape their contractual obligations. Having failed to pay their public pension bills for many years, they now are attempting to use their own negligence as a rationale to break Colorado PERA public pension contracts. The Colorado Legislature, having intentionally reduced the funding ratio of the Colorado PERA pension system through underfunding, now wants PERA retirees to bear the burden of fixing their problem. In 2010, the Colorado Legislature enacted a bill, SB10-001, that attempts to shift the accrued public pension debts of Colorado governments onto the backs elderly pensioners (Colorado PERA retirees.)

    Note Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee (relating to the Legislature’s historical underfunding of its PERA pension obligations):

    “We’ve had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we’re involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year.”

    Recall the words of Colorado PERA’s General Counsel (now Executive Director) Greg Smith. On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio: “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

    The recently released 2012 PERA CAFR (financial report), page 34, includes a chart illustrating the failure of the Colorado General Assembly to set PERA contribution rates at a level sufficient to meet PERA’s “actuarially required contributions” (ARC). The chart identifies Colorado PERA pension underfunding from 2008 to 2012, although the pension underfunding has been uninterrupted since 2001, [also occurring in the 1990s.]

    Page 93 of the 2012 PERA CAFR identifies the historical underfunding of the Colorado PERA pension (failure of the General Assembly to pay the full ARC) by PERA division.

    Note that while the Colorado General Assembly has failed to pay its contractual PERA public pension bills, it has simultaneously paid off $700 million in Colorado local government legacy pension debt (Old Hire Fire and Police Pensions) that ARE NOT the contractual obligation of the State of Colorado. Having failed to pay its PERA pension bills, and directed state funds to pensions that ARE NOT the contractual obligation of the State of Colorado, the General Assembly now seeks to break its own PERA contracts.

    At the 2013 Colorado legislative session, the Colorado General Assembly made a final installment of $142 million to pay off Colorado local government Old Hire Fire and Police legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado, while (according to the 2012 PERA CAFR) again underfunding its Colorado PERA contractual public pension obligations.

    2012 PERA CAFR, page 35 – “ARC Deficiency.”

    “In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries.”
    “During the past 10 years, this shortfall in funding . . . has been $3.4 billion.”

    https://www.copera.org/pdf/5/5-20-12.pdf

    Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” (ARCs), from the Center for Retirement Research at Boston College Public Plans Database:

    2001 Colorado School – 100% ARC Paid
    2002 Colorado School – 100% ARC Paid
    2003 Colorado School – 69% ARC Paid
    2004 Colorado School – 51% ARC Paid
    2005 Colorado School – 48% ARC Paid
    2006 Colorado School – 62% ARC Paid
    2007 Colorado School – 60% ARC Paid
    2008 Colorado School – 68% ARC Paid
    2009 Colorado School – 65% ARC Paid
    2010 Colorado School – 70% ARC Paid
    2011 Colorado School – 89% ARC Paid
    2001 Colorado State – 100% ARC Paid
    2002 Colorado State – 100% ARC Paid
    2003 Colorado State – 69% ARC Paid
    2004 Colorado State – 51% ARC Paid
    2005 Colorado State – 48% ARC Paid
    2006 Colorado State – 58% ARC Paid
    2007 Colorado State – 56% ARC Paid
    2008 Colorado State – 63% ARC Paid
    2009 Colorado State – 61% ARC Paid
    2010 Colorado State – 62% ARC Paid
    2011 Colorado State – 85% ARC Paid
    2001 Colorado Municipal – 100% ARC Paid
    2002 Colorado Municipal – 100% ARC Paid
    2003 Colorado Municipal – 69% ARC Paid
    2004 Colorado Municipal – 62% ARC Paid
    2005 Colorado Municipal – 64% ARC Paid
    2006 Colorado Municipal – 85% ARC Paid
    2007 Colorado Municipal – 84% ARC Paid
    2008 Colorado Municipal – 98% ARC Paid
    2009 Colorado Municipal – 96% ARC Paid
    2010 Colorado Municipal – 101% ARC Paid
    2011 Colorado Municipal – 139% ARC Paid

    (According to the 2011 PERA CAFR, the dramatic increase in the percentage contributed for the Colorado PERA Local Government Division in 2011, is a “result of the changes contained in SB10-001,” [2011 PERA CAFR Financial Section, page 82.]
    Apparently, when the State of Colorado breaks its public pension contracts it really facilitates the payment of the full ARC in some PERA divisions.)

    Colorado PERA active and retired members, when a government creates a problem through its own negligence, and then attempts to fix the problem by breaking its contracts, that is clearly immoral and illegal. Colorado is better than this. Support contractual public pension rights in the United States. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  13. Al Moncrief says:

    COLORADO PERA INVESTMENT STAFF MISSES 2012 PERFORMANCE BENCHMARK COSTING TAXPAYERS $175 MILLION;

    COLORADO PERA 2012 FINANCIAL REPORT (CAFR) RELEASED;

    COLORADO GENERAL ASSEMBLY CONTINUES HISTORICAL UNDERFUNDING OF THE PERA PENSION (IN SPITE OF THE 2010, SB10-001, PERA CONTRACT BREACH);

    PERA ACTUARY, PROVISIONS OF SB10-001 WERE STRONGER THAN NECESSARY TO MEET FEDERAL REGULATORY REQUIREMENTS;

    PERA’S LONG-TERM INFLATION ASSUMPTION LOWERED TO 3.5 PERCENT, MATCHING THE CONTRACTED PERA COLA TAKEN BY THE COLORADO GENERAL ASSEMBLY.

    Colorado PERA released its 2012 PERA CAFR (financial report) today. Here are a few upbeat excerpts from Colorado PERA’s announcement of the CAFR on the PERA website:

    “Colorado PERA 2012 Investment Returns Exceed 12 Percent.”

    “Strong Investment Returns During 2012 Add $4.6 Billion to PERA Trusts.”

    “Colorado PERA investment returns for 2012 were 12.9 percent, according to the Comprehensive Annual Financial Report released by the PERA Board of Trustees today.”

    https://www.copera.org/pera/about/latestnews.htm#cafr

    As expected, surging equity markets provided an excellent return for the Colorado PERA trust funds in 2012; but what’s the “rest of the story”?

    The 2012 Colorado PERA CAFR continues the documentation of the Colorado General Assembly’s failure to pay its PERA pension bills. The 2012 PERA CAFR documents the failure of Colorado PERA’s investment professionals to meet investment performance benchmarks. This failure cost the PERA trust funds approximately $175 million last year (by my estimation.) It’s easy to ignore PERA’s investment underperformance while the PERA trust funds are earning double-digit returns; but we should remember that such PERA investment underperformance has been a contributor to the Colorado General Assembly’s rationale for breaking Colorado PERA pension contracts. Since the Colorado General Assembly has abdicated its policy-making authority regarding the PERA public pension system to PERA lobbyists, members of the Colorado Legislature (Finance Committees) pay scant attention to PERA’s investment performance. This is odd, since taxpayers will pick up any underperformance.

    The 2012 PERA CAFR repeats the observation of Colorado PERA’s actuary Cavanaugh MacDonald (made in earlier CAFRs) that the 100 percent funding ratio goal incorporated into the Colorado PERA statutory public pension contract by SB10-001 was much stronger than is necessary to meet federal regulatory (GASB) standards. (Recall that Colorado PERA’s Executive Director Greg Smith has written that changes to public pension plans must be the minimum changes necessary to solve the economic problems of the pension plan in order to pass constitutional muster. This absurd 100 percent funding requirement placed in the PERA statutory contract by SB10-001 is clearly “not the minimum change necessary.”)

    Finally, the 2012 PERA CAFR reveals that the reduction of Colorado PERA’s long-term portfolio return assumption from 8.5 percent to 8 percent by the Colorado PERA Board of Trustees continues to suppress the actuarial funded ratio of the PERA trust funds. (I have no position on the PERA Board’s portfolio return assumption, other than the fact that a policy decision by the PERA Board should not be used as a rationale for the breach of Colorado PERA pension contracts. The accumulated PERA pension debt is unaffected by PERA Board policy or market conditions.)

    Excerpts from the 2012 PERA CAFR, “Letter of Transmittal”:

    “On December 31, 2012, PERA’s funded ratio was 61.9 percent with an unfunded liability of $24.2 billion based on the actuarial value of assets and an investment return and discount rate assumption of 8.0 percent.”

    From the 2012 PERA CAFR, page 125: “Colorado PERA pension divisions have a funded ratio of 63% based on the Actuarial Value of Assets and 64% based on the Market Value of Assets.”

    (My comment: The PERA portfolio is now about $40 billion. PERA’s actuarial funding ratio was 68.9 percent the time of the contract breach in 2010.

    February 14, 2011

    Subcommittee on Courts, Commercial and Administrative Law, Committee on Judiciary

    House of Representatives, Testimony of Keith Brainard, Research Director, National Association of State Retirement Administrators

    “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.”

    A 2006 Federal Reserve paper, by Ronald A Wirtz, notes that public pension funded ratios in the 50 to 60 percent range were typical in the 1970s:

    “From a long-term perspective, however, one can’t really pin too much of the pension problem on the recent stock market pullback—in fact, it’s [the stock market in recent decades] been a savior for most pensions. Rewind 50 years, and almost all pension assets were invested in U.S. bonds and other fixed-income sorts of securities. Though comparatively safe in terms of protecting assets, such a portfolio could not generate the returns necessary for pension funds to keep up with the benefits promised by generous government employers. During the 1970s, funding ratios generally hovered between 50 and 60 percent.”

    Silver and Gold Record, October 26, 2006:

    “One attendee asked if there was any similar controversy in the 1970s, when PERA’s unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”

    https://www.cu.edu/sg/messages/5245.html

    2012 PERA CAFR CONTINUES DOCUMENTATION OF THE GENERAL ASSEMBLY’S HISTORICAL UNDERFUNDING OF THE PERA PENSION SYSTEM.

    The 2012 PERA CAFR, page 34, includes a chart illustrating the failure of the Colorado General Assembly to set PERA contribution rates at a level sufficient to meet PERA’s “annual required contributions” (ARC). The chart identifies Colorado PERA pension underfunding from 2008 to 2012, although the pension underfunding has been uninterrupted since 2001, [also occurring in the 1990s.]

    Page 93 of the 2012 PERA CAFR identifies the historical underfunding of the Colorado PERA pension (failure of the General Assembly to pay the full ARC) by PERA division.

    As we have seen, the failure of the Colorado General Assembly to pay its public pension bills has also been documented by the Center for Retirement Research at Boston College. Note that while the Colorado General Assembly has failed to pay its contractual PERA public pension bills, it has simultaneously paid off $700 million in Colorado local government legacy pension debt (Old Hire Fire and Police Pensions) that ARE NOT the contractual obligation of the State of Colorado. Having failed to pay its PERA pension bills, and directed state funds to pensions that ARE NOT the contractual obligation of the State of Colorado, the General Assembly now seeks to break PERA contracts.

    At the 2013 Colorado legislative session, the Colorado General assembly made a final installment of $142 million to pay off Colorado local government Old Hire Fire and Police legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado, while (according to the 2012 PERA CAFR) again underfunding its Colorado PERA contractual public pension obligations.

    2012 PERA CAFR, page 35 – “ARC Deficiency.”

    “In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries.”

    “During the past 10 years, this shortfall in funding . . . has been $3.4 billion.”

    https://www.copera.org/pdf/5/5-20-12.pdf

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee relating to the Legislature’s historical underfunding of its PERA pension obligations:

    “We’ve had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we’re involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year.”

    Recall the words of Colorado PERA’s General Counsel (now Executive Director) Greg Smith. On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio: “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

    2012 PERA CAFR: PERA’S LONG-TERM INFLATION ASSUMPTION HAS BEEN LOWERED TO 3.5 PERCENT, MATCHING THE CONTRACTED PERA COLA TAKEN BY THE GENERAL ASSEMBLY IN 2010.

    On page 95 of the 2012 PERA CAFR, Colorado PERA notes that it has recently reduced its long-term inflation assumption from 3.75 percent to 3.50 percent.

    In 2010, the Colorado General Assembly enacted SB10-001 slashing the contracted inflation protection of Colorado PERA retirees by 42 percent, from 3.5 percent to 2.0 percent (for non-DPS retirees). This taking by the Colorado General Assembly will cost many PERA retirees hundreds of thousands of dollars over their remaining lives. The bill (SB10-001) took this money from Colorado PERA retirees in order to maintain Colorado’s status as a “tax haven,” the state with the lowest per capita state tax burden in the nation, and to “inflate away” the pension debt of PERA employers.

    Back in 1993, when the “automatic” Colorado PERA COLA benefit was adopted, Colorado PERA’s Director of Governmental Relations (Rob Gray) informed the Colorado Legislature (in testimony) that the “automatic” PERA COLA benefit they were placing into Colorado law would “come close to what the long-term inflation rate is.”

    On March 24, 1993 (1:32 PM – 2:28 PM) the House Finance Committee of the Colorado General Assembly heard House Bill 93-1324.

    Rob Gray elaborated: “The (CPI up to) 3.5 percent increase is a reasonable level.” “It will probably come close to what the long-term inflation rate is.”

    (Note that the PERA COLA was in later years improved to a flat 3.5 percent rate, permissible as this improvement did not impair PERA retiree pension contracts.)

    Rob Gray also noted that: “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” (Ironically, at the time PERA employers thought they were getting a great deal by fixing an “automatic” PERA COLA benefit, only to break the contract two decades later.)

    COLORADO PERA ACTUARIES: THE OBJECTIVE OF SB10-001 TO SEEK A 100 PERCENT FUNDING RATIO IS MUCH STRONGER THAN REQUIRED BY FEDERAL REGULATORS.

    The 2012 PERA CAFR, page 126, includes the following statement from Colorado PERA’s actuary:

    Colorado PERA actuary Cavanaugh MacDonald Consulting, LLC:

    “It should be noted that the changes made to the PERA structure as a result of SB10-001 had as a goal 100% funding of the accrued liability within 30 years for all divisions. The results of the December 31, 2012, 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.” (My comment: In my opinion, PERA’s actuaries want this on the record when SB10-001 is declared unconstitutional.)

    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 and again in the newly released CAFR] 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

    Also from the 2012 PERA CAFR, page 43, “These benefits earned will be payable over the lifespan of members after their retirement and therefore, it is not necessary that the actuarially determined benefits equal the actuarial value of assets at any given moment in time.”

    So, why did the Colorado Legislature make this the goal of SB10-001??

    UNDERPERFORMANCE BY COLORADO PERA’S INVESTMENT STAFF IN 2012 COSTS THE PERA TRUST FUNDS (AND COLORADO TAXPAYERS) $175 MILLION.

    Page 29 of the 2012 PERA CAFR reveals that Colorado PERA’s investment staff have failed to meet their investment performance benchmarks. During 2012, Colorado PERA’s investment staff achieved a rate of return of 12.9 percent while the PERA investment performance benchmark was 13.4 percent. (By my estimation this underperformance by PERA’s investment staff [53 basis points] cost the PERA trust funds approximately $175 million.)

    Although the Colorado General Assembly and Colorado PERA are trying to push market risk onto PERA retirees, Colorado PERA retirees should not have to bear the cost of any historical PERA investment underperformance on the part of PERA’s investment staff. Again, PERA retirees “bear no market risk” in the PERA defined benefit pension plan.

    “The Total Fund underperformed the policy benchmark return by approximately 53 basis points (0.53 percentage points) for the year ended December 31, 2012.”

    “Alternative Investments was the primary contributor to the underperformance . . .”

    What has been the performance of PERA’s investment staff historically? In what years have they missed their benchmarks? What has been the cost to the PERA trust funds?

    Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board’s historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

    “Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization. We were very aggressive in what I’ll call private equity or alternatives. At the board’s direction we’ve pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each. I think that the portfolio as we headed into the dotcom bust was far riskier than it is today. We paid the price for that.”

    (My comment: Meredith Williams tells us here that PERA “paid the price” for its past investing mistakes. Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds. I ask: Why should Colorado PERA retirees, who bear no “market risk” in their “defined benefit” pension plan, whose contractual public pension rights are “fully-vested,” why should these Colorado PERA retirees pay the cost of the PERA Board’s past investing mistakes by relinquishing their contracted pension benefits?)

    THE 2012 PERA CAFR ON THE JUSTUS v. STATE LAWSUIT:

    The 2012 PERA CAFR, page 82, addresses the Justus v. State PERA retiree lawsuit: “The maximum potential damages arising from this Civil Action consist of the payment of additional statutory benefits beyond those provided for by SB10-001. In the event the pertinent portion of SB10-001 was held to be unconstitutional by an unappealable final court order, PERA would be required to pay the annual increase in effect prior to the passage of SB10-001. The nature of the relief sought is a mandatory injunction requiring the payment of annual increases going forward based on the PERA statutes as they existed prior to passage and enactment of SB10-001.”

    A few final excerpts from the 2012 Colorado PERA CAFR:

    From the 2012 PERA CAFR, page 136, “Benefits to retirees are funded at 77 percent, that is, assets reserved for benefits currently being paid are less than the liabilities for those benefits.”

    From the 2012 PERA CAFR, page 174, the average age of a current PERA retiree is now 70 years.

    From the 2012 PERA CAFR, page 175, “For most benefit recipients, this is the only source of income in retirement as most PERA benefit recipients and their beneficiaries do not qualify for Social Security payments.”

    (My comment: It is unconscionable that the Colorado General Assembly has broken the PERA pension contracts of Colorado PERA retirees, who average 70 years of age, and are completely dependent on their contracted PERA retirement benefits. All in order to keep taxes low in the 15th wealthiest state in the nation.)

    Colorado PERA active and retired members, support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com and “Friend” Save Pera Cola on Facebook!

  14. Al Moncrief says:

    COLORADO PERA STAFF ATTORNEY TO BE PERA’S NEXT GENERAL COUNSEL: PERA’S COLLECTIVE COGNITIVE DISSONANCE PERSISTS.

    The “post-Meredith shuffle” continues at Colorado PERA. Today, (June 21, 2013) Colorado PERA announced that staff attorney Adam Franklin will replace Greg Smith as Colorado PERA’s General Counsel. Last year, the Colorado PERA Board of Trustees appointed Greg Smith to be PERA’s Executive Director (after the departure of Executive Director Meredith Williams.)

    From the announcement of Adam Franklin as PERA’s General Counsel on the Colorado PERA website:

    “Franklin has served as a Senior Staff Attorney at PERA since January 2007.”

    Link:

    https://www.copera.org/pera/about/latestnews.htm#gc

    Former Colorado PERA Executive Director Meredith Williams was at PERA’s helm during the Colorado General Assembly’s 2010 PERA pension contract breach. Current Colorado PERA Executive Director, Greg Smith served as Colorado PERA’s General Counsel during the PERA contract breach, providing the Colorado PERA Board of Trustees with legal advice, prior to and during the 2010 contract breach. The legislation breaking Colorado PERA pension contracts (SB10-001) was recommended by the Colorado PERA Board of Trustees (most of the provisions of the ultimate bill were PERA Board recommendations.) As Meredith Williams has informed us, nearly all of the Colorado PERA Board’s pension reform recommendations in 2009 “came out of the hides” of PERA retirees, rather than coming from those who ACTUALLY OWE THE PERA PENSION DEBT, Colorado PERA-affiliated employers. As Colorado PERA officials have informed us, 90 percent of the savings in their 2009 reform recommendation came from taking accrued PERA pension COLA benefits from retirees with “fully-vested” PERA pension contracts.

    In 2010, the Colorado PERA Board of Trustees, (a board composed of fiduciaries) became one of a handful of public pension governing bodies in U.S. history that has advocated breaking the pension contracts of persons who have retired in their pension systems. Yes, incredibly, PERA trustees with fiduciary obligations formally recommended as board policy the breach of the contracts of members of the pension trust. It’s clear where the “reform” is really needed.

    The Colorado Court of Appeals has confirmed the contractual status of the PERA COLA benefit:

    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

    Soon after presiding over the 2010 Colorado PERA pension contract breach, Meredith Williams began job hunting (here’s a reference to Meredith’s job hunt in November 2010):

    “Texas Teachers picks 5 finalists for executive director.”

    http://www.pionline.com/article/20101123/DAILYREG/101129968

    Why was Meredith job hunting just months after the PERA pension contract breach? Was Meredith not on the same page with the PERA Board of Trustees on the COLA taking? Or, did he just need a change of scenery? In any event, Meredith succeeded in escaping the aftermath of Colorado PERA’s self-inflicted SB10-001 legal fiasco.

    COLORADO PERA OFFICIALS AFTER THE CONTRACT BREACH: THE COLA IS NOT CONTRACTUAL.

    It has been reported that Colorado PERA’s new General Counsel (in my opinion . . . conveniently) believes that fully-vested, accrued PERA COLA benefits taken in the bill SB10-001 are not contractual obligations of the Colorado PERA pension system. Adam Franklin, Senior Staff Attorney, Colorado PERA, April 5, 2011 (as documented by the organization Friends of PERA):

    “PERA believes that the COLA formula is not contractual.”

    Link:

    http://www.friendsofpera.com/0405meeting.pdf

    Given that Colorado PERA is currently a defendant in a lawsuit generated by the Colorado General Assembly’s 2010 taking of contracted PERA COLA benefits, I believe that it would have been prudent for the Colorado PERA Board of Trustees to ensure that PERA’s new General Counsel (Adam Franklin) holds the same opinion as Colorado PERA’s administrative leadership on this important question of the contractual nature of PERA COLA benefits. It appears that newly appointed Colorado PERA General Counsel Adam Franklin’s opinion on this question differs from that of former Colorado PERA General Counsel (and current PERA Executive Director) Greg Smith’s opinion.

    COLORADO PERA OFFICIALS BEFORE THE PENSION CONTRACT BREACH: THE COLA IS CONTRACTUAL

    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 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.”

    Link:

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

    Former Colorado PERA Executive Director Meredith Williams has also noted his respect for “fully-vested” Colorado PERA pension contracts:

    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 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

    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

    February 23, 2012

    Meredith Williams, Feb 23, 2012, House Finance Committee:

    “What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor’s edge. You can’t fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers. No one has ever done anything quite like that. I am quite anxious for the litigation to get behind us.”

    In 2008, when Colorado PERA officials were asked (by legislative staff) if PERA pension contracts can be broken in the event of “actuarial necessity,” PERA officials responded (in writing) that a 2004 Colorado Attorney General Opinion states that a Colorado PERA retiree’s “fully-vested” pension benefits cannot be reduced by the Colorado General Assembly.

    COLORADO GENERAL ASSEMBLY – JOINT BUDGET COMMITTEE

    FY 2009-10 STAFF BUDGET BRIEFING

    December 22, 2008 – Joint Budget Committee staff question to Colorado PERA:

    “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?”

    Below is the written response from Colorado PERA officials to the JBC staff in 2008. (It would also be interesting to listen to the tape of this legislative hearing, for PERA staff’s verbal response to the question, as well as the January 5, 2009 PERA meeting with the JBC.)

    December 22, 2008 – PERA Response to Joint Budget Committee:

    “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.”

    Link:

    http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2008-09/perbrf.pdf

    Recall that the Colorado General Assembly did not declare an “actuarial emergency” prior to enacting SB10-001. Why would they? They had plenty of revenue to continue paying off $700 million in legacy pension obligations of Colorado local governments that ARE NOT the contractual obligation of the State of Colorado (Old Hire Fire and Police pension obligations.)
    As I understand it, attorneys are required to zealously defend the interests of their clients. This requirement may account for what we (as laypeople) perceive as a sort of collective cognitive dissonance of Colorado PERA officials on the question of the contractual nature of accrued PERA COLA benefits.
    Colorado PERA active and retired members, support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com and “Friend” Save Pera Cola on Facebook!

  15. Al Moncrief says:

    THE TOP TEN: DAMNING EVIDENCE IN THE COLORADO PERA RETIREE LAWSUIT, JUSTUS v. STATE. Part 1 of 2.

    Here’s a synopsis of the “Top Ten” for the casual reader:

    (1) Colorado governments face no fiscal “crisis” that would warrant the breach of their pension contracts. They spend a mere two percent of revenues on public pensions.
    (2) The Colorado General Assembly has not paid its full pension bill for a decade. It comes with dirty hands.
    (3) The Colorado General Assembly has adopted PROSPECTIVE, legal pension reform for Colorado county governments (SB12-149). It can also adopt such PROSPECTIVE, legal pension reform for the Colorado PERA pension system. SB12-149 is proof that the Colorado Legislature can adopt “less drastic” pension reform than the breach of “fully-vested” PERA public pension contracts. The 2010 PERA COLA taking was unnecessary.
    (4) The Colorado PERA COLA benefit is an “AUTOMATIC” COLA benefit, a contractual obligation of Colorado PERA employers, rather than an “ad hoc” pension COLA that can be diminished by pension plan sponsors. Colorado PERA officials have confirmed this fact in writing.
    (5) Opinions of Colorado Attorneys General and Colorado case law support the sanctity of Colorado PERA COLA pension contracts.
    (6) Colorado PERA officials have testified before the Colorado Legislature that the PERA COLA is their contractual obligation. Their words are on the record at the Colorado Legislature.
    (7) The taking of the PERA COLA benefit was planned by lobbyists and the Leadership of the Colorado Legislature. Thus, Leadership failed to send an interrogatory to the Colorado Supreme Court, or appoint an interim study committee to explore legal pension reform options. Colorado PERA was shopping for a legal rationale to break COLA contracts a full year prior to the adoption of SB10-001.
    (8) The Colorado Legislature overreached in attempting to shift 90 percent of the PERA pension reform bill’s costs away from those who actually owe the debt, Colorado PERA-affiliated employers, and onto those who DO NOT owe the debt, Colorado PERA pensioners. Not exactly “reasonable.”
    (9) Colorado PERA’s actuarial funded ratio (AFR) has been much lower in the past, than its level at the time of the contract breach, yet no “crisis” was perceived by PERA or Colorado legislators or Governors in the past. Clear evidence that SB10-001 was arbitrary . . . political.
    (10) In 2009, Colorado PERA selected a politically, and judicially, connected lawyer to create a legal rationale to break PERA COLA contracts. This connected lawyer worked with our gifted Colorado Supreme Court Justice Marquez (a former PERA legal advisor) on the lawsuit, Justus v. State.

    Income inequality in the United States is bad enough without the Colorado Legislature exacerbating the problem by breaking the contracts of elderly, middle-class pensioners. The Colorado Legislature intends to take the property of Colorado PERA retirees in order to help preserve Colorado’s status as a “tax haven,” the state with the lowest per capita state tax burden in the nation. The Colorado Legislature has planned a deliberate breach of Colorado PERA retiree pension contracts that will result in Colorado corporations, corporate owners and executives controlling even more of the wealth in the state.

    In 2010, a majority of Colorado legislators decided to use the force of government to take property from Colorado PERA pensioners, to renege on the contractual obligations of Colorado state and local governments, as well as taxpayers. Our state legislators took this action as a political favor for their voters, and for the constituencies that finance their state legislative campaigns.

    In 2010, a troop of 27 statehouse lobbyists, hired by Colorado PERA-affiliated employers, rammed a bill through the legislative process (SB10-001) in an attempt to force their employer’s debts onto the backs of Colorado PERA pensioners. Three years have passed, and I still cannot believe that a majority of the members of our own Colorado Legislature were capable of such immorality.
    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

    Over the last three years, a great deal of information relating to the circumstances of the Colorado Legislature’s 2010 PERA pension contract breach has come to light. Colorado PERA officials have already admitted (provided written and verbal testimony to the Legislature) that the Colorado PERA COLA benefit is a contractual obligation of PERA-affiliated employers.
    Their legislative testimony is in agreement with the recent finding of the Colorado Court of Appeals that the PERA COLA provision IS such a contractual obligation. Why does Colorado PERA bother appealing a ruling on this question, when they agree with the Court of Appeals decision? It makes no sense. Further, it is obvious that the taking of one-third to one-half of a contracted annuity stream is a “substantial” impairment of the contract, just as the taking of one-half of a homeowner’s equity would be a “substantial” taking.

    In legal briefs, the State of Colorado and PERA Defendants present arguments in favor of the legislative taking of contracted Colorado pensioner benefits. In this article, I rank what I perceive to be the most damning evidence to the State of Colorado and PERA Defendant’s legal arguments. I prioritize the evidence (discovered to date) that I believe most soundly refutes the State of Colorado and PERA Defendant’s legal arguments that the taking of money from PERA pensioners to meet Colorado public sector debts was “reasonable and necessary.” Even the evidence gathered to date, without formal discovery, demonstrates that the Colorado Legislature’s 2010 PERA pension contract breach was completely arbitrary, and purely a political preference, rather than “reasonable,” or “necessary.”

    The Top Ten:

    (1) Colorado is not in the midst of a fiscal “crisis.” Colorado is a wealthy state with a budget surplus. Colorado has paid off $700 million in local government pension debt that is not its responsibility, while ignoring its own contractual Colorado PERA debt. Colorado has recently made $100 million grants of discretionary property tax relief. Colorado governments can afford to pay their debts.
    (2) The Colorado General Assembly has, historically, ignored its PERA pension bills (ARC), the Colorado PERA Board of Trustees has, historically, made it board policy to underfund the PERA pension system (a “90 percent cap.”)
    (3) The Colorado Legislature has recently adopted PROSPECTIVE, legal public pension reform honoring the accrued pension benefits of thousands of Colorado county government pensioners (SB12-149). Thus, the General Assembly has demonstrated that it is capable of public pension reform that conforms to the strictures of the Colorado Constitution. Similar legislation may be adopted to bolster the actuarial funded ratio (AFR) of the Colorado PERA pension system.
    (4) The Colorado PERA COLA benefit is an “AUTOMATIC” COLA benefit, a contractual obligation of Colorado PERA employers. It has a legal status identical to any other provision of the written, statutory Colorado PERA pension contract. In spite of the wishes of those who would break PERA contracts, it IS NOT an “ad hoc” COLA benefit (provided by some states) that may be diminished by a pension plan sponsor for vested annuitants.
    (5) A number of Opinions of Colorado Attorneys General support the sanctity of Colorado PERA COLA contracts.
    (6) Colorado PERA officials have provided written testimony to the Colorado Legislature’s Joint Budget Committee stating that the Colorado PERA COLA benefit is a contractual obligation of PERA-affiliated employers. Officials of the Ritter Administration (Governor Ritter signed SB10-001) have confirmed this opinion in a letter to the federal regulatory agency, GASB.
    (7) The Legislative Leadership of the Colorado General Assembly failed to perform due diligence. Although encouraged to do so, Leadership failed to send an interrogatory to the Colorado Supreme Court to clarify the contractual nature of the PERA COLA benefit. Leadership failed to appoint an interim study committee to examine PROSPECTIVE, legal pension reform options. The taking of the PERA COLA benefit was preconceived, rather than the result of a deliberative process.
    (8) The Colorado Legislature (and lobbyists hired by PERA employers) overreached in attempting to shift 90 percent of the costs of PERA reform away from those who legally owe the debt, PERA employers, and by incorporating an unnecessary “100 percent” funded ratio threshold into the PERA statutory contract.
    (9) The actuarial funded ratio of the Colorado PERA pension system has been much lower in the past, than its level at the time of the SB10-001 pension contract breach. Yet, during those times, Colorado PERA officials supported PERA pensioner contractual rights.
    (10) In early 2009, the supporters of the planned Colorado PERA COLA contract breach shopped for a law firm to create a legal rationale to justify the taking of the COLA benefit. They selected the law firm of an education advocate with impressive connections in the Colorado political and judicial communities. The selected attorney, Jean Dubofsky, worked on the Justus v. State lawsuit with current Colorado Supreme Court Justice Monica Marquez. While at the Colorado Attorney General’s Office, our accomplished Justice Marquez provided legal advice to Colorado PERA.

    #1: COLORADO STATE AND LOCAL GOVERNMENTS FACE NO FINANCIAL “CRISIS.”

    Prior to the adoption of SB10-001, Colorado PERA officials assured us that the Colorado PERA pension system faced no “crisis”:

    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.”

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

    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.” “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

    March 1, 2012

    Representative Kagan, March 1, 2012, House Finance Committee: “(In adopting SB10-001) we had put PERA . . . on an actuarial sound footing without waiting for a crisis to hit, without waiting for exposés and pressure . . .”

    (My comment: Here, Rep. Kagan notes that the Colorado General Assembly adopted SB10-001 in 2010, breaking PERA pension contracts, while Colorado PERA faced no financial “crisis.”)

    April 12, 2013

    From Governing Magazine:

    “Tax revenues increased in all but five states in fiscal year 2012, with some recording noticeable gains. In all, states collected $794.6 billion, a record-high that represents a 13 percent increase from 2010 totals, not adjusting for inflation.”

    “Governing compiled current and historical revenue data reported to the Census Bureau into the chart below.”

    Colorado Total Revenue Collected, 2008: $9,624,636,000
    Colorado Total Revenue Collected, 2012: $10,250, 628,000

    http://www.governing.com/gov-data/state-tax-revenue-data.html

    March 18, 2013

    State financial crisis? From the 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

    States that are able to voluntarily pay off debts that ARE NOT their contractual obligations, while ignoring debts that ARE INDEED their contractual obligations do not, by definition, face a financial “crisis”:

    April 2, 2013

    The Colorado Legislature has paid off local government pension debt that IS NOT the contractual obligation of the State of Colorado. (This 2013 $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/

    September 19, 2012

    FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government “Old Hire Police Officers Pension Plans” to the Colorado General Assembly’s Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

    “So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans.”

    Link:

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

    The fact that the State of Colorado has directed $700 million ($142 million at the 2013 legislative session) to the payment of public pensions (Old Hire Fire and Police pensions) that ARE NOT its contractual obligation, the fact that the State of Colorado is making a $105 million discretionary grant of property tax relief in the budget for the coming fiscal year, proves that the State of Colorado has available financial resources and is quite able to perform under the terms of its Colorado PERA public pension contracts.

    Next year’s property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

    Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, “Homestead” property tax relief grant: $105,200,000

    http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

    #2: THE COLORADO GENERAL ASSEMBLY HAS NOT PAID ITS PUBLIC PENSION BILLS FOR A DECADE.

    Colorado state and local governments (employers) have not paid their full pension bills for a decade. Colorado PERA members (workers) have ALWAYS paid their required Colorado PERA pension contributions, every month from their paychecks, without fail. These workers are required under Colorado law to make their PERA pension payments. In the history of the Colorado PERA pension system public workers have NEVER missed a payment. Why does Colorado law not similarly force Colorado PERA-affiliated employers to pay their own PERA pension bills?

    Now that the Colorado Legislature has run up the PERA pension debt by failing to require PERA-affiliated employers to pay their pension bills, the Legislature seeks to push this EMPLOYER pension debt onto former employees.) That is plainly immoral and illegal.

    October 10, 2003

    “In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”

    “Adding to the problem is the fact that the legislature voted to reduce the amount of the state’s contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)

    http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf

    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

    August 11, 2009

    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

    February 23, 2012

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee relating to the Legislature’s historical underfunding of its PERA pension obligations:

    “We’ve had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we’re involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year.”

    March 1, 2012

    House Finance Hearing: Don Schaeffer, Colorado PERA retiree, “I actually worked at PERA for 20 years.” “In my job at PERA, I was the Communications Director, and that started somewhere back in the early 80s.” “In the year 2000 . . . we (PERA) were fully funded and they (the General Assembly) said ‘Oh, we have too much money,” and so then we had (pension contribution) cuts, and we had benefits added and so forth.”

    (My comment: I ask: Why should Colorado PERA retirees, who have fully-vested public pension contracts relinquish their constitutional rights to compensate for such policy decisions of the Colorado General Assembly?)

    March 1, 2012

    House Finance Hearing: Rep. Hullinghorst, “We got ourselves into this mess in the 1980s to begin with, in the 1980s and 1990s, when the Legislature just on a whim decided they were going to do this and that with PERA, and made some changes that were very detrimental to the system.”

    Even the Colorado PERA Board of Trustees has sought to limit the funding available to the Colorado PERA pension system in the past. Now, having supported underfunding the system, the Board seeks to compensate by breaking Colorado PERA pension contracts.

    1999

    George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?” (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved? As PERA officials have noted, the pension debt comes due over up to 70 years, it is not “due tomorrow.”)

    Was the PERA Board’s “90 percent cap” on the actuarial funded ratio of the PERA trust funds a formal or informal board policy? By what means did the PERA Board seek to “cap” the trust funds? In what years has this policy been in place? Did the PERA Board make recommendations to the Legislature to maintain this 90 percent funded level?

    #3: THE COLORADO LEGISLATURE HAS ADOPTED PROSPECTIVE, LEGAL PENSION REFORM HONORING ACCRUED PENSION BENEFITS OF THOUSANDS OF COLORADO COUNTY GOVERNMENT RETIREES. THE LEGISLATURE CAN ALSO HONOR COLORADO PERA CONTRACTS.

    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.

    Language from SB12-149:

    “(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

    Link to SB12-149, the Act:

    http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/0E9F894D31C081EF87257981007DAF5A?open&file=149_enr.pdf

    Reforms adopted by the Colorado Legislature for county government pension systems (administrative arms of the state) conform with the legal theories of Professor Amy Monahan regarding protection of accrued public pension benefits.

    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 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

    What instructions did the PERA Board or staff provide to PERA’s actuaries modeling costs of proposals for pension reform? Did PERA’s actuaries not find it odd that nearly all pension reform alternatives under consideration in the summer of 2009 financially impacted PERA employees and retirees, rather than PERA employers? What actuary performed these services for PERA? How many years has this actuary worked for PERA? What has been the value of Colorado PERA’s contracts for actuarial services in recent years? Over the totality of the contractual relationship?

    #4: THE COLORADO PERA COLA BENEFIT IS AN “AUTOMATIC” PENSION COLA BENEFIT, RATHER THAN AN “AD HOC” COLA THAT MAY BE LEGALLY DIMINISHED BY A PENSION PLAN SPONSOR.

    Note that the Colorado PERA Defendants are clearly aware of the difference between an “ad hoc” public pension COLA benefit and an “automatic” public pension COLA benefit. On page 5 of the May 10, 2010 PERA Defendant’s Motion to Dismiss, PERA’s lawyers write: “From 1975 to 1978, the General Assembly also enacted ad hoc increases.” See also, page 6 and page 7 of the PERA brief: “The ad hoc increases were also eliminated.” Although Colorado PERA administrators know the difference between “automatic” and “ad hoc” pension COLAs, they would prefer that Colorado courts not recognize the difference. Accordingly, since deciding to attempt a breach of Colorado PERA COLA contracts, Colorado PERA officials no longer describe the COLA as an “automatic” pension benefit (as has been their historical practice.)

    For decades, in every paycheck, Colorado PERA retirees paid for their contracted, “automatic,” PERA COLA benefit. The Colorado General Assembly voluntarily offered this “automatic,” pension COLA benefit in the PERA contract. Colorado PERA retirees acted on this contractual offer, they chose to continue in state service, forgoing other job opportunities, and they retired under these contractual terms. The Colorado General Assembly has no right to claw back this earned, accrued, deferred compensation after the fact.

    At some point in recent years the decision was made that part of Colorado PERA’s legal strategy would be to attempt to deny the “automatic” nature of the PERA retiree COLA benefit itself. In hindsight, so much evidence of the “automatic” nature of the PERA COLA benefit exists that this decision now looks foolish. Prior to 2009, Colorado PERA officials had correctly assumed that fully-vested PERA retiree benefits, including contracted “automatic” COLA benefits were inviolate.

    When it became clear that Colorado PERA would attempt to deny the “automatic” nature of the PERA COLA as part of its legal defense strategy, PERA began placing “disclaimers” on documents published on its website that identified the PERA COLA as “automatic.” PERA officials stopped referring to the PERA retiree COLA benefit as “automatic.”

    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

    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 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

    March 24, 1993 (1:32 PM – 2:28 PM)

    Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature’s House Finance Committee in regard to the “automatic” PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA “adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”. Rob Gray characterizes the “automatic” PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.” (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

    From the Colorado PERA 2001 CAFR (financial report), page 64:

    “Summary of Actuarial Methods and Assumptions”

    “Benefits are assumed to increase at a rate of 3.5 percent after payments begin.”

    https://www.copera.org/pdf/5/5-20-01.pdf

    From “Ask Meredith,” December 16, 2009:

    In December 2009, PERA’s Executive Director Meredith Williams was unaware of PERA’s ultimate legal defense strategy in the case, Justus v. State, when he wrote the following: “. . . most other pension plans, public and private, do not have automatic COLAs and remember that Social Security is not a retirement plan.)”

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

    Colorado PERA has since added a “disclaimer” to this publication. (The PERA website is now peppered with disclaimers.)

    Another PERA publication refers to the “automatic” nature of the PERA retiree COLA benefit:

    “PERA Benefits at a Glance,” 2004:

    “Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”

    Yet another PERA publication refers to the “automatic” nature of the PERA retiree COLA benefit:

    PERA Legislative Update, February 2006:

    http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

    “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

    “PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

    Further evidence of the absurdity of Colorado PERA’s denial of the “automatic” nature of the PERA COLA exists. PERA has historically communicated the “automatic” nature of the COLA benefit to the “fiscal note” staff of the Colorado General Assembly. These communications should be on file at the offices of these legislative staffers.

    Colorado PERA tells us in a 2004 document:

    “Whenever legislation is contemplated regarding PERA benefits or contribution rates, PERA asks the actuary for an estimate of the long-term impact. The results are communicated to Legislative Council for preparation of fiscal notes on such legislation.”

    From this document:

    http://www.copera.org/pdf/Legislation/2004/LegUp2-04.pdf

    With such information from Colorado PERA, the Legislative “fiscal note” staff wrote the fiscal note for House Bill 00-1458 (the bill that improved the COLA benefit to a fixed 3.5 percent.) The fiscal note for this bill, HB 00-1458, includes the term “automatic” in the following description of the retiree COLA:

    “Established 3.5% compounded annual automatic COLA effective March 2001.”

    As we know, Colorado PERA contracts with outside, independent actuaries for supplemental actuarial reviews every five years. In 2001, Buck Consultants provided such an actuarial report to the Legislative Audit Committee of the Colorado General Assembly.

    This Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” and the “fixed” COLA, that is “compounded annually for each year of retirement.”

    The Buck Consultants report identifies the 3.5% PERA COLA as “automatic,” contrasting the PERA COLA with an “ad hoc” COLA “as approved by Legislature.”

    Specifically, the report makes reference to:

    “PERA’s automatic 3.5% per year COLA feature”;

    “the guaranteed lifetime income provided by PERA”;

    “COLA – Automatic 3.5%” as opposed to an “ad hoc” COLA;

    “PERA guaranteed benefits at retirement”;

    “Colorado PERA vesting requirement – five years.”

    Further, the Buck Consultants report notes that:

    “Effective March of 2001, the cost of living adjustment was set at an annual fixed rate of 3.5%”;

    “PERA provides inflation protection to retirees with a 3.5% annual COLA,” and

    “Post-Retirement Benefit Increases: Each year on March 1, benefits which have been paid for at least three months are increased. The increase is 3.5% compounded annually for each year of retirement.”

    If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented to the Legislative Audit Committee in 2001?

    Over the years, Colorado PERA has published, and periodically updated a memorandum with a title along the lines of “History of Colorado PERA Legislation.”

    The 2009 version of this memorandum is stored on the website of the Colorado General Assembly at this link:

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

    Right clicking on this PDF, and then clicking on “Document Properties” reveals that the memorandum was prepared by Mr. Karl Paulson of Colorado PERA on 11/30-2009.

    When it became apparent that part of PERA’s legal strategy would be to deny the “automatic” nature of the retiree COLA benefit, PERA suppressed this “History of Colorado PERA Legislation” memorandum which identifies the PERA COLA as an “automatic” COLA benefit. However, they were unable to remove the copy stored on the website of the Colorado General Assembly. Colorado PERA officials replaced the memorandum with a “scrubbed” version of the memo, striking all reference to the “automatic” COLA, as well as pre-1993 references to the “ad hoc” PERA COLA, (which the COLA was at the time.) The “scrubbed” memo is available here:

    http://www.copera.org/pera/active/benefithistory.htm

    The “History of Colorado PERA Legislation” memorandum from 2009 (that is, the “non-scrubbed version of the memo) describes the COLAs in HB 00-1458 as follows:

    “HB 00-1458

    Established 3.5% compounded annual automatic COLA effective March 2001.” “Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.” (The PERA COLA was improved from “automatic” lesser of 3.5 percent or inflation, to a flat “automatic” 3.5 percent in HB 00-1458.)

    Additional PERA documents describing the PERA retiree COLA as “automatic” are available on PERA’s website at the following links:

    http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf
    http://www.copera.org/pdf/5/5-114.pdf
    http://www.copera.org/pdf/Legislation/2006/legislation2006.pdf
    http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf
    http://www.copera.org/pdf/Legislation/2006/LegUp3-06.pdf

    #5: OPINIONS OF COLORADO ATTORNEYS GENERAL SUPPORT COLORADO PERA PENSION COLA CONTRACTS.

    November 18, 2004

    Colorado Attorney General Ken Salazar Opinion (post-DeWitt): “Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly.”

    http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf

    November 17, 1975

    Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”

    http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

    August 14, 1984

    Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee”

    http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

    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 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

    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

    February 23, 2012

    Meredith Williams, Feb 23, 2012, House Finance Committee:

    “What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor’s edge. You can’t fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers. No one has ever done anything quite like that. I am quite anxious for the litigation to get behind us.”

    #6: COLORADO PERA OFFICIALS HAVE TESTIFIED TO THE LEGISLATURE’S JOINT BUDGET COMMITTEE: “THE COLA IS A CONTRACT.”

    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

    Colorado PERA General Counsel: An “actuarial emergency” occurs when a pension plan runs out of cash to pay benefits:

    February 21, 2004

    “PERA General Counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that’s not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.” – Rocky Mountain News, David Milstead.

    Colorado PERA Board Trustee Casebolt: Colorado PERA has plenty of cash to pay benefits:

    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.”

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

    August 17, 2005

    Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): “‘Everyone agrees you certainly can make changes for people you haven’t even hired yet,’ said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. ‘On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.’”

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

    “His (Colorado PERA General Counsel Greg Smith) briefing paper said ‘there has never been a finding in Colorado that the state has reserved its power to make changes’ in PERA’s benefit structure.”

    “The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member. That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan.”

    “Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem.”

    http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/

    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

    December 17, 2009

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

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

  16. Al Moncrief says:

    THE TOP TEN: DAMNING EVIDENCE IN THE COLORADO PERA RETIREE LAWSUIT, JUSTUS v. STATE. Part 2 of 2.

    July 7, 2004

    PERA response to July 5, 2004, Rocky Mountain News Editorial:

    “PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”

    http://www.copera.org/pera/about/newsarchives2004.htm

    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.”

    February 23, 2012

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee: “Those people all have a contract with their employer with the plan. You made changes to impact people like that in SB1.”

    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 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.”

    2012 House Finance Hearings:

    Representative Chris Holbert – February 23, 2012, House Finance Committee, hearing on HB12-1250: “We have a contract, an obligation to the vested members of PERA, and we have to meet that . .”

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

    Representative Kevin Priola – February 23, 2012, House Finance Committee, hearing on HB12-1150: ” . . . taxpayers know that in the end they’re on the hook, State of Colorado taxpayers are on the hook for any (PERA) unfunded liability down the road . . ”

    House Finance Committee Chairman Brian DelGrosso, February 23, 2012:

    “I voted against Senate Bill1, and I voted against Senate Bill 1 not because I felt like we didn’t need to fix PERA, I agreed with that part of it, but I voted against Senate Bill1 for the fact that it did adjust some of the COLAs and it did adjust stuff for folks that were already retired and people that were about ready to retire, and to me I felt like that was violating a contract that those people had got into . . . they played by the rules that were of the game at the time, and these folks . . . got up to where they about to retire or were retired, and now all of a sudden we were going to change the rules of game on them after they were done playing. So to me, that was why I voted against Senate Bill 1, because I felt like that violated some of the contractual issues that we had.”

    Representative Jim Kerr, February 23, 2012: “The taxpayers . . . are obligated to fulfill the (PERA) benefits as soon as someone starts drawing those benefits down.”

    Representative Jim Kerr, February 23, 2012: “They’ve earned those benefits . .” “. . . The taxpayers . . . they’re the ones who ultimately have to make the (PERA) fund whole . . .”

    Representative Jim Kerr, February 23, 2012: “If you’re in a defined benefit program, you have a guarantee.” “PERA does have a guarantee.” “A defined benefit plan is a guarantee.”

    Representative Dickey Lee Hullinghorst, February 23, 2012: “Our state employees earn retirement benefits when they work.”

    Representative Spencer Swalm, February 23, 2012: “There is a contractual obligation here. This is a defined benefit plan, those benefits are guaranteed, and ultimately the taxpayers of the state are on the hook.”

    Representative Dickey Lee Hullinghorst, February 23, 2012: “I would like to know exactly what that (PERA) contractual relationship is.” “We are employers and we pay into PERA as a part of a benefit that’s earned by our employees.”

    Colorado PERA Executive Director Meredith Williams in response to Representative Hullinghorst’s question, February 23, 2012, (after preliminary remarks):

    “We never have to answer that question. It’s not a black and white answer.”

    (My comment: Why is Colorado PERA’s Executive Director, Meredith Williams now hesitant to succinctly state the contractual rights of PERA’s members? Are the employees of PERA-affiliated employers expected to work for decades without knowing clearly what their rights are under their PERA contracts? Are they expected to work each day for pension benefits that are undefined?)

    Representative Hullinghorst, March 1, 2012, House Finance Committee: “My understanding is that when you go to work, and you sign up for PERA benefits, and you are required by the state to do that . . . that’s a contract, and I think that this is potentially actionable.”

    Representative DelGrosso, March 1, 2012, House Finance Committee: “The problem that we ran into with Senate Bill 1 . . . is that when they start adjusting things like the COLA . . . that’s where it opens us up to lawsuits, because people are like ‘hey, I’m five years away from retirement, I’m ten years away from retirement, I’m one year away, I am retired,’ and then we go and make changes that’s where we have lawsuits, because hey this a violating a contract . . . ”

    Representative Kefalas, March 1, 2012, House Finance Committee: “It still does affect those members that have signed contracts that are non-vested. Is that correct? And therefore I still have concerns about L.001.”

    (My comment: Here Rep. Kefalas expressed concern about impacting PERA benefits of “non-vested” PERA members, yet he supported Senate Bill 10-001, a bill abrogating “fully-vested” Colorado PERA pension contracts . . . a bill that took one-third of the accrued public pension benefits of Colorado PERA retirees. This is stunning admission.)

    Representative Kagan, March 1, 2012, House Finance Committee: “This is a benefit cut to public employees who work hard all of their lives and one of their measures of compensation is their benefits package, that’s how we manage to attract such fine public employees as we have on such low salaries is because they know ‘yeah, the salaries aren’t as high as I’d like, but I’m still very loyal to the state, I work very hard for the state for a very low salary because I do have a respectable benefits package, and I’m sure that that benefits package will be there for me when I retire.’ Now you come and you say we’re going to cut those benefits, we’re going to reduce the value of that package . . .”

    Representative DelGrosso, March 1, 2012, House Finance Committee: “These new hires know what their retirement will be, so when they’re getting into the system they can choose to accept the job or not knowing what their retirement benefits will be.”

    “We are still involved in lawsuits over Senate Bill 1 on whether or not those were constitutional because we made changes to people that are currently in the system that were vested, current retirees. So, Senate Bill 1 did affect people’s current retirements and those that were retired.”

    Representative DelGrosso, March 1, 2012, House Finance Committee: “We have to look 25 to 30 years into the future to avoid the lawsuits that we are currently involved in because of Senate Bill 1.” “We’re forced to, to avoid lawsuits, to look that far into the future.”

    Representative Hullinghorst, March 1, 2012, House Finance Committee: “The current suits are relative to COLA.” “There was some awareness that that possibly could draw some suits.” “It was much less a problem with cutting benefits than any other thing you could look at in that regard.” “This is a more difficult . . . approach than the COLA situation.”

    (My comment: Incredibly, here we have Rep. Hullinhorst stating that enactment of PROSPECTIVE public pension reform for NEW HIRES is a “more difficult approach” for the Colorado General Assembly than is the outright, intentional breach of fully-vested Colorado PERA pension contracts of PERA members who had worked for PERA-affiliated employers FOR DECADES. The lobbyists earned their pay.)

    Representative Kefalas, March 1, 2012, House Finance Committee: “I am concerned that this will undermine the contractual obligations that we have made with folks who are state employees and that could invite litigation and I think that’s something the state does not need.”

    (My comment: Again, Rep. Kefalas defends the interests of non-vested Colorado PERA members, members who have NO contractual right to any PERA annuity.)

    THE RITTER ADMINISTRATION’S “GASB LETTER.”

    Why did officials in the Colorado State Controller’s Office describe Colorado PERA pension benefits as a “present obligation” arising from the “employment exchange transaction,” in a letter to federal regulators, just six months after SB10-001 was signed? Why did they write that taking the COLA benefit changes the “net economic benefit to the employee” that was “entered into” in the “exchange transaction agreement” six months after the bill was signed?

    Did officials in the State Controller’s office disagree with Governor Ritter’s action on SB10-001? Were they astonished that the General Assembly would attempt to break Colorado public pension contracts? Were they prevented from speaking openly, believing that such candor would end their careers? Did they hope that their letter would be discovered in order that their view of state contractual pension obligations be known? How many state employees find themselves in this predicament? How many employees of the Colorado Attorney General’s Office, or the state Judicial Branch are in this predicament? employees of PERA-affiliated local governments?

    Ritter Administration GASB Letter:

    “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] . . . serve[s] to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

    Here the Ritter Administration states clearly that a reduction in a COLA benefit [that is earned in an “exchange transaction”] changes the “net economic benefit” to the employee under the employee’s pension “agreement.” Under SB 10-001, the “net economic benefit,” for an average PERA member was “reduced,” according the Ritter Administration, by “$165,000.”

    Read the entirety of the Ritter Administration letter on the GASB site here:

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

    August 2, 2010

    Excerpts, 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

    #7: THE TAKING OF ACCRUED PERA COLA BENEFITS WAS NOT THE RESULT OF A DELIBERATIVE PROCESS . . . IT WAS PRECONCEIVED. THE LEGISLATURE DID NOT PURSUE AN INTERROGATORY OR APPOINT AN INTERIM STUDY COMMITTEE, AS THIS WOULD HAVE INTERFERED WITH THE PLANNED COLA TAKING.

    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

    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

    Why did the Colorado General Assembly believe that market volatility in 2008/09 was a “window of opportunity” to break PERA pension contracts, but market volatility in 2001 was NOT a “window of opportunity” to break PERA pension contracts? In October 1987, U.S. stock markets fell 23 percent over ten days (beginning with “Black Monday.”) Why was this 1987 market volatility not seized by Colorado legislators as an opportunity to break PERA pension contracts? What was the reaction of the Colorado PERA Board to the market drop in 1987?

    February 1, 2010

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

    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

    COLORADO PERA BOARD OF TRUSTEES CONTROLLING THE LEGISLATIVE PROCESS.

    Colorado PERA’s propaganda has emphasized that the Colorado Legislature requested that the PERA Board of Directors make recommendations to shore up the PERA trust funds. I ask if this Colorado PERA assertion is an attempt to mislead. Colorado PERA went so far as to emphasize the General Assembly’s “legislative mandate” in a Response Brief submitted to the Denver District Court:

    “By LEGISLATIVE MANDATE the PERA Board extensively studied the underfunding and consulted with its members . . . before proposing a solution to the General Assembly.”

    Link:

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

    I ask: Did Colorado PERA plant this request language into SB 09-282 at the end of the 2009 legislative session in order to lend a patina of legitimacy to what was in fact a premeditated attempt to breach pension COLA contractual obligations?

    Recall Senator Lundberg’s statement on the Senate floor during the SB 10-001 debate: “This bill is a deal that was cut before this body met.”

    Was Colorado PERA’s ostensible, impartial examination of pension reform options in 2009 in reality a ruse constructed by PERA lobbyists to add legitimacy to a process with a predetermined conclusion? To falsely portray a preordained conclusion to breach pension COLA contracts as the result of an extensive, deliberative process?

    I wonder, did the request for a PERA study actually come from the Colorado General Assembly? Was this request the product of SB 10-001 co-prime sponsor Senator Josh Penry’s mind? Did he conceive this idea to request PERA recommendations? Or, was this idea planted in the Penry brain by PERA’s lobbyists?

    In 2009, the Colorado General Assembly enacted legislation (SB 09-282) to merge Denver Public Schools with Colorado PERA (specifically, to merge the assets and liabilities of Denver Public Schools into Colorado PERA.) A provision of SB 09-282 required that the PERA Board of Trustees submit recommendations to the Colorado General Assembly regarding methods of responding to the decrease in the value of the association’s assets on or before November 1, 2009. Note that this bill asks for “possible methods” to respond to the decrease in the value of PERA’s assets. The General Assembly did not ask that the PERA Board dictate a plan that would breach PERA’s contractual pension obligations. Implicit in the request from the General Assembly was the fact that the requested “possible methods” would be constitutional.

    On April 21, 2009, Senator Penry, the co-prime sponsor of SB 10-001 amended SB 09-282 on the floor of the Senate. His prepared amendment to the bill required the PERA Board to make recommendations to the Legislature regarding “possible methods” to respond to the decrease in the value of PERA’s assets. His amendment required that this report be provided to the Legislature by September 1, 2009. Two days later, Senator Sandoval amended the bill (SB 09-282) to move the deadline for submission of the report from September 1, 2009 to November 1, 2009. (The PERA Board wanted more time? It looks like the PERA Board may claim some ownership in the statutory language requiring the “study.” In fact, PERA lawyers may very well have drafted the entire amendment.)

    Questions for Senator Penry: Did you originate the idea to require the PERA Board to make recommendations to the General Assembly regarding possible methods to respond to the decrease in PERA assets of your own accord? Or, did you offer this amendment on behalf of a PERA lobbyist? Another lobbyist? Another legislative member?

    The drafter of SB 09-282 was a lawyer from the General Assembly’s Office of Legislative Legal Services, Nicole Myers. Questions for Ms. Myers: Who asked you to draft the amendment requesting that the General Assembly make recommendations regarding methods to respond to the decrease in PERA assets? A lobbyist? A PERA lobbyist? Did a PERA lobbyist make this request on behalf of Senator Penry? Did a PERA lobbyist provide a draft of their desired language in this regard? Please check your records.

    LEGISLATIVE LEADERSHIP OF THE COLORADO GENERAL ASSEMBLY WANTED TO KEEP STATE LEGISLATORS IN THE DARK ON PERA PENSION RIGHTS.

    In 2009, the General Assembly’s Leadership did not want to know the truth, and they did not want others to know the truth. Thus, Leadership did not pursue an interrogatory to the Colorado Supreme Court addressing the constitutionality of their proposal to take contracted, accrued PERA COLA benefits. The Denver Post Editorial Board encouraged the General Assembly to pursue an interrogatory. This advice was ignored by Legislative Leadership. (Better to put thousands of old people through hell.)

    Leadership did not want the rank and file members to know the truth. In 2009/2010 how many members of the Colorado Legislature could tell you the difference between an “automatic” public pension COLA benefit and an “ad hoc” COLA benefit? Two? Three out of 100?

    How many state legislators could tell you what an ARC is in 2009? How many knew that the General Assembly had skipped full payment of that ARC for a decade? How many can answer even the most basic questions regarding public pension contractual rights even today?

    How many had read the on-point Colorado case law regarding the contractual nature of pension COLA benefits in our state? How many had even read the four page Colorado Attorney General’s opinion on the contractual nature of public pension benefits in Colorado?

    Can these state legislators be blamed for their lack of knowledge in this very complex subject area, if that ignorance was by design of the Leadership of the General Assembly? That ignorance worked to the benefit of self-interested parties (public sector unions) and their 27-member troop of lobbyists pursuing the PERA pension COLA contract breach.

    Why would any state legislator assume that public pension benefits in Colorado are not part of contracted compensation for public sector workers in the state? Do they expect that these employees will work for compensation that is not determined in advance, that is not “defined,” as in “defined benefit” pension plan? Did they hold the opinion that public sector workers in Colorado will give a day of labor for whatever compensation is deemed appropriate by the benevolent sovereign, the Colorado General Assembly?

    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

    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

    July 19, 2009

    “That may include asking Colorado’s Supreme Court, via what’s called an interrogatory from the legislature, about what changes can be done legally.”

    “It will complicate the situation, but given how disruptive such a change could be — imagine the accounting nightmare of changing benefits only to see the court strike it down some years later — it would be helpful if the court could answer such a question in advance of legislation.”

    http://www.denverpost.com/opinion/ci_12856631

    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.” (My comment: Would it not have been simpler to send an interrogatory to the Colorado Supreme Court in 2009?)

    #8: THE COLORADO LEGISLATURE OVERREACHED IN PUSHING 90 PERCENT OF THE COSTS OF SB10-001 ONTO PERA RETIREES AND IN PLACING AN UNNECESSARY 100 PERCENT FUNDED GOAL INTO THE PERA CONTRACT.

    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

    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.”

    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 29, 2011

    Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

    “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.”

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

    COLORADO PERA GENERAL COUNSEL: TO MEET CONSTITUTIONAL MUSTER, A CHANGE TO A PENSION CONTRACT MUST BE THE “MINIMUM NECESSARY.”

    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

    #9: COLORADO PERA’S FUNDED RATIO HAS BEEN MUCH LOWER IN THE PAST, WHILE PERA PENSION CONTRACTS WERE HONORED.

    December 31, 2009

    At the time of the breach of Colorado PERA pension contracts, the Colorado PERA actuarial funded ratio (AFR) stood at 68.9 percent. This funding level is 9.1 percent below the 40-year average of the PERA actuarial funded ratio. It was 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, and 3.1 percent below the Wilshire Associates average U.S. public pension actuarial funded ratio that year. At the time of the contract breach the PERA AFR stood at a level 1.1 percent below the level at which Standard and Poor’s considers public pension systems to have “above average” funding. In 2010, the General Assembly determined that the Colorado PERA pension plan faced such financial stress that PERA pension contracts must be broken at a 68.9 percent AFR. 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
    Standard and Poor’s Public Pension System Ratings:

    “Standard & Poor’s, ‘U.S. State Ratings Method¬ology,’ Global Credit Portal, Jan. 3, 2011.”

    “Table 25 – Pension Funded Ratio

    Strong – 90% or above
    Above Average – 80% to 90%
    Below Average – 60% to 80%
    Weak - 60% or below.”
    http://www.standardandpoors.com/spf/upload/Ratings_US/US_State_Ratings_Methodology_Related_2.pdf

    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

    From the SB10-001 hearing:

    “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 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.”

    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

    June 3, 2003

    Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”

    July 7, 2004

    PERA response to July 5, 2004, Rocky Mountain News Editorial:

    “PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”

    http://www.copera.org/pera/about/newsarchives2004.htm

    October 28, 2004

    PERA official: Legislators say PERA is “too well-funded” at an 87 percent actuarial funded ratio. Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 82-year] history, in 1999 and 2000.” Silver and Gold Record:

    November 4, 2005

    PERA Shareholders Meeting Presentation, Fall, 2005:

    “Note that PERA’s funded status was lower 30 years ago than it is now. You may recall that there was no perceived ‘crisis’ in PERA’s funded status in 1975.” “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent. Why? Because not all benefits are due and payable today or tomorrow . . . PERA can weather the ups and downs in the markets.” “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”

    http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf

    A Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:

    “From a long-term perspective, however, one can’t really pin too much of the pension problem on the recent stock market pullback . . .”. “During the 1970s, funding ratios generally hovered between 50 and 60 percent.” (Yet, public pension contracts in the United States were honored.)

    February 24, 2006

    “In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”

    http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/

    March 9, 2006

    Silver and Gold Record: “Williams noted that most people don’t have enough money to pay off their mortgages, and that PERA’s assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’” (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)
    https://www.cu.edu/sg/messages/4871.html

    June 5, 2006

    PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)

    http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf

    October 26, 2006

    Silver and Gold Record: “One attendee asked if there was any similar controversy in the 1970s, when PERA’s unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.” “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools. Williams said this ‘employer contribution’ will not affect retirees . . .”
    https://www.cu.edu/sg/messages/5245.html

    December 17, 2009

    The Colorado General Assembly’s Joint Budget Committee (JBC) meets with representatives of Colorado PERA. 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

    March 1, 2012

    Colorado PERA General Counsel Greg Smith on PERA’s return assumption:

    ” . . if we fall short of the 8 percent, what it does is it takes us longer to pay off that unfunded liability, instead of doing it in 30 years it may take us 35 years, it may take us 38 years, it may take us 50 years.”

    (My comment: Here Colorado PERA’s General Counsel admits that the 30-year time frame for amortization of PERA liabilities set in Colorado statutes is arbitrary. The 30-year period is merely an arbitrarily set goal, however this “goal” in Colorado law was used to justify the breach of Colorado PERA pension contracts in 2010. Thus, an important actuarial assumption used to justify the taking of fully-vested Colorado PERA benefits in SB10-001 was arbitrary. This assumption, put in statute by the same General Assembly that enacted SB10-001, was used to calculate projections of PERA’s future unfunded liabilities, placing unnecessary financial pressure on the PERA trust funds. Note that just 15 years ago, Colorado PERA’s “maximum amortization period” was set in statute at 60 years.

    Administrators of public pension funds in the United States expect market volatility. To paraphrase the author of a recent law review: “The unanticipated severity of an anticipated event does not justify unilateral modification of a contract.” In any event, Colorado PERA pensioners, who have fully-vested pension contracts, by design bear no market risk in their DEFINED benefit pension plans.

    “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

    #10: THE DUBOFSKY/MARQUEZ CONNECTION.

    Colorado Supreme Court Justice Monica Marquez has worked for the defense in the Colorado PERA retiree lawsuit, Justus v. State:

    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 the 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

    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

    In 2009, Colorado PERA officials told the members of the Joint Budget Committee that they had obtained outside legal counsel’s advice regarding Colorado PERA contractual rights:

    December 17, 2009

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

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

    Sometime in 2009

    Attorney Jean Dubofsky, at the request of Colorado PERA, creates a legal opinion arguing that the Colorado Legislature may 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

    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

    October 18, 2010

    Jean Dubofsky deposition submitted to Colorado PUC stating 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.)

    March 7, 2013

    Colorado Supreme Court Justice Marquez recuses herself in Lobato case deliberations, since she had previously worked on the Lobato 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

    Support public pension contractual rights and the rule of law in the United States. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  17. Al Moncrief says:

    MONTANA PUBLIC SECTOR UNIONS TO SUE OVER PENSION COLA THEFT. (COLORADO’S UNIONS SUPPORTED THE TAKING OF THE COLORADO PERA COLA BENEFIT FROM PERA PENSIONERS.)

    In 2010, Colorado public sector unions supported the Colorado Legislature’s breach of the contracts of Colorado PERA retirees (in SB10-001.) This bill took earned, accrued, fully-vested, contracted PERA COLA benefits from retirees, i.e., the PERA retiree’s “inflation protection” provided for in their PERA contracts. A lawsuit over this taking, Justus v. State, is now pending before the Colorado Supreme Court.

    Colorado PERA Executive Director Meredith Williams recorded the names of Colorado public sector unions supporting the taking of the PERA COLA benefit here:

    “In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA . . . the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

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

    In 2010, the Colorado General Assembly colluded with those who ACTUALLY OWE the Colorado PERA pension debt, Colorado PERA-affiliated employers (the State of Colorado and Colorado local governments) and those seeking to lower future PERA pension contributions for their “dues-paying,” (non-retired) members (Colorado public sector unions.) This collusion culminated in the bill, SB10-001, breaking the pension contracts of Colorado PERA retirees.

    By taking the contracted PERA COLA benefit, the Colorado Legislature is attempting to slash the PERA pension debt of Colorado state and local governments in order to further lower taxes in the state with the lowest per capita state tax burden in the nation. The Colorado Legislature is attempting to use a legal contrivance to justify the taking of one-third to one-half of the accrued PERA pension benefit from Colorado PERA retirees. The Colorado Legislature is attempting to “inflate away” its PERA pension debt, breaking the statutory requirement to pay the PERA COLA, while the Colorado PERA Board of Trustees’ own long-term actuarial inflation assumption is 3.75 percent.

    In 2010, financially self-interested parties told Colorado PERA retirees that they were greedy to expect the State of Colorado and Colorado local governments to honor their Colorado PERA pension contracts.

    In 2010, the Colorado General Assembly spat in the faces of those who have given their lives in public service . . . Colorado PERA retirees.

    Rather than supporting the breach of pension contracts like Colorado’s public sector unions, today, Montana’s public sector unions announced that they will sue the State of Montana over the Montana Legislature’s recent taking of retiree pension COLA benefits. (In Montana, the COLA is known as the “GABA,” “guaranteed annual benefit increase.”):

    MEA-MFT:

    “We keep getting calls and emails asking if MEA-MFT is in fact going to litigate legislated amendments seriously truncating and delaying Guaranteed Annual Benefit Adjustments or GABAs in PERS and TRS.

    The answer is YES!

    MEA-MFT is right now working with other advocate organizations representing current and future retirees on a common, comprehensive legal challenge to the legislature’s GABA attacks. We have retained counsel. We are developing compelling legal arguments. We are vetting possible plaintiffs. We will file when it is the right time to file. And we expect to win.

    MEA-MFT President Eric Feaver”

    From helenair.com:

    “Bullock signs pension fixes, school funding bill.”

    “The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees.”

    “The state’s largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes.”

    http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

    Eric Feaver, President, MEA-MFT:

    “There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)”

    MONTANA GOVERNOR: THE COLA TAKING IS UNCONSTITUTIONAL.

    From helenair.com:

    “In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality.”

    “‘We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,’ Villa said. ‘It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.’”

    http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

    Montana pensioners:

    “The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a ‘deal’s a deal’ only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?”

    “The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA.”

    “Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees.”

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    (My comment: Like Montana, Colorado has an “automatic” public pension COLA benefit, that is a contractual obligation of the Colorado PERA pension system. For every day of labor that Colorado PERA retirees provided, with every monthly PERA contribution that Colorado PERA retirees made, they paid for their contracted PERA COLA. Having benefited from this labor, Colorado PERA-affiliated employers now want to retroactively take this earned “deferred compensation” from PERA retirees.
    In Colorado, the Legislature did not bother to ask its legal staff for a legal opinion addressing the taking of the Colorado PERA COLA benefit. Although encouraged to do so, prior to the taking, the Colorado Legislature did not bother to ask the Colorado Supreme Court for an opinion on the constitutionality of their PERA pension proposal (through an interrogatory.) The Colorado Legislature did not appoint an interim study committee to examine legal, PROSPECTIVE, PERA pension reform options, instead abdicating its policy-making authority in this area to lobbyists representing self-interested Colorado PERA employers trying to escape their debts.)

    Colorado PERA active and retired members. Support public pension contractual rights in the USA. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  18. Al Moncrief says:

    NEW HAMPSHIRE JUDGE: PUBLIC EMPLOYEE PENSIONS ARE PROTECTED ON DAY ONE. COLORADO LEGISLATURE: PUBLIC EMPLOYEE PENSIONS ARE NOT PROTECTED EVEN ON DAY 10,950.

    A New Hampshire judge recently determined that public employee contractual rights to their accrued pension benefits vest immediately upon employment. This conclusion seems logical. A worker wants to know what she is earning in salary and deferred pension compensation for each day of labor. If she does not know this, how can she make an informed, economic decision regarding alternative employment opportunities? It is truly immoral for an employer to change the rate of compensation (salary or deferred pension compensation) after the employer has already benefited from the worker’s labor (See the Colorado bill, SB10-001.)

    This New Hampshire judge determined that public pension benefits are legally protected on Day One. Ironically, the Colorado General Assembly does not consider accrued, earned, contracted Colorado PERA pension benefits to be protected even on Day 10,950 (30 years.) Thus, the State of Colorado is a defendant in the lawsuit, Justus v. State.

    In 2010, a majority of the members of the Colorado Legislature voted to support the breach of the fully-vested public pension COLA contracts of Colorado PERA retirees. Last year, the Colorado Court of Appeals agreed with the PERA retirees that the Colorado Legislature unconstitutionally seized their COLA benefits. This lawsuit, Justus v. State, is now pending before the Colorado Supreme Court.

    The New Hampshire Decision.

    From seacoastonline.com:

    “Judge rules in union pension case: Says state workers are protected from Day One of employment.”

    “CONCORD — A superior court justice has ruled in the lawsuit that state unions filed to block pension reform that state workers are contractually protected beginning at the time of employment.”

    “Hillsborough County Superior Court Judge Gillian Abramson ruled May 23 in the case of Professional Fire Fighters of New Hampshire et al. vs. the State of New Hampshire and the state Retirement System that ‘vesting occurs upon commencement of permanent employee status.’ It is a position long held by the N.H. Retirement Security Coalition, but was challenged when the Republican-led Legislature crafted House Bill 2 in 2011, which made changes to the benefits of current employees.”

    (My comment: In my opinion, the Colorado Coalition for Retirement Security, an organization that supported SB10-001 [the bill taking contracted COLA benefits from Colorado PERA retirees] believes that Colorado PERA retirees are more “secure” in their retirement when the State of Colorado seizes one-third to one-half of their contracted annuity stream to maintain Colorado’s status as a tax haven. How does having one’s property taken, one’s contract ignored, bring a person greater “security”?)

    New Hampshire decision:

    “‘Workers with five years in the system are just as committed to their work as those with 20 years in the system, and therefore shouldn’t be treated differently by the retirement system. The decision is right to rule in favor of promoting worker retention and recruitment,’ said Steve Arnold, a retired Portsmouth police officer and the current state director for the New England Police Benevolent Association.”

    (My comment: Now that public sector unions in Colorado have argued that the Colorado PERA pension benefits of their (former, “non-dues paying,” retired) members are not constitutionally protected, even after 30 years, how will these public sector unions argue in the future that the PERA pension benefits of their members who have 3 or 7 or 12 years of service are constitutionally protected? Those who should defend contracted public pension benefits in Colorado argue that Colorado governments should be free to break these contracts at will.)

    New Hampshire decision:

    “Member unions of the coalition filed suit in court asking a judge to rule that the changes to the state budget that would affect retirement benefits are unconstitutional. They argued that certain sections of the budget bill violate the Contract and Takings Clauses of both the state and U.S. constitutions when it comes to N.H. Retirement System members who reached permanent employment status or retired as of Jan. 1, 2012.”

    “‘According to a statement from the retirement coalition, the court has requested, and the coalition will provide, additional information supporting their argument of the damages the legislative changes make to workers who are ‘prepared to give a lifetime of service to the state.’”

    Link to complete article:

    http://www.seacoastonline.com/articles/20130530-NEWS-305300397

    From the New Hampshire Retirement System website:

    “Below is a brief summary of pending lawsuits regarding legislative changes to RSA 100-A, the statute governing the New Hampshire Retirement System (NHRS, the retirement system):

    HB 2 Benefits suit – Filed February 2012:

    Professional Fire Fighters of NH v. State of NH”

    “This suit, filed in Hillsborough County Superior Court by a coalition representing active and retired public employees, teachers, police, and firefighters, challenges a number of the pension provisions in House Bill 2, passed in 2011. The State of New Hampshire and NHRS were named as defendants in this lawsuit.”

    “The Plaintiffs claim HB 2 violates the New Hampshire and U.S. constitutions by substantially impairing vested contract rights, Judge Abramson issued a ruling May 24, 2013, on the pending motions for partial summary judgment filed last August. In her ruling she stated that that ‘vesting’ of the plaintiffs’ contract rights occur at the time of employment. The next step is for her to make a determination whether or not there was a substantial impairment of the contract rights of the plaintiffs. Previously, in the related HB 2 Contribution suit in Merrimack County, Judge McNamara determined that vesting occurred at 10 years of service.”

    Thoughts on “substantial” impairments of public pension contracts from the Beerman paper addressing contractual public pension rights at this link:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2131481

    “Amy Monahan concludes from her examination of the case law that in general, changes to the level of benefits and changes that affect the rights and responsibilities of employers are held to be substantial impairments. In her view, except perhaps in extraordinary circumstances, changing the method for calculating benefits so that lower benefits are paid is likely to be found to be a substantial impairment of the contract.”

    “At the time the contract was made, had the employees’ known that their pension promises were subject to significant revision, they may not have accepted government employment or they may have demanded significantly higher current compensation.”

    Link to NHRS:

    http://www.nhrs.org/documents/NHRS_Legal_Update_WEB.pdf

    Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  19. Al Moncrief says:

    U.S. CENSUS BUREAU: COLORADO RENEGED ON ITS PUBLIC PENSION CONTRACTS WHILE SPENDING A MERE 2.08 PERCENT OF REVENUES ON PUBLIC PENSIONS . . .

    WHILE RANKING 35TH IN THE NATION IN FINANCIAL SUPPORT FOR PUBLIC PENSIONS . . .

    WHILE DEAD LAST AMONG THE “NON-SOCIAL SECURITY” STATES IN PUBLIC PENSION SUPPORT.

    Colorado PERA retirees have fully performed under their Colorado PERA pension contracts. Nevertheless, in 2010, the Colorado General Assembly acted in bad faith, willfully breaching its contracts with these Colorado PERA pensioners. The Colorado General Assembly is attempting to abrogate the PERA pension COLA, “escalator” provision of the written, statutory Colorado PERA pension contract. The Colorado General Assembly is attempting to renege on one-third to one-half of its contractual obligations to pay Colorado PERA pension benefits.
    In 2010, the Colorado Legislature allowed a pack of 27 lobbyists to ram a bill through the legislative process breaking the contracts of Colorado PERA pensioners. During the debate on this bill, SB10-001, lobbyists, members of the Colorado Legislature, and Colorado PERA administrators argued that if the State of Colorado and local governments were forced to honor their PERA pension contracts, this would burden Colorado taxpayers.

    Yet, according to the U.S. Census Bureau, at the time of the Colorado PERA pension contract breach in 2010, Colorado ranked 35th in the nation in taxpayer support for public pension obligations. At the time of the taking of fully-vested, accrued Colorado PERA retiree pension COLA benefits by the Colorado Legislature, Colorado’s financial support for public pensions was slightly more than two percent of all Colorado public sector expenditures. (It would be interesting to examine historical data comparing Colorado’s financial support for public pensions to the level of support of other states for public pensions.)

    Colorado PERA’s Chief Investment Officer, Jennifer Paquette, provided comparative data for the year 2008. In a May 22, 2011, Denver Post Guest Commentary entitled, “Careful Planning, Not Hope, Drives PERA” Jennifer Paquette writes:

    “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/commented/ci_18100068?source=commented-

    If we allow state governments in the United States to break their contracts based on flimsy, self-serving, political arguments, our Constitution will be meaningless, and the rule of law in the United States will be a myth. It is not possible for the defendants in the lawsuit, Justus v. State, to legitimately argue that contracted Colorado PERA pension benefits are a burden on taxpayers while Colorado ranks 35th in the nation in support for public pensions, and support for public pensions consumes two percent of Colorado state and local government expenditures. Two percent of expenditures is hardly a crushing burden on Colorado taxpayers. In any event, under the Colorado Constitution, Colorado state and local governments cannot escape their contractual obligations even if meeting these contractual obligations is a burden on Colorado taxpayers. Debts are by their nature “burdensome.” When Colorado state and local governments became parties to Colorado PERA pension contracts they freely assumed the contractual, financial burden of providing future deferred compensation to members of the Colorado PERA pension system. In the United States, neither individuals, nor governments, may set aside the Contract Clause of the U.S. Constitution when it is simply convenient. Governments cannot set aside their contractual obligations in order to make discretionary expenditures.

    Here is a link to a recent NASRA Issue Brief reporting U.S. Census Bureau public pension expenditure data:

    http://www.nasra.org/resources/NASRACostsBrief.pdf

    And, some background on NASRA:

    “NASRA (the National Association of State Retirement Administrators) is a non-profit association whose members are the directors of the nation’s state, territorial, and largest statewide public retirement systems. NASRA members oversee retirement systems that hold more than $2.0 trillion in assets and that provide pension and other benefits to more than two-thirds of all state and local government employees.”

    http://www.nasra.org/AboutNasra/whoweare.htm

    According to the U.S. Census Bureau, 34 states spend more on public pensions than does Colorado, but we see only a handful of states in breach of their public pension contracts.

    “NASRA ISSUE BRIEF: Spending on Public Employee Retirement Systems, May 9, 2013.”

    “Table 1: State and Local Government Contributions to Pensions as a Percentage of All State and Local Government Spending, by State, 2010.

    Alabama 2.85
    ALASKA 2.25
    Arizona 2.42
    Arkansas 3.02
    CALIFORNIA 3.58
    COLORADO 2.08
    Connecticut 4.54
    Delaware 1.99
    District of Columbia 1.33
    Florida 2.58
    Georgia 2.14
    Hawaii 3.57
    Idaho 2.38
    ILLINOIS 4.75
    Indiana 2.82
    Iowa 1.73
    Kansas 2.03
    Kentucky 2.58
    LOUISIANA 3.31
    MAINE 2.77
    Maryland 3.14
    MASSACHUSETTS 3.36
    Michigan 2.32
    Minnesota 1.62
    Mississippi 2.81
    Missouri 3.08
    Montana 2.40
    Nebraska 1.60
    NEVADA 2.84
    New Hampshire 2.47
    New Jersey 2.03
    New Mexico 2.77
    New York 3.68
    North Carolina 0.99
    North Dakota 1.20
    OHIO 2.85
    Oklahoma 3.34
    Oregon 1.46
    Pennsylvania 1.29
    Rhode Island 3.99
    South Carolina 2.24
    South Dakota 1.54
    Tennessee 1.97
    TEXAS 2.16
    Utah 2.76
    Vermont 1.09
    Virginia 3.15
    Washington 1.40
    West Virginia 3.87
    Wisconsin 2.07
    Wyoming 1.24
    U. S. weighted avg. 2.77″

    (My comment: Note that Colorado’s support for public pensions [2.08 percent] was 25 percent below the national average support for public pensions [2.77 percent] in 2010. Also, I show the 10 states “where more than one-half of public employee payrolls are estimated to be outside of Social Security in ALL CAPS in Table 1.)

    Source: U.S. Census Bureau

    The ten states where the preponderance of public employees are outside of Social Security:

    ALASKA – 2.25 percent
    CALIFORNIA – 3.58 percent
    COLORADO – 2.08 percent
    ILLINOIS – 4.75 percent
    LOUISIANA – 3.31 percent
    MAINE – 2.77 percent
    MASSACHUSETTS – 3.36 percent
    NEVADA – 2.84 percent
    OHIO – 2.85 percent
    TEXAS – 2.16 percent

    (My comment: Note that the average public pension support among the ten “non-Social Security” states, in 2010, was 2.79 percent, while Colorado’s level of support that year was 2.08 percent. One might expect that in states where the preponderance of public employees are not eligible to receive Social Security benefits [such as Colorado] these states would offset that detriment to public employees with more robust financial support for public pension benefits. One might have this expectation, since taxpayers in these states are spared the “burden” of making the 6.2 percent Social Security payment under FICA for these public employees. Yet, when we isolate the states where most public employees are ineligible for Social Security benefits, what do we find? Even in this select group we find Colorado at the bottom of the barrel in terms of financial support for public pensions at 2.08 percent.)

    NASRA Issue Brief:

    “Social Security Coverage: Twenty-five to thirty percent of state and local governments and their employees make contributions to their retirement plan instead of to Social Security. This is the case for most to substantially all of the state and local government workforce in seven states, 40 percent of the nation’s public school teachers, and a majority of firefighters and police officers. Pension benefits—and costs—for those who do not participate in Social Security are usually higher than for those who do participate in order to compensate for the absence of Social Security benefits. This higher cost should be considered in the context of the 12.4 percent of payroll, or an estimated $31.2 billion annually, these employers and employees would otherwise be paying into Social Security.”

    NASRA Issue Brief:

    “On a nationwide basis, pension contributions made by state and local governments account for roughly three percent of total spending (see Figure 1).”

    (My comment: Note that Colorado governments contribute one-quarter less than the national average to support public pensions and yet they find this level of support so burdensome that they seek to escape their contractual obligations.)

    NASRA Issue Brief:

    “Three Percent Nationwide: Based on the most recent information provided by the U.S. Census Bureau, approximately three percent of all state and local government spending is used to fund pension benefits for employees of state and local government. As shown in Figure 2, pension costs since 1980 have been reliably stable, declining from around four percent to three percent in 2010.”

    “Although pensions are not the state-local budget-drain that some claim they are, as shown in Table 1, spending levels for states and cities do vary from the national average, from less than one percent to more than four percent.”

    “In addition, some states and cities do not contribute the amount determined actuarially to adequately fund the plan.”

    (My comment: The Center for Retirement Research at Boston College compiles the “Public Plans Database,” which includes the State and Local Defined Benefit Plans dataset.

    http://crr.bc.edu/data/public-plans-database/

    Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” [ARC], from the Center for Retirement Research at Boston College Public Plans Database:

    2001 Colorado School – 100% ARC Paid
    2002 Colorado School – 100% ARC Paid
    2003 Colorado School – 69% ARC Paid
    2004 Colorado School – 51% ARC Paid
    2005 Colorado School – 48% ARC Paid
    2006 Colorado School – 62% ARC Paid
    2007 Colorado School – 60% ARC Paid
    2008 Colorado School – 68% ARC Paid
    2009 Colorado School – 65% ARC Paid
    2010 Colorado School – 70% ARC Paid
    2011 Colorado School – 89% ARC Paid
    2001 Colorado State – 100% ARC Paid
    2002 Colorado State – 100% ARC Paid
    2003 Colorado State – 69% ARC Paid
    2004 Colorado State – 51% ARC Paid
    2005 Colorado State – 48% ARC Paid
    2006 Colorado State – 58% ARC Paid
    2007 Colorado State – 56% ARC Paid
    2008 Colorado State – 63% ARC Paid
    2009 Colorado State – 61% ARC Paid
    2010 Colorado State – 62% ARC Paid
    2011 Colorado State – 85% ARC Paid
    2001 Colorado Municipal – 100% ARC Paid
    2002 Colorado Municipal – 100% ARC Paid
    2003 Colorado Municipal – 69% ARC Paid
    2004 Colorado Municipal – 62% ARC Paid
    2005 Colorado Municipal – 64% ARC Paid
    2006 Colorado Municipal – 85% ARC Paid
    2007 Colorado Municipal – 84% ARC Paid
    2008 Colorado Municipal – 98% ARC Paid
    2009 Colorado Municipal – 96% ARC Paid
    2010 Colorado Municipal – 101% ARC Paid
    2011 Colorado Municipal – 139% ARC Paid

    According to the 2011 Colorado PERA CAFR [annual financial report], the dramatic increase in the percentage contributed for the Colorado PERA Local Government Division in 2011, is a “result of the changes contained in SB10-001,” [2011 PERA CAFR Financial Section, page 82.] Apparently, when the State of Colorado breaks its public pension contracts it really facilitates the payment of the full ARC in some PERA divisions.)

    NASRA Issue Brief:

    “The chronic failure by some pension plan sponsors to pay required contributions results in greater future contributions to make-up the difference.”

    (My comment: Instead, of “making-up the difference” resulting from ignoring its public pension bills, the Colorado Legislature is trying to escape its contractual PERA pension obligations, trying to take accrued public pension COLA benefits from pensioners.)

    NASRA Issue Brief:

    “A variety of state and local laws and policies guide governmental pension funding practices. Most require employers to contribute what is known as the Annual Required Contribution (ARC), which is the amount needed to finance benefits being accrued each year, plus the cost to amortize unfunded liabilities from past years, minus required employee contributions.

    “The average ARC received in recent years has been around 90 percent. Beneath this average ARC experience lies diversity: approximately 60 percent of plans in the Public Fund Survey consistently receive 90 percent or more of their ARC. This means that although a majority of plans have been receiving their required funding, many plans have not been adequately funded, which will result in higher future costs.”

    (My comment: In 2010, when the Colorado General Assembly broke Colorado PERA pension contracts, most Colorado state legislators did not know what a pension “ARC” is. This ignorance resulted from the failure of Legislative Leadership to appoint an interim study committee on public pensions to educate the members, and the desire of Legislative Leadership break PERA retiree pension contracts. The ignorance of state legislators regarding public pension administration and contractual public pension rights served the preconceived political goals of Colorado Legislative Leadership.)

    NASRA Issue Brief:

    “Generally, states and cities with a history of paying their required pension contributions are in better condition and have needed more minor adjustments to benefits or financing arrangements compared to those with a history of not adequately making their contributions.”

    Link to complete NASRA Issue Brief:

    http://www.nasra.org/resources/NASRACostsBrief.pdf

    Colorado PERA active and retired members, the argument that contracted PERA pension benefits are a burden on Colorado taxpayers is clearly specious. Support contractual public pension rights and the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  20. Al Moncrief says:

    HOW DOES COLORADO TREASURER WALKER STAPLETON’S DUI ARREST INFORM HIS LATEST COLORADO PERA PENSION RANT?

    After Colorado’s State Treasurer Walker Stapleton was arrested for driving under the influence, his honesty and integrity were called into question. In this article, I examine the circumstances of Treasurer Stapleton’s DUI arrest and ask if a pattern of personal failings relating to “honesty and integrity” have spilled over into his participation in the Colorado PERA pension reform debate.

    Reform of the Colorado PERA pension system is one of our Treasurer’s favorite political topics. Perhaps, similar to Rhode Island’s State Treasurer, Stapleton believes that public pension contract breach is the route to higher political office (not working out as planned for Treasurer Gina Raimondo in Rhode Island.) Or, given the decline of defined benefit pension plans in the private sector, perhaps our State Treasurer hopes to exploit “PERA pension envy” for personal political gain. Whatever his motives, or political goals, I encourage our Treasurer to engage in a fair, open and fully-informed discussion of pension reform options for the Colorado PERA system . . . to participate in the PERA reform debate with “honesty and integrity.” I also encourage him to advocate prospective PERA pension reforms in conformance with the Contract Clause of the Colorado Constitution, similar to prospective reforms made available to Colorado county governments in SB 12-149.

    In this article, I examine published materials germane to the “honesty and integrity” of our State Treasurer, and consider whether a recent article written by Treasurer Stapleton regarding Colorado education finance and public pension obligations does not again call into question our Treasurer’s forthrightness.
    The Colorado PERA pension system has significant unfunded pension liabilities. These liabilities have accumulated due to the failure of the Colorado Legislature to pay its full pension bill for the last decade. Colorado PERA pension liabilities are a contractual obligation of Colorado PERA-affiliated employers, a legal debt obligation of Colorado state and local governments. Our State Treasurer should not ignore the fact that the decline in the funded ratio of the Colorado PERA pension system is the result of the failure of the Colorado Legislature to pay its pension bills for a decade.

    Colorado’s Treasurer Stapleton has expressed concern regarding Colorado PERA’s unfunded liabilities, but why is our State Treasurer so concerned about this one particular form of Colorado state and local government debt, public pension debt? Why do we not see our State Treasurer concerned about all other Colorado governmental debt, all outstanding bonds issued by Colorado state and local governments? What is so special about our public pension debt obligations?

    Why do we see our State Treasurer focus on Colorado’s public pension debt obligations that will come due over the next 70 years? Why does he leave the impression that PERA unfunded liabilities due over the next 70 years are somehow due immediately? A current financial “crisis,” a “shortfall”? Why have we never heard our Treasurer note that Colorado’s financial support for public pension obligations consumes less than three percent of all Colorado state and local governmental expenditures? A level far below the national average for the states? Does this key information not comport with his political agenda? Would it not be more “honest” for our State Treasurer to acknowledge this fact?

    Why does our State Treasurer see the PERA pension debt service that will be paid by Colorado taxpayers in coming decades as onerous, yet he lacks any corresponding concern for the “burden” of all other Colorado state and local government debt (bonds) on taxpayers that will come due over the next 70 years?

    Colorado has not “banked” the three percent of future state and local governmental expenditures that will be required to support future Colorado PERA pension obligations and that is a “crisis” in the mind of our State Treasurer. Yet, Colorado has not banked the 97 percent of state and local governmental expenditures that will be required to support all other public sector programs for the next 70 years and that IS NOT a “crisis” in the mind of our Treasurer. We see our State Treasurer ranting about Colorado PERA public pension debt in particular because this serves a political agenda.

    WHAT DO THE CIRCUMSTANCES OF COLORADO TREASURER WALKER STAPLETON’S DUI ARREST TELL US ABOUT HIS “HONESTY AND INTEGRITY”?

    Ellen Dumm writes in a Huffington Post article:

    “Colorado’s treasurer accounts for $20 billion and manages a $6 billion investment pool of public funds annually. Integrity, responsibility and good decision making are critical to this job. So are honesty and transparency.” It is important that the person serving as Colorado’s Treasurer act with integrity, and honesty.

    Here are a few excerpts from her Huffington Post article:

    “In June 1999, GOP candidate state Treasurer Walker Stapleton was charged with DUI and leaving the scene of the accident in San Francisco where two women were injured.”

    “He blamed the victims. (The reality is that he accepted a plea bargain down to a DUI, with three-year probation, twice weekly AA meetings and court-ordered community work.)”

    “That charge was amended several days later, to charges of running a flashing light and hitting a cab in the intersection, causing injuries and leaving the scene.”

    “One of the victims, Ginger Vasquez of Santa Monica, CA, was alone in the backseat of the cab that was hit by Stapleton. She describes the vehicle spinning after the impact and seeing Stapleton’s car driving away.”

    “After Stapleton’s car stopped down a steep hill, she says, two cabs boxed in his vehicle to prevent him driving any farther. She has never talked to Stapleton and did not know his name until recently. She does not know the other woman injured in the accident. Stapleton never approached the cab to find out if everyone was all right. Most importantly, she has no motive to lie about events that night.”

    “Stapleton, who has an obvious motive not to tell the whole truth, continues to shift the blame and will not produce police reports (unavailable to the public) of the accident.”

    (My comment: Have complete police reports relating to the incident been released by our State Treasurer?)

    “Ironically, Stapleton was born into one of the country’s wealthiest, best-connected families, sharing a family tree with the Bushes. He attended prep school in Connecticut and expensive colleges and universities. The truth is that Stapleton has never had to find a real job outside his wealthy family’s umbrella.”

    Link to Huffington Post article:

    http://www.huffingtonpost.com/ellen-dumm/why-walker-stapletons-11y_b_776122.html

    From 5280.com:

    “Stapleton smelled of alcohol as he allegedly walked away from the scene of an accident in San Francisco, making ‘loud and belligerent’ noises and ignoring officers, writes The Denver Post . . .”

    “After his arrest, Stapleton pleaded guilty to drunken-driving after a taxi hit his Jeep Cherokee, damaging it, and forcing him to pull over a block away–which Stapleton disputes. The report claims he continued to drive away even after police attempted to stop him with lights and sirens, and that he only stopped after his Jeep could no longer continue. He was sentenced to community service. The Colorado Independent is critical of the Post’s article, saying it fails to answer some questions, such as, ‘Was anyone hurt in the accident?’ Court documents examined by the Independent list two victims, but the Post, citing California police, writes that ‘no pedestrians’ were injured in the collision.”

    http://www.5280.com/blogs/2010/11/24/treasurer-elect-walker-stapletons-dui-records-continue-raise-questions

    From the Denver Post:

    “Stapleton, now 36, was arrested in the early hours of June 20, 1999, in San Francisco on complaints of driving under the influence and hit-and-run. He later pleaded guilty only to drunken driving, for which he was sentenced to community service.”

    “When police arrived, they asked if he had been drinking, and he admitted he had, prompting officers to arrest him, Stapleton said.”

    “According to the report, witnesses said that after the two vehicles collided at the intersection of Bush and Jones streets, Stapleton continued to drive away. Police caught up with his Jeep down the street.”

    “‘We then attempted to stop the vehicle with lights and siren,’ the report said. The car ‘then failed to pull over and continued southbound on Jones St. (The Jeep) having been damaged by the collision, could no longer continue and came to rest.’”

    “A strong odor of alcohol beverage could be detected emanating from Stapleton’s breath and clothing. He spontaneously stated, ‘I had the yellow light, he ran the light.’”

    “‘He was unsteady on his feet, and loud and belligerent.’”

    http://www.denverpost.com/legislature/ci_16688120

    The records indicate that a plea of no contest was entered. Walker Stapleton placed his initials after the following on the Superior Court of California, County of San Francisco, “Waiver of Rights/Plea Form”:

    “Charges: I understand that I am accused of violating Vehicle Code section 2352(a), driving under the influence (DUI) of an alcoholic beverage and/or drugs.”

    “No Contest Plea: I understand that if I plead no contest, the Court will make a finding that I am guilty and the effect in this case is the same as a guilty plea.”

    “Probation Revocation: I understand that if I violate any of the terms or conditions of probation or conditional release (see 22a-o below), a Judge after a hearing but without a jury trial, may revoke my probation or conditional release and order me to serve out my suspended sentence in jail.”

    “Costs of Restitution and Public Agency Response: I understand that in addition to the fine imposed, I may also be ordered to make restitution to the victim(s), if any, and to pay the expenses incurred by a public agency that responded to any incident caused by my vehicle at the time of my arrest.”

    “Jail: I understand that the maximum penalty for a first offense is 6 months in the county jail, a mandatory minimum sentence of 96 hours, a fine of $1,000 plus penalty assessments, and suspension of my driving privilege for 6 months. I understand that if I plead guilty (or no contest), 1 year in the county jail will be suspended, . . .”

    “Probation: I will be placed on FORMAL SUPERVISED PROBATION for 3 years and I will have to pay probation costs of up to $40 per month. These probation costs are not a condition of my probation, but failure to pay may result in my civil liability. My probation has the following initialed terms and conditions:”

    “I must obey all laws.”

    “2 AA mtgs./week progress rept. 6 months”

    Link to Colorado Treasurer Walker Stapleton’s court records:

    http://strongcolorado.org/wp-content/uploads/2010/10/Walker-Stapleton-Court-Docs.pdf

    From the Denver Post:

    “They asked if I’d been drinking, and I said I had been drinking,” Stapleton said, adding he was charged with a DUI and a hit-and-run charge.

    “The hit-and-run charge was dropped later after he explained how the accident occurred, Stapleton said. He was sentenced to community service, which included ‘a fantastic period of time that involved me cleaning up garbage in the Tenderloin district of San Francisco’ and working at a nursing home.”

    http://blogs.denverpost.com/thespot/2010/09/30/stapleton-admits-to-dui-during-debate/15478/

    From brandeisbulletin.blogspot.com:

    “Most of you know that he comes from a rich and powerful Colorado family (hence, the old Stapleton Airport, etc), and that he used millions from his family trust to buy a whole bunch of premium land and had expensive properties developed. That allowed him to call himself a ‘developer/businessman’ instead of a trust-fund baby.”

    “But, I’ll bet none of you knew, until the Denver Post printed it today, that Walker Stapleton has a third job: that of Gentleman Farmer. Yes, in Colorado alone, Farmer Stapleton owns 180 acres of primo real estate near Castle Rock, worth millions right now, which will be worth tons more, after he’s done speculating and decides to actually develop it. No, no crops are actually grown on the land. A cow or two were most certainly plopped down on the fenced property to eat the weeds for a day or two and were then removed, never to return.”

    “But the ‘rent-a-cow’ thingy was enough to allow Walker Stapleton to have this pre-development acreage classified as ‘agricultural’, and so he paid exactly $116 in property taxes last year.”

    “Add the $336 million lost to Gentleman Farmers last year, to the $300 million we needlessly donated to the obscenely rich oil companies, to the $300+ million in welfare checks for the equally rich mega-agricorps, to the $8.8 million un-earned bonus to Wal-Mart, (the world’s largest retailer) and then you can plainly see why we have a $1 billion budget shortfall (in 2011.)”

    http://brandeisbulletin.blogspot.com/2011/03/walker-stapleton-gentleman-farmer.html

    (My comment: The State of Colorado can afford to lose millions in tax revenues to “Gentlemen Farmers,” but cannot afford to honor state contracts?)

    TREASURER STAPLETON’S MOST RECENT COLORADO PERA PENSION RANT.

    So, what is the connection between Colorado Treasurer Walker Stapleton’s DUI arrest and his latest rant regarding the Colorado PERA pension system? In my opinion, Treasurer Stapleton’s personal failings relating to “honesty and integrity” are spilling over into the Colorado PERA pension reform debate.

    Now that we have increased our knowledge of Colorado Treasurer Walker Stapleton, we’ll examine his recent article addressing Colorado education funding and the underfunding of the Colorado PERA pension system. The May 30, 2013 issue of the Colorado Springs Gazette Telegraph includes an article written by Colorado Treasurer Walker Stapleton addressing the Colorado education finance measure on the Fall 2013 ballot.

    Here is a link to the article, a few excerpts and my comments:

    http://gazette.com/education-finance-reform-buyer-beware/article/1501394

    Treasurer Walker Stapleton:

    “This November, Colorado will be given the opportunity to vote for a more than $1 billion tax increase to fund Colorado education.”

    “But, as voters take a closer look, this tax increase, masked as education funding, is also another mechanism to keep our sinking public pension system afloat.”

    (My comment: Colorado’s PERA public pension debt is independent of public school finance in the state. This state debt would remain even if Colorado’s K-12 education system were completely privatized, or eliminated for that matter. Also, Colorado PERA-affiliated employers hire workers in hundreds of professions other than teaching.

    It is not entirely “honest” of our Treasurer to refer to the PERA pension system as “sinking” in light of recent double digit portfolio returns [to be augmented by a report of yet another double digit return in the coming weeks]. Further, our Treasurer had an opportunity here to note that the Colorado Legislature’s historical failure to pay its pension bills has caused the financial pressure on PERA’s trust funds. By fully disclosing this information in his article our Treasurer could act with “integrity.”)

    Treasurer Walker Stapleton:

    “While PERA is currently $20 billion underfunded, its debt grows every year it does not achieve an 8 percent return on its portfolio. This 8 percent return is not an inflated conclusion simply contested along partisan lines.”

    (My comment: Here our Treasurer fails to note that the average return assumption for private sector defined benefit plans in the U.S now exceeds 8 percent. Good enough for the private sector, not good enough for the public sector?

    Also, Stapleton, in his article, does not mention the fact that many private sector employers make Social Security contributions on behalf of their workers, in addition to 401K contributions. He makes no mention of the fact that Colorado PERA members are not eligible to participate in the Social Security system, and thus rely entirely on their contracted PERA pension benefits for retirement security. By omitting this information our State Treasurer is not acting with complete “honesty.”)

    Treasurer Walker Stapleton:

    “We cannot allow more taxpayer money to be taken out of our children’s classrooms in order to backfill obligations in a bankrupt retirement system.”

    (My comment: Here our Colorado Treasurer presents a “false choice,” again displaying a lack of integrity. When the State of Colorado or Colorado local governments pay their debts, when these governments meet their contractual obligations, they are not “taking money out of children’s classrooms” anymore than they are taking money out of law enforcement or road construction. He presents an emotional argument with the intent to deceive the reader.

    Colorado PERA-affiliated employers are contractually obligated to pay deferred compensation to Colorado PERA retirees for work completed over the course of their careers. Rather than encouraging the Colorado Legislature to actually meet its Colorado PERA pension obligations by paying the full actuarially required contribution [ARC,] our Treasurer assumes, in his article, that these obligations will be met by taking money from public school budgets, a false choice. Here we have the Washington Post condemning such tactics:

    “It’s time to retire the false choice. As a rhetorical device, particularly as a political rhetorical device, the false choice has outlived its usefulness, if it ever had any. The phrase has become a trite substitute for serious thinking. It serves too often to obscure rather than to explain.”

    http://articles.washingtonpost.com/2011-03-31/opinions/35208590_1_financial-reform-false-choice-false-choice

    Also, Walker Stapleton, as State Treasurer, should know that state governments are not eligible to file for “bankruptcy” under federal law.)

    Treasurer Walker Stapleton:

    “When I explained the funding shortfall to different stakeholders and legislators crafting this bill they told me that PERA was off the table.”

    (My comment: Here our Treasurer again laments the underfunding of the Colorado PERA pension system. Complete honesty demands that he inform the reader that the Colorado General Assembly is the author of this “shortfall.”

    Our State Treasurer refers to Colorado PERA unfunded liabilities as a “shortfall.” Yet, these Colorado PERA unfunded liabilities will come due over the next seven decades, consuming approximately three percent of total Colorado state and local government resources. How is it that our Treasurer sees the failure of Colorado state and local governments to set aside an amount equivalent to three percent of their future revenues as a “shortfall,” a pressing financial matter for Colorado PERA, but the failure of Colorado state and local governments to set aside an amount equal to 97 percent of their future revenues to meet all other future Colorado public expenditures is inconsequential, not a “shortfall”? Is it simply politically convenient for our State Treasurer to label certain revenues needed in the future, for a public program he does not support a “shortfall,” while the remaining revenue needed for all other future state and local government expenditures are not a “shortfall”? If so, again this is not being “honest” with the reader.

    In his Gazette Telegraph article, it appears that our State Treasurer intends to deceive the reader, withhold information critical to the debate from the reader to advance a political agenda (elimination of public defined benefit pension plans in the United States, see ALEC), and he presents a false choice to the reader. As Ellen Dumm wrote in the Huffington Post, it is important that the person serving as Colorado’s Treasurer act with integrity, and honesty.

    Colorado PERA active and retired members, many Colorado legislators supported the breach of Colorado PERA pension contracts in 2010 out of ignorance. Many state legislators did not have sufficient information to make an informed decision regarding SB10-001 in 2010, because Legislative Leadership at the time did not want them to have complete information. As with our State Treasurer’s article, Legislative Leadership intended that members be deceived and accordingly served up uninformed legislators to a pack of 27 lobbyists promoting PERA pension contract breach.

    Leadership could have appointed an interim study committee to ensure that the members had complete information regarding Colorado contractual public pension rights. Legislative Leadership could have sent an interrogatory to the Colorado Supreme Court, but instead opted to squander millions of taxpayer dollars on protracted litigation. Do your part to support public pension contractual rights in Colorado, contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook.

  21. Al Moncrief says:

    COLORADO TREASURER AND PERA BOARD TRUSTEE WALKER STAPLETON:

    HAVING ENACTED SB10-001, THE COLORADO LEGISLATURE WILL CONTINUE TO BREAK COLORADO PERA PENSION CONTRACTS IN THE FUTURE, AS NEEDED.

    TREASURER STAPLETON: THERE WAS NO “ACTUARIAL EMERGENCY” IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

    COMMENTS FROM: REPRESENTATIVE PRIOLA, LABUDA, DELGROSSO, HOLBERT, JIM KERR, HULLINGHORST, SWALM, AND KEFALAS;

    COMMENTS OF COLORADO PERA DIRECTOR WILLIAMS, PERA TRUSTEE CAROLE WRIGHT, PERA GENERAL COUNSEL SMITH, AND TREASURER STAPLETON.

    In 2010, the Colorado Legislature enacted legislation breaking Colorado PERA pension contracts. Members of the Colorado Legislature, generally, have little respect for Colorado PERA pension contracts. Thus, in 2010, the Colorado Legislature recognized no constraints on its power to take property from Colorado PERA pensioners.

    Offering low public sector salaries in order to maintain Colorado’s status as a “tax haven” is one thing. No one is forced to accept a job with a Colorado PERA-affiliated employer, but taking back compensation that has already been earned crosses both moral and legal lines. For some reason, in 2010, lobbyists were able to push a majority of Colorado legislators across these lines. Twenty-seven lobbyists successfully persuaded state legislators that breaking pension contracts is acceptable here in Colorado.

    A century ago, public pensions in the United States were considered “gratuities granted by a benevolent sovereign.” Although this idea was eradicated from public pension jurisprudence nearly a century ago, it remains predominant at the Colorado Legislature well into the twenty-first century.

    In 2009, members of the Colorado Legislature were unlikely, of their own accord, to plumb the depths of public pension contractual obligations. It was incumbent on the Leadership of the Colorado Legislature that year to perform due diligence . . . to appoint an interim study committee to explore legal, prospective pension reform options for the Colorado PERA pension system, but no interim study committee was appointed. The Leadership of the Colorado Legislature, recognizing that well-informed Colorado legislators would not support a planned breach of Colorado PERA pension contracts, opted against legislative examination of prospective pension reform options. Colorado PERA’s hired lobbyists would be unable to manipulate state legislators who might easily refute specious arguments relating to public pension contractual rights. In early 2009, the Colorado PERA Board was already shopping for a law firm willing to create a legal rationale for breaking Colorado PERA’s contractual obligation to provide total, accrued pension benefits via a pension “escalator,” i.e., a COLA. Why should Legislative Leadership and the Colorado PERA Board work against their own interests in taking COLA benefits by educating the members?

    Therefore, Leadership controlled the flow of information relating to public pension contractual rights in 2009 and 2010; by failing to appoint an interim study committee to examine prospective reforms, by abdicating policy-making authority in this area to outside groups with an agenda to protect their own financial interests, and by failing to send an interrogatory to the Colorado Supreme Court requesting an opinion on the constitutionality of SB10-001′s proposed changes to PERA contracts.

    There is an apparent disconnect between the prevailing view of Colorado state legislators regarding contractual public pension obligations, and the sanctity of public pension contractual obligations as recognized in case law across the United States. The nonchalant treatment of public pension contractual rights by Colorado legislators conveniently aligns with their desire to break Colorado PERA pension contracts . . . their desire to force a group of elderly Coloradans to pay for the Colorado General Assembly’s past public pension mismanagement.

    In 2010, 27 lobbyists told our state legislators that they were free to break the state’s contractual obligations; hence, it must be true.

    The Colorado PERA pension system is an alternative to Social Security for Colorado state and local government workers. These workers are not eligible to participate in the Social Security system, they are completely dependent on the Colorado General Assembly to ensure that contractual obligations of Colorado state and local governments are honored. Instead of acting responsibly, and paying its annual pension bills, the Colorado Legislature has mismanaged its pension system, and enacted legislation, SB10-001, under which Colorado PERA pension benefits are no longer “definitely determinable” under IRS regulations.

    According to our State Treasurer, (a Trustee on the Colorado PERA Board of Trustees) the Colorado Legislature, having abrogated Colorado PERA pension contracts in 2010, will continue to break Colorado PERA pension contracts in the future at its convenience. Here are Colorado Treasurer Walker Stapleton’s comments made in testimony to a committee of the Colorado Legislature (recorded March 1, 2012, House Finance Committee):

    “That’s what happened in Senate Bill 1, and if the plan becomes insolvent or the liabilities grow again, it will happen in ‘Senate Bill 2,’ and who knows how many more bills.”

    ” . . . make no mistake that will happen.”

    “And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it.”

    If the Colorado Legislature’s breach of Colorado PERA public pension contracts is upheld by the Colorado Supreme Court, Colorado’s Treasurer assures us that the Colorado Legislature will break Colorado PERA pension contracts repeatedly. Future breach of Colorado PERA public pension contracts by the Colorado Legislature will occur in accordance with the following formula that was employed for the 2010 PERA contract breach: “Underfund the PERA pension to lower its funded ratio, claim that the low funded ratio represents a ‘fiscal crisis’ justifying seizure of accrued PERA pension benefits, break PERA pension contracts to lower taxpayer obligations, repeat . . .”

    Recently, I discovered that Senate Bill 10-001, the legislation enacted by the Colorado General Assembly in 2010, breaking “fully-vested” Colorado PERA pension contracts and taking PERA COLA benefits, was discussed at length during hearings of the Colorado Legislature’s House Finance Committee in 2012. A number of comments relating to SB10-001 were made by members of the Colorado General Assembly (on the record) who voted in favor of SB10-001 during the 2010 Colorado legislative session, as well as other witnesses. (PERA members and retirees, I apologize for my failure to discover these comments by SB10-001 proponents made at 2012 House Finance Committee hearings earlier.)

    Below, I provide quotations of state legislators, and witnesses from testimony relating to Colorado PERA contractual pension rights given during 2010 House Finance Committee hearings. Note that the bulk of the comments presented in this article, (many demonstrating a somewhat limited grasp of public pension contractual obligations) were made by members of the Colorado House Finance Committee. The Finance Committees of the Colorado General Assembly are designated as the committees of reference of the Legislature with oversight responsibility for Colorado public pension systems. The members of these committees ostensibly possess the greatest degree of sophistication on the subject of public pensions at the Colorado General Assembly.

    It is important, (not just for litigation of the breach of public pension contractual rights in SB10-001), but for the integrity of the Colorado legislative process, that these comments be readily available for those who will, in the future, consider reforms addressing Colorado legislative ethics, legislative procedure, and administration.

    2012 HOUSE FINANCE HEARINGS ON PERA LEGISLATION:

    Representative Chris Holbert – Feb 23, 2012, House Finance Committee, hearing on HB12-1250: “We have a contract, an obligation to the vested members of PERA, and we have to meet that . .”

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

    Representative Kevin Priola – Feb 23, 2012, House Finance Committee, hearing on HB12-1150: ” . . . taxpayers know that in the end they’re on the hook, State of Colorado taxpayers are on the hook for any (PERA) unfunded liability down the road . . ”

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee: “Those people all have a contract with their employer with the plan. You made changes to impact people like that in SB1.”

    “The only reason you could do that in Senate Bill1 . . . and to unilaterally change the terms of the contract, is because the sustainability of PERA was significantly in question.”

    (My comment: Sustainability? Here, Colorado PERA’s Executive Director Meredith Williams tells us that the sustainability of PERA was in question in 2010 when the Colorado PERA actuarial funded ratio [AFR] stood at 69 percent. Yet, Meredith Williams has informed us earlier, that the sustainability of PERA was not in question when the Colorado PERA AFR was at 54 percent.

    From the Silver and Gold Record:

    “One attendee asked if there was any similar controversy in the 1970s, when PERA’s unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”

    https://www.cu.edu/sg/messages/5245.html

    When one compares the past comments of Meredith Williams arguing that a PERA funded ratio [AFR, not "market-based"] in the mid-50s is not a crisis, with recent comments of Meredith Williams that a 69 percent PERA AFR IS a crisis of sufficient proportion to warrant the breach of contracts, only herculean restraint allows one to limit one’s characterization of Meredith Williams comments to simply “disingenuous.”

    Why did Meredith Williams support the breach of Colorado PERA pension contracts in 2010? Was he embarrassed that, on his watch, the Colorado Legislature underfunded the PERA pension? Embarrassed that he failed to do his job, to impress upon the Legislature the importance of paying its public pension bills? Did the PERA Board and education establishment lobbyists persuade him that historical PERA underfunding should be solved by taking money from PERA retirees?

    At the end of 2009, just prior to the breach of Colorado PERA pension contracts, the actuarial funded ratio of the Colorado PERA trust funds was nine percent below its 40-year average, and three percent below the national average actuarial funded ratio of public pension funds. If public pension funds are in crisis at this funding level [a 69 percent AFR] should half of the pension contracts in the United States be abandoned at this funding level?)

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee relating to the Legislature’s historical underfunding of its PERA pension obligations:

    “We’ve had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we’re involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year.”

    (My comment: Recall the words of Colorado PERA’s General Counsel Greg Smith. On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio: “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

    So, here we have Colorado PERA officials acknowledging that the Colorado General Assembly has not paid its public pension bills. Instead of proposing that the Colorado General Assembly make the PERA trust funds whole, and commit to meeting its future pension obligations, these PERA officials propose that money be taken by force of government from a relatively small group of Colorado’s pensioners. These are our leaders in Colorado state government.)

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee on SB10-001:

    “What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor’s edge. You can’t fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers. No one has ever done anything quite like that. I am quite anxious for the litigation to get behind us.”

    (My comment: Meredith Williams states that the SB10-001 “90 percent” cost-shift from PERA employers onto PERA retirees was “dicey.” Webster’s dictionary defines “dicey” as “risky.” I consider this unnecessary, planned breach of public pension contracts beyond “dicey,” I consider this action to be immoral, ill-advised and foolhardy.

    From “Colorado PERA on the Issues”:

    “In all, about 90 percent of the changes enacted by Senate Bill 1 will fall on the shoulders of current and future PERA members and retirees – not other taxpayers.”

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

    Senator Brandon Shaffer, in the Denver Post, April 17, 2011:

    “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

    Meredith Williams, PERA Executive Director, in the Pueblo Chieftain, May 29, 2011:

    “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.”

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

    SB 10-001 co-prime sponsor Senator Josh Penry and sponsor Senator Greg Brophy in the Denver Post, January 22, 2010:

    “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees . . .”

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

    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.copera.org/pera/about/shareholder.htm.)

    Back to the House Finance Committee hearings:

    Colorado PERA Executive Director Meredith Williams’ comments on February 23, 2012 to the House Finance Committee:

    “I had something cross my desk earlier this week that appears that it could be the beginnings of another Senate Bill 1 lawsuit, on a completely different and very bizarre issue.”

    (My comment: What is that about? PERA retirees?)

    House Finance Committee Chairman Brian DelGrosso, February 23, 2012:

    “I voted against Senate Bill1, and I voted against Senate Bill 1 not because I felt like we didn’t need to fix PERA, I agreed with that part of it, but I voted against Senate Bill1 for the fact that it did adjust some of the COLAs and it did adjust stuff for folks that were already retired and people that were about ready to retire, and to me I felt like that was violating a contract that those people had got into . . . they played by the rules that were of the game at the time, and these folks . . . got up to where they about to retire or were retired, and now all of a sudden we were going to change the rules of game on them after they were done playing. So to me, that was why I voted against Senate Bill 1, because I felt like that violated some of the contractual issues that we had.”

    House Finance Hearing on HB 12-1179:

    Representative Jim Kerr, February 23, 2012: “The taxpayers . . . are obligated to fulfill the (PERA) benefits as soon as someone starts drawing those benefits down.”

    Rep. Jim Kerr, February 23, 2012: “They’ve earned those benefits . .” “. . . The taxpayers . . . they’re the ones who ultimately have to make the (PERA) fund whole . . .”

    (My comment: According to Representative Jim Kerr, Colorado taxpayers are obligated to meet the state’s contractual obligations to Colorado PERA retirees. So, why is the Colorado General Assembly attempting to shift 90 percent of the costs of their 2010 pension reform bill from Colorado taxpayers onto PERA retirees?)

    Rep. Jim Kerr, February 23, 2012: “If you’re in a defined benefit program, you have a guarantee.” “PERA does have a guarantee.” “A defined benefit plan is a guarantee.”

    Rep. Dickey Lee Hullinghorst, February 23, 2012: “Our state employees earn retirement benefits when they work.”

    (My comment: Representative Hullinghorst agrees with officials of the Ritter Administration who write:

    “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] . . . serve[s] to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

    Here the Ritter Administration states clearly that a reduction in a COLA benefit [that is earned in an “exchange transaction”] changes the “net economic benefit” to the employee under the employee’s pension “agreement.” Under SB 10-001, the “net economic benefit,” for an average PERA member was “reduced,” according the Ritter Administration, by “$165,000.”

    Read the entirety of the Ritter Administration letter on the GASB site here:

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

    Colorado PERA Board Trustee Carole Wright, February 23, 2012: “Only 18 percent of the money that comes into the (PERA) trust comes from taxpayers or from employers.”

    (My comment: PERA Trustee Carole Wright knows that the taxpayers provide a mere 18 percent of the resources that support the Colorado PERA pension system. In light of this relatively small burden on Colorado taxpayers, [amounting to just 2-3 percent of all Colorado state and local government expenditures] why did PERA Trustee Wright support a further diminution of the taxpayer’s PERA contribution in 2009 by shifting 90 percent of the costs of the PERA Board’s pension reform proposal onto PERA retirees?)

    Representative Spencer Swalm, February 23, 2012: “There is a contractual obligation here. This is a defined benefit plan, those benefits are guaranteed, and ultimately the taxpayers of the state are on the hook.”

    Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board’s historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

    “Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization. We were very aggressive in what I’ll call private equity or alternatives. At the board’s direction we’ve pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each. I think that the portfolio as we headed into the dotcom bust was far riskier than it is today. We paid the price for that.”

    (My comment: Meredith Williams tells us here that PERA “paid the price” for its past investing mistakes. Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds. I ask: Why should Colorado PERA retirees, who bear no “market risk” in their “defined benefit” pension plan, whose contractual public pension rights are “fully-vested,” why should these Colorado PERA retirees pay the cost of the PERA Board’s past investing mistakes by relinquishing their contracted pension benefits?)

    Rep. Dickey Lee Hullinghorst, February 23, 2012: “I would like to know exactly what that (PERA) contractual relationship is.” “We are employers and we pay into PERA as a part of a benefit that’s earned by our employees.”

    Colorado PERA Executive Director Meredith Williams in response to Representative Hullinghorst’s question, February 23, 2012, (after preliminary remarks):

    “We never have to answer that question. It’s not a black and white answer.”

    (My comment: Why did Colorado PERA’s Executive Director, Meredith Williams refuse to answer Rep. Hullinghorst’s question? One might expect a more sophisticated response from the head of an organization that recently recommended a breach of PERA pension contracts to the Colorado Legislature. During his many years in public pension administration one might have expected Meredith Williams to explore such a foundational question in depth.

    Why is Colorado PERA’s Executive Director, Meredith Williams unable to succinctly state the contractual rights of PERA’s members? Are the employees of PERA-affiliated employers expected to work for decades without knowing clearly what their rights are under their PERA contracts? Are they expected to work each day for pension benefits that are undefined?

    Why did Representative Hullinghorst vote for SB10-001 in 2010 without knowing the contractual rights of persons impacted by the bill? Without this knowledge, how could she be certain that she was not violating her oath of office to act only within the strictures of the Colorado Constitution?)

    THE HOUSE FINANCE COMMITTEE DEBATES PROSPECTIVE, LEGAL PENSION REFORM THAT WOULD IMPACT ONLY “NON-VESTED” PERA MEMBERS.

    March 1, 2012, House Finance Committee, comments of members of the House Finance Committee made during the amendment phase of the committee’s hearing on HB 12-1150:

    Rep. Priola: “I would draw your attention to L.001.” “This amendment simply moves the universe of folks that the three to seven years would apply to, to new hires and to folks that are not yet vested, meaning five years of service credit or less.” “I think it strikes a fair balance to not change the rules of the game on people later in their working years.”

    (My comment: This amendment proposed a change to the method of calculation of the “highest average salary” used to determine Colorado PERA base pension benefits. The change would affect ONLY new hires and those without vested PERA pension contracts.)

    Rep. Hullinghorst: “My understanding is that when you go to work, and you sign up for PERA benefits, and you are required by the state to do that . . . that’s a contract, and I think that this is potentially actionable.”

    (My comment: If this is Representative Hullinghorst’s “understanding,” why did she support the breach of Colorado PERA public pension contracts when she voted for SB10-001?)

    Rep. Labuda: “In 40-50 years they’re going to be seniors, and they’re going to be living on less because of this amendment, and I can’t support that.”

    (My comment: Here, Rep. Labuda tells us that she cannot support a prospective change FOR NEW HIRES and non-vested PERA members because they will be “seniors” forced to “live on less” in 40-50 years! Yet, she voted for SB10-001 in 2010, forcing current “seniors” [who have fully-vested PERA contractual rights] to “live on less” when SB10-001 was signed into law. I see two possible explanations for the inconsistency of Representative Labuda’s position. First, she was persuaded to abandon her belief system by the 27 SB10-001 lobbyists. Second, her vote in favor of SB10-001 was entirely arbitrary.)

    Rep. Priola: “Representative Labuda, that brings to mind something that I need to correct the record on as well. When I was in testimony a week or so ago, I had stated that I voted for SB 1, I then checked the voting record, and realized that I voted against it, and I tried to think back to what was in my mind at the time. Then I refreshed my memory that although I thought it was a much needed step in the right direction, I wasn’t willing to make the vote that bought it lock stock and barrel.”

    (My comment: Two years after a legislator considers legislation that abrogates Colorado State contracts, the legislator cannot recall whether he supported or opposed the legislation?)

    Rep. DelGrosso: “The problem that we ran into with Senate Bill 1 . . . is that when they start adjusting things like the COLA . . . that’s where it opens us up to lawsuits, because people are like ‘hey, I’m five years away from retirement, I’m ten years away from retirement, I’m one year away, I am retired,’ and then we go and make changes that’s where we have lawsuits, because hey this a violating a contract . . . ”

    Rep. Kefalas: “It still does affect those members that have signed contracts that are non-vested. Is that correct? And therefore I still have concerns about L.001.”

    (My comment: Here Rep. Kefalas expresses concern about impacting PERA benefits of “non-vested” PERA members, yet he supported Senate Bill 10-001, a bill abrogating “fully-vested” Colorado PERA pension contracts . . . a bill that took one-third of the accrued public pension benefits of Colorado PERA retirees. This is stunning admission.

    Again, in 2010 the Leadership of the Colorado General Assembly decided against appointing an interim study committee to examine prospective pension reform options in order to keep its members in the dark. This is apparent from comments made by members of the House Finance Committee who supported SB10-001.)

    Rep. Hullinghorst: “We got ourselves into this mess in the 1980s to begin with, in the 1980s and 1990s, when the Legislature just on a whim decided they were going to do this and that with PERA, and made some changes that were very detrimental to the system.”

    (My comment: Here, Rep. Hullinghorst adds her voice to the many voices that have condemned the Colorado General Assembly’s historical mismanagement of the PERA pension system.)

    Rep. Kagan: “This is a benefit cut to public employees who work hard all of their lives and one of their measures of compensation is their benefits package, that’s how we manage to attract such fine public employees as we have on such low salaries is because they know ‘yeah, the salaries aren’t as high as I’d like, but I’m still very loyal to the state, I work very hard for the state for a very low salary because I do have a respectable benefits package, and I’m sure that that benefits package will be there for me when I retire.’ Now you come and you say we’re going to cut those benefits, we’re going to reduce the value of that package . . .”

    Rep. Kagan: “(In adopting SB10-001) we had put PERA . . . on an actuarial sound footing without waiting for a crisis to hit, without waiting for exposés and pressure . . .”

    (My comment: Here, Rep. Kagan notes that the Colorado General Assembly adopted SB10-001 in 2010, breaking PERA pension contracts, while Colorado PERA faced no financial “crisis.” Like Representative Labuda and Kefalas above, Rep. Kagan expresses concern regarding changes to “non-vested” Colorado PERA pension contracts, while he supported the breach of “fully-vested” PERA contracts in SB10-001. Such inconsistency of logic is not found among persons with knowledge of public pension contractual rights. It is truly surprising that such an argument is propounded by a man of such discernment.)

    Rep. DelGrosso: “These new hires know what their retirement will be, so when they’re getting into the system they can choose to accept the job or not knowing what their retirement benefits will be.”

    “We are still involved in lawsuits over Senate Bill 1 on whether or not those were constitutional because we made changes to people that are currently in the system that were vested, current retirees. So, Senate Bill 1 did affect people’s current retirements and those that were retired.”

    Rep. DelGrosso: “We have to look 25 to 30 years into the future to avoid the lawsuits that we are currently involved in because of Senate Bill 1.”

    “We’re forced to, to avoid lawsuits, to look that far into the future.”

    (My comment: Here Rep. DelGrosso notes that prospective, legal public pension reform options are available to the Colorado General Assembly. In fact, just six weeks after Rep. DelGrosso made these remarks, the House Finance Committee [on April 19, 2012] adopted such legal, prospective pension reform options for thousands of members of Colorado county public pension systems [when the committee referred out SB12-149.]

    Language from SB12-149:

    “(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

    Link to SB12-149, the Act:

    http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/0E9F894D31C081EF87257981007DAF5A?open&file=149_enr.pdf

    Note that House Finance Committee members, Representatives Priola, Jim Kerr and Labuda co-sponsored this legislation making prospective pension reform options available to Colorado county governments. Note that Representative Labuda co-sponsored SB12-149, providing prospective pension reform options to Colorado county governments, AND voted in favor of SB10-001, breaking “fully-vested” Colorado PERA retiree pension contracts. Completely arbitrary.)

    Link to meeting summary of House Finance Hearing on SB12-149 (excerpts from hearings on this bill are available at saveperacola.com):

    http://www.leg.state.co.us/clics/clics2012a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/b695bc1290e34d25872579e4006ba1bd?OpenDocument)

    Rep. Hullinghorst: “The current suits are relative to COLA.” “There was some awareness that that possibly could draw some suits.” “It was much less a problem with cutting benefits than any other thing you could look at in that regard.”

    Representative Hullinghorst: “This is a more difficult . . . approach than the COLA situation.”

    (My comment: Incredibly, here we have Rep. Hullinhorst stating that enactment of PROSPECTIVE public pension reform for NEW HIRES is a “more difficult approach” for the Colorado General Assembly than is the outright, intentional breach of fully-vested Colorado PERA pension contracts of PERA members who had worked for PERA-affiliated employers FOR DECADES. Here we see, manifest in Rep. Hullinghorst’s remarks, the work of 27 lobbyists hired to enact SB10-001. It is sickening that lobbyists have gained such control over the minds of Colorado legislators. In 2010, Legislative Leadership served up pliable members for the 27 SB10-001 lobbyists . . . members who were ignorant of public pension contractual rights.)

    Rep. Kefalas: “I believe that a fundamental premise, principle, value of this great State of Colorado, of this great country, is this idea of some semblance of retirement security.”

    “I am concerned that this will undermine the contractual obligations that we have made with folks who are state employees and that could invite litigation and I think that’s something the state does not need.”

    (My comment: Again, Rep. Kefalas defends the interests of non-vested Colorado PERA members, members who have NO contractual right to any PERA annuity. Two years earlier, he voted to take one-third of the accrued public pension benefits of PERA retirees with fully-vested pension contracts.)

    Rep. Labuda: “I don’t want to penalize anybody who is thinking of coming to work for PERA, or someone who is newly started for PERA.”

    (My comment: Again, note the members of the House Finance Committee who aggressively defend the interests of persons who have no vested PERA contractual pension rights, while having voted to take fully-vested PERA public pension benefits in SB10-001.)

    Rep. DelGrosso: “This has nothing to do with those that are in the system, that are moving through the system, that are retired or not retired.” “This puts more money into PERA’s coffers, this will actually put more money in there to shore up the sustainability of PERA.”

    (My comment: Here Rep. DelGrosso attempts to educate the members of the House Finance Committee. He attempts to do the job that should have been done by the Leadership of the Colorado General Assembly during the 2009 interim.)

    The amendment to HB12-1150, (L.001), passed, the bill was then postponed indefinitely.

    House Finance Committee, March 1, 2012, Hearing on HB12-1142:

    COLORADO TREASURER STAPLETON: THE LEGISLATURE’S SB10-001 PERA CONTRACT BREACH WILL BE REPEATED.

    Colorado Treasurer Walker Stapleton:

    “It’s incumbent on a plan to make promises that are conservative to our public workers, so that at the end of the day . . . the plan is in a position that it’s making promises that it can afford to make and it’s not putting the plan at risk of having benefits cut and amended and retirement lengthened by the Legislature, because make no mistake that will happen. That’s what happened in Senate Bill1, and if the plan becomes insolvent or the liabilities grow again, it will happen in “Senate Bill 2,” and who knows how many more bills.”

    (My comment: Here, the Colorado Treasurer assumes that state worker contracts are inferior to the state’s contracts with corporations, that state worker contracts may be freely abrogated while other state contracts remain untouched. The Treasurer assumes that the Colorado Legislature possesses power permitting it to ignore the provisions of the Colorado Constitution, that the Colorado Legislature is the one branch of government that is unrestrained by the Colorado and U.S. Constitutions. The Treasurer assumes, erroneously, that the members of the Colorado PERA pension system are somehow subject to “market risk” in their “defined” benefit plan. The Treasurer notes that no actuarial emergency existed in 2010 when the Colorado Legislature broke Colorado PERA public pension contracts. In 2010, the Colorado General Assembly refused to act responsibly, refused to explore legal, prospective pension reform options. The Colorado Legislature has ignored its PERA pension bills. Having ignored its contractual public pension obligations, the Colorado Legislature finds a cavalier attitude toward the contracts of Colorado PERA retirees to be quite convenient. The Colorado Treasurer anticipates that members of the Colorado General Assembly will again break Colorado PERA contracts in the future at their pleasure.

    Thus, if the Colorado General Assembly’s legislation breaking Colorado PERA pension contracts, SB10-001, is upheld by Colorado courts, the Colorado PERA pension system becomes, for all practical purposes, a “gratuity.” In that event, Colorado public sector workers who are members of the PERA pension system will work each day for compensation that will be determined after the fact by their Colorado PERA-affiliated employers.)

    COLORADO TREASURER AND PERA BOARD TRUSTEE WALKER STAPLETON: THERE WAS NO ACTUARIAL EMERGENCY IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

    Colorado Treasurer Stapleton:

    “And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it.”
    (My comment: This statement by our State Treasurer is in conformance with the failure of the Colorado General Assembly to declare an “actuarial emergency” prior to adoption of SB10-001 in 2010. Our State Treasurer observed no PERA “actuarial emergency,” and the Colorado Legislature declared no “actuarial emergency.” And, why would the Colorado General Assembly declare an actuarial emergency in 2010? That year, the actuarial funded ratio of the Colorado PERA trust funds was only nine percent less than the average PERA AFR over the prior 40 year period.)

    Colorado PERA General Counsel Greg Smith on PERA’s return assumption:

    ” . . if we fall short of the 8 percent, what it does is it takes us longer to pay off that unfunded liability, instead of doing it in 30 years it may take us 35 years, it may take us 38 years, it may take us 50 years.”

    (My comment: Here Colorado PERA’s General Counsel admits that the 30-year time frame for amortization of PERA liabilities set in Colorado statutes is arbitrary. The 30-year period is merely an arbitrarily set goal, however this “goal” in Colorado law was used to justify the breach of Colorado PERA pension contracts in 2010. Thus, an important actuarial assumption used to justify the taking of fully-vested Colorado PERA benefits in SB10-001 was arbitrary. This assumption, put in statute by the same General Assembly that enacted SB10-001, was used to calculate projections of PERA’s future unfunded liabilities, placing unnecessary financial pressure on the PERA trust funds. Note that just 15 years ago, Colorado PERA’s “maximum amortization period” was set in statute at 60 years.)

    Don Schaeffer, Colorado PERA retiree, “I actually worked at PERA for 20 years.” “In my job at PERA, I was the Communications Director, and that started somewhere back in the early 80s.”

    “In the year 2000 . . . we (PERA) were fully funded and they (the General Assembly) said ‘Oh, we have too much money,” and so then we had (pension contribution) cuts, and we had benefits added and so forth.”

    “If you look at the . . . State Division trust fund it is more underfunded than the School Division, because the School Division doesn’t have choice (of a defined contribution alternative).” “It’s expensive to give choice.”

    (My comment: Here, Don Schaeffer, former Colorado PERA Communications Director, points out that legislation enacted by the Colorado General Assembly, allowing a defined contribution choice for certain members of that PERA Division, places an additional burden on members of the Division, and results in the underfunding of that PERA Division’s trust fund. I ask: Why should Colorado PERA retirees, who have fully-vested public pension contracts relinquish their constitutional rights to compensate for such policy decisions of the Colorado General Assembly?)

    Dan Chapman, Legislative Advocate, AARP Colorado: “I am here today solely as a represent of AARP Colorado and its members.”

    “AARP also supports pension reform, but believes that modification to pension plans or plan formulas should have as a key objective to hold harmless current beneficiaries and employees . . .”

    (My comment: Here we have a representative of AARP Colorado informing the House Finance Committee of AARP’s position that public pension reforms should hold harmless current public pension beneficiaries. In light of this AARP position, why did AARP Colorado fail to defend the contractual rights of Colorado PERA retirees in 2010? Are Colorado PERA retirees an exception to AARP Colorado’s policy that current public pension beneficiaries should be held harmless in pension reform legislation?

    Does AARP Colorado support public pension contractual rights? or do they not support public pension contractual rights? Or, did it happen in 2010, that certain self-interested parties successfully lobbied AARP Colorado officials, persuading AARP Colorado to remain on the sidelines while SB10-001 was pushed through the legislative process, that is, while one-third of the accrued public pension benefits of Colorado PERA retirees were seized by the Colorado Legislature?

    In 2009/2010, the Colorado AARP decided to do nothing to defend Colorado PERA retiree constitutional rights. Here is a statement from an AARP Colorado representative on SB10-001: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.” I ask: How does the “monitoring” of a breach of contract protect the interests of retirees?)

    Colorado PERA active and retired members, in 2010, we observed a willful, deliberate, breach of public pension contracts by the Colorado General Assembly. If Colorado legislators did not take Colorado PERA statutory contracts seriously in 2010, as our State Treasurer warns, they will never take Colorado PERA statutory contracts seriously in the future. Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  22. Al Moncrief says:

    NATIONAL ASSOCIATION OF STATE BUDGET OFFICERS – THE COMMON FUNDING BENCHMARK FOR PUBLIC PENSIONS IS 80 PERCENT – SO WHY IS THE COLORADO LEGISLATURE TAKING CONTRACTED PERA PENSION BENEFITS UNTIL A 100 PERCENT FUNDING RATIO IS ATTAINED? CLEARLY LEGISLATIVE OVERREACH.

    Last year, the National Association of State Budget Officers published an Issue Brief that places public pension funding in a state budgetary perspective. The Issue Brief brings perspective to the Colorado General Assembly’s breach of Colorado PERA public pension COLA contractual obligations in 2010. A lawsuit contesting this state taking of PERA public pension benefits, Justus v. State, is currently pending before the Colorado Supreme Court.

    “For over 60 years, the National Association of State Budget Officers (NASBO) has been the professional membership organization for state budget and finance officers.”

    http://www.nasbo.org/about-nasbo

    The Issue Brief, “A State Budgeting Perspective on Public Pensions,” is available at the following link:

    http://www.nasbo.org/sites/default/files/pdf/A%20State%20Budgeting%20Perspective%20on%20Public%20Pensions.pdf

    Below, I provide a few important excerpts from the NASBO public pension Issue Brief (and my observations):

    “This brief examines a number of pension issues from a budgetary perspective. A budgetary perspective considers long term pension funding adequacy, and the financial cost of promised benefits in relation to the rest of current state spending.”

    “Most public pensions have retained a defined benefit status in which retiree payments are guaranteed under state statute, constitution, or contract law.”

    (My comment: When the Colorado General Assembly enacted the bill breaking Colorado PERA retiree pension contracts in 2010 [SB10-001], scant attention was given to the fact that the issue of governmental taking of contracted public pension COLA benefits had been previously litigated in Colorado. Decades ago the Colorado Supreme Court invalidated the taking of contracted COLA benefits by Colorado governmental employers as a means of escaping their contracted public pension debt. Colorado state and local government employers cannot “define” their way out of their contractual public pension COLA obligations in statute or ordinance. How did the Colorado PERA Board of Trustees and Colorado’s public sector unions arrive at the conclusion that state and local government employers, after benefiting from the labor of their employees, did not have to pay contracted current and deferred compensation for that labor? This notion defies Colorado case law, and common sense.

    Although, many state legislators were generally aware of the recent Colorado Attorney General’s Opinion stating that impairment of contracted PERA benefits would be unconstitutional (during debate of SB10-001), few had read the on-point case law, Bills or McPhail. In 2009/2010 the Leadership of the Colorado General Assembly, encouraged by self-interested public sector unions, preferred to keep rank and file members of the General Assembly in ignorance. Thus, Leadership abdicated legislative policy-making authority in this area to the state’s pension administrator, Colorado PERA. The Colorado PERA Board of Trustees conducted a statewide campaign to persuade Colorado PERA retirees to relinquish their contractual pension rights. As planned, the PERA Board of Trustees presented a preordained conclusion to take “fully-vested” PERA retiree pension COLA benefits to the Legislature prior to the 2010 legislative session.

    Although encouraged to do so, the Leadership of the General Assembly did not pursue an interrogatory to the Colorado Supreme Court requesting an opinion on the constitutionality of their proposed taking of PERA retiree public pension benefits. The Leadership of the General Assembly did not propose that an interim study committee be appointed to examine potential PERA pension reforms that would comply with Colorado Constitution. Such actions on the part of the General Assembly’s Leadership would have resulted in a level of knowledge of public pension contractual rights on the part of the members sufficient to prevent even 27 statehouse lobbyists from pushing SB10-001 through the legislative process.)

    NASBO:

    “The yearly . . . employer contribution to the fund comes directly from the state’s operating budget and is called the annual required contribution or (ARC). The ARC represents the level of payment needed for the state to keep pace with the accumulation of benefits.”

    “When states contribute significantly less than the ARC, assets in the pension fund may not be able to meet the liabilities that accrue, which can necessitate future taxpayer dollars to cover
    the cost of benefits for services delivered in the past. States must consider the issue of equity because, as the Government Accountability Office points out, ‘When the ARC is not paid in full
    each year, future generations must make up for the costs of benefits that accrued to employees in the past.’”

    (My comment: On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio: “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/about/listeningtour.htm)

    This legislative habit of failing to pay annual public pension bills [the ARC deficiency] has been referred to as “taking a pension holiday,” or “putting state expenditures on a credit card.” Skipping out on required PERA pension bills allowed the Colorado General Assembly to redirect this money to discretionary state programs. Colorado state legislators have racked up their PERA credit card balance on an extended “pension holiday.” Rather than acting responsibly and facing the consequences of their negligence, state legislators now seek to raid Grandma’s bank account to pay off their credit card debt. These are our state leaders . . . setting a example for today’s youth.)

    NASBO:

    “The amount owed on unfunded liabilities can be paid over time because the obligations are amortized much like a mortgage payment.”

    (My comment: Colorado PERA Executive Director Meredith Williams in “Setting the Record Straight”:

    “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

    Silver and Gold Record, March 9, 2006:

    “Williams noted that most people don’t have enough money to pay off their mortgages, and that PERA’s assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said.”

    https://www.cu.edu/sg/messages/4871.html)

    NASBO:

    “When a pension plan’s accrued actuarial liability exceeds the actuarial valuation of assets the plan is said to have an unfunded actuarial accrued liability (UAAL) or unfunded liabilities.”

    “The ratio of liabilities to assets is depicted as a pension plans’ funding ratio, which indicates the level of funds available for paying accrued benefits. The benchmark for many state and local plans is to maintain an 80 percent funding ratio or enough assets to cover 80 percent of accrued liabilities.”

    (My comment: “Mr. [Meredith] 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 [on SB10-001] 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 [actually two of the last eighty-one years], it was necessary now. The answer was ‘it just makes things easier.’”

    Link:

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

    In February 2011, Colorado PERA’s General Counsel wrote in the periodical “Government Finance Review,” that, in order for a PERA pension reform to be found “reasonable” under the law, changes to the Colorado PERA pension must be “the minimum changes necessary.” The next year, June 26, 2012, Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, wrote in the 2011 Colorado PERA CAFR: that the 100 percent funding threshold put into Colorado law by SB10-001 is much stronger than is necessary [i.e., not "the minimum change necessary"] to meet public pension regulatory [GASB] standards. Alteration of the statutory Colorado PERA pension contract in 2010 [SB10-001] by incorporation of this 100 percent PERA pension funding threshold placed unnecessary financial pressure on the PERA pension trust funds, creating the Legislature’s desired rationale for breaking pension contracts, and does not represent the “least drastic” reform option available to the Colorado General Assembly.

    You can see that, in 2010, when Leadership decided to attempt a Colorado PERA pension contract breach, they were determined to “go big.” If they were going to use recent [2008/2009] market volatility as a “window” to attempt to slash state and local government pension debt, why not roll the dice and slash the PERA pension debt dramatically? Why not push 90 percent of the cost-shift in their bill, SB10-001, onto PERA retirees? PERA retirees were weak and unrepresented . . . an easy target for PERA’s hired lobbyists. Instead of placing a PERA pension funded ratio of 80 percent in the title of SB10-001, why not bet the farm and stick in a 100 percent funded ratio threshold? [Note that another state that has been condemned for its attempt to take public pension COLA benefits, Rhode Island, proposes to continue its own pension theft until just an 80 percent funding threshold is achieved. The Rhode Island theft is thus, comparatively, the lesser crime.] This is what happens when lobbyists run the legislative show. Greed takes over.

    Note this 2012 Fitch Ratings position on public pension funding levels: “Fitch generally considers pensions with funded ratios 80% and above to be well-funded.” Also, in a 2011 Fitch Ratings report, Fitch notes that a 70 percent actuarial funded ratio for public defined benefit pensions is considered an “adequate” actuarial funded ratio.

    Link:

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

    Back to NASBO:

    “In the past, pension dollars accounted for a much greater share of state budgets than they do today (See graph at Save Pera Cola on Facebook.)”

    “Overall, pension contributions represent a small percentage of states’ operating budgets at roughly 3.8 percent.”

    (My comment: Jennifer Paquette, Colorado PERA Chief Investment Officer, May 22, 2011, 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.”

    Note that according to the NASBO graph, in the 1980s, U.S. state and local government expenditures to meet public pension obligations reached six percent of total state and local government expenditures, nearly three times Colorado’s public pension burden in 2008 as identified by Colorado PERA’s Chief Investment Officer above.)

    NASBO:

    “Center for Retirement Research at Boston College, October 2010 – Public Pension Contributions as a Percent of State and Local Government Budgets.”

    NASBO:

    “Pension liabilities can also be viewed as a debt structure component, comprising one aspect of a state’s long-term outstanding debt. Therefore, state pension systems are a factor that rating agencies consider before issuing an opinion on a state’s ability to repay debt obligations. The degree to which states consistently pay their ARC indicates that other debt obligations will likely be met through the normal budget process.”

    “Pension obligations are referred to as ‘riskless’ because the payments are guaranteed to beneficiaries.”

    Link to complete NASBO public pension Issue Brief:

    http://www.nasbo.org/sites/default/files/pdf/A%20State%20Budgeting%20Perspective%20on%20Public%20Pensions.pdf

    Colorado PERA active and retired members, the proponents of SB10-001 would have you, and Colorado courts, believe that your accrued pension benefits are a burden on Colorado state and local governments. In reality, pension contributions made by Colorado governments are a fraction of public pension contributions in other states. The Colorado General Assembly and self-interested lobbyists want to conceal many truths from you and the courts. Help bring the truth to light in our state. Do your part to preserve the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  23. Al Moncrief says:

    DO COLORADO PERA RETIREES HAVE A DUTY TO DIE?

    The average age of a Colorado PERA retiree has now passed 70 years. In 2010, a majority of the members of the Colorado General Assembly determined that these Colorado residents were no longer full “citizens” of Colorado. They no longer deserved protections afforded by the Colorado Constitution.

    Agreeing with lobbyists in 2010, a majority of Colorado legislators decided that this group of elderly Coloradans should have no voice. They were a burden on Colorado. Lifetimes that had been spent serving Coloradans deserved no recognition. Thousands of these PERA retirees were in hospitals or nursing homes. Under no circumstances would these PERA retirees ever show up at the Colorado Capitol’s lobbies to defend their constitutional rights. The State of Colorado’s contracts with these “residents” were inferior to the state’s contracts with corporations. Colorado PERA retiree contracts could be casually discarded.

    “You’ve got a duty to die and get out of the way,” said former Colorado Governor Dick Lamm decades ago. The former Colorado Governor was speaking in support of physician-assisted suicide; nevertheless, his words came to mind in 2010 when the Colorado General Assembly voted to break Colorado’s contracts with elderly Colorado PERA pensioners.

    http://en.wikipedia.org/wiki/Richard_Lamm

    The State of Colorado, the 15th wealthiest state in the nation, a state with an unexpected billion dollar tax bonus in next year’s budget, a state that pumps $700 million into pensions that are not its responsibility while ignoring its own pension contracts, a state that recently granted $105 million in discretionary property tax relief . . . that state is burdened by its elderly and therefore must illegally seize their property.

    As Colorado PERA officials have informed us, Colorado legislators have skipped out on their pension obligations for a decade . . . they haven’t paid their pension bills (ARC). In 2010, a majority of Colorado legislators decided to try and use recent market volatility as an excuse to take money from this group of PERA retirees (who, by the way, bear no “market risk” in their “defined” benefit pension plan.) Colorado legislators decided to inflict a compulsory “shared sacrifice” on PERA retirees. This “shared sacrifice” was put into Colorado law, to help keep taxes low in the state with the lowest per capita tax receipts in the country. Each new year finds thousands of criminals convicted in the United States for misappropriating the assets of the elderly . . . tapping an old man’s bank account for a “compulsory shared sacrifice.”

    IS THE STATE OF COLORADO OBLIGATED UNDER COLORADO LAW TO REPORT ITSELF FOR “ELDER FINANCIAL ABUSE”?

    I find tremendous irony in the fact that the Colorado General Assembly has recently enacted legislation that requires reports of financial abuse of Colorado residents over 70 years of age.

    “SB 13-111: Requiring Certain Mandatory Reporters to Report Suspected Abuse of Persons 70 Years of Age or Older.”

    (My comment: The taking of one-third of an at-risk elder’s contracted, accrued, earned, “fully-vested” pension benefits to maintain Colorado’s position as a “tax haven” is undeniably abusive.)

    “Under the bill, on and after July 1, 2014, certain professionals (mandatory reporters) who observe the abuse or exploitation of a person who is 70 years of age or older (at-risk elder) or who have reasonable cause to believe that an at-risk elder has been abused or has been exploited and is at imminent risk of abuse or exploitation are required to report such fact to a law enforcement agency within 24 hours after making the observation or discovery. A mandatory reporter who fails to report commits a class 3 misdemeanor.”

    (My comment: Under this legislation, a person who steals a paltry $1,000 from an at-risk elder must be reported. Why should an organization that illegally takes one-third of an at-risk PERA retiree’s pension not also be reported?)

    “A person who exercises undue influence to convert or take possession of an at-risk elder’s money, assets, or other property commits statutory theft.”

    “Within 24 hours after receiving a report of abuse or exploitation of an at-risk elder, a law enforcement agency shall notify the at-risk elder’s county department and district attorney’s office of the report. The law enforcement agency shall complete a criminal investigation when appropriate. Upon completion of an investigation, the law enforcement agency shall provide a report of the investigation to the at-risk elder’s county department and a district attorney’s office.

    “On or before January 1, 2014, the peace officers standards and training board (P.O.S.T. board) shall create and implement a training curriculum to prepare peace officers to recognize and address incidents of abuse and exploitation of at-risk elders.”

    http://cbaclelegalconnection.com/tag/elder-law/

    From the SB13-111:

    “(e) The general assembly should study and implement specific recommendations for combating financial exploitation of elder adults . . .”

    (10) “EXPLOITATION” MEANS AN ACT OR OMISSION COMMITTED BY A PERSON WHO: (a) USES DECEPTION, HARASSMENT, INTIMIDATION, OR UNDUE INFLUENCE TO PERMANENTLY OR TEMPORARILY DEPRIVE AN AT-RISK ELDER OF THE USE, BENEFIT, OR POSSESSION OF HIS OR HER MONEY, ASSETS, OR PROPERTY;

    (My comment: “Deception . . . undue influence to permanently . . . deprive an at-risk elder . . . of her money.” This phrase perfectly encapsulates the Colorado PERA legal, lobbying, and political campaigns to break Colorado PERA retiree pension contracts in 2009/2010.)

    (12) “Position of trust” means assuming a responsibility, duty, or FIDUCIARY relationship toward an at-risk adult . . .

    (My comment, Colorado PERA statutes: “As FIDUCIARIES, such [PERA Board] trustees shall carry out their functions solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law.”)

    “THEFT FROM THE PERSON OF AN AT-RISK ELDER BY MEANS OTHER THAN THE USE OF FORCE, THREAT, OR INTIMIDATION IS A CLASS 4 FELONY WITHOUT REGARD TO THE VALUE OF THE THING TAKEN.

    (7.5) ANY PERSON WHO EXERCISES UNDUE INFLUENCE TO CONVERT OR TAKE POSSESSION OF AN AT-RISK ELDER’S MONEY, ASSETS, OR OTHER PROPERTY COMMITS THEFT . . .”

    (My comment: Colorado Court of Appeals on PERA pensioner property rights: “See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim.”

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

    For the complete bill, SB13-111, visit this link:

    http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/3006FD57CDD34B8287257AEE00570CDC?open&file=111_rer.pdf

    In an eleven-page letter, dated August 2, 2010, from the Ritter Administration (Office of the Colorado State Controller) to the Governmental Accounting Standards Board, GASB, (the national regulator for public pension plans) officials of the Ritter Administration note that SB10-001 will cost every Colorado PERA retiree $165,000 over the next 20 years. Ritter Administration officials in 2010:

    “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.” You can read the entirety of the letter on the GASB site here:

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

    Colorado Coalition for Elder Rights and Abuse Prevention:

    “Our mission: to promote state-wide understanding of elder/at-risk adult abuse and the rights and protections available to elder and at-risk adults.”

    “What is financial exploitation? The improper use of an elder’s funds, property or assets constitutes financial exploitation or abuse.”

    “By far, the greatest number of elder abuse cases involves some type of financial exploitation.”

    http://ccerap.org/

    Not even the retiree organization, Colorado AARP, will defend the constitutional rights of Colorado PERA retirees. In 2009/2010, the Colorado AARP decided to do nothing to defend PERA retiree constitutional rights. Here is a statement from an AARP representative: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.” How does the “monitoring” of a breach of contract protect the interests of retirees?

    “AARP ElderWatch is designed to operate as a clearinghouse for complaints, educational information, and training materials dealing with the financial exploitation of elderly Coloradoans.”

    http://hotline.aarpelderwatch.org/public/home.html

    Colorado PERA active members, is this the future you desire? A future in which contractual rights to your accrued benefits can be casually ignored by your employer?

    Colorado PERA retirees, when state legislators ignore the Colorado Constitution they have sworn to uphold, courts must necessarily intervene to defend that constitution. Support the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  24. Al Moncrief says:

    HICK SIGNS NEXT YEAR’S STATE BUDGET; PROVIDES MORE EVIDENCE THAT THE STATE FACES NO FINANCIAL “CRISIS” WARRANTING BREACH OF ITS PENSION CONTRACTS.

    STATE LAWYERS ARGUE THAT COLORADO CANNOT MEET ITS OWN CONTRACTUAL PENSION OBLIGATIONS. IF THIS IS TRUE, HOW HAS THE STATE MANAGED TO PAY $700 MILLION FOR PENSIONS THAT ARE NOT ITS CONTRACTUAL OBLIGATION?

    Three years ago, a mob of statehouse lobbyists (paid by self-interested parties) set their sights on breaking Colorado state and local government pension contracts. These 27 lobbyists successfully persuaded a majority of Colorado state legislators to attempt to break the contracts of Colorado PERA pensioners. In effect, the lobbyists intend to use the force of government to take money from older Coloradans to subsidize state and local government budgets.

    The pensioners whose property was seized immediately filed a lawsuit, Justus v. State. A defendant in the case, the Colorado PERA pension system, notes (in its May, 2010 Motion to Dismiss, page 12) that even the prime sponsor of the legislation they are attempting to defend considers Colorado PERA’s pension debt to be a “financial liability” of the State of Colorado.

    From the PERA Defendant’s Motion to Dismiss:

    “Senate Minority Leader Penry, another co-sponsor of the bill, called PERA’s unfunded pension liability the ‘single largest financial liability facing the State of Colorado.’ Id. at 9-10 (statement of Sen. Joshua Penry, Senate Minority Leader).”

    The PERA Defendants also note, on page 27 of their Motion to Dismiss, that ” . . . PERA is . . . an instrumentality of the state . . .”

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

    The PERA Defendants highlight the fact that Colorado PERA pension debt is a financial liability of the State of Colorado in legal briefs, so why have they bothered appealing a recent Colorado Court of Appeals decision making this same finding?

    The PERA Defendants would have us believe that meeting contractual public pension obligations is a financial burden on the State of Colorado. The defendants would have us believe that the State of Colorado has insufficient financial resources to perform under the Colorado PERA pension contract.

    If meeting contractual Colorado PERA pension obligations is such a burden on the State of Colorado, why has the Colorado General Assembly recently and voluntarily agreed to finish paying off $700 million of public pension liabilities that ARE NOT its contractual obligation?

    The State of Colorado, the 15th wealthiest state in the nation, is fortunate to find itself with an extra $1 billion in next fiscal year’s budget. Yet, the defendants in the case, Justus v. State, would have us believe that the State of Colorado faces such a severe financial “crisis” that it cannot afford to meet its contractual pension obligations.

    Further, if the State of Colorado is indeed confronted by a “financial crisis,” how has the Colorado General Assembly managed to give away $105 million in discretionary property tax relief in next year’s state budget? The PERA Defendant’s arguments continue to defy logic.

    When a person hires a lawyer to file a civil case, isn’t it generally safe to assume that the person will try to help their lawyer win the case? That the person will avoid, to the extent possible, actions that are contrary to his legal interests? If an organization is sued and hires a law firm to defend its interests, is it not generally expected that the organization will act in its own defense, and assist the law firm in building a defense?

    The State of Colorado is an organization that is currently being sued by its retired workers. The State of Colorado and its pension-administering arm, Colorado PERA, have in-house attorneys, state attorneys general, and an outside, hired law firm defending their breach of Colorado PERA pension contracts. You might expect that the Colorado General Assembly, as a branch of Colorado state government, would assist this host of lawyers in building a case.

    You would be wrong.

    When the Colorado General Assembly broke the state’s pension contracts in 2010, politics was in the driver’s seat. Is it really a surprise that short-term political considerations predominate in the minds of politicians? Nevertheless, one might expect that Colorado state legislators would at least temporarily attempt to set political considerations aside in order to help Colorado PERA’s in-house and outside hired attorneys build a defense in the case, Justus v. State, i.e., establish “actuarial necessity.”

    One would be disappointed.

    In 2010, when a majority of state legislators violated Colorado PERA pension contracts, politics controlled. Political calculations and ambitions continue to control in 2013. At the recently concluded legislative session, Colorado legislators could not (even temporarily) resist the impulse to provide political favors to constituents and lobbyists in order to avoid harming the state’s case in the PERA COLA lawsuit. Thus, while their lawyers are trying to establish an atmosphere of “financial crisis,” state legislators are using this year’s billion dollar tax bonus to provide a gift to local governments, paying off local government legacy pension liabilities. With an extra billion dollars in their pockets, we did not see a single Colorado legislator propose that the General Assembly meet ITS OWN contractual pension obligations. At the recently concluded 2013 legislative session, not a single state legislator suggested that a good faith effort be made to catch up with a decade of underfunded PERA pension contributions. Instead, we see a $105 million purchase of votes in the form of a discretionary grant of property tax relief. We see local government lobbyists persuade state legislators to use state government resources to meet local government legacy pension debt.

    I have no objection to discretionary expenditures that are deemed appropriate by the Colorado General Assembly. However, I do object to arguments by attorneys representing the State of Colorado that the state cannot meet its own contractual pension obligations while it is giving away revenues to pay off local government pension obligations. Having made such appropriations, representatives of the Colorado General Assembly cannot legitimately argue in court that financial need has forced the Legislature to break Colorado PERA pension contracts.

    Business Week:

    “Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado.”

    http://www.businessweek.com/ap/2013-04-29/hickenlooper-signs-next-years-budget-for-colo-dot

    Note again, that this $140 million is not “state debt,” in spite of the effort of politicians to portray these local government pension liabilities as “state debt.” This deception serves their political purposes.

    September 19, 2012, FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government “Old Hire Police Officers Pension Plans” to the Colorado General Assembly’s Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

    “So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans.”

    Link:

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

    The fact that FPPA Old Hire Pension Plan unfunded liabilities are not a contractual obligation of the State of Colorado is also made clear in Colorado statutes and in the language of Referendum C.

    The discretionary nature of state grants to fund Colorado local government pensions is stated clearly in the “Legislative Declaration” (preceding Section 31-31-101, C.R.S. ) in Colorado law. Section 31-31-101, C.R.S. Legislative Declaration:

    “The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits, except for state funding of death and disability benefits as specified in this article, but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

    http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=SB234_r1.pdf

    A few years ago, a Colorado Department of Treasury JBC Budget Briefing document provided an accounting of the Colorado General Assembly’s historical discretionary grants to meet local government public pension obligations:

    http://www.state.co.us/gov_dir/leg_dir/jbc/2011-12/trebrf.pdf

    Here are a few excerpts:

    “State Contributions for Local Fire and Police Pension Plans: Since 1980, the State has contributed almost $540 million to the FPPA to eliminate the unfunded liability of the ‘old-hire’ pension plans.”

    From page 29 of the JBC document:

    “To put this figure in perspective, the total state General Fund operating budget in the FY 1978-79 Long Bill was just over $1.0 billion. Thus the $500 million shortfall in local plans represented nearly half of the annual state General Fund budget. If the magnitude of this shortfall were adjusted for inflation, it would exceed $1.8 billion.”

    From page 31 of the JBC document:

    “During the ensuing years, the State’s contribution to the old hire plans equaled about 41 percent of the total combined contributions of the state, local governments and employees.”

    From Senate Bill13-234 – $132.4 million to pay off local government pension obligations (this appropriation, coupled with funding in next year’s Long Bill brings total state appropriations to pay off local government pension obligations to approximately $700 million):

    SB13-234, CONCERNING THE STATE’S AUTHORITY TO PREPAY ITS OBLIGATION FOR THE UNFUNDED ACCRUED LIABILITY OF OLD HIRE PENSION PLANS THAT ARE AFFILIATED WITH THE FIRE AND POLICE PENSION ASSOCIATION.

    (My comment: Note the deception present even in the title of the bill. As with SB10-001, the rank and file membership did not bother to root out deception.)

    Page 2:

    “(b) ON MAY 31, 2013, THE STATE TREASURER SHALL TRANSFER ONE HUNDRED THIRTY-TWO MILLION FOUR HUNDRED NINE THOUSAND THREE HUNDRED THIRTY-NINE DOLLARS FROM THE GENERAL FUND TO THE OLD HIRE PLAN MEMBERS’ BENEFIT TRUST FUND CREATED IN SECTION 31-31-701 (6).”

    http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=234_enr.pdf

    Next year’s property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

    Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, “Homestead” property tax relief grant: $105,200,000

    http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

    Denver Post:

    “But Joint Budget Committee vice-chairwoman Rep. Claire Levy, D-Boulder, lauded her colleagues on the committee and noted that with Colorado’s economic recovery, the state is no longer in a position that requires it to cut programs.”

    http://www.denverpost.com/breakingnews/ci_23131374/hickenlooper-sign-next-years-20-5-billion-colorado

    HICK’S LETTER TO THE GENERAL ASSEMBLY ON THE 2013/14 STATE BUDGET.

    April 29, 2013:

    “With thanks to the members of the sixty-ninth General Assembly, this budget is the result of a bipartisan dedication to Colorado’s values. We are enacting this budget at a unique time in our
    history. After enduring a significant economic downturn, Colorado’s economy is outperforming the nation’s. The resulting recovery is allowing us the opportunity to allocate resources for the common good.”

    http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22A+letter+to+the+general+assembly+from+Hickenlooper.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251854377268&ssbinary=true

    Denver Business Journal:

    “Colorado Gov. John Hickenlooper on Monday signed into law the $20.5 billion state budget for the 2013-14 fiscal year . . . ”

    “The new eco-devo money — a priority for Hickenlooper since he introduced his proposed budget in November — includes:

    • $2.9 million more for incentives for relocating and expanding companies.
    • $1 million for increased film incentives.
    • $2 million for increased tourism marketing and development of a state branding campaign to attract tourists and entrepreneurs.

    http://www.bizjournals.com/denver/news/2013/04/29/hickenlooper-signs-state-budget-with.html

    Boulder Daily Camera:

    “Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado.”

    “We’re in the happy position of no longer having to cut programs,” said Rep. Claire Levy, D-Boulder, one of six budget writers.

    http://www.dailycamera.com/nation-world-news/ci_23135284/hickenlooper-signs-next-years-state-budget

    KDVR:

    “Republicans support those pieces of the budget, as well as a measure House Republicans fought for to pay off a long-standing debt to the Fire and Police Protection Association.”

    http://kdvr.com/2013/04/29/hickenlooper-signs-next-years-20-5-billion-budget-into-law/

    (My comment: Can you believe the voracity with which Colorado media will gobble up the propaganda?)

    COLORADO COURTS: MEMBERS OF BOTH MAJOR PARTIES HAVE BEEN LOBBIED HARD AND PERSUADED TO TAKE MONEY FROM PENSIONERS, SO PLEASE GIVE IT YOUR BLESSING.

    Much has been made in the press (and in legal briefs) of the fact that both Democrats and some Republicans voted for SB10-001 in 2010.

    From the Colorado PERA Defendant’s Motion to Dismiss:

    “In a BIPARTISAN effort to address this critical funding shortfall, the General Assembly enacted Senate Bill 10-001 to make changes to the state pension system.”

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

    Of course, the term “shortfall” implies that PERA-affiliated employers need the ability to “pay off the mortgage” today, which is untrue. If a Colorado PERA “critical shortfall” existed in 2010, as we have seen, the General Assembly is itself the author of that “critical shortfall.”

    This PERA Defendant argument distills to: “Colorado courts we both want to take money from old people, so please give it your blessing.” The fact that both a Republican and a Democrat support a bill does not necessarily place the stamp of morality or constitutionality on the legislation.

    If a lobbyist persuades one Democrat and one Republican to mug an old lady, is the mugging thereby rendered “moral” because it was a “bipartisan” mugging? If a lobbyist persuades both a Republican and a Democrat to raid an old lady’s bank account, will the theft conform with statutory or constitutional law in the United States? After all, it was a “bipartisan” theft.

    Occasionally, “bi-partisan” collusion serves the political interests of both parties. Many Colorado conservatives would like to see the Colorado PERA defined benefit plan eliminated entirely. A fraction of these conservatives will look the other way if constitutional rights are trampled in the process (as we know, not all conservatives will look the other way.) Many Colorado Democrats naturally want to serve the interests of organized labor. In 2009, Colorado’s public sector unions decided that the breach of Colorado PERA retiree pension contracts would help to minimize future pension contributions from their dues-paying membership. So, the unions supported SB10-001, and convinced some of their legislative friends to ignore their oaths of office. As always, follow the money.

    In 2010, it happened that “bi-partisan” Colorado political interests intersected on immoral and unconstitutional ground. Collusion benefited some Democrats and some Republicans. In this environment, a collective push from 27 lobbyists was sufficient to enact SB10-001.

    Colorado PERA active and retired members, politics can be a filthy business. Don’t let dirty politics rob you of your constitutional rights. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  25. Al Moncrief says:

    ARGENTINE AND COLORADO PENSION PIRACY . . . MORALLY EQUIVALENT?

    In 2008, the Argentine Legislature passed a bill taking $25 billion in pension assets in which millions of Argentines held a property interest. This taking bolstered Argentina’s financial condition.

    In 2010, the Colorado Legislature passed a bill abrogating the contractual obligation of Colorado PERA employers to pay approximately one-third of a PERA member’s accrued PERA pension benefits over the next 70 years. Thousands of Colorado pensioners hold a property interest in this PERA contracted annuity. This taking bolstered Colorado’s financial condition.

    Which government has the greater respect for property rights? How is Colorado’s taking of pension property rights not the moral equivalent of Argentina’s taking of pension property rights?

    From the organization “Friends of PERA”:

    “There is a misconception that the ‘taxpayers’ are owners of the (PERA pension) fund; the trust fund is owned by the beneficiaries of the fund . . .”

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

    These two instances, in which pension contracts were breached by a legislative body (the Argentine National Congress and the Colorado General Assembly), are not factually identical, but they are quite similar. In both cases pension contracts were violated to make additional funds available to a government for that government’s discretionary expenditures, and to curry political favor.

    If contracts are meaningless in the United States, if U.S. state and local governments are permitted to take accrued pension benefits with impunity, the moral standing of our nation is diminished. We will find ourselves on the same moral plane with governments that brush aside the rule of law. How exceptional will we find a United States that takes, by force, property earned by its citizens over decades? Does the theft of contracted pension benefits not somewhat diminish the luster of that “shining city upon a hill”?

    The Wall Street Journal on the Argentine pension taking:

    “‘With the [latest, Argentine] announcement, the custom of violating the rules of the game has been repeated, which deepens the lack of confidence,’ political analyst Rosendo Fraga wrote in the Buenos Aires daily La Nacion.”

    http://online.wsj.com/article/SB122460155879054331.html

    Professor Secunda of Marquette University on U.S. state government takings of accrued pension benefits:

    “What the states are trying to do is change the rules in the middle of the game.”

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

    Colorado Supreme Court in Bills:

    “Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.”

    Wall Street Journal:

    “Buenos Aires economist Aldo Abram, among many other economists, wasn’t buying that argument. ‘They were in a tight situation and this was an accessible source of funds,’ he said.”

    “Opposition leader Elisa Carrió vowed to contest it, saying, ‘The government measures aren’t designed to better the retirement system but rather to plunder the funds of the retirees.’”

    Washington Post:

    “The proposal by (Argentine) President Cristina Fernández de Kirchner last month to nationalize about $25 billion in private pension funds provoked an outburst of criticism that the government was seizing retirement savings for cash to shore up its finances.”

    “‘The announced nationalization-expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country’s recent history,’ wrote Claudio Loser, senior fellow at the Inter-American Dialogue, in the Latin American Advisor newsletter.”

    “Sen. Ernesto Sanz of Mendoza, who opposed the nationalization, said: ‘We don’t have any doubt that this is violating the right to private property. Not just for us, but for all society and the world. This is clearly confiscation.’”

    http://articles.washingtonpost.com/2008-11-21/world/36794754_1_pension-system-pension-funds-private-pension

    Colorado Court of Appeals on PERA pensioner property rights:

    “See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim.”

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

    New York Times:

    “The (Argentine) measure . . . was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009 . . .”

    “The announcement . . . led analysts to question whether the nationalization, which is subject to approval by the Argentine Legislature, puts property rights at risk and threatens the rule of law in the country.”

    “It may be the first time a Latin American government has expropriated cash.”

    Argentina’s President, Mrs. Kirchner: ” . . . we are protecting our retirees and our workers.”

    “She dismissed criticism that the move was simply a grab for cash . . .”

    “The opposition leader Elisa Carrio . . . told radio Mitre on Tuesday that the government was trying to ‘loot the funds of retirees.’”

    “By taking over the pension funds the government can continue to spend on programs that help it retain political support.”

    “If the move is approved, her government may have secured an important electoral asset, which could help guarantee Mrs. Kirchner’s political survival.”

    http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html

    Lebanon, Pennsylvania Daily News Editorial:

    “The reasons for the pirating of deposits or the nationalization of pensions don’t matter nearly as much as the demonstrated willingness of government to treat money – privately held money, money earned by individuals – as a state resource, as needed.”

    “And we have to wonder, again, who might be paying attention in this country (the USA); how good are our protections against such a thing. Forget lip service and what anyone may claim ‘could never happen.’”

    (My comment: As we have seen, it not only can happen, it is happening . . . in Colorado.)

    “How good are our protections? How strong are the underpinnings of our individual rights against such demonstrable government-first thinking?”

    http://www.ldnews.com/editorial/ci_22872828/argentina-private-pension-holders-well-just-take-that

    The Colorado Legislator’s Oath of Office: “I do solemnly swear by the everliving God, that I will support the Constitution of the United States and of the State of Colorado . . .”

    The Colorado Constitution: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation . . . shall be passed by the general assembly.”

    Support contractual public pension rights and the rule of law in the United States. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook.

  26. Al Moncrief says:

    BLOOMBERG COLUMNIST: RHODE ISLAND’S TAKING OF CONTRACTED PENSION COLA BENEFITS COST THE STATE’S PENSIONERS ONE-THIRD OF THEIR ACCRUED PENSION BENEFITS.

    GOVERNOR CHAFEE: “I’LL HAVE TO THINK ABOUT” WHY THE STATE CAN TAKE A PENSIONER’S CONTRACTED COLA, BUT CAN’T DEFAULT ON MORAL OBLIGATION BONDS.

    GOVERNOR CHAFEE: “WE WERE TOO AGGRESSIVE,” IN OUR 2011 PENSION REFORM. I WAS AFRAID THEY WOULD OVERRIDE MY VETO.

    IF RHODE ISLAND CAN’T HONOR ITS PENSION COLA DEBT TO PUBLIC PENSIONERS, WHY IS IT HONORING ITS PRIVATE SECTOR MORAL OBLIGATION BONDS ISSUED FOR A BANKRUPT PRIVATE COMPANY?

    Josh Barro of Bloomberg writes on May 1, 2013:

    “Under Chafee, Rhode Island has drawn national attention for two major fiscal events. First, the state legislature passed (and Chafee signed) the country’s most sweeping public employee pension reform. The measure included a provision discharging about $1 billion in existing pension liabilities by freezing retirees’ cost of living adjustments (COLAs) for 15 years. This wasn’t a small cut; by the time the freeze is over, many retirees’ payments will be one-third smaller than initially promised.”

    http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

    http://www.bloomberg.com/view/bios/josh-barro/

    “Second was the implosion of 38 Studios, former Red Sox pitcher Curt Schilling’s video game enterprise. Rhode Island offered the company a loan guarantee to relocate from Massachusetts. Now, the venture is bankrupt, and the state is on the hook to bondholders for $112 million.”

    Columnist Josh Barro:

    “That raises a question that many state residents — especially retired employees — would like to see answered: If Rhode Island can’t afford to keep its promises to retirees, how can it afford to keep its promise to the 38 Studios bondholders? Chafee isn’t prepared to answer.”

    How is it that RI can afford to honor its obligations to a bankrupt video game company, but cannot afford to honor its contractual obligations to its retired public workers? How can the State of Colorado afford to pay $700 million for local government pension obligations that ARE NOT the state’s contractual obligation (Old Hire Fire and Police pensions,) and (this session) provide $104 million in discretionary property tax relief, but the State of Colorado cannot afford to honor its contractual obligations to its retired public workers?

    How is it that Colorado, the 15th wealthiest state in the nation, a state with an extra billion dollars for the next fiscal year, can’t afford to honor its pension contracts? Why does the State of Colorado propose to break public pension contracts, but honors its other bonded moral obligations?

    Governor Chaffee dismisses the idea of defaulting on the 38 studios moral obligation bonds.

    Chaffee: “The words moral obligation speak for themselves.”

    Columnist Josh Barro:

    “But aren’t the pensions a moral obligation, too? After all, people spent their careers working for state and local governments in exchange for specific pension benefits. I asked Chafee, why it was acceptable to freeze the COLAs and unacceptable to break the moral obligation on the bonds.”

    “He responded: ‘Good question. A lot of discussion about that and, in fact, we’re in court on that issue with the unions.’ But he never got around to explaining why his position is right and the unions’ is wrong.” “Instead, he sought to disclaim ownership of the COLA freeze, which was part of the 2011 pension reform law and the key issue the unions are suing over.”

    Chaffee: I took the COLA because the Legislature would have overridden my veto:

    “Asked why he signed, he responded that he had to weigh costs and benefits, and that a key concern was that a veto would have been overridden by the large legislative majority that had passed the bill.”

    Yet, in 2011, Governor Chaffee supported the proposed pension COLA taking:

    “Chafee urged the legislature to pass pension reform, and helped build the veto-proof majorities that got the bill to his desk. I witnessed this: In October 2011, I spoke on a panel after a joint presentation by Chafee and state Treasurer Gina Raimondo in which they advocated the pension reform plan that eventually became law. At the time, Chafee also called for additional reforms that would have drawn more litigation by cutting benefits in locally run pension plans that were left untouched by his joint reform with Raimondo.”

    Columnist Josh Barro:

    “Now, Chafee says he was the voice of caution: ‘We got a little too aggressive. The treasurer was very aggressive, I was more, ‘we need buy-in, avoid litigation.’”

    “This would repeat a pattern that we’ve often seen in state level pension reforms — a law that looks like it will produce big cost savings gets unwound years later for political or legal reasons.”

    “As the interview ended, Chafee remarked, ‘I’ll have to think a little more about Josh’s question’ — the one about why you can freeze COLAs but can’t default on 38 Studios.”

    http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

    Support contractual public pension rights. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  27. Al Moncrief says:

    ALL MANNER OF CONTRADICTORY PUBLIC POLICY POSITIONS FIT UNDER A BIG SKY.

    MONTANA PUBLIC SECTOR UNIONS: WE SUPPORT THE LEGISLATURE’S TAKING OF THE CONTRACTED PENSION COLA BENEFIT, AND WE SUPPORT A RETIREE LAWSUIT OVER THE LEGISLATURE’S TAKING OF THE CONTRACTED COLA BENEFIT.

    MONTANA GOVERNOR: I’M SIGNING THE BILL TO TAKE THE CONTRACTED COLA; HOWEVER, IT’S ILLEGAL, AND I SUPPORT THE COMING RETIREE LAWSUIT OVER THE COLA TAKING.

    MONTANA LEGISLATIVE ATTORNEYS: TAKING THE COLA IS ILLEGAL.

    In 2010, Colorado public sector unions, 27 lobbyists, and a majority of “low information” Colorado legislators (on public sector pensions anyway) conspired to erase Colorado state and local government debt by taking accrued pension benefits from Colorado PERA retirees.

    Montana public sector unions are now in the pension theft game; however, they should have taken the time to get their story straight up front.
    From helenair.com:

    “Bullock signs pension fixes, school funding bill.”

    “The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees.”

    “The state’s largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes.”

    http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

    Eric Feaver, President, MEA-MFT:

    “There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)”

    “Guaranteed annual benefit adjustments (GABA), as necessary as they are for retirees, are not themselves the pension.”

    (My comment: This is deceit. Public pension COLAs are simply a method of delivering a defined, determinable, accrued public pension benefit. Should your mortgage company be able to retroactively hike your mortgage rate, breaking your contract, because the mortgage rate “is not itself the mortgage”? As in Colorado, Montana public sector unions are embracing a ludicrous [but convenient] contrivance.)

    From helenair.com:

    “In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality.”

    “‘We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,’ Villa said. ‘It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.’”

    http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

    Montana pensioners:

    “The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a ‘deal’s a deal’ only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?”

    “The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA.”

    “Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees.”

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    Colorado PERA active and retired members, I am speechless. Thankfully, I am still able to type. Support public pension contractual rights in the USA. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  28. Al Moncrief says:

    MORE ON THE MONTANA PENSION COLA-TAKING. AGAIN, THE GOVERNOR SAYS TAKING THE COLA IS ILLEGAL, BUT HE’S SIGNING THE BILL ANYWAY.

    COME AGAIN?

    MONTANA GOV. BULLOCK: STATE PENSIONERS WILL WIN THEIR LAWSUIT OVER THE COLA TAKING.

    If Colorado’s former Governor Ritter (an attorney) had such views, he wasn’t sharing them in 2010. Many states just want to roll the public pension dice. If they lose their pension contract breach case, they have the status quo, and the courts become the “bad guys.”

    From mtprnews.wordpress.com:

    “‘We believe that ultimately when current and retired employees bring challenge to them that they will be successful,’ (Gov. Bulllock’s Budget Director Dan) Villa said, adding the bill fixes the retirement system with or without the reduction in yearly raises which he said just make the fix more aggressive.”

    “(Association of Montana Retired Public Employees President Russell) Wrigg said he wants the pension fix bills to pass without the raise reductions (COLA taking) – he would prefer that to them (pension reform bills) dying through a veto. He says the group will consider legal actions against the bills if the governor signs them, which is expected. But, he doesn’t approve of the tactic.”

    “‘Legislation through litigation is really not the way to solve our problems in this state,’ he said.”‘

    http://mtprnews.wordpress.com/2013/05/03/fix-to-state-retirement-systems-opposed-by-retirees/

    My comment: “Legislation through litigation” is the strategy employed by the proponents of our Colorado COLA-theft bill, SB10-001. Recall Colorado Deputy Attorney General for Legal Policy and Government Affairs Geoff Blue’s comments [he's now in private practice.] Geoff Blue notes that since Colorado’s education establishment has failed to win new revenues at the polls lately, they are now seeking to “legislate through the courts.” “They’ve been losing so they’re trying to legislate through the courts.” Breaking PERA pension contracts frees up funds for Colorado’s education establishment.

    This Montana situation is a first for me . . . I can’t recall another instance, in which a Governor believes that a bill is unconstitutional, but signs it anyway. When the Montana pensioner’s case is filed it will be interesting to see how Montana’s Attorney General goes about defending it. The plaintiffs will certainly bring the Governor’s position on the constitutionality of the pension COLA taking to the attention of the court. The State of Montana as a defendant will have to argue in defense of statutory provisions that the Chief Executive of the State of Montana deems a breach of state contracts.

    In the Colorado case, Justus v. State, there is a parallel in that officials from Governor Ritter’s administration wrote a letter to federal regulators (GASB) after the 2010 COLA-taking contravening legal arguments made by the defendants.)

    You can read the entirety of the letter on the GASB site here:

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

    Colorado PERA active and retired members, are you as appalled as I am about the irrationality of the public pension debate in the United States? Support public pension contractual rights at saveperacola.com. Friend Save Pera Cola on Facebook.

  29. Al Moncrief says:

    MONTANA DECIDES TO ATTEMPT A PENSION COLA-THEFT. GOVERNOR BULLOCK “QUESTIONS THE CONSTITUTIONALITY” OF TAKING THE COLA.

    BULLOCK, INCREDIBLY, SUPPORTS A PENSIONER LAWSUIT AGAINST THE STATE, BUT WILL LIKELY SIGN THE BILL ANYWAY.

    Theatre of the absurd in Montana.

    The Montana Legislature has enacted a bill to retroactively take public pension COLA benefits from the state’s public pensioners. Like the Colorado education establishment in 2010, education lobbyists in Montana have their fingerprints all over the Montana Legislature’s attempt to break public pension COLA contracts. (If employers affiliated with the public pension system can break pensioner contracts, that minimizes future pension contributions for dues-paying union members and local government employers. If the bill gets struck down in court, the judges become “the bad guys.”)

    Governor Bullock didn’t support the COLA-theft amendment to the bill. Although Bullock thinks the COLA-theft provision in the bill is illegal, it appears he’ll sign the bill into law. (Odd that his primary concern is the taxpayers, but he doesn’t seem to mind squandering millions of taxpayer dollars on litigation.)

    Here’s Montana Governor Steve Bullock in his State of the State address:

    “We must also meet our responsibility to fix a long-term problem created by our predecessors. I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes. I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants. A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”

    Link to Governor Bullock’s State of the State speech:

    http://watch.montanapbs.org/video/2331212142?starttime=1200000

    From helenair.com:

    “Feeling betrayed, retiree group asks governor to veto pension bill.”

    “Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees.”

    “We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”

    “About 2,000 retirees in the Public Employees’ Retirement System belong to the association.”

    “At issue was an amendment to the Guaranteed Annual Benefit Adjustment (GABA), to reduce the current 3 percent annual cost of living pension raises.”

    “In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality.”

    “‘We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,’ Villa said. ‘It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.’”

    “‘Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,’ Wrigg said.”

    (My comment: Employers affiliated with a public pension system collude with public sector unions to reduce their future pension contributions by taking money from pensioners. Been there.)

    http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

    Montana pensioners:

    “The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a ‘deal’s a deal’ only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?”

    “The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA.”

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    Meanwhile, in Pennsylvania, Governor Tom Corbett’s proposal for legal, prospective changes in the state’s pension system is moving along:

    From lvb.com:

    “The governor also wants to change the formula for future benefits in current employees’ plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent.”

    (Recall that the Colorado Legislature adopted a bill last year, SB12-149, providing such prospective, legal public pension reform for certain Colorado county governments. This bill honored the accrued public pension benefits of thousands of Colorado government workers and retirees, while two years earlier, the Colorado Legislature passed a bill to seize up to one-third of the accrued pension benefits of Colorado PERA retirees.)

    http://www.lvb.com/article/20130501/LVB01/130509987

    I believe that this solution of prospective pension reform, reducing the rate of accrual of future pension benefits will ultimately prevail in the United States. It is emerging as a logical and legal pension reform alternative increasingly embraced by public pension legal scholars. Many politicians will not act responsibly unless forced to do so by the courts.

    Colorado PERA active and retired members. Contribute at saveperacola.com, and Friend Save Pera Cola on Facebook!

  30. Al Moncrief says:

    COLORADO LEGISLATURE . . . PAY YOUR DEBTS!

    THE COLORADO PERA COLA IS SIMPLY A METHOD OF DELIVERING A DEFINED PERA PENSION BENEFIT.

    USE OF THIS METHOD DOES NOT JUSTIFY BREACH OF PENSION CONTRACTS.

    Three years ago, a majority of Colorado legislators decided to attempt to break state contracts to cut the debt of Colorado state and local governments. In 2010, Colorado legislators passed a bill, SB10-001, that attempts to discard the obligation of Colorado governments and the state’s pension system, Colorado PERA, to pay cost-of-living (COLA) increases due retirees under their state pension contracts. Retirees in the Colorado PERA pension system, unwilling to allow the State of Colorado to take one-third of their contracted PERA pension benefits, immediately filed a lawsuit (Justus v. State.) Last year, the Colorado Court of Appeals agreed with the retirees that Colorado state and local governments have a contractual obligation to pay the annual cost-of-living adjustments due under the retiree’s contracts. The Court of Appeals also decided that (since the matter has not yet been heard by a jury) the retiree’s lawsuit should be sent back to the trial court (Denver District Court.) The trial court was ordered to determine if the Colorado General Assembly’s breach of Colorado PERA contracts in 2010 was “reasonable,” or “necessary.” Immediately after the Court of Appeal’s ruling last year, both the PERA retirees and the State of Colorado appealed the Court of Appeal’s decision to the Colorado Supreme Court. Both the plaintiffs and the defendants in the case are currently waiting to see if the Colorado Supreme Court will take the case, or send it back to the Denver District Court to make a determination as to “reasonableness” and “necessity.”

    http://saveperacola.com/

    In 2010, a majority of Colorado legislators decided to attempt to break Colorado PERA pension contracts to free up money for “discretionary” state and local public programs. Although the constituents of these state legislators want public services (good roads, education, police and fire protection) they do not want to pay for these services. Incredibly, many of the constituents of Colorado legislators do not want to pay for public services that they have already consumed. Therefore, they encouraged Colorado legislators to break Colorado PERA pension contracts.

    For some reason, in 2010, a majority of Colorado state legislators arrived at the conclusion that Colorado’s public pension contracts are inferior to the state’s corporate contracts. If there is a threat to the financial well-being of the State of Colorado (i.e., the state with an extra billion dollars to spend next year) all Colorado contracts should be on the table, not just one set of contracts.
    Like salary, Colorado PERA pension COLA benefits are compensation for work performed; specifically “deferred compensation,” presently earned. When a Colorado PERA member has completed the job, and finished earning her salary, her employer cannot retroactively take that salary from her. Her right to receive her earned salary is plainly a contractual obligation of her employer. The pension benefits that this PERA member earns each day are, similarly, a contractual obligation of her employer.

    For each day that a Colorado PERA member works she is entitled to know precisely what she is earning that day. She deserves to know both the salary and the pension benefit that she earned in exchange for her day of labor. When her day of work is complete, her employer cannot retroactively change the agreement. Her compensation for the day of work is defined, just as her deferred pension compensation is defined in Colorado law. As we have seen, deferred compensation due Colorado PERA members must stand “immutable for work already performed.”

    A public pension COLA is simply a method by which a defined pension benefit is provided. There is nothing inherent in this “method” (provision of a pension COLA) that negates its essence as a contractual obligation of Colorado PERA-affiliated employers.

    The Colorado Legislature has placed into Colorado law an agreement to provide an “automatic,” fixed, pension COLA “escalator” to PERA members upon retirement. When the Colorado Legislature created the Colorado PERA contract in statute, the Legislature could just as well have offered PERA members a higher total pension benefit and no COLA escalator. Instead, Colorado legislators chose to deliver accrued Colorado PERA pension benefits by means of a pension COLA “escalator.”

    If I buy an annuity from a private insurance company, and I opt to have my purchased income stream delivered via a cost-of-living escalator, does the insurance company that sold the annuity to me have the right to eliminate that purchased COLA benefit after the fact? Does the insurance company have the right to retroactively diminish the total value of my purchased, contracted income stream simply because I selected an escalator as a method of receiving the income stream? Perhaps the insurance company wants to use the money made available by breaking the COLA contractual provision to make desired discretionary expenditures. Perhaps the insurance company wants to construct a new headquarters building or increase the compensation of its executives. What court would permit this private sector insurance company to ignore its contractual COLA obligations? Why do we not see insurance companies in the United States attempting to escape their contractual COLA obligations? We do not see this happening because attorneys working for these insurance companies recognize such arguments as ridiculous, self-serving contrivances. Why should the State of Colorado be permitted to retroactively take a COLA benefit that has been paid for (through paycheck deductions and labor) by Colorado PERA members for decades?

    Purchased annuity COLA benefits in the private sector:

    “One way to address this problem is by purchasing a cost-of-living adjustment (COLA) option with the immediate annuity. The COLA option increases the dollar amount of future payments to keep up with inflation, with the goal of preserving the buying power of the immediate annuity payments.”

    http://www.myretirementpaycheck.org/savings-investments/immediate-annuities.aspx

    The contractual obligation of an accrued pension benefit does not disappear simply because state legislators have agreed to use a particular method of delivering the benefit. If the Colorado Legislature had, historically, placed into statute a Colorado PERA pension contract setting the initial Colorado PERA pension benefit at a maximum 20 percent of highest average salary (HAS), with a 10 percent annual COLA escalator, could the Colorado Legislature retroactively take 90 percent of the total contracted benefit by simply striking the COLA provision from Colorado law? The contractual obligation of Colorado PERA-affiliated employers to honor statutory COLA provisions does not disappear due to the fact that Colorado statutes mandate payment of a PERA member’s accrued pension benefit by means of a COLA escalator. This contrivance was embraced by the proponents of SB10-001 in 2010 in the hope that Colorado PERA-affiliated employers could somehow escape their pension debt.

    For fifty-two years, (since the Bills and McPhail cases) the Colorado Legislature has known that public pension COLA benefits are contractual obligations in our state. They cannot claim ignorance of this fact, they are obligated to read case law and know the implications of legislation they enact. For fifty-two consecutive legislative sessions, Colorado legislators have had opportunities to adopt any legal, prospective public pension reform they feel is appropriate. They have had many decades of opportunity to reform the Colorado PERA pension without breaking PERA contracts. While U.S. equity markets have endured extreme volatility over these decades (1987 and 2001) Colorado PERA contracts were honored. As Colorado PERA officials have noted many times, pension administrators expect market volatility. The State of Colorado cannot legitimately argue in court that the “unanticipated severity of an anticipated event” justifies the breach of Colorado PERA pension contracts.

    Note that critics of public pensions focus on a single aspect of future state and local government expenditures (public pension obligations) when they argue that these governments are in “crisis.” The critics argue that public pensions are in “crisis,” because states and cities have not banked the three or four percent of future state revenues that will be needed to meet these pension obligations. The critics call this a public pension “shortfall.” State and local governments have not banked sufficient funds to cover the other 95 percent of expected future expenditures and yet, somehow, this lack of accumulated resources is not a “crisis.” As we know, public pension obligations to current workers will come due over the next 70 years, like a mortgage, they are not due tomorrow.

    What entity on high has decreed that a government’s lack of current resources to immediately cover all of its accumulated pension obligations is a “crisis,” while a government’s failure to set aside resources sufficient to meet all other future expenditures is just standard operating procedure? Is the State of Colorado in “crisis” because it has bonds outstanding? Why are accumulated state financial obligations in the form of bonded debt not a “crisis,” but accumulated state financial obligations in the form of public pension debt are a “crisis”? Who decided that one of these state debt obligations has inferior legal status?

    Colorado PERA active and retired members. Help restore some degree of rationality to discussion of Colorado PERA public pensions. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  31. Al Moncrief says:

    2013 MORITZ COLLEGE OF LAW PUBLIC PENSION ROUNDTABLE.

    PROFESSOR AMY MONAHAN: THE U.S. SUPREME COURT TELLS US THAT PUBLIC PENSION PLAN REFORMS MUST BE THE “LEAST DRASTIC” ALTERNATIVE TO MEET CONSTITUTIONAL MUSTER.

    TAKING PUBLIC PENSION RETIREE BENEFITS CARRIES THE GREATEST LEGAL RISK OF ALL PUBLIC PENSION REFORMS.

    MOST PEOPLE THINK OF PUBLIC PENSION COLAS AS AN ACCRUED PUBLIC PENSION BENEFIT.

    On February 22, 2013, the Ohio State University Moritz College of Law hosted a “Roundtable on Public Pension Reform.”

    The first panel of the Roundtable was entitled: “Recent Pension Reform Efforts.” Panelists were; Professor Amy Monahan of the University of Minnesota School of Law, Karen Carraher of the Ohio Public Employees Retirement System (OPERS), and Luke Martel of the National Conference on State Legislatures.

    http://moritzlaw.osu.edu/programs/capital-markets/roundtable-on-public-pension-reform-video-archive/

    (My comment: For Professor Monahan’s paper, “Public Pension Reform: The Legal Framework,” visit the link below. In her paper, Monahan concludes:

    “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.”

    Link to Monahan law article:

    http://www.law.umn.edu/facultyprofiles/monahana.html)

    Video of the Moritz College of Law Roundtable is available on the Moritz Law website in two parts. (Note that Professor Monahan’s presentation consumes the last five minutes of Part 1, and concludes in Part 2.)

    Below, I provide quotations from the panel presentation of interest to Colorado PERA retirees:

    Karen Carraher, OPERS (19 minutes into Part 1): “The minute any individual in our system retires, we actually transfer dollars equal to their lifetime payoff at that point into a fund. So, they are 100 percent funded, every person who has retired. Who we’re working on funding are the folks who are still working.”

    (Note that combined employee and employer pension contributions in the OPERS pension system currently total 24 percent of salary.)

    Professor Amy Monahan:

    “I’m not aware of any case, where a court has said that once a participant has retired, and completed all of the necessary ingredients to receive a pension that that pension is not contractual.”

    “Even in some liberal states, once you’ve retired, you have a vested, contractual right to the benefit.”

    Amy Monahan on the relative legal risk of legislative enactment of various reforms to public pension systems:

    “I think it’s fair to generalize that there is a sort of risk hierarchy here.”

    “So, I’m going to start with the most risky and go down to the least.”

    Pension Changes Impacting:

    Public Pension Retiree Accrued Benefits

    ” . . . benefits being paid to retirees are the riskiest thing to touch.” “The idea is that they have completed their side of the bargain, and so any changes to those individuals usually get the highest level of scrutiny.”

    Active Pension Member Accrued Benefits

    “Next, is touching accrued benefits for people who haven’t retired. So, they’re still working, but you’re reducing what they’ve already earned to date. That’s also pretty risky. Basically, the analogy here is to salary. You can’t retroactively reduce someone’s salary. The court’s going to easily imply a contract here, for the same reasons reducing accrued benefits are risky.”

    Future Benefit Accruals

    “Future benefit accruals in most states, should be less risky.”

    (My comment: Note that the Colorado General Assembly adopted prospective changes to future benefit accruals of certain Colorado county government pension systems in 2012 [SB12-149]. The Colorado Legislature adopted these prospective pension reforms, honoring the accrued pension benefits of thousands of Colorado county government retirees two years after having retroactively seized accrued contracted public pension benefits of Colorado PERA retirees. In 2010, most members of the Colorado Legislature were unaware of Monahan’s “hierarchy of legal risk” of various public pension reform options. This lack of knowledge is attributable to the fact that, in 2009 and 2010, the Colorado Legislature permitted self-interested outside parties to develop public pension policy for the State of Colorado [through lobbyists].)

    New Hires

    “New hires are easy.”

    Monahan on public pension COLAs:

    “I think that most people in the pension world, when they think of COLAs, think of it as part of the participant’s accrued benefit.”

    Monahan on the “Reasonable and Necessary” standard to break public pension contracts:

    “That sounds like an easy test.” “It’s not.” “The U.S. Supreme Court tells us that it has to be the least drastic way of achieving the policy goal.”

    (My comment: In February 2011, Colorado PERA’s General Counsel wrote in the periodical “Government Finance Review,” that, in order for a PERA pension reform to be found “reasonable,” changes to the Colorado PERA pension must be “the minimum changes necessary.” [The next year, June 26, 2012, Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, wrote in the 2011 Colorado PERA CAFR: that the 100 percent funding threshold put into Colorado law by SB10-001 is much stronger than is necessary [i.e., not "the minimum change necessary"] to meet public pension regulatory (GASB) standards. Alteration of the statutory Colorado PERA pension contract in 2010 [SB10-001] through incorporation of this 100 percent PERA pension funding threshold placed unnecessary financial pressure on the PERA pension’s trust funds, creating the Legislature’s desired rationale for breaking pension contracts, and does not represent the “least drastic” reform option available to the Colorado General Assembly.

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

    Professor Amy Monahan:

    “Colorado is a closely watched case that’s been going on for awhile now. Colorado reduced COLAs. Most recent ruling there is the Appellate Court which just ruled that there is a contractual right to COLAs.”

    Colorado PERA active and retired members. It is clear that the Colorado General Assembly willfully ignored on-point Colorado public pension contract case law when adopting SB10-001 in 2010. Support public pension contractual rights and the rule of law in Colorado.

    Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  32. Al Moncrief says:

    ANATOMY OF A COLORADO PERA PENSION CONTRACT BREACH. (Part 1 of 2.)

    In this article I have compiled an extensive (but, incomplete) chronology of events and statements surrounding the Colorado General Assembly’s breach of Colorado PERA pension COLA contracts in 2010. Colorado PERA retirees have filed a lawsuit, Justus v. State, asking that Colorado courts protect the retiree’s accrued, earned, contracted Colorado PERA public pension benefits. (More complete information germane to this lawsuit may be obtained only through formal discovery.)

    Readers of the article should note the abrupt transition of the organization, Colorado PERA, in 2009, from an organization that has historically defended the contractual rights of PERA members, to an organization influenced by self-interested parties . . . parties that successfully induced the Colorado PERA Board of Trustees to attempt a breach of the pension plan’s contractual obligations in 2010.

    Many Colorado politicians are primarily engaged in seeking votes, and bestowing political favors . . . compliance with constitutional provisions for these politicians is an afterthought. The prevailing legislative sentiment at the Colorado General Assembly in 2010 was that, since the idea of breaking Colorado PERA pension contracts was popular with influential self-interested groups and many constituents . . . those contracts should be scrapped. Colorado Constitution be damned! In 2010, political considerations trumped respect for the State of Colorado’s contractual obligations.

    Colorado PERA retirees (the target of the SB10-001 contract breach) have many unanswered questions regarding the 2010 breach of their pension contracts by the State of Colorado:

    Was the Colorado PERA Board of Trustees “opinion shopping” for a legal rationale to break PERA pension contracts in 2009? How was Jean Dubofsky’s firm selected to create this legal opinion? On her resume, Jean Dubofsky writes that Colorado PERA “requested” that she provide an opinion to PERA arguing that the Colorado General Assembly could “repeal” the PERA COLA benefit “without violating the vested rights” of PERA members. When exactly, in early 2009, did the Colorado PERA board decide to seek a legal opinion that would justify taking contracted PERA COLA benefits?

    Colorado PERA retirees should grasp the full implications of this statement Jean Dubofsky makes on her resume. This statement on Jean Dubofsky’s resume proves that the Colorado PERA Board intended to attempt a taking of PERA COLA benefits prior to the 2009 PERA “Listening Tour,” prior to the placement into Colorado statute of the “requirement” for the Colorado PERA Board to recommend pension reforms to the General Assembly, and prior to any sort of objective contemplation of pension reform options.

    In 2009, we do not see the Colorado PERA Board of Trustees seeking a legal opinion regarding changes in the rate of accrual of PERA pension benefits to be earned in the future. We don’t see the PERA board searching for a legal rationale to increase the retirement age of active PERA members, or increase the number of years over which active PERA member base pension benefits are calculated (increasing years in the HAS calculation).
    We DO see the PERA board ignoring “less drastic” impairment of PERA pension contracts, and targeting “fully-vested” PERA pension COLA benefits. We DO see the PERA board seeking a legal opinion regarding their FIRST CHOICE for PERA pension reform, breach of “fully-vested” pension COLA contracts. (Or, perhaps this option was the first choice of PERA employer lobbyists.)

    Given the numerous previous statements of Colorado PERA officials (that have been reported in the press and in Colorado PERA publications) supporting the contractual pension rights of PERA members, why would the Colorado PERA Board of Trustees actively seek a legal opinion contravening this legal advice?

    What was the initial reaction of Colorado PERA’s in-house attorneys to the PERA board’s objective to break PERA pension contracts? Were these in-house attorneys charged with the task of finding an attorney who might create the board’s desired legal opinion? Or, was Jean Dubofsky recommended to the PERA board by outside lobbyists (perhaps education lobbyists, or other representatives of PERA-affiliated employers?)

    If the Colorado PERA board sought a legal opinion regarding PERA COLA contractual rights in early 2009, it follows that the PERA board anticipated litigation in early 2009, and thus the organization, Colorado PERA, should have had a “litigation hold” in place at that point in time on all materials relevant to the COLA taking. Why bother seeking a legal opinion if you are on solid legal footing?

    Why would a board, that has a fiduciary duty to act only in the interests of the beneficiaries of the pension trust, actively seek a legal opinion that would rationalize contemplated harm to the rights of those beneficiaries?

    Who made the original proposal to attempt to break PERA COLA contracts? A member of the PERA Board of Trustees? Education lobbyists? Colorado PERA staff? When was this suggestion first proposed to the PERA Board?

    Did Executive Director Meredith Williams leave PERA due to a disagreement with the PERA Board over the COLA-taking? As we have seen, he was a finalist for a pension job in Texas in November 2010 . . . nine months after SB10-001 was signed. Were Meredith Williams and General Counsel Greg Smith forced to defend a PERA Board decision to attempt a contract breach against their will? Or, did they personally support the contract breach attempt?

    Apparently, Colorado PERA officials wanted the Colorado General Assembly to submit an interrogatory to the Colorado Supreme Court seeking clarification regarding PERA contractual public pension rights. Was this idea quashed by legislative leadership? Why was this responsible step ignored in 2009?

    How did the Colorado General Assembly reach the conclusion in 2010 that the state’s public pension contracts are inferior to the state’s contracts with corporations?

    By what means did the Colorado General Assembly conclude that it is free to pump $700 million of state revenue into local government pensions that ARE NOT the contractual obligation of the State of Colorado, while ignoring the funding of the state’s own contractual PERA public pension obligations?

    Did lobbyists for PERA-affiliated employers pressure the PERA board to attempt a taking of fully-vested pension benefits from retirees in order to prevent changes to the partially-vested pension benefits of their union dues-paying members?

    As late as December of 2009, Colorado PERA officials provided written testimony to the Colorado General Assembly stating that PERA members have a contractual right to their PERA pension COLA benefits. In light of this, why is Colorado PERA currently appealing a Colorado Court of Appeals decision with this same finding?

    Did the Colorado PERA Board (through PERA lobbyists) actually “ask itself” to make pension reform recommendations to the General Assembly? Did PERA lobbyists initiate the amendment (request drafting of this 2009 bill amendment through a legislator)? Did PERA lobbyists seek the amendment to the bill, SB09-282, at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board? Was this amendment adopted in anticipation of the coming litigation over the PERA COLA, to potentially benefit the defendants? The PERA defendants have emphasized in their pleadings that PERA board recommendations were made in conformance with this “legislative mandate.”

    Many aspects of the Colorado General Assembly’s breach of Colorado PERA pension contracts in 2010 are revealed in the chronological compilation of events and statements provided in this article.

    “The Preordained Colorado PERA COLA Contract Breach.”

    We see the co-prime sponsor of SB10-001 and Colorado PERA’s attorneys stating that the COLA is a Colorado PERA contractual obligation. We see members of the Legislature stating that SB10-001 breaks PERA contracts.

    We see officials of Governor Bill Ritter’s administration describing the Colorado PERA COLA benefit as a “present obligation” arising from the “employment exchange transaction,” which will result in an average loss of $165,000 for PERA retirees over the next twenty years (a substantial loss.)

    We see numerous statements by Colorado PERA officials that PERA pension benefits are “guaranteed.”

    We see a former Colorado Assistant Attorney General, and numerous Colorado PERA retirees, warn the Colorado PERA board and the General Assembly against an attempted PERA COLA contract breach.

    We see state legislators using market volatility to justify the breach of Colorado PERA pension contracts, retroactively take accrued pension benefits, slash the pension debt of PERA employers, and seize what they believe is a “window of opportunity” to break pension contracts.

    We see Colorado PERA attempting to deceive Colorado courts by conflating constitutionally permissible improvements to the contracted PERA COLA benefit, with retrospective legislative takings of accrued PERA COLA benefits in 2010.

    We see Colorado PERA attempting to confuse Colorado courts regarding the distinction between “ad hoc” public pension COLA benefits and “automatic” pension COLA benefits.

    We see Colorado PERA attempting to exaggerate the financial condition of the Colorado PERA trust funds by employing “market-based” public pension funding ratios in legal briefs, while Colorado PERA has used “actuarial funded ratios” historically (as is common practice in public pension administration.)

    We see documentation of legal research conducted by Colorado PERA attorneys supporting the contractual pension rights of PERA members. (I doubt that PERA’s General Counsel originated the idea to attempt the COLA contract breach given his numerous previous statements and his legal briefs [cited in the press] that militate against such an attempt.)

    We see Colorado PERA officials emphasize the fact that PERA members are not eligible to receive Social Security benefits, and are accordingly particularly vulnerable to state breach of pension contracts.

    We see the Colorado General Assembly enact “prospective” pension reform for thousands of Colorado county government retirees, honoring their accrued pension benefits, after having retroactively seized the accrued pension benefits of Colorado PERA retirees in 2010.

    We see the adoption of legislation in the past by the Colorado General Assembly in which PERA employee pension contributions are “technically being paid by employers, from their salary-raise pools” in order to AVOID the breach of PERA member pension contracts.

    “The Colorado PERA SB10-001 Lobbying Juggernaut.”

    We see a member of the Colorado Legislature stating that SB10-001 was “a deal cut before this body met,” (that is, prior to legislative deliberation of PERA pension reform alternatives.) We see PERA lobbyists orchestrating debate on SB10-001.

    We see the co-prime sponsor of SB10-001 stating that the Colorado PERA Board of Trustees “needs to make it toxic” (through lobbyists) for anyone to challenge Colorado PERA in the legislative arena.

    We see a Deputy Colorado Attorney General stating that the Colorado education establishment is attempting to raise education funding by “legislating through the courts.”

    We see PERA officials (in 2009) blaming the Colorado General Assembly for the decline in the actuarial funded ratio of the PERA trust funds.

    We see a member of the PERA Board state that the PERA trust funds are in no immediate danger, and that benefits can be paid for decades.

    We see a 27-member team of lobbyists assembled to push the pension contract breach through the legislative process. We see the Colorado PERA Board of Trustees spending the resources of PERA trust fund beneficiaries in an attempt to take the contracted benefits of those same beneficiaries.

    “Chronic Legislative Mismanagement of the Colorado PERA Pension Plan.”

    We see historical and ongoing mismanagement of the Colorado PERA pension plan by the Colorado General Assembly, a preference to shortchange the pension in order to lower PERA employer pension contributions, regular cuts to employer contribution rates, enactment of “early retirement incentives” to shift labor costs from Colorado governments to the PERA pension, enactment of pension benefit enhancements without paying for the enhancements, and a lack of respect for the state’s contractual obligations.

    We see the 15th wealthiest state in the nation, a state with $1 billion in new revenue, a state that has pumped $700 million into local government public pensions that ARE NOT its contractual obligation, a state that makes $100 million grants in discretionary property tax relief, a state with (nearly) the lowest per capita state tax revenue in the country, attempting to escape its contractual obligations.

    We see PERA officials and the prime sponsors of SB10-001 stating that 90 percent of the “cost” savings in SB10-001 derive from those who do not “owe” the debt, i.e., PERA members, rather than from the Colorado governments that are bound contractually to pay the debt. We see Colorado PERA officials and legislative sponsors of SB10-001 boasting that their PERA reform plan pushes 90 percent of the costs onto parties who do not legally owe the debt.

    We see the Speaker of the House state that he has no intention of allowing increased Colorado PERA employer pension contributions to be a significant part of the planned pension reform.

    We see the Colorado General Assembly cutting its revenue stream beyond the requirements of the 1992 TABOR amendment, and later claiming that limited state revenues constitute a “crisis” justifying the breach of Colorado PERA pension contracts.

    We see officials from Colorado PERA and the National Council on Teacher Retirement (former Colorado PERA Executive Director Meredith Williams’ current employer) stating that public pension systems consume under three percent of all state and local government spending.

    We see a 2002 veto of a bill that would have improved Colorado PERA’s funded ratio by Governor Bill Owens.

    We find that the Colorado PERA Board has considered the use of pension obligation bonds (POB) in the past, that a PERA official considers POBs a “useful tool” for addressing unfunded pension liabilities, and we find this “less drastic” means of bolstering the PERA trust funds (re-amortization of the pension debt) off the table in 2010.

    “Jean Dubofsky: Author of the 1999 ‘Requested’ Colorado PERA COLA-taking Legal Opinion.”

    We see the author of the Colorado PERA COLA-taking legal opinion write a letter of recommendation for attorney Monica Marquez to serve on the Colorado Supreme Court. The letter states that the author of the COLA-taking legal opinion “worked on the case,” Justus v. State, with attorney Monica Marquez. The letter further states that attorney Monica Marquez will “bring sophistication” to the Colorado Supreme Court on “public pensions.”

    We see attorney Monica Marquez advising Colorado PERA, prior to her appointment to the Colorado Supreme Court.

    (In my view, the State of Colorado is fortunate that a talented jurist, Monica Marquez, has recently joined the Colorado Supreme Court. However [although I have complete confidence in Justice Marquez's objectivity and dedication to the rule of law] it appears unlikely that our new Supreme Court justice will be able to participate in the coming decision in the case, Justus v. State, since she has worked on the case.)

    “Actuarial Funded Ratios” vs. “Market-based” Funded Ratios.”

    Note that, historically, Colorado PERA has used “actuarial funded ratios” (almost) exclusively in its written communications to gauge the financial soundness of the PERA divisions. In 2010, we see Colorado PERA begin to use “market-based” funded ratios (in an attempt to exaggerate the financial condition of the pension plan) only after the commencement of the legal, political and lobbying campaign to break Colorado PERA pension contracts.

    We see PERA officials in the past stating that an 80 percent PERA actuarial funded ratio is “sound.”

    We see numerous statements by Colorado PERA officials indicating that the Colorado PERA Board of Trustees finds an 80 percent actuarial funded ratio (AFR) for the pension plan acceptable, as well as documentation that the PERA Board seeks to cap the AFR at a 90 percent level.

    We see PERA officials condemning employer contribution cuts by the Colorado General Assembly. We see PERA officials stating that a PERA AFR under 60 percent is not a “crisis.”

    We see the Colorado General Assembly modify the Colorado PERA pension statutory contract in SB10-001 through the introduction of an absurd “100 percent” pension funding threshold.

    We learn that, in the past, Colorado legislators argued that an 87 percent PERA actuarial funded ratio is “too well-funded,” and yet current legislators intend in SB10-001 to retroactively take contracted PERA COLA benefits until a 100 percent AFR is achieved.

    We see the firm, Fitch Ratings, state that a 80 percent actuarial funded ratio (AFR) for public defined benefit pensions is considered “well-funded,” and that an AFR of 70 percent or above is an “adequate” actuarial funded ratio.

    We learn that, for the entire decade of the 1970s, the Colorado PERA actuarial funded ratio remained lower than its level at the time of the breach of PERA COLA contracts in 2010 (a low of 54.5 percent.) There was no concern about a PERA financial “crisis” that decade.

    We see public pensions in the United States with actuarial funded ratios as low as the 30s (in the 1970s) and yet public pension contracts were honored.

    We see Colorado PERA’s General Counsel stating that in order for a pension reform to be found “reasonable” under the Colorado Constitution, such changes to the Colorado PERA pension must be “the minimum changes necessary.” We see Colorado PERA’s actuaries stating that the 100 percent funding threshold in SB10-001 is much stronger than is necessary (not “the minimum changes necessary”) to meet public pension regulatory (GASB) standards.

    “Maximum Amortization Period.”

    We see Colorado PERA officials stating that the pension’s investment time horizon extends to 70 years.

    We see the Colorado General Assembly arbitrarily cut Colorado PERA’s “maximum amortization period” in half (from 60 years to 30 years) putting pressure on PERA’s funded ratio. There is no federal statutory mandate for this change, it is merely a “recommendation.”

    We find the Chairman of the Joint Budget Committee asking his colleagues: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”

    “Service Credit Purchase Contracts.”

    We see Colorado PERA officials encouraging PERA members to send in checks for the purchase of “service credit” in 2002, only to later renege on those pension contracts. Much of this money was taken from the PERA member’s separate retirement accounts (401Ks, 457 plans.) The value of these “service credit purchases” was dramatically reduced by SB10-001, after Colorado PERA had their member’s money. The purchase of a defined pension benefit, “service credit,” by Colorado PERA members is a separate Colorado PERA pension contract that was broken by SB10-001.

    The entries in this article (below) summarize material that is posted at saveperacola.com on the internet, “Save Pera Cola” on Facebook, and also on Coloradopols.com. Additional information on the subject of each entry is generally available through a search of these sites. Many Coloradans know the answers to the questions posed in this article, I encourage such persons to post their answers to the questions (even anonymously) on these three sites.

    I believe that complete revelation of the truth regarding the political machinations that resulted in the breach of Colorado PERA pension contracts in 2010 would benefit the Colorado state legislative process in the future.

    I don’t believe that accrued Colorado PERA COLA benefits can be successfully taken by Colorado PERA lobbyists, PERA employer lobbyists, or members of the Colorado General Assembly. I don’t believe that such a taking is possible under Colorado case law, McPhail, Bills or even DeWitt . . . (if that case is applicable.)

    The chronology:

    August 1, 1876

    The Colorado Constitution takes effect upon statehood: Colorado: Art. II, § 11: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges, franchises or immunities, shall be passed by the general assembly.”

    http://www.colorado.gov/dpa/doit/archives/constitution/1876.pdf

    May 26, 1905

    Franklin MacVeagh, U.S. Secretary of Treasury: “There is no moral exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private respect for a contract breaker. A contract breaker is an utter misfit as a citizen or a business man.”

    http://www.senatedem.ilga.gov/phocadownload/PDF/PensionDocs/madiarrevisedpensionclausearticle.pdf

    June 28, 1954

    Hickey v. Pittsburgh Pension Board: “But WHEN THOMAS HICKEY STARTED CONTRIBUTING TO THE CITY PENSION FUND IN 1915, THERE APPEARED ON THE HORIZON NOT THE SLIGHTEST SUGGESTION OF A CLOUD TO IMPERIL THE PENSION TOWARD WHICH HE WAS FAITHFULLY TO PLOD FOR 31 YEARS. It is not reasonable or logical to suppose that, given the liberal attitude that the General Assembly has assumed in this field of legislation, that it would impose restrictions so fundamentally contrary not only to its policy but to the elemental rules of fairness ‘WHETHER IT BE IN THE FIELD OF SPORTS OR IN THE HALLS OF THE LEGISLATURE IT IS NOT CONSONANT WITH AMERICAN TRADITIONS OF FAIRNESS AND JUSTICE TO CHANGE THE GROUND RULES IN THE MIDDLE OF THE GAME.’”

    http://scholar.google.com/scholar_case?case=13490833546797588256&q=Hickey+v.+Pittsburgh+Pension+Board&hl=en&as_sdt=2,6

    May 4, 1959

    Colorado Supreme Court, Police Pension and Relief Board of Denver v. McPhail:

    “ . . .we believe that in a case, such as that before us, involving a contributory system it is the only reasonable conclusion that can be reached (the contract principle.)”

    “It would be unjust and contrary to our basic notions concerning the validity of contracts to hold that this provision could be changed by the lawmakers.”

    “We conclude that the (Colorado constitutional Contract Clause) applies to the status of the plaintiffs here and prevents the enforcement of the (Denver Charter Amendment) against them.”

    http://scholar.google.com/scholar_case?case=14051800929013625867&q=McPhail+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

    December 11, 1961

    Colorado Supreme Court, Police Pension and Relief Board of Denver v. Bills: “We now hold that not only prior to their actual retirement, but also prior even to their eligibility to retire, there was a limited vesting in these plaintiffs of their pension rights to the end that although prior to their eligibility to retire the pension plan could be changed, it could not be abolished NOR COULD THERE BE A SUBSTANTIAL CHANGE OF AN ADVERSE NATURE, WITHOUT A CORRESPONDING CHANGE OF A BENEFICIAL NATURE.” “Hence, prior to eligibility for retirement, changes may properly be made in a pension plan if these changes strengthen or better it, or if they are actuarially necessary.”

    “The charter amendment with which we are here concerned constituted an adverse change in the overall pension plan which deprived plaintiffs of a very substantial right, was unaccompanied by a corresponding change of a beneficial nature, was not shown to be actuarially necessary, nor that it in anywise strengthened or bettered the pension plan.”

    http://scholar.google.com/scholar_case?case=3470001684402878070&q=Bills+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

    1969

    SB 69-144, SB 69-311, HB 69-1230, and HB 69-1247 (Colorado PERA notes that the PERA COLA benefit in 1969 was an “ad hoc” COLA in its publication “History of Colorado PERA Legislation,” later we find Colorado PERA describing the PERA COLA benefit as “automatic” in this same PERA publication.)
    - New annual post-retirement increase (COLA) adopted provided maximum 1.5% per year, in addition to AD HOC COLA increases that were based on the year in which the retirement benefit had begun.
    - Legislature declared its intent to establish employer contribution rates to provide adequate funding of PERA’s accrued retirement benefits. (In later years [2010], the Legislature finds it more convenient to break PERA pension contracts to erase its public pension debt.)
    - Amortization of PERA’s actuarial liabilities over a 60 year period was deemed adequate to maintain the retirement fund’s actuarial stability. (In later years, this “maximum amortization period” is arbitrarily cut in half. There is no federal statutory mandate for this change, it is merely a “recommendation.”)

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

    December 31, 1973

    The Colorado PERA actuarial funded ratio reaches its nadir of 54.5 percent. There are no concerns at the Colorado General Assembly regarding a Colorado PERA financial “crisis.” For the balance of the decade of the 1970s, the Colorado PERA actuarial funded ratio remains lower than its level at the time of the breach of PERA COLA contracts in 2010.

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

    1975

    HB 75-1364 (Colorado PERA notes that the PERA COLA benefit in 1975 was “ad hoc,” later we find Colorado PERA describing the PERA COLA benefit as “automatic” in its publication “History of Colorado PERA Legislation.”)
    - Improved AD HOC post-retirement benefit increases.

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

    November 17, 1975

    Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”

    http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

    August 14, 1984

    Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee”

    http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

    1987

    SB 87-239 (Cuts to PERA employer pension contributions.)
    - Legislature reduced FY88 PERA employer payroll contribution rates to:
    - 10.2% from 12.2% for the State Division;
    - 11.2% from 13.2% for State Troopers (also in the State Division);
    - 11.5% from 12.5% for the School Division;
    - 13.0% from 15.0% for the Judicial Division.

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

    1992

    HB 92-1335 (Cuts to PERA State and School Division pension contributions.)
    - Reduced the School Division employer contribution rate by 0.6% to 11.6% of payroll.
    - Temporarily reduced the State Division employer contribution rate by 1.0% of payroll in FY92.

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

    1993

    HB 93-1324 (“Automatic” PERA COLA benefit enacted. The auto COLA was later improved by the Legislature to a fixed 3.5 percent. Legislative improvements in the contracted COLA are permissible as there is no impairment of existing contracts. Colorado PERA members began paying for this automatic COLA benefit out of each paycheck, and earning this PERA benefit for each day worked.)
    - Changed annual COLA to 3.5% maximum, compounded annually, based on the CPI, and folded the PERA CLSF into the PERA pension trust funds.

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

    March 24, 1993 (1:32 PM – 2:28 PM)

    Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature’s House Finance Committee in regard to the “automatic” PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA “adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”. Rob Gray characterizes the “automatic” PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.” (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

    1997

    HB 97-1082 (PERA employer pension contribution cuts, benefit enhancements.)
    - Increased retirement formula from 1.5% to 2.5% per year of HAS on 20-40 years service, with 100% HAS maximum benefit. Benefits were recalculated for current benefit recipients on a prospective basis.
    - One year HAS adopted for Judicial Division’s future retiring judges.
    - Combined the State Division’s and the School Division’s trust funds, and reduced the State and School Division employer contribution rate by 0.1% to 11.5% of payroll.

    HB 97-1114 (Statutory timeframe for meeting PERA obligations cut by one-third, in later years, the Legislature continues to arbitrarily cut this timeframe to half of the 1997 standard.)
    - Reduced PERA’s maximum amortization period to 40 years from 60 years.

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

    1998

    HB 98-1242 (Cuts to PERA employer pension contributions in State and School Divisions.)
    - State and School Division employer payroll contribution rate was reduced from 11.5% to 11.4%.

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

    1999

    SB 99-90 (Cuts to PERA employer and trooper pension contributions.)
    - Permanent 1% employer payroll contribution rate cut for state, school, and judicial employers authorized when PERA is fully funded in the State and School Division, and in the Judicial Division.
    - Municipal employer payroll contribution rate cut authorized when Municipal Division is fully funded.
    - Reduced State Trooper member contribution rate from 11.5% to 10.0% of salary, effective 7/1/99.

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

    1999

    George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?” (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved? As PERA officials have noted, the pension debt comes due over up to 70 years, it is not “due tomorrow.”)

    2000

    December 31, 2000

    The Colorado PERA actuarial funded ratio reaches a peak of 105.2 percent. The General Assembly determines that PERA is overfunded, and the effort to bring down the PERA actuarial funded ratio accelerates. (The General Assembly enacts legislation shifting labor costs to the pension through “early retirement incentives,” and employer contribution cuts and benefit enhancements continue.)

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

    2000

    HB 00-1458 (Cuts to PERA employer pension contributions, PERA COLA set at automatic 3.5%.)
    - Moved date of 1% reduction in employer payroll contribution rate forward from 1/1/01 to 7/1/00 since PERA was now fully funded, to 10.4% for the State and School Division, and to 14.0% of payroll for the Judicial Division.
    - Established an additional minimum 0.25% employer payroll contribution rate cut.
    - 20% of any PERA overfunding amortized over 10 years, would be allocated for further employer payroll contribution rate cuts.
    - 30% of PERA overfunding amortized over 10 years, would be allocated to the HCTF for retiree health care premium subsidy increases.
    - Established 3.5% compounded annual automatic COLA effective March 2001.
    - Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.

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

    2001

    November 20, 2001

    Buck Consultants study presented to the Colorado General Assembly’s Legislative Audit Committee. (The report provided the results of a retirement plan study for Colorado PERA, conducted pursuant to SB 01-149.) Six of the seven members of the Audit Committee sitting at the table had sponsored [the prior year] the bill enacting the 3.5 percent fixed, automatic PERA COLA, HB 00-1458 the prior year.) The Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” the “fixed” COLA, that is “compounded annually for each year of retirement,” and contrasts the PERA COLA with an “ad hoc” COLA “as approved by Legislature.” If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented in 2001?

    http://www.nctr.org/pdf/coloradodcdbstudy.pdf

    December 31, 2001

    Colorado PERA Executive Director Meredith Williams:

    “Be assured that your PERA account is safe, and that the benefit you receive when you retire is not affected by PERA’s short-term return on investments.”

    http://www.copera.org/pdf/5/5-21-01.pdf

    2002

    February 15, 2002

    Kim Natale, Chairman, Colorado PERA Board of Trustees: “As a comprehensive retirement plan, PERA benefits are guaranteed for life.” “However, the loss . . . does not affect our ability to pay guaranteed lifetime benefits to you.”

    http://www.copera.org/pdf/Newsletters/MemberUpdate3-02.pdf

    February 25, 2002

    From Colorado PERA News Release: “Colorado PERA’s monthly retirement benefits are guaranteed for life and purchasing time makes good sense for many of our members.”

    https://www.copera.org/pdf/NewsReleases/2002/Purchasing.pdf

    July 18, 2002

    “PERA’s Funding Status”: “Because Colorado PERA is a defined benefit plan, members and retirees will receive a guaranteed benefit. Those members who are planning on retiring should not be alarmed by the underfunded status of PERA. Retirement benefits will be calculated and paid, in the same manner, regardless of PERA’s funded status.”

    http://www.copera.org/pera/about/newsarchives2002.htm

    2003

    Colorado PERA: “In any event, members and retirees with fully vested rights and entitlements provided by the PERA statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”

    https://www.copera.org/pera/about/newsarchives2003.htm

    June 3, 2003

    Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”

    http://www.copera.org/pdf/5/5-21-02.pdf

    October 9, 2003

    “Colorado PERA Fund Secure, Board of Trustees Seeks to Improve Funded Status.”
    “It is our opinion that PERA continues to have a relatively good funded ratio of 88 percent (based on the actuarial value of assets).”
    “PERA believes that state constitutional provisions that prohibit the reduction of benefits to existing retirees and restrict the changes which can be imposed on vested members of PERA further limit alternatives.”
    “The funding reductions enacted as a result of the up markets of the 1990s must end. The State must return to fully funding future obligations to PERA members and retirees.”
    “PERA Benefits being paid are guaranteed . . .”
    “PERA staff is in the process of fully researching and analyzing the issue of changing benefits and has not recommended anything to the Board regarding such changes. PERA has not made the decision to propose legislation that would change the current benefit levels of vested members.”
    “In any event, members and retirees with fully vested rights and entitlements provided by the PERA Statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”
    “With PERA, Las Animas employees have a guaranteed benefit for life.”

    http://www.copera.org/pera/about/newsarchives2003.htm

    October 10, 2003

    “In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”

    http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf

    “Adding to the problem is the fact that the legislature voted to reduce the amount of the state’s contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)

    December 4, 2003

    “Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

    https://www.cu.edu/sg/messages/2718.html

    December 4, 2003

    “JBC members questioned why PERA is asking for an increase in the employer contribution but not asking employees to contribute more. Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

    https://www.cu.edu/sg/messages/2718.html

    2004

    February 21, 2004

    “PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that’s not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.” – Rocky Mountain News, David Milstead.

    July 2004

    “PERA Benefits at a Glance”: “Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.” (PERA Document 5/58 (REV 7-04)

    July 7, 2004

    PERA response to July 5, 2004, Rocky Mountain News Editorial:
    “PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”
    “The fact is that benefits guaranteed to PERA members are of a contractual nature, and that means that unless benefits are increased, contribution rates for members cannot be increased.”
    “The PERA Board agrees with the Treasurer that a 40-year period should be used as a standard for amortizing the unfunded liability.”
    “PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”
    http://www.copera.org/pera/about/newsarchives2004.htm

    October 28, 2004

    PERA official: Legislators say PERA is “too well-funded” at 87 percent actuarial funded ratio. Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 81-year] history, in 1999 and 2000.” Silver and Gold Record:

    https://www.cu.edu/sg/messages/3851.html

    November 18, 2004

    Colorado Attorney General Ken Salazar Opinion (post-DeWitt): “Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly.”

    http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf

    2005

    May 12, 2005

    “Befort also noted that several years ago, the Legislature and Gov. Bill Owens decided to encourage higher-paid employees to retire early. Payroll expenses went down for the state, but PERA’s costs increased, he explained.”

    https://www.cu.edu/sg/messages/4405.html

    July 14, 2005

    Colorado PERA would rather break pension contracts than issue pension obligation bonds at historically low interest rates: “Rob Gray, PERA government relations director, told S&GR this week that the PERA board has looked at pension obligation bonds and will meet later this week with its regular actuary and an outside actuarial company that did its own review of PERA’s unfunded liability, and which may make recommendations on additional steps PERA could take to cover the liability.” “PERA has been approached by investment firms about POBs during the past several years, Gray said this week. He agreed with Doherty’s assessment that POBs could be a useful tool to cover the liability and improve PERA’s funding situation, and Gray noted that the independent actuarial firm also is reviewing POBs as a solution.”

    https://www.cu.edu/sg/messages/4467.html

    August 13, 2005

    Colorado PERA Executive Director Meredith Williams,. “The liabilities of the system, frankly, will be paid out over multiple decades, and we’re talking 70 or 80 years. We’re kind of designed for the long haul and we know we’re going to experience ups and downs in the marketplace.”

    http://www.chieftain.com/metro/slow-stock-market-retiree-boom-hurts-pension-system/article_da58863b-1799-50b4-8ff3-0548d16be68c.html

    August 17, 2005

    Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): “‘Everyone agrees you certainly can make changes for people you haven’t even hired yet,’ said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. ‘On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.’”
    “Smith said in his opinion that ‘other (non-Colorado) courts have set a high burden to meet the necessity threshold.’”
    “His (Colorado PERA General Counsel Greg Smith) briefing paper said ‘there has never been a finding in Colorado that the state has reserved its power to make changes’ in PERA’s benefit structure.”
    “The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member. That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan.”
    “Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem.”

    http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/

    September 14, 2005

    Colorado Treasurer’s “Commission to Strengthen and Secure PERA,” co-chaired by former Colorado Senator Hank Brown (who later supported a retroactive taking of PERA COLA benefits):

    “For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The commission may not make any recommendations that materially affect current retirees.”

    https://www.copera.org/pdf/Misc/CommissionReport.pdf

    November 4, 2005

    PERA Shareholders Meeting Presentation, Fall, 2005:

    “Note that PERA’s funded status was lower 30 years ago than it is now. You may recall that there was no perceived ‘crisis’ in PERA’s funded status in 1975.” “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent. Why? Because not all benefits are due and payable today or tomorrow . . . PERA can weather the ups and downs in the markets.” “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”

    http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf

    2006

    SB 06-235
    - Reduced PERA’s statutorily prescribed maximum amortization period (MAP) from 40 years to 30 years. (In 1997, the PERA MAP was set in law at 60 years.)

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

    2006

    Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:
    “From a long-term perspective, however, one can’t really pin too much of the pension problem on the recent stock market pullback . . .”. “During the 1970s, funding ratios generally hovered between 50 and 60 percent.” (Yet, public pension contracts in the United States were honored.)

    January 2006

    Colorado PERA Member Report: “As I said above, no changes are proposed for ‘legally protected’ benefits.” “The package addresses PERA’s funded status without impairing earned pension benefits for existing and retired members.”

    http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf

    January 12, 2006

    Governor Bill Owens 2006 State of the State:

    “We need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer. This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.

    “We also need to take the politically tough step of examining benefit levels for our current employees. We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the ‘out’ years for those furthest from retirement. These changes should not affect those closest to retirement, but could be phased in for those who have years to go.”

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

    January 13, 2006

    Rocky Mountain News: “(Colorado PERA Executive Director Meredith) Williams claims that any compromises in promised benefits to current employees could be deemed unconstitutional.”

    http://m.rockymountainnews.com/news/2006/jan/13/brosenb-slay-the-pera-dinosaur/

    February 2006

    From PERA Legislative Update:

    “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

    “PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

    http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

    February 10, 2006

    Colorado PERA Board meeting summary on DocStoc: “A motion was made by Scott Noller and seconded by Carole Wright that ‘as it is in the best interest of the members and beneficiaries of PERA, and in compliance with the fiduciary obligation of the Board of Trustees, that any laws affecting PERA be legally adopted, that staff take appropriate action, including incurring reasonable expenses, to ensure that any laws affecting PERA be legally adopted.’”:

    http://www.docstoc.com/docs/61834277/Colorado-Public-Employees-Retirement-Association

    February 11, 2006

    “It defines ‘actuarial necessity’ in state law, opening the door for benefit reductions for current PERA members who have not retired.”

    http://m.rockymountainnews.com/news/2006/feb/11/governor-demands-pera-solution/

    February 16, 2006

    “Joint Budget Committee member Rep. Bernie Buescher (D-Grand Junction) told S&GR this week that he hopes in the next week to meet with representatives of CAPE, CEA, the Colorado Federation of Public Employees, the Colorado Association of School Executives, PERA and Gov. Bill Owens to work out a PERA solution.”

    “Deputy Colorado Attorney General Bernie Buescher, ‘who spent 20 years as a pension attorney,’ has said that he believes Colorado PERA needs changes, but not drastic ones, pointing out that the ‘beauty’ of pension plans is that small changes compound interest over time. ‘When you’re talking about something as complex as retirement plans, the planning horizon is 30 to 50 years — even 20 years is too short.’”

    “‘Some folks feel urgency’ to solve PERA’s problems, Buescher added. ‘I feel much more strongly that we need to do it right,’ he said. ‘We don’t have to do it this year, but the sooner we deal with it, the less painful the solution would be. It would be better to not do anything than to do something that is not productive.’” (Note that Buescher later served as Colorado Secretary of State and now works at the Colorado Attorney General’s office in the position formerly occupied by our new Colorado Supreme Court Justice, Monica Marquez.)

    https://www.cu.edu/sg/messages/4829.html

    February 24, 2006

    “In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”

    http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/

    March 5, 2006

    Colorado PERA’s “Five Minute Rule.” Denver Post article by Bob Ewegen (who retired from the Denver Post in 2008 after 36 years at the paper.) The title of the article is: “A 3 Percent Solution for PERA: Rescue Plan for Retirement Groups Finances Might be Simple”:

    “In excluding any cuts for current retirees and slashing benefits for new hires, PERA and its critics agree on what might be called the ‘five minute rule.’ PERA members who are already retired – even if they left just five minutes ago – are considered ‘fully vested’ and thus legally immune from any changes that would reduce their current or future benefits.”

    “Current or retired employees are guaranteed a 3.5 percent increase in benefits each year.” “PERA itself argues that the law bans any adverse change affecting even future earned benefits for existing employees.”

    http://www.denverpost.com/opinion/ci_3566250

    March 9, 2006

    Silver and Gold Record: “Williams noted that most people don’t have enough money to pay off their mortgages, and that PERA’s assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’” (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)

    https://www.cu.edu/sg/messages/4871.html

    April 2006

    Colorado Association of School Executives (an organization that supported SB10-001) in an issue brief, “Politics and PERA, Separating Fact from Fiction”:

    “What is PERA’s financial condition? Is PERA stable? Yes. PERA is quite stable. As of this writing, PERA’s market value is in excess of $35 billion. If there were flat investment returns in the future, PERA would have enough cash to pay benefits or over 40 years. By almost every standard, PERA is solvent.”

    “How did PERA get into this predicament? Several factors have contributed to PERA’s current funded status. In 1999 and 2000 when PERA had more assets than liabilities, there was a major political movement to increase benefits, to lower the age of retirement, and to lower employer contribution rates for PERA.”

    “Now, some of the same politicians who voted for increased benefits and lower contribution rates are the ones pointing fingers and talking about a ‘crisis.’”

    “One result of these changes is that PERA’s employer contribution rate has declined by 25 percent since the late 1990s. Current contribution rates and estimated return on investments aren’t enough to pay off the debt over time.”

    “In short, employer contributions were lowered during the boom years — now employers need to step up to fill some of the gap.”

    “Different groups have proposed numerous ‘fixes’ that range from adjusting how Highest Average Salary is figured, to reconfiguring the benefit package, to privatizing the system.”

    (My comment: Here CASE, an SB10-001 proponent, notes in its 2006 Issue Brief the existence of several “less drastic” alternatives to the breach of fully-vested PERA retiree pension contracts.)

    “The negative publicity about PERA over the past year is largely the work of organized ideologically motivated activists and profit-minded special interest groups.”

    “In reality, PERA has one of the lowest employer contribution rates in comparison with other public pension plans in Colorado and other states. The 2006 employer contribution to PERA is 10.65 percent. By comparison, public pension plans for neighboring states show an average employer contribution rate of 17.2 percent. Even with the scheduled gradual increase of the employer rate up to 13.15 percent by 2012, Colorado will still compare favorably with other public pension plans.”

    “By Phil Fox, deputy executive director, and Jana Caldwell, director of communications, CASE.”

    http://www.friendsofpera.com/facts/PERAIssuebrief.pdf

    June 5, 2006

    PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)

    http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf

    Fall 2006

    “Shareholders Meeting Fall 2006” document: “Note that PERA was over 100% funded in only two years of our 75 year history.”

    http://www.copera.org/pdf/Shareholder/ShareholderPresentation06.pdf

    October 26, 2006

    Silver and Gold Record: “One attendee asked if there was any similar controversy in the 1970s, when PERA’s unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level. Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.” “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools. Williams said this ‘employer contribution’ will not affect retirees . . .”

    https://www.cu.edu/sg/messages/5245.html

    2007

    “Representative Bernie Buescher, a pension attorney from Grand Junction, began a month-long effort (in 2006) to educate the PERA Board and include them in discussions with others, including Senator Owen, in order to forge a compromise.”

    http://cppa.utah.edu/_documents/westernstatesbudgets/wpsa-06/colorado-06.pdf

    2008

    Friends of PERA (an organization that supported SB10-001) in “PERA Quick Facts”:

    “The employer contribution rate for the PERA pension plan is below the average rate contributed by public & private employers into retirement plans for their employees. Many employers contribute between 6% and 10% of pay in addition to 6.2% of pay for Social Security, for a total of 16.2% of pay.”
    “In 1984, the contribution rate to PERA’s pension fund for the School and School Divisions was 12.5% and 12.2%, respectively. Over the years, the rate dropped to less than 10%. The rate in 2009 is 11.9%, still lower than it was 25 years ago.”
    “Compare PERA’s rate with other non-PERA Colorado public plans: Denver = 13.7%, Adams & Pueblo counties = 13.7%, Douglas County = 14.2%, University of Colorado = 16.2%, City of Fort Collins = 13.7%, Jefferson County = 13.2%, Durango = 11.2%, Westminster = 10.3%, Lakewood = 11.7%.”
    “Compare PERA’s rate with the average rate of the seven neighboring state pension plans: 11.9% vs. average of 18.3%, NM State = 22.8%, NM School = 17.8%, Utah RS = 21.9%, Wyoming = 17.5%, NE School = 13.5%, OK RS = 20.7%, KS PERS = 14.2%.”
    “Compare PERA’s rate with the average of 32 public DB plans: 11.9% vs. 14.3%.”
    “Average pension cost for all Private Employers according to the 2006 Chamber of Commerce Employee Benefits Study is 14.25%. PERA is 16 percent below this.”
    “Rate cuts to PERA between 2000 and 2005 equaled some $325 million.”
    “The State (taxpayers) is not the major provider of funds to the pension plan; only 17% of PERA’s revenue of $45 billion in the last 20 years came from the taxpayer; members contributed about 18% of the revenue. Investments brought in 65% of the revenue.”
    “PERA’s funded level at the end of 2007 was an overall 75% of assets – about the same as it was in 1984.”
    “Equating PERA’s amortization period (number of years when it will have the unfunded portion paid off) to an actuarial emergency or necessity is erroneous. PERA continues to have a positive cash flow without selling off assets.”
    “PERA has been fully funded only two years in its 75-year history – in 1999 and 2000. When it was fully funded, Governor Owens immediately pursued cutting the employer contribution rate and unwisely pushed the Board of Trustees very strongly to reduce the cost to purchase service credit. This action resulted in a very large unfunded liability increase to the fund. When PERA tried to pursue legislative changes to remedy the situation, Governor Owens vetoed the legislation because it did not include a ‘defined contribution option’ for state employees.”
    “PERA benefits are actually lower than private industry and other public plans that have Social Security plus a pension.”
    “Laws passed in 1999 and 2000 to reduce the cost to purchase years of service and to provide for earlier retirement were initiated by Governor Owens’ office and legislators who wanted to encourage long-term state employees to retire. At the same time that the benefit rules were made better, the employer contribution rates were reduced and the rate employees paid remained the same. These changes were made by the Executive and Legislative branches, not by the PERA board.”
    “There is a misconception that the ‘taxpayers’ are owners of the fund; the trust fund is owned by the beneficiaries of the fund . . .”
    “PERA reacted promptly to the market downturn in 2001. In 2002, it developed a proposal that would have saved PERA millions of dollars in payments and brought in millions of dollars in additional revenue. This plan was passed unanimously by the General Assembly in 2003 but was vetoed by Governor Bill Owens (R). He vetoed this bill because of a political desire to include defined contribution plans as an alternative option to PERA, even though no other organization in the state offers a ‘choice’ in retirement plans.”

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

    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 state and localities 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

  33. Al Moncrief says:

    ANATOMY OF A COLORADO PERA PENSION CONTRACT BREACH. (Part 2 of 2.)

    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?)

    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.”

    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.”

    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/

    Support public pension contractual rights and the rule of law in the United States at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  34. Gary says:

    Unbelievable !

  35. Al Moncrief says:

    Hi here is the second half of this very long article (52 pages). Can you please post them in the correct order? and trim the end of the first half accordingly? Al

    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?)

    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.”

    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.”

    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/

    Support public pension contractual rights and the rule of law in the United States at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  36. Al Moncrief says:

    FORBES COLUMNIST: HOW DOES “SCREWING WORKERS” OUT OF A PENSION COLA BENEFIT ENHANCE THEIR “RETIREMENT SECURITY?”

    SENATOR BRANDON SHAFFER, SPONSOR OF THE COLORADO PERA “COLO-THEFT” BILL: PERA HAS “BAD LOBBYISTS.” COME AGAIN SHAFFER?

    Rather than enacting legislation to reform public pensions prospectively and legally, (like state legislatures across the country), a handful of state legislatures (including the Colorado General Assembly and the Rhode Island Legislature) are attempting to retroactively take accrued, earned benefits from public pensioners. Colorado state legislators (setting a moral example for their children) are trying to break state contracts to maintain Colorado’s status as a state “tax haven.” (So far, Colorado legislators have opted against an attempt to break the state’s corporate contracts.)

    Edward Siedle, a contributor at Forbes addresses state legislative “COLA-theft” in his most recent column. Siedle:

    “The Rhode Island Retirement Security Act of 2011, enacted November 18, 2011 (which is being challenged as unconstitutional), suspends the COLA for all state employees, teachers, state police and judges until the plans’ funding level exceeds an 80 percent funding level.”

    (My comment: The Colorado Legislature’s SB10-001 sets a more ambitious COLA-theft goal than does the Rhode Island legislation . . . Colorado’s bill takes pension COLA benefits until a “100 percent” pension funded level is achieved. Perhaps, the Colorado Legislature should finish the job it started, and simply pass a bill stating that ALL of the state’s public and corporate contracts will be scrapped until Colorado taxpayers contribute nothing for state services.)

    Siedle:

    “Why is it that laws screwing workers always have the words ‘retirement security’ in their titles?”

    (My comment: Colorado PERA, proponent of Colorado’s 2010 public pension contract breach, tells us: “In Colorado, Senate Bill 1 [the bill that broke Colorado PERA pension COLA contracts] passed with the support of the Colorado Coalition for RETIREMENT SECURITY . . .”.

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

    In a recent editorial, former Colorado Senator Hank Brown tells Colorado PERA pensioners that Colorado PERA’s 2010 breach of their COLA contracts will help provide them with “RETIREMENT SECURITY.” Hank Brown:

    “Through a little ‘Colorado Courage,’ [a euphemism for breach of contracts] policy makers ensured that PERA is on track to be fully funded and provide RETIREMENT SECURITY . . .”.

    It follows that Hank Brown could enhance his own RETIREMENT SECURITY by relinquishing part of his own “2.6 million” federal pension. The Duke Chronicle on Senator Hank Brown’s personal “$2.6 million” federal pension benefit:

    “Members of Congress rant and rave about government spending, but when it comes to their golden retirement pensions — somehow that doesn’t count.” “On the Senate side, the Midas awards go to next year retirees: Sens. Sam Nunn, D-Ga., Bill Bradley, D-N.J., and Hank Brown, R-Colo., who will each collect estimated lifetime benefits in excess of $2.6 million.”

    http://www.dukechronicle.com/articles/1996/01/11/congressional-pensions-out-touch-reality

    I do not understand how taking money by force, seizing accrued, earned pension benefits, breaking the state’s public pension contracts while the state’s corporate contracts are unscathed . . . how this enhances a Colorado PERA pensioner’s “retirement security.”

    As we have seen, Rhode Island’s “COLA-theft” legislation was championed by current Rhode Island Treasurer Gina Raimondo, who hopes to ride this “COLA-theft” horse to the Rhode Island Governor’s office. (Breaking public pension contracts is rather popular among voters at present.)

    Siedle:

    “Retired, largely elderly state workers had to have their benefits shaved by 3% annually to ‘save’ the pension, they were told. With an average pension benefit of $33,000, the Treasurer (Gina Raimondo) apparently figured these retirees could learn to live a bit more frugally in their golden years.”

    “The measly 3% COLAs promised to working stiffs are chump-change compared to the over 4% fees she’s (Rhode Island Treasurer Gina Raimondo) paying hedge fund desperados.”

    “It seems the Treasurer believes it’s a lot easier for retired state workers to adjust their cost of living than it is for hedge fund high rollers. Or maybe workers are simply less deserving of the monies that have been set-aside for, and by, them.”

    Our own Governor John Hickenlooper (R-Colorado) is also doing his part to nudge a few public pension dollars toward the captains of industry:

    “Gov. John Hickenlooper said in a statement that Colorado business owners have long said they need easier access to capital to grow. ‘The creation of the Colorado Mile High Fund will improve the access to capital and we are pleased that Colorado PERA’s partnership will benefit and help grow companies here in Colorado,’ Hickenlooper said.”

    http://csbj.com/2012/10/18/pera-establishes-capital-fund-for-colorado-businesses/

    According to Hick, Colorado business owners need “easier access to capital.” The current, historically-low interest rates on Colorado bank loans just aren’t cutting the mustard. So, Hick recently decreed that Colorado PERA pensioners will assume risk with their Colorado PERA trust funds that smart bankers apparently won’t touch. I think this Hickenlooper corporate welfare decree ($50 million in corporate loans backed by pensioners) proves his “Colorado Courage?”

    “The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado.”

    “The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group.”

    http://coloradomilehighfund.com/

    Back to Siedle:

    “I can tell you where that COLA savings is going—into the already-stuffed pockets of Wall Street’s most highly-compensated gamblers—almost dollar-for-dollar. By my estimate, $2.1 billion in fees (out of the $2.3 billion in COLA savings) will be paid by the pension to hedge, private equity and venture capital tycoons. That’s some ‘reform.’ No wonder Wall Street is so eager to support this shameless public pension money grab.”

    “This should come as no surprise because Wall Street solutions to retirement problems, even in the corporate and 401(k) marketplace, have always involved greater fees to Wall Street.”

    “If $87.4 million in fees were paid every year for the next 20 years, that would amount to $1.75 billion or with compounding to $3.8 billion, which equates to $2.1 billion in 2013 dollars. In summary, the savings related to suspension of the 3% COLA ($2.3 billion) miraculously appear to be just enough to pay Wall Street’s elevated fees of 2% and 20% of profits ($2.1 billion). Imagine that!”

    “Rhode Island pensioners have been told that they have to sacrifice to ‘save’” the state pension. If that is true and the pension can’t afford to pay retirees 3%, then how can it afford to pay Wall Street 2% and 20%– over 4%? Rhode Islanders, in my opinion, you don’t have to be a Rhodes scholar to see you’ve been hood-winked.”

    Full article at Forbes:

    http://www.forbes.com/sites/edwardsiedle/2013/04/16/rhode-island-pensioners-3-colas-will-help-pay-wall-street-high-rollers-4-fees/2/

    BRANDON SHAFFER ON THOSE “BAD COLORADO PERA LOBBYISTS.”

    In my mind, the 27 members of Colorado PERA’s SB10-001 lobbying troop were quite effective during the 2010 legislative session. They succeeded in ramming SB10-001 through the legislative process. To me, it looks like they got the job done for Colorado PERA.

    Colorado PERA spends $400,000 out of PERA member’ trust funds each year for lobbying, and they get their money’s worth! It’s no simple matter to persuade an elected official who has sworn to uphold the U.S. Constitution to ignore the constitution’s Contract Clause. The 27 SB10-001 lobbyists succeeded in dramatically (and temporarily) diminishing the contractual obligations of Colorado PERA-affiliated employers.

    So, I find it odd that the prime sponsor of the “COLA-theft” bill, former Senator Brandon Shaffer considers some PERA lobbyists to be “bad lobbyists.”

    The wisdom of SB10-001 co-prime sponsor Brandon Shaffer:

    “PERA is very good at crunching numbers, but they’re terrible at getting their message out. 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

    (My comment: Some of the lobbyists supporting Colorado PERA’s “COLA-theft” bill, SB 10-001, represented the Colorado Education Association.)

    “His wife (Senator Brandon Shaffer) is a teacher, active in the CEA . . .”

    http://www.davidthielen.info/politics/2010/05/senate-president-brandon-shaffer-interview.html

    According to the website of the Colorado Secretary of State, six lobbyists (of the 27 SB10-001 lobbyists) were paid by Colorado PERA to ram the COLA-theft bill (SB10-001) through the legislative process:

    1. Michael Beasley – Colorado PERA – supporting
    5280 Strategies (Beasley) – Colorado PERA – supporting
    2. Beth C. Minahan – Colorado PERA – supporting
    3. Collon Kennedy – Colorado PERA – supporting
    4. Steve Adams – Colorado PERA – supporting
    Colorado Communique, Inc. (Minahan, Kennedy, Adams) – Colorado PERA – supporting
    5. Mary Alice Mandarich – Colorado PERA – supporting
    6. Roberta Robinette – Colorado PERA – supporting

    When SB10-001 co-prime sponsor Senator Brandon Shaffer refers to “PERA’s bad lobbyists” who, exactly, is he referring to? Does he consider any of these six lobbyists to be “bad lobbyists”? Come clean Shaffer!

    Rather than strengthening Colorado PERA’s influence at the Colorado General Assembly as Senator Shaffer suggests (“making it toxic for any politician to go up against PERA”) I argue that the Colorado General Assembly should begin making its own public pension policy.

    I suggest that the Colorado General Assembly create an ongoing oversight commission for all Colorado public pensions. I suggest that the Colorado Legislature study public pension administration, and prospective pension reform options (i.e., follow the example of other states.) I suggest that Colorado PERA’s influence over the legislative process be curtailed rather than magnified.

    In 2010, Colorado PERA’s leaders marched uninformed Colorado legislators right off the contract breach cliff. In light of this, why should Colorado PERA’s legislative influence be increased?

    “LESS DRASTIC” PENSION REFORM OPTIONS THAT PACK MORE PENSION LIABILITY REDUCTION “PUNCH” THAN DOES THE BREACH OF “FULLY-VESTED” COLA CONTRACTS.

    According to Colorado PERA officials, breaking “fully-vested” pension COLA contracts was the only choice in 2010:

    “The only solution that works involves impacting the COLA,” he (Colorado PERA General Counsel Greg Smith) said.

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

    But, it turns out that certain modifications to “partially-vested” public pension contractual rights pack more pension reform “punch” than does the breach of pension COLA contracts. Such alternatives to taking “fully-vested” public pension benefits offer a “less drastic” impairment of public pension contracts.

    This fact was reported during a 2011 public pension funding presentation at Harvard. According to the presenters, two public pension reform options impacting “partially-vested” pension contractual rights: (1) the use of average pay over the course of a career to calculate base pension benefits and (2) raising retirement age to 65 offer a greater reduction of public pension liabilities than does the elimination of pension COLA benefits. Both of these pension reform options impact only “partially-vested” public pension contractual rights.

    It follows that incremental changes in these “partially-vested” parameters, for example, calculating a PERA pension base benefit using a 10 or 15 year salary average, or raising the PERA retirement age to 60 for active pension members would generate a greater pension liability reduction than a 1.5 percent taking of “fully-vested” COLA benefits. The point is that public pension reform options are available, that offer significant cost savings, that do not impact “fully-vested” public pension contractual rights. Why were the “less drastic” pension reform options of raising the PERA retirement age, or averaging pay over the course of a public sector career not considered in 2010?

    Further, the rate at which future pension benefits accrue may be set prospectively by a legislative body at a level generating a greater reduction in pension system liabilities than does the breach of “fully-vested” public pension COLA contracts. Such options were not on the table in 2010 because these pension reform options were not supported by the 27 lobbyists pushing SB10-001 through the legislative process.

    October 13, 2011 Thomas J. Healey & Carl Hess presentation at Harvard:

    “Underfunded State Pensions: The Size of the Problem, the Obstacles to Reforms, and Potential Paths Forward.”

    “Change to practice of averaging pay over the course of a career:
    • Lowers the cost by 7.4% of payroll
    • Overall cost reduction of 33%

    Raise retirement age to 65:
    • Lowers the cost by 5.7% of payroll
    • Overall cost reduction of 25%

    Cost savings from elimination of public pension COLAs:
    • Lowers the cost by 5.3% of payroll
    • Overall cost reduction of 24%”

    http://www.hks.harvard.edu/m-rcbg/Events/Underfunded_State_Pensions_29%20October.pdf

    Colorado PERA active and retired members, many legal, prospective “less drastic” pension reform options were ignored by the Colorado Legislature in 2010. Support the rule of law and public pension contractual rights in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  37. Al Moncrief says:

    6,000 COLORADO POLICE AND FIREFIGHTERS TO CONSIDER TAXING THEMSELVES TO PAY FOR A PENSION COLA BENEFIT.

    (IN DECADES TO COME, WHEN THE COLA IS ALL PAID OFF . . . WILL THE STATE LEGISLATURE JUST TAKE IT?)

    In 2014, more than 6,000 police officers and firefighters in Colorado will have a chance to vote on the question of raising their pension contributions (by a gradual increase of an additional four percent) to pay for a new pension benefit . . . an enhanced annual cost-of-living increase after they retire.

    These Colorado police officers and firefighters are members of a pension system called the Fire and Police Pension Association of Colorado (FPPA.) In Colorado, we have a number of public pension systems . . . including Colorado PERA, the FPPA, the Denver Employees’ Retirement Plan and many county-run pension systems. These public pension systems are governed by Colorado statutes, which set forth a variety of standards for the contractual pension rights of the members of these pension systems. Under the 2012 bill, SB12-149, accrued public pension benefits of certain Colorado county-run pension plans are honored, while the 2010 bill, SB10-001, seizes accrued public pension benefits. Current Colorado law also provides disparate treatment of Colorado pension systems in regard to “amortization of plan liabilities” (the amount of time pension plans have to pay off their debt.) Colorado law allows some pension plans to amortize plan liabilities over a 40-year period, while other plans (like Colorado PERA) are permitted only a 30-year “maximum amortization period.”

    Colorado’s police officers and firefighters should take heed. Pensioners in the Colorado PERA pension system paid for their DEFINED, pension COLA benefit (out of every paycheck) for decades, only to see the Colorado Legislature renege on this contract. Why would a Colorado police officer or firefighter trust that the Colorado Legislature, or a local government, would not simply pass legislation in the future to take their money as well? As we have seen, Colorado politicians are primarily concerned about maintaining Colorado’s status as a “tax haven.” They are not above breaking contracts to win votes from constituents who want governmental services, but don’t want to pay for those governmental services.

    I ask, in a state that casually breaks public pension COLA contracts, and that has recently demonstrated a willingness to seize accrued public pension COLA benefits, why would any public employee vote to tax themselves for a public pension COLA benefit?

    Police officers and firefighters would be better off placing this money in their own savings accounts and managing their own “retirement inflation protection,” instead of putting the money in the hands of a governmental plan sponsor that may use it to reduce future taxpayer obligations.

    Colorado PERA pension benefits are governed by Colorado state law, the Colorado Revised Statutes. Colorado fire and police pension benefits are also governed by the Colorado Revised Statutes. In 2010, the Colorado General Assembly enacted a bill that amended the Colorado Revised Statutes to break Colorado PERA contracts and seize accrued PERA pension COLA benefits. What is to prevent the Colorado Legislature, or a local government, from simply enacting legislation in decades to come to shore up local government pension plans through the elimination of the proposed, new FPPA COLA? Nothing. The reality is that a majority of the members of the Colorado Legislature do not respect public pension contracts. They will take accrued, earned, contracted pension benefits to the extent permitted by courts. Moral constraints on such takings of property are not a factor. Remember that taking accrued, earned, contracted pension COLA benefits was the first choice of Colorado legislators in 2010.

    If accrued pension COLA benefits may be freely seized in Colorado state legislation, or in municipal ordinance, if pension contracts are freely abrogated under the Colorado Constitution, why would a Colorado police officer or firefighter vote to increase their monthly contributions to pay for a new COLA benefit? If police officer or firefighter pension contributions can simply be redirected under Colorado law to fund other municipal programs, why would they support this contribution increase?

    What legal protections for police officers and firefighters does the FPPA propose that would prevent FPPA-affiliated employers (local governments) from passing ordinances to unilaterally take the new COLA benefit in the future? None. What is to prevent an FPPA-affiliated local government from following the example of the Colorado General Assembly? Underfund the pension to lower its funded ratio, claim that the low funded ratio represents a “fiscal crisis” justifying seizure of accrued pension benefits, break pension contracts to lower taxpayer obligations, repeat . . .
    The assets of public pension plans are trust funds that belong to the beneficiaries of the pension plan. In spite of this fact, for decades, Colorado legislators have tried to get their hands on public pension trust funds. In the minds of many Colorado legislators, access to these pension trust funds allows them to keep state taxation low in the state with the nation’s lowest state tax revenue per capita. Colorado legislators have tried to get at public pension assets through the “front door” and through the “back door.”

    At the turn of the century, former Governor Bill Owens sought and signed legislation creating “early retirement incentives” for Colorado PERA members. His goal was to persuade the older, more “expensive” public workers to retire under Colorado PERA, in order to shift Colorado public sector labor costs from Colorado governments to the Colorado PERA pension system. Governor Bill Owens pension scheme was a “back door” raid on Colorado PERA public pension assets. Having prompted these retirements, the Colorado Legislature now seeks to renege on the deal.

    In 2010, Colorado legislators passed a bill that brazenly seized accrued, earned, contracted Colorado PERA pension benefits (SB10-001) to minimize future taxpayer contributions to the pension system. This bill, SB10-001, represents the legislators’ desired “front-door” raid on the Colorado PERA pension trust funds. Even Governor Hickenlooper is getting into the public pension raid game with his recent decree that Colorado PERA pension trust funds will be used to provide corporate welfare ($50 million in loans) to businesses that the private sector apparently won’t touch.

    “AD HOC” PENSION COLAS VS. “AUTOMATIC” PENSION COLAS.

    The FPPA currently provides a small “ad hoc” pension COLA benefit, that is, a COLA benefit that is discretionary. The Colorado PERA pension system provides an “automatic” COLA benefit under Colorado law, that is a COLA benefit that is contracted, guaranteed, mandatory on the part of the pension plan sponsor.

    FPPA:

    “Benefit adjustments are not guaranteed and are determined annually by the FPPA Board of Directors based on the most recent actuarial study. The amount of the benefit adjustment can be 0% to 3%, or the greater of the Consumer Price Index (CPI) per year.”

    http://www.fppaco.org/pdfs/pubs_handouts/SWDBP_3.5.13.pdf

    The Colorado PERA pension system has “automatic” pension COLA benefits (i.e., pension COLA benefits that are a contractual obligation of PERA-affiliated employers):

    “PERA Benefits at a Glance,” 2004:

    “Receive an annual AUTOMATIC increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”

    PERA Legislative Update, February 2006:

    “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) AUTOMATIC increase of 3.5% per year after retirement.”

    “PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

    http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

    Buck Consultants (independent actuary) 2001 actuarial report to the Legislative Audit Committee of the Colorado General Assembly: the Colorado PERA 3.5 percent COLA is “AUTOMATIC,” a “fixed” COLA, that is “compounded annually for each year of retirement,” part of PERA’s “guaranteed benefits at retirement.”

    Colorado PERA publication “History of Colorado PERA Legislation”:

    “HB 00-1458. Established 3.5% compounded annual AUTOMATIC COLA effective March 2001.”

    NEXT YEAR’S FIRE AND POLICE PENSION COLA ELECTION.

    Here are a few excerpts from FPPA materials for next year’s police and fire COLA election . . . the “FPPA Fire and Police Pension COLA Election White Paper”:

    “A benefit adjustment for retirees, often commonly known as a ‘COLA’ or cost of living adjustment, is not guaranteed in the SWDB (FPPA Statewide Defined Benefit) Plan. The board of directors of FPPA determines on an annual basis what, if any, benefit adjustment to provide to current retirees.”

    “In addition, an election requires a mandate from the active members of the plan, since 65% of the members must vote in favor of a proposition and a non-vote is treated as a negative vote.”

    “Effect of inflation upon purchasing power.”

    “The base benefit provided in the SWDB Plan does not have any form of automatic adjustment for inflation. Without some type of inflation protection, an annuity will not provide equivalent purchasing power over time.”

    “It cannot be over-emphasized, however, that the SWDB Plan does not provide guaranteed benefit adjustments.”

    “In the event that the Plan were ever to become actuarially unsound, the board of directors has the authority to: Reduce or eliminate plan amendments voted in by the membership.”

    “Retirement income needs to keep pace with inflation as much as possible, so that over time the retiree can continue to maintain his or her standard of living.”

    “Benefit adjustments provide protection against inflation and are the most cost-effective way to achieve that protection.”

    “Working together, members of the SWDB Plan can proactively act to preserve and improve retirement security for themselves.”

    http://www.fppaco.org/pdfs/election-2012-pdfs/white-paper.v03.pdf

    (My comment: Colorado PERA retirees “worked together,” and made mandatory contributions to the Colorado PERA pension system for a “DEFINED” pension COLA benefit upon retirement. Colorado PERA retirees “acted proactively” to ensure their “retirement security.” For decades Colorado PERA retirees made these mandatory contributions. In 2010, Governor Ritter, with the stroke of a pen, seized these PERA contributions, and breached the retirees’ PERA contracts.)

    From the FPPA “Election Handout”:

    “Why vote ‘yes’ on increasing the member contribution rate? The short answer is that added funding: Increases the likelihood that you will get a greater benefit adjustment (commonly called
    a COLA) when you retire . . .”.

    http://www.fppaco.org/pdfs/election-2012-pdfs/handout.V4.3.19.13.pdf

    (My comment: “Likelihood,” an excellent word choice here.)

    COLORADO’S ARBITRARY PARAMETERS FOR MEETING PUBLIC PENSION LIABILITIES.

    As noted earlier, a public pension plan’s “maximum amortization period” is the number of years allowed by the legislative body overseeing the plan during which any pension liabilities must be paid off. Although public pension benefits will come due over the next 70 years, Colorado law requires that these liabilities be paid off in about half that time frame.

    Under Colorado law, the Colorado PERA pension system is currently permitted a period of 30 years to pay off its unfunded pension liabilities. Seven years ago, Colorado law allowed the Colorado PERA pension system 40 years to pay off unfunded pension liabilities (the time period was reduced in SB06-235.) Sixteen years ago, Colorado law allowed the Colorado PERA pension system 60 years to pay off its unfunded pension liabilities (the time period was reduced in HB97-1114.) Colorado law currently allows the FPPA pension system to pay off unfunded pension liabilities over a 40-year period, except for FPPA “Old Hire” pension plans that get 37 years. You can see that this factor, incorporated into written, statutory public pension contracts in Colorado, is set in law in an arbitrary fashion.

    Colorado PERA, in its publication “Setting the Record Straight”:

    “The bottom line is that SB 1 prefunds these liabilities over the next 30 years while the payment of benefits will occur over the next 70 years.”

    “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

    In 2006, the Colorado Legislature lowered Colorado PERA’s maximum amortization period to 30 years, in 2010 the Colorado Legislature claimed that this 30-year maximum amortization period was such a burden that the State of Colorado was forced to break its PERA pension contracts.

    Recall the words of Representative Jack Pommer, JBC Chairman in 2009. 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 because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?” 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.

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

    Colorado law governing the FPPA:

    “31-31-102. Definitions. (1) “Actuarially sound” means a police officers’ or firefighters’ pension fund . . . receiving or scheduled to receive employer and member contributions . . . actuarially determined to be necessary . . . to pay the annual contribution necessary to amortize any unfunded accrued liability over a period not to exceed FORTY years.”

    “31-31-408. Modification of state plan by the board. (1) . . . the board may modify the pension benefits and the age and service requirements for pension benefits . . . with respect to the members of the statewide defined benefit plan if: (f) The modification does not adversely affect the pension benefits of retired members.”

    http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

    Colorado Legislature: We’ll break Colorado PERA pension contracts in order to pay off the unfunded liability in 30 years, but we’ll give local government Old Hire fire and police pension plans 37 years. (The arbitrary 30-year time frame is included in the title of the bill that broke Colorado PERA pension contracts, SB10-001.)

    “31-30.5-304. (4) (a) For municipalities, fire protection districts, and county improvement districts (with Old Hire fire and police pension plans) . . . contributions for each calendar year . . . shall be at a rate . . . required to amortize the unfunded accrued liabilities of such state-assisted fund over a period of not more than thirty-seven years . . .”.

    “31-30.5-305. No change in employer obligation. It is the intention of the general assembly that the minimum funding standards established by this part 3 shall not enlarge nor diminish the obligation of municipalities and fire protection districts to their employees for pension benefits provided pursuant to this article.”

    Colorado Legislature: However, the funding standards that we put in SB10-001, WE DO INTEND to use to break pension contracts and diminish our own state PERA pension obligations.

    From the FPPA Rules:

    “909. Vesting. Upon attaining the eligibility requirements for a benefit, a Member shall be fully vested in the benefits such Member has accrued.” “This rule is not to be construed as a reduction or limitation of rights heretofore existing, nor as an indication that vested benefits would be forfeitable before the stated age is attained.”

    http://www.fppaco.org/pdfs/rnr/120927%20%20Codified%20Final%20FPPA%20Rules%20Regulations.pdf

    Colorado law governing Colorado PERA:

    “24-51-211, C.R.S. Amortization of liabilities. (1) . . . A maximum amortization period of thirty years shall be deemed actuarially sound . . . the employer or member contribution rates for the plan may be adjusted by the general assembly when indicated by actuarial experience.”

    (My comment: No mention here in Colorado statutes about the Colorado General Assembly breaking its pension contract when “indicated by actuarial experience.”)

    Instead of simply reamortizing Colorado PERA’s unfunded pension liabilities in 2010, a majority of Colorado legislators preferred to break PERA contracts.

    THE COLORADO LEGISLATURE INTENDS TO PAY AN ADDITIONAL $142 MILLION IN NEXT YEAR’S BUDGET FOR LOCAL GOVERNMENT PENSIONS THAT ARE NOT ITS RESPONSIBILITY . . . WHILE IGNORING ITS OWN CONTRACTUAL PERA PENSION OBLIGATIONS.

    The Colorado General Assembly claims that financial hardship necessitates its breach of Colorado PERA pension contracts, while simultaneously the Colorado General Assembly tops off a collective $700 million appropriation for local government public pensions that are not its responsibility. At least the local government lobbyists are happy.

    On September 19, 2012, FPPA CEO Dan Slack provided testimony to the Colorado General Assembly’s Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing) regarding the obligation of the State of Colorado to pay for local government “Old Hire Police Officers Pension Plans.” Dan Slack: “So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans.”

    Link:

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

    “31-31-101. Legislative declaration.” “The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits . . . but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

    This “Legislative Declaration” states that the Colorado General Assembly has provided state resources “in recognition that local governments are currently burdened with financial obligations relating to pensions . . .”. Accordingly, the policy preference of the Colorado General Assembly is that discretionary grants of state resources should be made to Colorado local governments when they are “burdened by financial pension obligations,” but when the State of Colorado is also “burdened by financial pension obligations” the State of Colorado will break its public pension contracts.

    More Colorado law:

    “31-30.5-304, C.R.S. (3) The general assembly finds and determines that it has contributed substantial sums to the (FPPA Old Hire fire and police pension) program established by this part 3 and that the state has a responsibility to evaluate the advisability of its contribution in light of its own fiscal situation.”

    http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

    In spite of this statutory language, and the fact that the State of Colorado is currently in breach of its own pension contracts, the Colorado Legislature intends to pump this additional $142 million into local government pension obligations in the next fiscal year.

    How much more evidence is needed to demonstrate that no fiscal emergency exists in Colorado that would justify any breach of state contracts?

    Colorado PERA active and retired members, it is clear that the Colorado Legislature has placed into statute public pension contract provisions that are arbitrary, providing unequal protection under the law. Fight for your contractual public pension rights! Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  38. Al Moncrief says:

    LAW PROFESSOR: PENSION PROMISES MUST STAND IMMUTABLE FOR WORK ALREADY PERFORMED.

    LEGISLATURES SHOULD “RECOGNIZE EXPLICITLY THE PAST AND FUTURE SERVICE DISTINCTION.”

    “FOR EVERY DAY ONE WORKS, ONE IS ENTITLED TO KNOW WHAT ONE IS EARNING THAT DAY, INCLUDING WHAT PENSION BENEFIT ONE IS EARNING.”

    A few days ago, a “guest column” addressing contractual public pension rights was published in the periodical, Oregon Live. The author of the “guest column” is Professor Henry Drummonds of the Lewis and Clark Law School. Professor Drummonds is a public pension legal scholar who agrees with Professor Amy Monahan (University of Minnesota School of Law) that public pensions should be reformed prospectively, in conformance with state and federal constitutions. The law professors argue that the rate of future accrual of public pension benefits should be modified as a means of bolstering public pension funded ratios.

    http://www.oregonlive.com/opinion/index.ssf/2013/04/the_tragedy_of_the_oregon_publ.html

    Professor Monahan’s legal arguments:

    “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.”

    Link to Monahan law article:

    http://www.law.umn.edu/facultyprofiles/monahana.html

    This legal argument, for prospective reform of public pensions, was also made in testimony to the Colorado Legislature’s Senate and House Finance committees regarding SB12-149. (The Colorado General Assembly has adopted prospective pension reform for some Colorado public pension systems, those administered by certain county governments, while it has also enacted retroactive pension reforms that seize accrued pension benefits from Colorado PERA members.)

    Here are a few quotations from attorneys representing the Adams County Retirement Plan (Vickie Johnson and Cindy Birley of Davis, Graham and Stubbs) in testimony on SB12-149 before legislative committees in 2012:

    “As I said, in Subsection 3, we make clear in the proposed legislation that vested benefits already accrued, including the vested benefits of retirees, are not going to be touched.”

    “So, if a board was going to go and make changes, it would be to future benefit accruals, not stuff that has already been earned.”

    “For example, if you’re going to be paid a 2.5 percent multiplier, we could say ‘you’ve earned it to this day,’ and here’s your benefits to this day, we may reduce your benefit multiplier going forward.”

    “For future service . . . we would like to be able to lower that benefit formula, multiplier . . .”.

    “These are fully-vested rights once the person is eligible to retire.”

    “You’ve got fully-vested rights for everything that you’ve accrued, but your future accruals could be at a lower formula rate.”

    “So, let’s just say that you’ve worked for 25 years. And, you’ve earned your benefits at this multiplier. Those would not be taken away. If you elect to stay on for five more years, then that accrual may be reduced.”

    “Under the current law . . . once you start working as an employee for a governmental pension plan and you contribute to your pension benefits it’s understood that you have obtained a contract right.”

    “And, as long as you continue to work it’s understood under the law that your benefits cannot be changed.”

    If legal, prospective pension reform is appropriate for an administrative division of Colorado state government (county government), why is legal, prospective pension reform not appropriate for the State of Colorado itself? Language from SB12-149:

    “(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”

    Here are a few excerpts from Professor Drummond’s guest column at Oregon Live:

    “As explained below, pension promises must stand immutable for work already performed, but changeable prospectively for future work.”

    “First, as one relevant point of comparison, private sector pensions operate with just such a rule under the federal Employee Retirement Income Security Act (ERISA). Under ERISA, employers cannot renege on promises made regarding work already done, but can change the promises of what is earned for future work.”

    “Second, looking at public employees, pension promises are a form of deferred compensation and one aspect of TOTAL compensation, which includes salaries, fringe benefits, vacation and holiday pay, etc. Every other aspect of this total compensation package — most dramatically, salaries — CAN be changed prospectively, for future work.”

    “Instead it is much more reasonable to construe pension promises — like every other term of total compensation — as immutable for service already performed, but subject to democratic processes for work to be performed in the future. This would not only protect needed public services and younger public employees, but would also rest upon the reasonable expectation of the affected public employees; for every day one works one is entitled to know what one is earning that day, including what pension benefit one is earning.”

    “The (Oregon Supreme) Court struck down the portion of the 2003 law (in Strunk) that again attempted to eliminate the 8 percent guaranteed return as to both past and future work, and another portion of the 2003 law that reduced cost-of-living adjustments for already retired public employees.”

    “In sum, a firm basis exists in the holdings of the Oregon Supreme Court for the past service/future service presumption presented in this essay.”

    “It is time for both the Legislature and the Oregon Supreme Court to recognize explicitly the past and future service distinction.”

    “Henry Drummonds is a professor at Lewis and Clark Law School.”

    “More recently, Professor Drummonds served as an advisor to the Oregon Attorney General, to Oregon Governor John Kitzhaber, and Oregon Governor Ted Kulongoski on labor relations, tenure law, and pension matters.”

    “Academic Credentials: B.A. 1969 University of Oregon, J.D. cum laude 1972 Harvard Law School, Editor, Harvard Law Review, Member, Phi Beta Kappa.”

    http://law.lclark.edu/faculty/henry_drummonds/

    Recently, the Oregon Legislature requested an opinion (from their in-house legislative attorneys, the Oregon Legislative Counsel) on a proposal to take back accrued public pension COLA benefits. Here is the February 4, 2013 response of Oregon’s legislative attorneys:

    “Based on recent Oregon Supreme Court precedent, we conclude that an attempt to limit the COLA in this way would be found to be a violation of the contract rights of the members.”

    “The Oregon Supreme Court has found several times that the 1953 law establishing PERA created a contract between public employers and public employees.”

    “The court stated several times in Strunk that there is a contract right to the COLA. For example, the court found that:

    ‘We note that the status of the law is particularly clear with regard to retired members, and there can be little question that the COLA is a fully accrued benefit for a member who has retired.’”

    Here is a link to the complete February 4, 2013 opinion of the Oregon Legislative Counsel:

    http://media.oregonlive.com/politics_impact/other/LC%20Opinion.pdf

    Colorado legislators were not aware of such prospective, legal public pension reform options (as the Monahan proposal) in 2009/2010 because they allowed self-interested outside groups to run the PERA pension reform show. In any event, legislators did not want to know the truth. Instead of appointing a commission (or an interim committee) to examine all legal, prospective public pension reform options, the Colorado General Assembly abdicated its pension policy-making authority to the 27-member SB10-001 lobbying troop (we have identified earlier). The Colorado General Assembly did not conduct due diligence prior to breaking Colorado PERA contracts.

    During the 2009 “Listening Tour,” Colorado PERA distributed a list of its own predetermined pension reform options that was quite short on prospective solutions. The preference from the outset was to break PERA contracts. One person present at the Denver meeting of the “Listening Tour” pointed out that, of the many pension reform ideas on the list, only 2 or 3 impacted those who actually owe the debt, PERA-affiliated employers.

    Also, in 2009, the General Assembly ignored an on-point Colorado Attorney General Opinion precluding their proposed PERA contract breach. Further, the General Assembly ignored advice to send an interrogatory to the Colorado Supreme Court to clarify the constitutionality of the developing SB10-001 proposal. They did not want to hear the truth.

    Colorado PERA claims that the General Assembly requested that the PERA Board make recommendations regarding pension reform in 2009, while I suspect that PERA lobbyists actually put this request into Colorado statutes at the end of 2009 in an attempt to add legitimacy to a preordained outcome. (Perhaps I am wrong, but this suspicion could be easily confirmed by deposing the SB10-001 bill drafter, or by examining “member files” at the Colorado State Archives for the 2009 bill, which would identify the person who requested that the “PERA Board pension reform recommendation” amendment be drafted. I suspect that the amendment request came from a PERA lobbyist, or was made by a legislator on behalf of a PERA lobbyist.)

    In legal briefs, Colorado PERA goes so far as to emphasize this “legislative mandate” from the Colorado General Assembly. In a Response Brief submitted to the Denver District Court PERA attorneys write:

    “By LEGISLATIVE MANDATE the PERA Board extensively studied the underfunding and consulted with its members . . . before proposing a solution to the General Assembly.”

    Link:

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

    I ask: Did Colorado PERA plant this request language into SB 09-282 at the end of the 2009 legislative session in order to lend a patina of legitimacy to what was in fact a premeditated attempt to breach pension COLA contractual obligations?

    Recall Senator Lundberg’s statement on the Senate floor during the SB 10-001 debate: “This bill is a deal that was cut before this body met.”

    Was Colorado PERA’s ostensible, impartial examination of pension reform options in 2009 in reality an elaborate ruse constructed by PERA lobbyists to add legitimacy to a process with a predetermined conclusion? To falsely portray a preordained conclusion to breach pension COLA contracts as the result of an extensive, deliberative process?

    Colorado PERA active and retired members. Continue the fight for public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  39. Al Moncrief says:

    THE NATION’S PUBLIC PENSION COLA-THEFT CHAMPION RECEIVES HER COMEUPPANCE.

    FORBES COLUMNIST LAMBASTES RHODE ISLAND TREASURER GINA RAIMONDO.

    RAIMONDO ON COLORADO PERA MANAGEMENT FEES.

    In the United States, we have a handful of prominent self-serving politicians who support the breach of public pension contracts. As we have seen, such politicians serving in the Colorado General Assembly are attempting a “forced downward mobility” for a vulnerable subclass of Colorado residents . . . Colorado PERA pensioners.

    Some U.S. politicians seek to advance their own political careers by breaking public pension contracts, some want to see further state tax cuts, some want to free up money for state discretionary expenditures. In Colorado, politicians broke public pension (Colorado PERA) contracts to further reduce state taxation . . . in a state with (nearly) the lowest per capita state tax collections in the nation. Colorado politicians also have many personal priorities for public program expenditures that supersede meeting the state’s contractual obligations.

    Rhode Island’s Treasurer, Gina Raimondo, is apparently directing Rhode Island public pension trust funds to hedge fund cronies, and also hoping to ride her pension contract breach pony all the way to the Governor’s mansion.

    Edward Siedle, a contributor at Forbes writes:

    “According to Institutional Investor, Rhode Island Treasurer, Gina Raimondo is at work solving the nation’s retirement dilemma, showing how tough public pension reforms can pay fiscal and political dividends. Don’t believe a word of it.”

    “A look behind the curtain reveals her changes to the investment portfolio of the $7 billion Employee Retirement System of the State of Rhode Island will inevitably dramatically increase both risk and fees paid to alternative investment managers, such as hedge funds and private equity firms.”

    “There’s no prudent, disciplined investment program at work here—just a blatant Wall Street gorging, while simultaneously pruning state workers’ pension benefits. It’s no surprise that some of Wall Street’s wildest gamblers have backed her so-called pension reform efforts in the state legislature. Former Enron energy trader emerges as a leading advocate for prudent management of state worker pensions? That’s more than a little ironic.”

    ” . . . when alternative investment managers take control of a state pension and recklessly dump pension assets into high-cost, high-risk alternative investments, while they slash workers’ benefits, that’s no reform. Call it what it is: a money grab.”

    http://www.forbes.com/sites/edwardsiedle/2013/04/04/rhode-island-public-pension-reform-looks-more-like-wall-street-feeding-frenzy/

    (My comment: Wall Street Journal: “Hedge Funds Kiss Their Alpha Goodbye”:
    http://blogs.wsj.com/marketbeat/2011/11/21/hedge-funds-kiss-their-alpha-goodbye/)

    Siedle:

    “Financial alchemy, whether promoted by Democrats or Republicans, ends up costing the taxpayers dearly.”

    (My comment: This Siedle remark calls to mind our own Governor Hickenlooper’s recent raid on the Colorado PERA trust funds for corporate welfare:

    “COLORADO PERA’S LATEST FIASCO.”

    “News flash for our ‘businessman’ Governor: By definition, placing an artificial, political restriction on investment options for a portion of the PERA Trust Funds denies PERA members and retirees the benefit of the most productive use of those funds.”

    “Does the Governor understand that the Colorado PERA trust funds belong to the beneficiaries of the PERA trust? Does the Governor understand that the PERA Trust Funds are not public property to be used to meet public policy goals? [Politicians have been trying to gain access to this 'pile of money' for decades.]”

    “If Colorado businesses are desperate for capital why do these businesses not take advantage of available historically low market interest rates? Is it simply the case that these businesses are considered too great a risk by private lenders? This risk must be assumed by the beneficiaries of a public pension fund? Public pensions should be forced to invest in businesses that the private sector won’t touch?”

    “How is it the responsibility of Colorado PERA members and retirees to redress this shortfall of funding for Colorado entrepreneurs by accepting a less favorable risk/reward ratio for a portion of their PERA Trust Fund property?”

    “How did the PERA Board go about determining the geographical investment boundaries that offer the greatest risk/reward potential for the investment our PERA trust funds? What analysis was conducted? What advantages did Colorado’s borders offer over limiting investment of the funds to venture capital or private equity opportunities in Massachusetts? California? Australia?”

    http://thecontributor.com/colorado-peras-latest-fiasco

    “The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado.”

    “The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group.”

    http://coloradomilehighfund.com/)

    RHODE ISLAND TREASURER RAIMONDO ON COLORADO PERA FEES.

    Raimondo’s comments to a local Rhode Island reporter:

    (WPRI reporter Nesi): “On fees, Colorado’s pension fund says its expenses total less than 0.4% of assets per year. Do you know what the figure is for Rhode Island?”

    Raimondo: “No – you’ve got to be very careful with apples to apples in this, so I don’t know what Colorado means when they say that.”

    http://blogs.wpri.com/2013/04/05/qa-raimondo-fires-back-after-attack-by-forbes-contributor/

    Seidle’s reaction:

    “On fees, Colorado’s pension fund says its expenses total less than 0.4% of assets per year. Do you know what the figure is for Rhode Island?”

    “‘No,’ says Raimondo.”

    “Ouch.”

    http://www.forbes.com/sites/edwardsiedle/2013/04/06/rhode-islands-scary-state-treasurer/

    Recall that, some months ago, we heard another Forbes journalist call the breach of public pension contracts “theft.” William Baldwin of Forbes Magazine was interviewed in regard to public pension contracts on Fox:

    In the interview, Mr. Baldwin recommended the prospective pension reform advocated by Professor Amy Monahan of the University of Minnesota School of Law in her paper “Public Pension Plan Reform: The Legal Framework,” i.e., a reduction of the rate of future accrual of public pension benefits for current public employees.

    Link to Monahan paper:

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

    Professor Monahan’s PROSPECTIVE, “constitutional” public pension reform has been adopted by the Colorado General Assembly (in SB12-149) for certain county-operated public pension plans in Colorado, while RETROACTIVE pension reforms were enacted by the Colorado General Assembly for the Colorado PERA pension system (SB10-001). This is, of course, a statutory double standard on Colorado public pension contracts.

    The Colorado Legislature has placed into Colorado law a policy providing that the contracts and accrued public pension benefits of certain county government retirees in Colorado will be honored, while up to one-third of the contracted pension benefits of Colorado PERA retirees will be seized by the State of Colorado.

    Pension reforms adopted by the Colorado General Assembly in SB12-149 represent a “less drastic” alternative to the Legislature’s breach of the fully-vested pension contracts of current Colorado PERA retirees. Such PERA retirees have met all statutory conditions for the receipt of their PERA public pension benefits. They have fully performed under their PERA public pension contracts.

    Here are a few quotations from Mr. Baldwin’s interview:

    “It is not fair, and it may even be unconstitutional to take away a pension that has already been earned. That’s just theft.”

    “It’s not as sharp a change (401Ks, reduction of future pension accrual rates) as taking away something that has already been earned . . . which I don’t think you can do . . . I don’t think that’s fair.” “It’s all politics.”

    http://blogs.forbes.com/people/baldwin/

    More Seidle comments on Raimondo’s pension raid:

    “Rhode Island’s Scary State Treasurer”

    Seidle:

    “For the record, I was not provided any opportunity to comment on (local Rhode Island reporter) Nesi’s article. I’ve learned to expect as much whenever I criticize highly-politicized public pension investment shenanigans. Local media is usually, shall we say, heavily influenced by local politicians.”

    (My comment: Local media heavily influenced by local politicians? When the Colorado Court of Appeals reversed the Denver District Court’s ruling in the case Justus v. State last year, the Denver Post inexplicably labeled the reversal [upholding public pension COLA contractual rights in Colorado] a “win” for Colorado PERA, the organization trying to break those same contracts. When, last year in SB12-149, the Colorado Legislature contradicted its 2010 legislation, SB10-001, which denied the contractual nature of Colorado PERA COLA benefits, we heard not a peep from the Denver Post or any other Colorado media outlet. SB12-149 impacted the retirement benefits of thousands of Colorado county government retirees, yet not a word from the Colorado media. Heavily influenced by local politicians? To be fair, the Colorado media gives adequate attention to some substantive state legislation. They did a great job covering designation of the official Colorado amphibian:

    http://blogs.denverpost.com/thespot/2012/02/06/amphibian-bill-up-today-in-house-ag/57717/
    http://www.gazette.com/articles/inches-134074-salamander-amphibian.html
    http://www.chieftain.com/news/region/lawmakers-consider-state-amphibian/article_abf64222-5151-11e1-9a50-001871e3ce6c.html
    http://www.9news.com/news/sidetracks/247456/337/Colorado-considers-a-salamander-as-state-amphibian-
    http://www.koaa.com/news/colorado-gets-official-state-amphibian-friday/
    http://kdvr.com/2012/02/06/bill-to-name-tiger-salamander-state-amphibian-advances/)

    Back to Seidle:

    “The Ocean State’s Treasurer scares me. I am alarmed by her poor command of pension fundamentals. A phrase I once heard a Catholic priest use when I was in law school at Boston College comes to mind: Her reputation far exceeds her capabilities. This is the woman who is credited with leading the charge for public pension reform nationally?”

    “The high-risk alternative investments you have steered the pension into charge exponentially greater fees—fees of about 2% plus 20% of profits or more. Do the math and you’ll agree, the fees the pension will pay have skyrocketed. Mushroomed. Ballooned. Soared.”

    “That’s good for your Wall Street pals, no-so-good for workers participating in the pension. It’s a little difficult to reconcile your opinion that the state’s pension system can’t afford to pay workers the benefits they were promised but, on the other hand, it can afford to pay Wall Street’s wildest gamblers one hundred times greater fees than it has in the past.”

    http://www.forbes.com/sites/edwardsiedle/2013/04/06/rhode-islands-scary-state-treasurer/

    Public comments on Rhode Island’s COLA-theft Champion Raimondo:

    Retiree Binyamin Efreom: “My husband is one of the retired state employees affected by Raimondo’s pension steal. Now that he is 70 years old, we are supposed to be able to switch from an income that has a small built-in inflation correction to a fixed income. It’s too late to do that. We have no idea now how much money we have to live on but we are portrayed as the ‘evil’ unionists. The entire burden for making the pension system stable by Gina’s definition is on us — nothing is on the state. Engage RI enlisted a shell of figureheads financed by a Texas Enron billionaire to spend a million dollars on local advertising diverting attention away from the fact that her legislation bullies and targets the elderly — who do they think the retired people are. Also, despite her cries of state poverty, the state has been running significant surpluses, none of which have been earmarked for the pension fund. Thank you again for providing one lone voice in the wilderness.”

    (My comment: At least under Colorado’s 2010 pension reform bill, SB10-001, the entire burden of the reform is not on Colorado PERA retirees . . . just 90 percent. Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post, 4-17-11:

    “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

    This is how it works at the Colorado Legislature: Those who legally owe the debt pay 10 percent, those who do not owe the debt pay 90 percent.

    Note that the Colorado General Assembly has also recently received word of a one-billion surplus for the coming fiscal year. Does this news motivate the Colorado’s Legislature to conserve funds to meet its contractual obligations? No. In next year’s state budget, Colorado state legislators transfer $142 million to pay for pensions that ARE NOT the state’s responsibility . . . NOT their contractual obligation. These are pension obligations of local governments. We find more in next year’s state budget . . . although the State of Colorado already has the lowest per capita state tax burden in the nation, we see the Senate President planning to further cut Colorado state taxes by up to one-quarter billion over the next three years. All this, while Colorado argues that a “financial crisis” prevents the state from meeting its contractual PERA obligations.)

    Retiree John Oberle: “Thank you for your research into the workings of Treasurer Raimondo’s office. Since my wife and I are both pensioners in the retirement system managed by Ms. Raimondo we are impacted twofold by her action to freeze our COLAs. There is something very unnerving about the way the Treasurer manipulated the members of the media, i.e., the Providence Journal and Ted Nesi. She seems expert at appealing to people’s basest instincts, i.e., jealousy toward teachers and government workers who have fixed pensions while most private industry employees have been forced into 401k’s, IRA’s and Social Security.”

    “In our case, we were given a piece of paper at retirement by the state retirement system that clearly asked us to choose one of three options offered to retirees. We selected our option and the retirement system official signed it and we signed it. It stated that the third January after our retirement and every January thereafter we would receive a 3 percent COLA compounded annually. We did not make up the form. The retirement system and State legislature did. Now six years later this past January we did not receive the promised COLA’s. We clearly had a contract signed by both parties yet thanks to Ms. Raimondo’s dire predictions the general assembly of the state of RI changed the rules and has withheld the COLA’s. Now we see evidence of outside parties with political agendas were working behind the scenes supporting Treasurer Raimondo’s agenda. Treasurer Raimondo has snookered most Rhode Islanders into placing blame for the pension systems poor financial performance on retired workers although she hypocritically spent two years saying the retirees did nothing wrong, but for the survival of the system drastic actions were needed. Furthermore, she has spent much of her time as Treasurer building up a war chest for an upcoming run for Governor. Thanks again. Hopefully, shedding light on some of the behind the scenes wheeling and dealing taking place here in RI will result in a fairer, more competent functioning of the Treasurer’s office.”

    Seidle:

    “As a testifying expert in multiple Madoff cases, I can assure you that hedge funds INCREASE risk. In fact, every hedge fund offering statement I’ve reviewed in the past 30 years says in bold print, ‘These are speculative, high-risk investments.’ Beware of anyone who, like Bernie, tells you otherwise.”

    Retiree Paul Zecchino: “Thank you for staying on this. Retirees’ lives have been reduced by the cavalier actions of this individual and the curious cabal of cronyistic individuals who apparently direct her steps.”

    “Search ‘Raimondo’ in the search box here at Forbes at upper right, and you’ll find a most prophetic article by a Mr. Danker with a comment by WH Rosen which clearly state that withholding COLA’s is in effect a closet tax-hike, and is a most unwise move.”

    “A little googling will turn all this up and quickly produce troubling suggestions that there’s much more to this than merely looting retirees and teachers, the demonizing them is clearly to shift guilt from the pension manager and EngageRI, but also perhaps to remake the education system in the image of these characters.”

    “When someone withholds COLA’s that’s curious. When the ones who withhold then viciously demonize and blame the retirees they just reduced for all the world’s ills, that begins to stink of a Constructed Fraud.”

    Colorado PERA active and retired members. Support the rule of law in Colorado. Help Colorado politicians understand that the Contract Clause takes precedence over pet discretionary public programs. Let them know that Colorado public contracts will not be discarded on a whim. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  40. Al Moncrief says:

    THE EVIDENCE MOUNTS: POLITICS RATHER THAN FINANCIAL NECESSITY MOTIVATED THE BREACH OF COLORADO PERA PENSION CONTRACTS.

    Last week, the Colorado Legislature volunteered further evidence that it faces no financial need to break Colorado PERA pension contracts.

    Incredibly, the Colorado General Assembly, while it is in breach of its own (PERA) public pension contracts, has included a transfer of an additional $142 million in this year’s state budget (the Long Bill) to make discretionary payments for pension obligations of local governments. This transfer will bring total state transfers to make pension payments that ARE NOT contractual obligations of the State of Colorado to approximately $700 million.

    I repeat, these local government pension obligations (Old Hire Fire and Police pensions) ARE NOT contractual obligations of the State of Colorado.

    I emphasize, the State of Colorado is currently in breach of its own Colorado PERA pension contracts. From the Colorado Court of Appeals 2012 decision in the case 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.” 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.”

    Does this recent Colorado Court of Appeals decision motivate the Colorado Legislature to conserve available resources to meet its contractual pension obligations? The reality of the situation does not even register with Colorado lawmakers.

    From KDVR:

    “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/

    I have no objection to discretionary expenditures on the part of the Colorado General Assembly. However, I do object to arguments by attorneys representing the State of Colorado that the state cannot meet its own contractual pension obligations while it is giving away revenues to pay off local government pension obligations. I do object to attempts to break state pension contracts, while the Legislature is making discretionary expenditures to pay off public pension debts of local governments. Having made such appropriations, the Colorado General Assembly cannot legitimately argue that financial need has forced the Legislature to break Colorado PERA pension contracts.

    Have attorneys representing Colorado PERA in the lawsuit Justus v. State contacted legislative leadership recently? I suggest that they pose these questions to legislative leadership:

    “How do you expect us to establish a financial need to break Colorado PERA contracts, when you have an extra billion dollars in revenue for the coming fiscal year, and instead of directing a dime of it toward meeting your own contractual PERA pension obligations, you allocate $142 million of the new revenue to pay for local government pensions that ARE NOT your contractual obligation?”

    “Let’s get this straight . . . you’re asking the courts to allow you to break your own pension contracts, while you have simultaneously pumped $700 million into pensions that ARE NOT your responsibility?”

    “You’re asking the courts to allow you to retrospectively take accrued Colorado PERA pension benefits, when, last session, you enacted public pension reform for county governments that respects accrued public pension benefits (SB12-149)?”

    “We are your attorneys . . . do you have the slightest concern about our ability to effectively argue on your behalf in court?”

    Political considerations now trump even the need to build a case for SB10-001.

    Is the leadership of the Colorado Legislature completely oblivious? Or, have they simply given up efforts to make legal arguments for breaking Colorado PERA pension contracts?

    This 2013/14 Long Bill local government pension appropriation should be welcomed by the plaintiffs in the case Justus v. State. If the Colorado Supreme Court sends the case to trial, plaintiffs should add the 2013/14 Long Bill to the list of documents to be introduced into evidence.

    At the Colorado Legislature, politics and political careers take precedence over the U.S. and Colorado constitutions. There are no rational actors in sight, other than perhaps local government lobbyists.

    Are local government lobbyists driving the $142 million local government pension appropriation in this year’s Long Bill? Perhaps these lobbyists, recognizing the rotten legal foundation on which SB10-001 rests, have urged the Colorado General Assembly to pay off their local government debts before SB10-001 is struck down in court. (The local government lobbyists are, of course, acquainted with attorney Cindy Birley and her legal rationale for SB12-149.)

    The Colorado Legislature simply has a political preference to break Colorado PERA contracts. It is also the preference of many of their constituents to break PERA contracts. It is the political preference of the 27 lobbyists who ran the SB10-001 show to break PERA contracts. Like the Colorado legislators who initiated the decline in Colorado PERA’s funded ratio a decade ago, many current legislators realize that, due to term limits, they won’t be present to address the aftermath of their SB10-001 PERA contract breach fiasco.

    For the time being, Colorado PERA members can only sit back and marvel at this surreal spectacle.

    LOCAL GOVERNMENT PENSIONS ARE NOT THE CONTRACTUAL OBLIGATION OF THE STATE OF COLORADO.

    In 2005, Colorado voters adopted Referendum C. The language of this state-wide ballot measure makes it clear that local government pensions ARE NOT contractual obligations of the State of Colorado:

    “TO FUND RETIREMENT PLANS FOR FIREFIGHTERS AND POLICE OFFICERS, SO LONG AS THE GENERAL ASSEMBLY DETERMINES THAT SUCH FUNDING IS NECESSARY . . .”.

    The discretionary nature of state grants to fund Colorado local government pensions is also stated clearly in the “Legislative Declaration” preceding (Section 31-31-101, C.R.S. ) set forth in Colorado law.

    Here is the “Legislative Declaration”:

    “31-31-101. Legislative declaration.”

    “The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits, except for state funding of death and disability benefits as specified in this article, but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

    This “Legislative Declaration” states that the Colorado General Assembly has provided state resources “in recognition that local governments are currently burdened with financial obligations relating to pensions . . .”. Accordingly, the policy preference of the Colorado General Assembly is that discretionary grants of state resources should be made to Colorado local governments when they are “burdened by financial pension obligations,” but when the State of Colorado is also “burdened by financial pension obligations” the State of Colorado will break its public pension contracts.

    For an accounting of the Colorado General Assembly’s historical discretionary grants to meet local government public pension obligations see pages 6 and 28 of the 2012-2013 Colorado Department of Treasury Budget Briefing document at this link:

    http://www.state.co.us/gov_dir/leg_dir/jbc/2011-12/trebrf.pdf

    Here is an excerpt:

    “State Contributions for Local Fire and Police Pension Plans”

    “Since 1980, the State has contributed almost $540 million to the FPPA to eliminate the unfunded liability of the ‘old-hire’ pension plans.”

    From page 29 of the JBC document:

    “To put this figure in perspective, the total state General Fund operating budget in the FY 1978-79 Long Bill was just over $1.0 billion. Thus the $500 million shortfall in local plans represented nearly half of the annual state General Fund budget. If the magnitude of this shortfall were adjusted for inflation, it would exceed $1.8 billion.”

    From page 31:

    “During the ensuing years, the State’s contribution to the old hire plans equaled about 41 percent of the total combined contributions of the state, local governments and employees.”

    (Note that the Colorado General Assembly has made discretionary grants to fund more than 40 percent of the total contributions made to these local government pension plans . . . and yet the Colorado General Assembly claims it has been “burdened” by the necessity to provide for PERA-employer pension contributions at a fraction of this level of commitment.)

    In the coming years, judges may legitimately ask “Why should the state of Colorado be permitted to break its contractual PERA pension obligations when, for many years, it has opted to fund public pension obligations that are not its own?”

    For your information, I am providing a link to a memorandum prepared by the Colorado Municipal League that discusses these historical, discretionary state grants to meet Colorado local government pension obligations:

    http://www.cml.org/uploadedFiles/CML_Site_Map/_Global/pdf_files/pension_memo.pdf

    Colorado PERA active and retired members, has the need for Judicial Branch oversight of the Colorado General Assembly ever been so clear?

    Support the rule of law in Colorado. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  41. Al Moncrief says:

    THE PUBLIC PENSION RANT HEARD FROM FROG JUMP TO PUNKIN CENTER.

    A few days ago former (appointed) Colorado Treasurer and farmer Mark Hillman raised a ruckus in the Denver Post about those darn Colorado PERA public pensions. Hillman, rest assured, Colorado PERA retirees don’t take kindly to loose talk about breachin’ their contracts!

    As we have seen, the Colorado PERA public pension system was underfunded and mismanaged by former Colorado Governor Bill Owens, yet Hillman (appointed by Bill Owens) apparently believes that Colorado PERA retirees should bear the financial burden of this mismanagement. In his “guest commentary,” Hillman actually tries to use guilt as a mechanism to persuade Colorado PERA pensioners to relinquish their contractual public pension rights. He fails to recognize that spending to meet the government’s contractual obligations and spending for discretionary public purposes are different animals altogether. It’s one thing to cut a discretionary public program, quite another to break state contracts.

    Hillman, get this straight in your head . . . there is a world of difference between a governmental appropriation to meet a contractual obligation, and a discretionary governmental expenditure . . . for example, a farm subsidy.

    For Mark Hillman’s edification, let’s explore the distinction between mandatory and discretionary public sector expenditures. Later in this article, we’ll have a look at Colorado PERA’s contractual pension obligations, but first let’s peer into the nature of discretionary public expenditures. The U.S. Farm Subsidy program (“agriwelfare”) serves this purpose well.

    According to Hillman, the threat of government confiscation of property allows the federal government to give farm subsidies:

    Mark Hillman, September 2, 2007 Pueblo Chieftain:

    “Transfer payments – like welfare, Social Security and farm subsidies – couldn’t occur if government didn’t have the power to confiscate our property or assets if we refused to pay taxes, even for causes we would not support voluntarily.”

    Hillman praises Santorum’s efforts to “reform” farm subsidies:

    “He’s (Santorum) been a courageous leader in reforming entitlements, including welfare and farm subsidies.”

    http://www.markhillman.com/2012/02/10/santorums-surprise/

    So, it appears that the Hillman hackles can be easily stood up over this matter of farm subsidies. Yet, one website reports that farm subsidies received by a Mark Hillman of Burlington, Colorado approach one-half million dollars. From the EWG website:

    “EWG Farm Subsidy Database – Subsidy Total 1995-2011”

    “135 Mark Hillman Burlington, CO 80807 $463,616.75”

    http://farm.ewg.org/addrsearch.php?c=1&city=burlington&stab=CO&page=4

    For perspective on this matter of farm subsidies, let’s turn to sober journalist Dave Barry:

    “The purpose of the Farm Security act is to provide farmers with ‘price stability.’ What do we mean by ‘price stability?’ We mean: your money. You have already been very generous about this: Last year alone, you gave more than $20 billion worth of price stability to farmers. Since 1996, you’ve given more than a million dollars apiece to more than 1,000 lucky recipients, many of which are actually big agribusinesses.” “Perhaps you are asking yourself: ‘Wait a minute! Isn’t this kind of like, I don’t know . . . welfare?”

    “No, it is not. Welfare is when the government gives money to people who produce nothing. Whereas the farm-money recipients produce something that is critical to our nation: votes. Powerful congresspersons from both parties, as well as President Bush, believe that if they dump enough of your money on farm states, the farm states will re-elect them, thus enabling them to continue the vital work of dumping your money on the farm states. So as we see, it’s not welfare at all! It’s bribery.”

    http://news.google.com/newspapers?nid=861&dat=20020623&id=ODNSAAAAIBAJ&sjid=HjYNAAAAIBAJ&pg=7027,5523128

    From the EWG:

    “The program has been maintained beyond its intended lifetime and now is a federal entitlement program for farmers that costs the government about $5 billion per year.”

    “The Tea Party swept into the 112th Congress with promises of cutting government spending. But according to a report out today, at least five lawmakers with Tea Party connections have been longtime recipients of federal agricultural subsidies. ‘There’s nothing too surprising about hypocrisy in Washington,’ Ken Cook, president of Environmental Working Group, told ABC News. ‘This particular group, you not only have to look at the hypocrisy but you need to watch your wallet.’”

    “The biggest recipient was Rep. Stephen Fincher, a Republican from Frog Jump, Tenn. While the self-described Tea Party patriot lists his occupation as ‘farmer’ and ‘gospel singer’ in the Congressional Directory, he doesn’t mention that his family has received more than $3 million in farm subsidies from 1995 to 2009, according to the Environmental Working Group.”

    http://farm.ewg.org/subsidyprimer.php

    Hillman:

    “TEA parties ignite conservative resurgence.”

    http://www.markhillman.com/2010/10/03/tea-parties-ignite-conservative-resurgence/

    It appears that the agriwelfare flows freely across Kit Carson County, I reckon it flows all the way to yonder Punkin Center:

    “USDA subsidies for farms in Kit Carson County, Colorado totaled $557,637,000 from 1995 through 2011.”

    http://farm.ewg.org/regionsummary.php?fips=08063

    “Recipients of Subtotal, Farming Subsidies from farms in Kit Carson County, Colorado totaled $8,511,000 in 2011.”

    http://farm.ewg.org/top_recips.php?fips=08063&progcode=totalfarm&page=1&yr=2011

    Former Treasurer Hillman has a number of opinions about “discretionary” public expenditures, like those supporting life on the Farm Dole. But, let’s see what Hillman has to say about mandatory expenditures to meet public sector contractual obligations, for instance, Colorado PERA contractual obligations. Below I provide a few excerpts from Hillman’s March 29, 2013 “guest commentary” in the Denver Post. Hillman writes:

    “Do PERA pensioners really believe that keeping every last cent of their benefits is worth taking nearly $10,000 away from their grandchildren’s classrooms?”

    (My comment: Here Hillman uses a “guilt appeal” as a mechanism seeking to eliminate public sector pension debt. To be thorough, Hillman should also direct this “guilt appeal” toward the elimination of Colorado’s debt to corporations. Here is my proposal: Hillman . . . attend the next board meeting of the Colorado Association of Commerce and Industry and make a case for “shared corporate sacrifice” for our public schools. Ask that Colorado corporations forgive all receivables due from Colorado state and local governments for the next decade or so. Further, ask that investors in debt issued by Colorado governments take a one-third haircut on the face value of their bonds and that funds made available be transferred to Colorado schools. [Such a bondholder haircut would approximate the Colorado General Assembly’s proposed taking from Colorado PERA retirees.] I am confident that your corporate “guilt appeal” will be welcomed by the CACI Board with enthusiasm.

    By the way Hillman, Colorado PERA retirees are not concerned about the “last cent” they are owed under their PERA contracts. Colorado PERA retirees are primarily concerned about state seizure of a third of their contracted PERA retirement benefits. I ask, does Mark Hillman honestly believe that the State of Colorado should fund its public schools through the breach of state contracts? Do Colorado taxpayers, who have nearly the lowest per capita state tax burden in the nation, believe that maintaining a paltry level of support for public education in Colorado is worth shortchanging their grandchildren’s classrooms? Do Colorado’s corporate masters believe that keeping nearly “every last cent” of their corporate earnings is worth shortchanging a grandchild’s classroom? Well, of course these grandchildren are in private schools.)

    Hillman:

    “As Colorado lawmakers consider an overhaul of the way the state funds K-12 education, more people are noticing that schools are increasingly forced to pay for the past rather than invest in the future.”

    (My comment: Yes Hillman, Colorado PERA-affiliated employers are contractually obligated to pay deferred compensation to Colorado PERA retirees for work completed over the course of their careers. You know this . . . you have served on the PERA Board. But Hillman, you present a false choice. Here we have the Washington Post condemning such tactics:

    “It’s time to retire the false choice. As a rhetorical device, particularly as a political rhetorical device, the false choice has outlived its usefulness, if it ever had any. The phrase has become a trite substitute for serious thinking. It serves too often to obscure rather than to explain.”

    http://articles.washingtonpost.com/2011-03-31/opinions/35208590_1_financial-reform-false-choice-false-choice

    Colorado taxpayers are free to “invest in the future” of Colorado education at their pleasure. The fact that Colorado governments must meet debt obligations [incurred in the past] does not preclude Colorado taxpayers from lifting Colorado education from the bottom of the public education support barrel in the future.)

    Hillman:

    “No other line item is large enough to produce the savings necessary to pay for the tremendous cost of the PERA bailout.”

    (My comment: Hillman, paying your debts is not a “bailout.” Meeting your contractual obligations is not a “bailout.” For example, if a farmer receives a federal agriwelfare check and uses that check to meet his farm mortgage payment, the farmer is not “bailing out” his mortgage company.)

    Hillman:

    “Our public schools must take money out of the classroom in order to pay for investment losses and unaffordable promises that have created a $25 billion shortfall in the Public Employees Retirement Association (PERA).”

    (My comment: Where to begin? Shortfall? Hillman, contracted Colorado PERA benefits will be paid over the next 70 years, these PERA benefits are not due tomorrow. The term “shortfall” implies that the money is needed immediately. It is a misnomer.

    Allow me to further illustrate my point with another example. If a farmer has a $25,000 balance on his farm mortgage that is due over the next thirty years, the farmer does not fret about his “shortfall.” The farmer knows that future revenues (agriwelfare checks?) will permit him to meet obligations as they come due. The farmer does not holler about his “crisis” to the neighbors. If he did so, his fellow agriculturists would rightly deem him barking mad.

    Further Hillman, why concern yourself with this relatively insignificant “shortfall”? A much more massive and terrifying “shortfall” threatens. At this moment, Colorado taxpayers are confronted by a “shortfall” of many hundreds of billions of dollars needed to support Colorado public programs in the coming decades . . . highway construction, police protection, prisons and education. Colorado taxpayers have not banked the tax dollars needed to support these Colorado public programs over the next 70 years. Thus, by your definition, they are confronted by an unbearable burden. A mere two (to four?) percent of all future Colorado state and local government revenue will be needed to meet Colorado public pension contractual obligations, a commitment perhaps lower than expenditures that would be required to make Social Security contributions for such workers. The Colorado PERA “shortfall” you that worries you is comparatively, peanuts.)

    Hillman:

    “To continue to promise benefits that are unaffordable and unsustainable is simply unconscionable.”

    (My comment: Hillman, if you believe that Colorado PERA benefits are unaffordable and unsustainable why not support prospective, legal public pension reform, like that available to many Colorado counties under SB12-149? Such prospective pension reform protects your cherished property rights and diminishes future taxpayer obligations.

    Unlike “agriwelfare” handouts, Colorado PERA benefits are actually earned . . . they are contracted deferred compensation, earned in the present, payable in the future. Colorado PERA retirees do not ask for any sort of “handout” from their former employers. Colorado PERA retirees merely ask that Colorado governments meet their contractual obligations.

    I am heartened that, in the past, Hillman has acknowledged the Colorado PERA Board’s long-held position that accrued, contracted public pension benefits, under Colorado law, are inviolate:

    Former State Treasurer, and Colorado PERA Board Member Mark Hillman:

    “More significantly, PERA abandoned its long-held legal argument that benefits once promised to its members can never be scaled back, no matter how unaffordable they become. PERA proposes an immediate reduction of cost-of-living adjustments from the current 3.5 percent per year to no more than 2 percent.”

    http://www.markhillman.com/2010/01/26/workers-cant-ignore-cost-of-pera-fix/

    Hillman:

    “Parents must wonder: What can possibly justify penalizing two full generations of students for a mess created long before their lives began?”

    (My comment: Mark Hillman expresses concern here for a lack of adequate financial resources for Colorado public schools in the future.

    OK, now that we have absorbed that fact we can move on.

    Hillman, many Coloradans share your concern. From the Denver Post:

    “Colorado ranks among the stingiest states in the nation in how much it spends to educate its children, according to a government report released Monday.”

    http://www.denverpost.com/ci_12926871

    If Hillman is actually concerned about the underfunding of public education, why has he not actively supported campaigns to remedy the situation? If Hillman is actually concerned about the underfunding of public education, why not tackle those ridiculous farm subsidies? Hillman, the cost of the U.S. agriwelfare mess is simply tacked onto the national debt, displacing public education resources and “penalizing” future generations of students. These students are accordingly “penalized” although the agriwelfare mess was created “long before their lives began.” Does the protection of U.S. agriwelfare justify “penalizing” these future generations?)

    Hillman:

    “If we truly value our future, then we really should ask if it’s wise to shortchange schools for the next 35 years in order to pay for past mistakes.”

    (My comment: Give Hillman credit here for again acknowledging the historical mismanagement of the Colorado PERA pension. As you know, I also blame Colorado PERA Board and legislative mismanagement for the decline in PERA’s funded ratio in the last decade. Hillman joins me in criticizing Colorado PERA’s administration. From Friends of PERA:

    “Many (Colorado PERA Board) Trustees have daily work experience in areas such as finance and benefits administration. During 2006, when the change (to PERA Board composition) was being advocated since the Trustees supposedly ‘lacked experience and educational credentials’, the only individual on the 16-member Board who did not have a college degree was the temporary governor-appointed State Treasurer Mark Hillman.”
    http://www.friendsofpera.com/facts/index.html)

    Now, Hillman is also an ardent supporter of private property rights. The Colorado Court of Appeals recently cited Lynch on the matter of public pension property rights: “contract rights can constitute property interests protected by the Takings Clause . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim.”

    Strangely, Hillman believes that when the Colorado Legislature regulates public smoking, that regulation interferes with private property rights. Yet, when the Colorado Legislature seizes up to one-third of the value of a contracted public pension benefit, that’s just hunky-dory.

    Mark Hillman on the importance of honoring property rights:

    “But you don’t need to be a farmer or rancher to understand the importance of private property rights.”

    (My comment: Exactly Hillman, Colorado PERA retirees understand the importance of property rights.)

    Hillman:

    “Colorado’s popular new statewide smoking ban is another example of blatant disregard for property rights.”

    Hillman:

    “Once you’ve made a piece of property your own, for someone to take it from you by force is nothing less than theft . . .”.

    (My comment: Spot on Hillman.)

    Hillman:

    “Who would do such a thing? Too often, the answer is our government.”

    “Yet the legislature put the will of the majority ahead of the rights of property owners.”

    (Hillman, I nominate you as Chairman of Save Pera Cola!)

    http://www.markhillman.com/2007/08/29/property-rights-or-privileges/

    “In elected office, Mark has been a leader in the fight to protect the rights of private property owners against government takings . . .”

    http://www.leadershipprogram.org/board-of-directors/the-honorable-mark-hillman

    “During his service in the Colorado Senate, Mark focused on protecting the rights of private property owners against government takings . . . “

    http://www.markhillman.com/bio/

    Link to the complete Hillman “guest commentary” in the Denver Post:

    http://www.denverpost.com/opinion/ci_22893614/pera-bailout-shortchanges-students-teachers

    Recently, our former Colorado Senator Hank Brown (a man who collected a $400,000 salary running a charitable organization . . . a man with a $2.8 million federal pension) told us that breaking public pension contracts (perhaps a “non-Hank Brown” public pension) is “Colorado Courage.” Let’s see a “Colorado courageous” Hank Brown transfer of one-third of Hank Brown’s public pension benefits to Colorado public schools.

    Heck, let’s redirect the entirety of Colorado’s farm dole to the support of public education!

    Colorado PERA active and retired members, many prominent Coloradans are unfamiliar with the concept of “hypocrisy.” I blame chronic, inadequate financial support for public education in our state. But, obviously, the breach of state contracts as a means of funding Colorado public schools is an unconstitutional, immoral proposal advocated by self-serving demagogues.

    Help fight for public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. “Friend” Save Pera Cola on Facebook!

  42. Al Moncrief says:

    GIVEN THE 2010 BREACH OF COLORADO PERA PENSION CONTRACTS, DO PERA PENSION BENEFITS REMAIN “DEFINITELY DETERMINABLE”?

    By now, you have certainly heard that the State of Colorado is trying to break its contracts. A majority of Colorado legislators actually voted for a bill (in 2010) that claws back accrued, contracted benefits from pensioners in their home state.

    This is odd, since the Colorado Legislature has also recently enacted a pension reform measure that honors the accrued public pension benefits of certain other public pensioners in the state. We recently learned that, last year, the Colorado Legislature adopted legal, prospective pension reforms, in the bill SB12-149, for a number of Colorado’s county governments (administrative arms of the state). These county government pension reforms honor pension benefits that have been accrued to date, and make changes only on a prospective basis, while the pension reforms adopted for the Colorado PERA pension system seize pension benefits that have been accrued over decades. In spite of the fact the Colorado Legislature has adopted pension reforms that honor the accrued benefits of certain county government retirees, the Legislature persists in its attempt to claw back accrued benefits from PERA state government and other retirees. How is it possible that such a glaring disparity of treatment of the contractual rights of similarly situated parties under Colorado law escaped mention during the hearings on this legislation (SB12-149)?

    We also recently learned that the State of Colorado has an extra billion dollars to spend in the next year . . . and yet the State of Colorado persists in its efforts to break its contracts, due a financial “crisis.”

    We have learned that the failure of the Colorado Legislature to pay its pension bills for the last decade (as recommended by Colorado PERA’s actuaries), and the Legislature’s and Governor Bill Owens’ mismanagement of the pension system, are largely responsible for the decline in Colorado PERA’s funded ratio in the last ten years.

    More truth has come to light. In 2009, the Colorado PERA Board of Directors desired a legal opinion that they could use to justify their contemplated breach of Colorado PERA retiree pension contracts. They sought some means of circumventing legal roadblocks in the form of a 2004 Colorado Attorney General opinion on the subject and adverse Colorado case law. In addition, the Board faced the substantial hurdle presented by their own General Counsel’s testimony that the accrued pension benefits targeted by the Board were indeed contractual obligations of the State of Colorado.

    So, where did the Colorado PERA Board look for this desired legal opinion in 2009? They did not seek an opinion from a law firm that had specialized for decades in employee benefits law. Instead, they sought an opinion from an admirable Colorado attorney, who happens to be a “current full-time activist,” and a public education advocate . . . having founded a think tank that provides public education advocacy. The author of the 2009 “COLA-taking” opinion (on which Colorado PERA based its 2009/2010 legal, lobbying and public relations campaigns to break PERA pension contracts) is an impressive Colorado resident . . . indeed, a woman who has served on the Colorado Judicial Performance Commission.

    Now, to the meat of this article. According to Colorado PERA officials, the PERA pension plan is a “qualified plan” under federal IRS regulations:

    “Colorado PERA is a qualified retirement plan that can substitute for Social Security, as required by law.”

    https://www.copera.org/PDF/8/8-324.pdf

    “PERA is a qualified retirement plan under the Internal Revenue Code Section 401(a). As a defined benefit plan, PERA benefits are guaranteed based on a benefit formula that is set by law.”

    https://www.copera.org/pdf/5/5-115.pdf

    “In 1951, public employers could join Social Security; the Colorado Legislature decided to continue the PERA program instead of joining Social Security.”

    http://class.ccaurora.edu/fiscal/PERA_Choice.pdf

    Yet, under IRS regulations, a public pension plan must have something called “definitely determinable benefits” in order to pass muster as an IRS “qualified plan.”

    Denver attorney Cindy Birley (a woman I consider to be a champion of prospective public pension reform in Colorado) addressed this requirement for qualification of public pension plans at the Legislature’s Senate Finance Committee hearing on the bill SB12-149, on March 13, 2012:

    Cindy Birley:

    “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.”

    Since the Colorado General Assembly has clawed back “definitely determinable” Colorado PERA pension COLA benefits from PERA retirees in 2010, and retrospectively altered this pension COLA benefit, how can this “automatic” PERA COLA benefit still be characterized as a “definitely determinable” public pension benefit?

    IRS attorneys write that a qualified “governmental plan” must have “definitely determinable benefits”:

    “Definitely Determinable Benefits/Written Plan Document Section 401(a)(25) provides that the actuarial assumptions used to calculate participants’ benefits must be specified in the plan.”

    “A pension plan within the meaning of section 401(a) is a plan established and maintained by an employer primarily to provide systematically for the payment of definitely determinable benefits to his employees over a period of years, usually for life, after retirement. (§1.401-1(b)(1)(i)).”

    Reading this, I wondered how an IRS qualified governmental plan can be considered to have “definitely determinable benefits” if the plan sponsors are free to vary an “automatic,” contracted COLA as they please. For example, if a pension plan sponsor reduces its “automatic,” contracted COLA from 3.5 percent to 2 percent or lower, diminishing the value of an annuitant’s lifetime “guaranteed” pension benefit by say, one-third, how could such variable benefits be considered “definitely determinable”? Are qualified governmental plans, like Colorado PERA, required to report whether or not their COLAs are “automatic” or “ad hoc,” i.e., discretionary? How can the IRS know what the “definitely determinable” lifetime retirement benefit is without knowing the nature of a public pension plan’s COLA benefit? As we have seen, Colorado PERA has consistently described the PERA COLA benefit as “automatic.”

    IRS attorneys also note that qualified plans “must operate in accordance with plan terms,” and “must meet “Pre-ERISA Vesting Requirements in Section 411(e)(2).”

    “Pre-ERISA Vesting Requirements in Section 411(e)(2)

    “A governmental plan shall be treated as meeting the requirements of section 411 if the plan meets the vesting requirements resulting from the application of sections 401(a)(4) and 401(a)(7) as in effect on September 1, 1974. “Including “Vesting on Normal Retirement Age.”

    http://www.irs.gov/pub/irs-tege/govt_414d.pdf

    In 2009, Cindy Birley and Rebecca Hudson of the Denver law firm Davis Graham & Stubbs wrote an article: “New Trends in Public Sector Plans.”

    Cindy Birley writes:

    “A ‘qualified’ plan under Code Sec. 401(a) is afforded special tax treatment provided numerous requirements under Code Sec. 401(a) are met. The primary advantages of being a qualified plan are: 1) employer contributions are not taxable to the participants as they are made, 2) trust earnings are not taxable, and 3) favorable tax treatment is available to participants when they receive distributions (i.e., rollover treatment).

    “A defined benefit plan . . . is a retirement plan that provides (my emphasis) ‘DEFINITELY DETERMINABLE’ benefits. For instance, a defined benefit plan might entitle a participant to a monthly pension for life equal to a percentage of the participant’s monthly compensation.”

    “Cindy S. Birley is an attorney practicing at the Denver law firm Davis Graham & Stubbs LLP. Ms. Birley has 17 years of experience in the employee benefits/executive compensation field. Ms. Birley has extensive experience with public sector plans. She is also a member of the National Association of Public Pension Attorneys.”

    http://www.dgslaw.com/images/materials/606317.pdf

    In a May 30, 2008, “Public Employment and Pension Law Update,” for the Colorado Municipal League, Cindy Birley notes that the IRS is increasing scrutiny of public plans:

    “Increased Scrutiny of Governmental Plans, questionnaire to be sent to 200 government plan representatives. Failure to reply could open a compliance check.”

    How has Colorado PERA described its pension COLA benefit in responses to such IRS questionnaires?

    http://www.dgslaw.com/publications?&id=652

    Although the Colorado General Assembly has not paid its full pension bill for the last decade, at least one member of the Colorado PERA Board of Trustees, as a fiduciary, seems to feel some responsibility to encourage Colorado legislators to do so.

    Colorado PERA Board Trustee Maryann Motza (elected to the PERA Board in 2005) is the author of an article published in Vol. 22, No. 1 of the journal, “Government Finance Review,” that addresses training of new public pension board members.
    From Trustee Motza’s article “Recommended Practice: a Tutor for New Pension Board Members”:

    “Assure that actuarially required contributions are collected by the pension plan on a timely basis, so as to achieve the plan’s stated funding policy.”

    PERA Board Trustee Motza writes that Colorado PERA follows recommended practices of the Government Finance Officers Association (GFOA):

    “It is comforting to know that PERA adheres to GFOA’s recommended practices, which set the standard on how the funding of public pension plans can best be achieved and maintained.”

    But, I see no endorsement from the GFOA for the retrospective taking of accrued public pension benefits. From GFOA Best Practices (regarding the creation of new benefit tiers):

    “Identify and address legal constraints. Consult with legal counsel to identify any federal and state legal impediments. In some states, there may be a legal foundation for changing current employees’ pension benefits prospectively.”

    http://www.gfoa.org/index.php?option=com_content&task=view&id=1887

    The GFOA also recommends that public pension trustees consult the writings of Professor Amy Monahan at the University of Minnesota School of Law, “Public Pension Plan Reform: The Legal Framework.” “

    See ‘Public Pension Plan Reform: The Legal Framework’ by Amy B. Monahan, Education and Finance Policy, Fall 2010.”

    It happens that the aforementioned public pension attorney, Cindy Birley, has recommended (and advocated in testimony to the Colorado Legislature) prospective public pension reform for administrative arms of Colorado state government (county governments) that conforms perfectly to Professor Monahan’s legal theories.

    Back to the GFOA:

    “If state law allows public employers to change plan benefits prospectively for current employees, this right should be clearly stated in the plan documents that are distributed to employees. If there is no explicit or implied contract that entitles an employee to accrual of benefits indefinitely under the current benefit structure for future service, this should be clearly stated in the plan documents as well. Consult with legal counsel to ensure that such descriptions do not violate the requirement that benefits be ‘definitely determinable’ under Internal Revenue Code 401(a). Generally, a plan does not provide definitely determinable benefits if a member’s ability to receive the benefit is conditioned on the employer’s discretion, absent plan changes.”

    “Defined benefit plans . . . Investment risk born by the plan sponsor.”

    “Guaranteed lifetime annuity to members at retirement unless they choose an alternate payment method.”

    “Guaranteed or ad-hoc cost-of-living adjustments provided to annuitants.”

    http://www.gfoa.org/index.php?option=com_content&task=view&id=1608

    In light of all this, how has Colorado PERA remained a “qualified plan” under IRS regulations?

    Colorado PERA active and retired members, help put an end to the Colorado Legislature’s ill-advised attempt to escape its contractual obligations. Contribute at saveperacola.com and “Friend” Save Pera Cola on Facebook!

  43. Al Moncrief says:

    THE STATE WITH AN EXTRA BILLION DOLLARS. . . SADLY, FORCED TO BREAK ITS CONTRACTS.

    The Colorado Legislature and the state’s public pension administrator, Colorado PERA, claim that a financial emergency necessitates the breach of Colorado’s public pension contracts. But, how can legislators make this claim when they have an extra one billion dollars to spend? Do they simply prefer to spend this billion on discretionary governmental programs instead of meeting the state’s contractual obligations? Perhaps they wish to augment the $538 million they have already allocated toward local government pensions that are not the contractual obligation of the State of Colorado? Perhaps they wish to make another $100 million grant of discretionary property tax relief? The objective of a politician is to win votes. How many votes can be won by simply meeting the state’s contractual obligations?

    The Colorado Legislature claims that the state’s pension system, Colorado PERA, must be funded at a 100 percent level TODAY, although the PERA pension system’s obligations will come due over the next 70 years. Legislators claim that PERA must be funded at a 100 percent level although the PERA pension system has been funded at a 100 percent level just twice in its 82 year history.

    Claiming that the Colorado PERA pension system is “broke,” because the Colorado Legislature cannot pay 100 percent of contracted pension benefits right now is like saying every Colorado homeowner is broke because they can’t pay off the entire amount of their 30-year mortgage right now. It is nonsensical.

    From the 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

    From EdNewsColorado:

    “State economic forecasts released on Monday show revenues higher than predicted in the December estimates, creating a significant windfall for one of the state funds that supports K-12 education.”

    “Revenues are rising because of state economic growth that is outpacing the nation’s economic recovery.”

    “‘We know that there’s new money available’ but don’t know what the potential demands are, Sobanet said. ‘We’re at the very beginning stages’ of totaling everything up.”

    http://www.ednewscolorado.org/news/state-revenue-picture-brightens-again

    From the most recent Colorado Economic Forecast:

    “The recovery in Colorado’s economy is among the most vibrant in the nation.”

    “In FY 2012-13, the General Fund is expected to end the year with a surplus of $848.0 million.”

    “The General Assembly will have $924.3 million more to spend in the General Fund during FY 2013-14 than the amount budgeted for FY 2012-13.”

    http://www.colorado.gov/cs/Satellite/CGA-LegislativeCouncil/CLC/1251640260333

    From the January 29, 2010 Senate Finance hearing on the bill that broke Colorado PERA retiree pension contracts (SB10-001):

    “Retiree Carol Pace said the (PERA) COLA is a contractual obligation and ‘if you break this contract you will break others.’ She asked that the committee fully explore the legal ramifications, and to send interrogatories on the bill’s constitutionality to the Supreme Court ‘before you put us in a position of taking you to court.’”

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

    Colorado PERA Executive Director Greg Smith at this hearing:

    “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

    From the September 24, 2010 Denver Post:

    Senate Bill10-001 not only reduces current, contractually agreed upon benefits, it allows the legislators, rather than fiscal professionals to determine where the trigger point is to declare funding shortfalls and emergencies. By precedent, the only other pension fund in the U.S. that was declared by the courts to be actuarially emergent was flat broke. Colorado PERA has a large reserve that has tempted legislators and governors for years, but before the last legislative session, they couldn’t figure out how to get at it. In 2003, Governor Bill Owens went after it, but he was thwarted by an Attorney General’s opinion that the state could not walk away from its contracts. So that administration took a different tack by offering early retirement buy-outs and reduced rates to purchase service credit. Governor Owens dipped into Colorado PERA funds through the back door, moving state employees at the top ends of the pay grades from state paychecks to Colorado PERA paychecks. In other words, Governor Owens reduced state costs by shifting them to Colorado PERA and at the same time he reduced the state’s PERA contribution percentage, beginning the slide from 105% funded to current levels. Granted the slide was accelerated by the economic downturn, but it began when the state figured out how to supplement the General Fund by raiding PERA trust funds. Senate Bill 10-001, if upheld by the courts, will open the front door to Colorado PERA resources.

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

    Breach of Colorado PERA pensioner contracts . . . Reasonable? Necessary?

    Colorado PERA active and retired members, Colorado state legislators who now regret their support for SB10-001, newly installed Colorado legislators who are unfamiliar with public pension administration . . . help prevent Colorado PERA’s proposed breach of public pension contracts. Fight for the rule of law in Colorado, and contribute at saveperacola.com! Also, “Friend” Save Pera Cola on Facebook!

  44. Al Moncrief says:

    COLORADO’S STATUTORY DOUBLE STANDARD ON PUBLIC PENSION CONTRACTS.

    LAST YEAR, THE STATE OF COLORADO ADOPTED LEGAL, PROSPECTIVE PENSION REFORM (FOR COUNTY GOVERNMENTS). WE HONOR THE PENSION CONTRACTS OF THESE COUNTY PENSIONERS, WHY ARE WE ATTEMPTING A RETROSPECTIVE TAKING OF ACCRUED COLORADO PERA RETIREE BENEFITS?

    As you know, the State of Colorado is trying to break its contracts . . . escape its legal public pension obligations. In 2010, the Colorado Legislature passed a bill that proposes to take back accrued, earned, contracted, deferred compensation from public pensioners in the state. The bill taking these pension benefits, SB10-001, proposes to shift the debt of Colorado state and local governments onto the backs of Colorado PERA retirees.

    But, you may not know that a double standard exists in Colorado law on this matter of public pension contractual rights. Under Colorado statutes, the public pension plans of certain Colorado county governments are to be reformed prospectively. Respect for the vested, accrued benefits of pensioners in these counties has been codified in Colorado law. While such legal pension reform is embraced in one article of the Colorado Revised Statutes for county governments, another section of the law (that governing the state’s pension plan, Colorado PERA) includes provisions that mandate state seizure of accrued, fully-vested pension benefits from Colorado PERA retirees.

    Under current Colorado law, if you worked for one of these county governments and retired after 30 years, your accrued pension rights are protected. Under Colorado law, if you worked for the State of Colorado, and retired after 30 years, the statutory double standard mandates that up to one-third of your retirement benefit will be seized by the state.

    The existence of this double standard in Colorado law is particularly egregious given that some of the county governments for which prospective, legal pension reform is permitted have pension systems that are in far worse financial shape than was Colorado PERA at the time of the adoption of SB10-001. In 2010, the Colorado Legislature determined that it was “actuarially necessary” to bolster the Colorado PERA pension plan by taking accrued pension benefits. Two years later, the Colorado Legislature determined that it was NOT “actuarially necessary” to reform public pension plans that had lower funded ratios than Colorado PERA (county plans) by taking accrued pension benefits.

    It should also be noted that public pensioners in these counties participate in Social Security. Colorado PERA pensioners are not eligible to participate in Social Security. They rely much more heavily on their contracted PERA benefits, while their counterparts in Colorado county governments have this “extra leg of the retirement stool.” Yet, the accrued benefits of Colorado PERA pensioners are seized, while county pensioner accrued benefits are honored.

    If legal, prospective pension reform is appropriate for an administrative division of Colorado state government (county government), why is legal, prospective pension reform not appropriate for the State of Colorado itself? If the Colorado General Assembly had not abdicated its public pension policy making authority to 27 union and corporate lobbyists in 2010, it might have considered legal, prospective public pension reform options similar to those advocated by the proponents of SB12-149, the bill by which prospective pension reform for the county governments was permitted. The proponents of SB12-149 include Cindy Birley, a public pension attorney with many decades of experience. The 2012 decision of the Colorado Court of Appeals affirming the contractual nature of Colorado PERA COLA benefits reveals that the proponents of SB12-149 were correct to pursue prospective reform of their pension systems. The proponents of SB12-149 rely on the DeWitt case to permit changes simply to future pension accrual rates. Colorado PERA is relying on DeWitt for its ill-advised and reckless attempt to claw back fully-vested PERA retiree benefits.

    “Cindy Birley has over 25 years of experience in the employee benefits and executive compensation field. Ms. Birley is recognized in the 2009-2013 editions of The Best Lawyers in America in Employee Benefits Law. She is a member of the American, Colorado, and Denver Bar Associations. She is also a member of the National Association of Public Pension Attorneys, Denver Chapter of the Western Pension & Benefits Conference, and Colorado Municipal League.”

    http://www.dgslaw.com/attorneys/cindy-birley

    If the General Assembly had not abdicated its public pension policy making responsibility in 2010, it might have, rationally, sent an interrogatory to the Colorado Supreme Court regarding the constitutionality of the pension reform proposal, SB10-001. The Legislature was encouraged to take this step.

    In the past, we’ve looked at a prospective pension reform proposal offered by Professor Amy Monahan of the University of Minnesota School of Law. Professor Monahan proposes that public pension reforms be adopted by state governments that alter the rate of FUTURE accrual of pension benefits, thus avoiding retrospective takings of such accrued benefits. This proposal is made in Monahan’s paper “Public Pension Reform: The Legal Framework.”

    In her paper, Professor Monahan writes:

    “What if, ten years into X’s tenure with the state, the state announces that effective immediately, pension benefits will only accrue at the rate of 1% of salary per year? I have argued that such prospective changes should be permitted absent an explicit agreement protecting against such changes.”

    Professor Monahan concludes:

    “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.”

    Link to Monahan law article:

    http://www.law.umn.edu/facultyprofiles/monahana.html

    I consider Professor Monahan’s public pension reform proposal to be a “less drastic” public pension reform than Colorado PERA’s breach of the fully-vested public pension contracts of current retirees in 2010.

    In 2012, when the Colorado General Assembly adopted SB12-149, the Legislature demonstrated that it is capable of adopting legal, prospective public pension reforms. Here is a description of SB12-149 from the Colorado Municipal League:

    “Permits the board of a defined benefit plan or system created by a local government to (for a specified period of time) modify the benefits and the age and service requirements for any such plan or system when the board determines the modification is required to ensure the sustainability of the plan or system. Specifies that any modifications to the benefits and age and service requirements shall not adversely affect vested benefits already accrued by members of such defined benefit plans or systems.”

    http://www.cml.org/uploadedFiles/CML_Site_Map/_Global/Legislative/laws_2012.pdf

    Senator Pat Steadman was the prime sponsor of SB12-149 in the Senate. Why did Senator Steadman agree to carry SB12-149? It’s odd that Senator Steadman supports SB12-149, a bill proposing a prospective, legal public pension reform, while also supporting SB10-001 in 2010, a bill that operates retrospectively, taking accrued PERA retiree benefits . . . it just doesn’t add up.

    From, “PERA Changes: Shape up or Shakedown?”

    “Senator Pat Steadman (D-Denver) (on SB10-001) said, “I wasn’t the first to jump into this wagon, but I think this bill is great progress.”

    http://www.coloradocapitolwatch.com/blog/2010/01/27/pera-changes–shake-up-or-shake-down/

    Senator Steadman was present at the Denver meeting of the Colorado PERA Listening Tour on August 11, 2009 where he heard Colorado PERA Executive Director Greg Smith state:

    “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.”

    The balance of this article provides summaries of legislative committee hearings on the bill, SB12-149 and quotations from these hearings pertinent to the breach of Colorado PERA retiree contracts. During the legislative hearings on SB12-149, members of the Colorado General Assembly commented extensively on the concept of “actuarial necessity,” the DeWitt test in Colorado case law, prospective public pension reform, and the involvement of Colorado PERA and Colorado’s public sector unions in the development of SB12-149.

    First, some excerpts from the Senate Finance meeting summary for SB12-149, March 13, 2012:

    “02:20 PM — Senate Bill 12-149

    Senator Steadman, prime sponsor, presented Senate Bill 12-149 concerning allowing local government pension plan boards to make modifications to defined benefit plans. Senator Steadman stated that the bill impacts defined benefit plans in five counties in Colorado: Adams County, Arapahoe County, El Paso County, Pueblo County, and Weld County. He explained that the bill seeks to get rid of the unfunded liabilities in the defined benefit pension plans in these counties and allows the pension boards to shore up the long term solvency of the plans. He concluded his opening remarks by stating the bill is about retirement security and enabling local governments to make decisions for themselves as to how to secure their pension funds.”

    “02:30 PM

    Committee discussion ensued about differences between the statutory requirements of the Public Employees’ Retirement Association of Colorado (PERA) and local defined benefits plans.”

    “02:33 PM — Ms. Vicki Johnson, an attorney representing the Adams County Retirement Plan, spoke in support of the bill. Ms. Johnson explained the difference between defined benefit plans and defined contribution plans, and stated that this bill does not impact counties with PERA, defined contribution plans, or home-rule cities.”

    “03:16 PM — Mr. Michael McIntosh, member of the Adams County Retirement Plan Board of Directors, spoke in support of the board. He discussed why the Adams County plan is currently under-funded.”

    “03:23 PM — Mr. Erik Hansen, Adams County Commissioner, spoke in support of the bill. He talked about the need to avoid reducing benefits for current retirees.”

    “03:26 PM — Mr. Frank Weddig, former state senator and former Arapahoe County Commissioner, spoke in support of the bill.”

    “03:29 PM — Mr. John MacPherson, a member of the Colorado Coalition for Retirement Security, spoke in opposition to the bill. He stated that there is no need for the bill because it gives boards legal immunity for actions they are already legally able to take. He stated that the bill does not give these counties any additional tools to manage their retirement plans.”

    “03:33 PM — Ms. Cindy Birley, an attorney representing the Adams County Retirement Plan, spoke in support of the bill. She summarized the testimony that was given by previous witnesses and discussed some case law that was used in developing the language of the bill.”

    “03:43 PM

    Ms. Birley continued her testimony. Senator King asked Ms. Birley about the unfunded liabilities of the other counties that would be impacted by this bill. She answered by reiterating that none of these other counties oppose the legislation.”

    “03:54 PM

    Senator Guzman asked Ms. Birley if this legislation would impose any new requirements or restrictions on the other counties affected by the bill. Ms. Birley answered that making changes to a county plan by its board is voluntary and not required. Senator Johnston asked Ms. Birley to confirm the three classes of rights that exist in the defined benefits plans.”

    “04:05 PM

    Committee discussion ensued regarding case law that is applicable to the bill.”

    “04:16 PM

    Senator Johnston spoke about his concerns with the bill and brought up the possibility of including a repeal date of one year. Public testimony was closed.”

    “04:23 PM

    Senator Steadman gave closing remarks and stated that this bill is about retirement security and dealing with future liabilities in a responsible way.”

    Link to meeting summary:

    http://www.leg.state.co.us/clics/clics2012a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/8eaf024bd08e6f24872579c0006fb917?OpenDocument

    Below, I provide quotations from the Senate Finance Hearing on SB12-149 on March 13, 2012 that are relevant to the taking of the Colorado PERA pension COLA benefit by the Colorado General Assembly in 2010.

    Beginning 36 minutes into the meeting:

    Senator Steadman noted that the bill affects five county defined benefit pension plans in Colorado. Steadman:

    “The impetus for this bill is; however, very similar to what we saw two years ago when we were looking at SB10-001.”

    “The bottom there of page 3 actually talks about not impairing vested rights, and so really that’s just reciting some existing boundaries that exist.”

    (My comment: Here is the language in the bill that Senator Steadman refers to:

    “(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

    Senator Johnston, Chairman Senate Finance Committee:

    “You (Adams County) are probably the most underfunded pension plan in the state, certainly the most underfunded that I’ve seen.”

    Vickie Johnson, Davis Graham and Stubbs, attorney for the Adams County Retirement Plan, noted that her associate Cindy Birley, “is the tax and benefits counsel for more than 25 pension plans around the country and in Colorado.”

    Vickie Johnson:

    “Boards of pension plans have very limited options to improve the funded status of the plan.” “They could cut benefits, but for incoming employees . . . employees that haven’t been hired yet.”

    “Now, we’ve made clear that any modifications to benefits and age and service requirements shall not affect vested benefits already accrued. So, it won’t affect benefits that are already earned or benefits of retired members.”

    “When an employee begins working for a government entity that offers a pension, and the employee contributes to that benefit, the benefit offered to the employee is considered to be a contract right governed by the United States Constitution.”

    “The legislation that we’ve drafted, we use the Dewitt case, and this is the case that PERA is using right now to argue that the court should uphold their cuts to the COLA.”

    “There’s case law that says that . . . a board can make a change to limited vested rights . . . when it’s due to actuarially necessity.”

    “PERA has been arguing that this Dewitt case, which comes after those cases, has wiped out that limited vested concept and the concept of actuarial necessity.”

    “So, we had worked to maybe actually try to define what sustainability would be . . . like when a plan fell below 60 percent funded . . . but, there was a lot of concern that we shouldn’t define that.”

    “As I said, in Subsection 3, we make clear in the proposed legislation that vested benefits already accrued, including the vested benefits of retirees, are not going to be touched.”

    “So, if a board was going to go and make changes, it would be to future benefit accruals, not stuff that has already been earned.”

    Vicki Johnson embraces the Monahan proposal:

    “For example, if you’re going to be paid a 2.5 percent multiplier, we could say ‘you’ve earned it to this day,’ and here’s your benefits to this day, we may reduce your benefit multiplier going forward.”

    Pamela Mathisen, Adams County Retirement Plan Administrator:

    “The proposed legislation prohibits reducing benefits already accrued, and we do not intend to reduce those benefits.”

    Leslie Thompson, actuary, Gabriel, Roeder, Smith:

    “This reform looks at just amending the accruals in future years for current employees . . . nothing that has already been earned. This is a standard tool in the private sector tool kit, and I know we’re not private sector, but private sector has always been allowed to amend future accruals, never touch what has already earned, that’s completely protected.”

    Michael McIntosh, member of the Adams County Retirement Plan Board of Directors:

    “We’re not talking about doing anything with the benefits that they’ve already accrued, we’re not going to touch those, it would just be things moving forward.”

    “Anything going forward affecting my benefits, that’s different from what it is today, I need to obviously be able to plan for that.”

    (My comment: Colorado PERA retirees with fully-vested pension benefits feel the same way.)

    Cindy Birley, Davis Graham and Stubbs, (a 10-year member of the National Association of Public Pension Attorneys):

    “Based on current case law, we do not believe that we are able to reduce benefits for people who are eligible to retire, without having this legislation.” “So, for example at Adams County there are approximately 300 people that we could not reduce their future accruals.”

    (My comment: SB12-149 allows Adams County to change the rate of future accrual of pension benefits for employees who are currently eligible to retire, assuming that they continue to work.)

    Cindy Birley:

    “For future service . . . we would like to be able to lower that benefit formula, multiplier . . .”.

    “We’re unable to do that under some of the current case law, one of which is the ‘Police versus Bills’ case . . . “.

    “These are fully-vested rights once the person is eligible to retire.”

    “A partially-vested right you could eliminate due to actuarial necessity under some of the historical case law.”

    “You’ve got fully-vested rights for everything that you’ve accrued, but your future accruals could be at a lower formula rate.”

    Committee Chairman Senator Johnston:

    “What you’re telling me is that you believe that this bill actually substantively changes the ability for us to eliminate fully-vested rights for someone who is eligible for retirement, but has chosen to keep working.”

    Cindy Birley:

    “Correct, on a prospective basis.”

    “We did have . . . in initial drafts of the bill, we had a numerical test (a percent funded ratio threshold) . . .”.

    “We met in Senator Steadman’s office . . ., at a reception that Senator Steadman had for stakeholders on January 9th, and we met with representatives from PERA, Colorado WINS, AFSCME, as well people from Arapahoe and Adams.”

    “The various union groups and PERA were adamantly opposed to putting in an actuarial necessity test.”

    (My comment: Well of course, the proposed test for “actuarial necessity” was lower than Colorado PERA’s funded ratio [69% AFR] at the time of the breach of Colorado PERA retiree pension contracts.)

    Cindy Birley:

    “We were asked to remove that, they urged us to remove it, and so at their request we took out an actuarial necessity test.”

    “We were essentially told that if are unable to make that concession it would not pass through legislation, because there were enough Senators and Representatives who would vote ‘no’.”

    Senator Steadman:

    “If you study the DeWitt Case, you’ll find . . . is that when modifications are made in order to ensure sustainability of the plan, one of the things they’re going to look at is sort of who has been responsible for putting us into the ditch that we’re in now.”

    “ . . . and if the plan was sort of deliberately driven into the ditch, that’s not an excuse for them coming in and undermining the benefits that your own . . . malfeasance and how you’ve, you know breach, perhaps, of fiduciary duty in managing the plan, isn’t going to save you at that point.”

    (My comment: The fact that the Colorado General Assembly drove Colorado PERA into the pension “ditch” over the last decade is well-established . . . billions of dollars of underfunding, mismanagement, cutting needed state revenues, discretionary grants for state property tax relief in lieu of contractual pension payments, failure to propose measures to provide sufficient revenue to meet contractual obligations, funding local pension obligations that are not the state’s contractual duty, etc.)

    Senator Steadman:

    “I became increasingly convinced that any kind of numeric formula in statute was probably a bad idea.”

    Senator King:

    “Because, the formula was 60 percent.”

    Senator Steadman:

    “That was the one that was on the table at the time.”

    (My comment: At this January 9, 2012 meeting, did Colorado PERA, or AFSCME, or Colorado WINS officials agree that a 60 percent standard was an appropriate threshold? Remember, there is no threshold at which fully-vested retiree benefits can be taken by the state.)

    Cindy Birley, said that actuaries in the 1990s told pension boards:

    “You can afford to give a cost-of-living adjustment this year and here’s how much it’s going to cost in assets, and the boards would say ‘sure’.”

    Senator Steadman:

    “Just for the committee’s benefit, this Legislature did the exact same thing with PERA in that exact same time period, and PERA was like at 104 percent or 105 percent funded.”

    Senator Johnston:

    “We have three categories of rights here . . . “

    “We have partially vested rights, which under the AG’s opinion of 04, they are still deferring to Bills and (McPail) that, that is an actuarial necessity standard . . .”

    “So the legal standard for partially-vested is still actuarial necessity. Is that correct?”

    Cindy Birley:

    “DeWitt blends and just chats about vested rights and so the question is, is whether there is a partially-vested and a fully-vested rights category.”

    “I believe it was an amicus brief that was filed in connection with the PERA case . . . page 5, May 13, 2011.” “It was a brief, it’s not a court order.”

    Senator Johnston:

    “The other two categories are vested rights not retired, and then vested rights already retired.”

    “What you want us to do is reinforce the ‘defer to the legislative action’ part of DeWitt, rather than the three-part contractual test.”

    (My comment: Remember that 30 to 40 years ago public pensions in the United States were “mostly pay as you go,” they had funded ratios of zero, yet contracts were upheld. Indeed, pension contracts were upheld during the Great Depression.)

    Senator Johnston:

    “But, PERA is going to have win an actuarial necessity case at 64 percent . . .”.

    (My comment: Colorado PERA’s “actuarial funded ratio” at the time of the PERA contract breach in perspective:

    - (54.5% to 105.2%) – 40-year range of the Colorado PERA actuarial funding ratio (AFR), (source, Colorado PERA.)
    - 78% – average PERA AFR over the 40-year period.
    - 68.9% – PERA AFR at time of the taking of the contracted 3.5 % COLA benefit.
    - 9.1% – difference between the PERA AFR at time of COLA taking and the 40-year average PERA AFR.
    - 11.1% – difference between PERA AFR at the time of the COLA taking and an 80% AFR level considered “well-funded” by Fitch Ratings.
    - 72% – average AFR at the end of 2009 for 57 state retirement systems reporting to Wilshire Associates.
    - 3.1% – difference between the Colorado PERA AFR and Wilshire Associates average AFR for 57 state retirement systems at time of PERA COLA taking.)
    Cindy Birley:

    “The PERA order is just on DeWitt.”

    Senator Johnston:

    “So, if you don’t have us, you would have to use actuarial necessity instead of Dewitt which is a higher standard.”

    Cindy Birley:

    “But, we couldn’t make changes for people that are eligible to retire like Pam . . .”

    “The three-part test only applies when you have a state statute.”

    “Vicki is mentioning that the cases that had actuarial necessity also had state statutes.”

    Senator Johnston:

    “Has there never been a pension fund whose plan was modified without a preexisting state statute to support it?”

    Cindy Birley:

    “I think that pension funds have been modified, without preexisting state statutes, but they have not gone so far as to modify the benefits for people who have . . .and I’m not sure there is case law on it, that I’m aware of, in Colorado.”

    “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.”

    Now, we move over to the Colorado House and the House Finance meeting where SB12-149 was considered on April, 18, 2012. Here are excerpts from the summary of that meeting:

    “01:48 PM — Ms. Vicki Johnson, an attorney representing the Adams County Retirement Plan, spoke in support of the bill and distributed a handout on the Adams County Retirement Plan. Ms. Johnson explained the difference between defined benefit plans and defined contribution plans, and stated that this bill does not impact counties with PERA, defined contribution plans, or home-rule cities.” “She concluded by stating that the bill will not affect benefits that are already accrued and vested or those benefits of retired members.”

    “02:30 PM — Mr. Joseph Pacyga, representing the Adams County Retirement Plan, spoke in support of the bill and responded to committee questions about local government pension plans.”

    “02:38 PM — Ms. Cindy Birley, an attorney representing the Adams County Retirement Plan, spoke in support of the bill. Ms. Birley responded to committee questions about local government benefits under the pension plan systems.”

    “02:45 PM — Ms. Diane Hunt, representing Gabriel, Roeder & Smith, spoke in support of the bill and discussed the need for reform.”

    “02:51 PM — Sheriff Doug Darr, representing Adams County and Adams County Employees, spoke in support of the bill.”

    “02:52 PM — Mr. Frank Weddig, former state legislator and former Arapahoe County Commissioner, spoke in support of the bill.”

    Link to meeting summary:

    http://www.leg.state.co.us/clics/clics2012a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/b695bc1290e34d25872579e4006ba1bd?OpenDocument

    Here are some quotations from the Legislature’s House Finance Committee hearing of SB12-149 on April 19, 2012, (note that Representative Priola was the prime House sponsor for SB12-149):

    Representative Priola:

    “The purpose of this bill is very similar to why we passed Senate Bill 1 for PERA.”

    “Paragraph 3. . . makes clear that the bill does not impair vested rights, meaning that vested benefits already accrued cannot be taken away, including the benefits of retirees or individuals eligible to retire.”

    Representative Kagan:

    “Under your bill, local boards . . . would be able to simply adopt a modification.”

    “Would they get more authority under this bill than the PERA board has?”

    “Will there be any check at all, if this bill should pass, on the action of the boards?”

    Vicki Johnson, Davis, Graham and Stubbs:

    “I specialize in defending pension plans when they get sued.”

    House Finance Committee Chairman DelGrosso:

    “Are you expecting lawsuits because of this?”

    Vicki Johnson:

    “It’s a possibility, yes.”

    “So, let’s just say that you’ve worked for 25 years. And, you’ve earned your benefits at this multiplier. Those would not be taken away. If you elect to stay on for five more years, then that accrual may be reduced.”

    “If you’re a retiree, we’re not going to touch you.”

    “Under the current law . . . once you start working as an employee for a governmental pension plan and you contribute to your pension benefits it’s understood that you have obtained a contract right.”

    “And, as long as you continue to work it’s understood under the law that your benefits cannot be changed. “So, what the boards do is they go out and they change the benefits of new employees, new hires because that’s what they can change.”

    Representative Kagan:

    “Can the Legislature affect the contractual rights of an employee?”

    Vicki Johnson:

    The DeWitt case says that . . . “if a Legislature passes a law that impairs a contract right, the law will be upheld if it is reasonable and appropriately serves a significant and legitimate public purpose when considered against the severity of the contractual (impairment).”

    (My comment: Reasonable? 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.”)

    Vicki Johnson:

    “Part of the reason why you came there is because of this promise of a pension in the future, and so if you worked to earn it, the courts have been very protective of that area. We understand that and we think that that’s right.”

    Vicki Johnson:

    “There’s this case law out there that says you cannot cut benefits of current employees.”

    “The case law would trump that as it currently stands.”

    Cindy Birley:

    “The case law says that if you take an action . . . that impairs a contract pursuant to that change in law that will be sustained and upheld under the Dewitt case, if it was a reasonable and foreseeable change.”

    “We’re asking for a change in the law that we can point to if we are sued to say it’s a reasonable and foreseeable change that we would have modified the plan to . . . reduce a benefit formula, for example, on a prospective basis.”

    Diane Hunt, Gabriel Roeder and Smith:

    “My final comment is that this proposal only affects future accruals, and this is a tool that is used in private sector defined benefit plans.”

    Below, I provide (from Adams County board minutes) the reaction of Cindy Birley to the Colorado Court of Appeals decision in 2012 reversing the decision of the Denver District Court and remanding the case to the lower court:

    “PERA – Colorado Court of Appeals Update:

    Ms. Birley indicated that the Colorado Court of Appeals reversed the motion for summary judgment for Colorado PERA indicating that the COLA is a contractual right. She stated that the Court of Appeals sent it back down to the lower court to run the three prong test of DeWitt. Ms. Birley indicated that this sounds like the legislation that Adams County Retirement Plan just got enacted for Senate Bill 12-149. She stated that this action shows that Davis Graham & Stubbs was right with the language that was put in the legislation.”

    “Article – PERA – Vicki Johnson:

    Ms. Birley indicated that the Board packet contained an article with Vicki Johnson, Davis Graham & Stubbs being quoted on the PERA case.”

    http://www.acretirement.org/minutes/201211_board_meeting_minutes.pdf

    From the Adams County Retirement Plan website:

    “Prior to passage of Colo. SB 12-149 in 2012, the laws governing the Plan were unclear about the Board’s ability to reduce benefits for current employees.”

    “SB 12-149 permits the Retirement Plan Board to reduce future benefit accruals of current employees to ensure the sustainability of the Plan Vested benefits already earned cannot be reduced.”

    http://www.acretirement.org/legislative_update.htm

    “Any modification would be to future benefit accruals, refund provisions, or both and will not reduce vested benefits already accrued for any member, whether active or retired, or any beneficiary.”

    http://www.acretirement.org/legislative_update/notice_possibility_of_future_reduction_in_benefits.pdf

    “The Board will not reduce vested benefits already accrued for any member whether active or retired. SB 12-149 specifically prohibits any such reduction.”

    http://www.acretirement.org/legislative_update/201204MemorandumRE-ProposedLegislation.pdf

    Colorado PERA active and retired members, support the rule of law and contractual public pension rights in Colorado! Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  45. Al Moncrief says:

    LOBATO’S LESSONS FOR THE COLORADO PERA CASE, JUSTUS v. STATE.

    http://www.courts.state.co.us/lobatovstate/

    The Colorado Supreme Court recently heard oral arguments in the Lobato public education funding case:

    “The Colorado Supreme Court last week heard oral arguments on a lawsuit that could dramatically change the system of K-12 school finance in Colorado.” “The Supreme Court’s March 7 hearing included a first: a live video broadcast of the proceedings.”

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

    As I watched the Lobato oral arguments two important “takeaways” for the Colorado PERA retiree pension lawsuit (Justus v. State) came to mind. First, the failure of Colorado politicians to raise sufficient revenue to meet the state’s obligations does not excuse the state’s breach of public pension contracts in 2010. Second, if the Colorado Supreme Court finds for the plaintiffs in the case Justus v. State, this decision need not impose an undue hardship on Colorado governments given that legal, prospective PERA pension reforms may be implemented over as many as seven decades.

    TAKEAWAY #1: FAILURE TO RAISE REVENUE FOR DISCRETIONARY STATE EXPENDITURES DOES NOT EXCUSE COLORADO’S BREACH OF CONTRACT.

    According to the Denver Post, in Lobato oral arguments Colorado Assistant Attorney General Jonathan Fero (representing the state of Colorado) argues in regard to the state: “They have limited funds. They cannot become indebted. They cannot raise revenue on their own power.”

    Justice Hobbs responded: “‘I’m concerned that the argument ‘we can’t do it,’ becomes an excuse for ‘we won’t do it,’ Hobbs said, his voice rising.” (29 minutes into the 69 minute oral arguments.)

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

    Justice Hobbs continued: “It’s generally public knowledge we have a balanced budget requirement, that there is TABOR . . .” “I’m very concerned that what the state’s arguing here is that we simply don’t have any duty and we should give up.”

    http://www.courts.state.co.us/lobatovstate/

    As we know, Colorado’s constitutional TABOR amendment, does not prohibit the Colorado General Assembly from regularly referring measures to Colorado voters to raise revenues sufficient to meet Colorado’s contractual obligations, and sufficient to fund the state’s discretionary public policy programs. The 1992 Colorado TABOR constitutional amendment permits the Colorado General Assembly and Colorado local governments to seek voter approval for new revenues.

    In 2010, the Colorado General Assembly looked first to break Colorado public pension contracts. The Colorado General Assembly has never placed a measure on the statewide ballot asking voters for funding to meet the state’s contractual pension obligations. It’s just easier to break contracts. Colorado politicians should have some backbone and forthrightly inform the state’s voters that they actually have to pay for state services that are to be consumed . . . and they have to pay contractual deferred compensation for services that have been consumed in the past.

    Instead, Colorado politicians propose the breach of state pension contracts while simultaneously making $100 million annual discretionary grants of property tax relief (popular with constituents) and giving away $538 million for local government pension obligations (Old Hire Fire and Police pensions) that are not the state’s obligation (popular with local government lobbyists.)

    Although Colorado has (nearly) the lowest state tax revenue per capita in the nation, Colorado politicians do not want to propose tax hikes . . . here’s Hickenlooper on taxes:

    “‘It’s hard to say whether you have not enough taxes or too much taxes until you get to a point where you are running everything efficiently and you are utilizing the resources you have wisely,’ Hickenlooper said. ‘The enterprise isn’t running efficient yet.’”

    “John Straayer, a political scientist at Colorado State University who says state fiscal problems will not be solved without more revenue, questioned Hickenlooper’s reasoning.”

    “‘Obviously, you have to run any organization as efficiently as possible,’ Straayer said. ‘But when do you know that, and do you do nothing until you know? That could go on forever.’”

    http://www.denverpost.com/news/ci_22277571/hickenlooper-faces-hot-potatoes-second-half-term

    “A 50-state study from the University of Tennessee estimated that Colorado’s state and local tax revenue losses from untaxed e-commerce sales totaled $172.7 million in 2012.”

    http://www.denverpost.com/opinion/ci_22593397/yes-colorado-missing-out-sales-tax-revenue

    The thought of actually raising new revenue to meet contractual pension obligations is a non-starter in our state.

    Speaker Frank McNulty (R-Highlands Ranch): “I don’t think at this point we can expect employer contributions to be part of the (PERA) solution . . .”.

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

    “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

    SB10-001 Proponent Friends of PERA:

    “Rate cuts to PERA between 2000 and 2005 equaled some $325 million.”

    “There is a misconception that the ‘taxpayers’ are owners of the (PERA) fund; the trust fund is owned by the beneficiaries of the fund . . .”

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

    “The fact is that 80 percent of the dollars in the PERA trust fund come from the investment market and from member contributions — not taxpayers,” PERA spokeswoman Katie Kaufmanis said.

    http://watchdog.org/63044/co-lawmakers-battle-secret-pension-issue-on-behalf-of-taxpayers/

    Governor Bill Owens 2006 State of the State: “These changes should not affect those closest to retirement, but could be phased in for those who have years to go.”

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

    “Interestingly, positions attributed to the Governor (Owens) . . . emphasized (PERA) solvency and the unacceptability of taxpayer funding to achieve it.”

    http://cppa.utah.edu/_documents/westernstatesbudgets/wpsa-06/colorado-06.pdf

    Meredith Williams, PERA Executive Director, May 29, 2011, Pueblo Chieftain:

    “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.”

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

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

    “ . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

    SB10-001 co-prime sponsor Senator Josh Penry:

    “‘Republicans and Democrats created this (PERA) mess . . .’.

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

    In the minds of many Colorado legislators (and voters) public pension contracts are considered to possess an inferior status relative to Colorado’s corporate contracts. The idea of breaking the state’s corporate contracts would be unthinkable at the Legislature. Such a proposal would be universally condemned by Colorado’s media. But, as we recently heard, the breach of Colorado’s public pension obligations is “Colorado Courage.”

    In 2010, Colorado’s education establishment looked first to break Colorado PERA retiree pension contracts. The education establishment put a tax-hike measure (Proposition 103) on the ballot in 2011, AFTER the education establishment had already supported the breach of Colorado PERA retiree pension contracts in 2010. The proponents of the 2010 Colorado PERA bill that broke pension contracts (largely the Colorado education establishment) cannot claim that they tried to raise revenue PRIOR to breaking PERA contracts. In 2010, pensioners were considered a great new education funding source.

    In 2011, Senator Rollie Heath campaigned for a ballot measure seeking funding for public education in Colorado, but unfortunately the measure was defeated at the polls. Senator Heath shares Justice Hobb’s concern . . . that the General Assembly not “give up”:

    “It’s a conversation,” Heath said, “that we need to keep going.” “ . . . Heath said he hopes Coloradans will ‘come together to say, we need to make some changes’ and work on what he termed ‘the big fix’ to unwind the knot of the Taxpayers Bill of Rights, or TABOR, the Gallagher Amendment and Amendment 23, three constitutional provisions he described as a fiscal stranglehold on the state.”

    The Colorado Education Association (CEA), as a proponent of SB10-001, appears to remain optimistic that Colorado voters will eventually provide sufficient public education funding:

    “‘CEA was similarly encouraged by more than 140,000 voters across the state who signed petitions to put Proposition 103 on the election ballot, and thousands more who joined the grassroots coalition led by state Senator Rollie Heath,’ CEA President Beverly Ingle added. ‘The momentum created by this energy and awareness to find new ways to increase public education funding will be Proposition 103’s lasting legacy.’”

    http://coloradostatesman.com/content/993126-tax-hike-proves-be-losing-proposition

    Geoff Blue, former Colorado Deputy Attorney General, argues that since Colorado’s education establishment has failed at the polls lately, they are now seeking to “legislate through the courts.”

    Geoff Blue, Deputy Attorney General for Legal Policy and Government Affairs (now in private practice) made these comments in a 2011 interview (on Jon Caldara’s show The Devil’s Advocate, June 24, 2011) regarding the Lobato case:
    Jon Caldara:

    “Where is the teachers union on this?”

    Geoff Blue:

    “I don’t know if they are the plaintiffs, but I’m sure they’re very happy about this case.”

    Jon Caldara:

    “If the school districts want more money through law we have that ability to get them more money. We can raise our taxes. The state legislature can put on tax increases. The local districts can put up mill levy increases. All they need to do is ask us, that’s what the state constitution says. Wouldn’t that be easier than this?”

    Geoff Blue:

    “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.”

    “Geoff Blue joined the Attorney General’s Office in early 2008 as a senior policy adviser to the Attorney General and the office’s liaison to the governor, General Assembly and local governments.”

    http://www.coloradoattorneygeneral.gov/sites/default/files/uploads/AnnualReport.pdf

    TAKEAWAY #2, A COLORADO SUPREME COURT DECISION STRIKING DOWN SB10-001 NEED NOT IMPOSE UNDUE HARDSHIP, SINCE PUBLIC PENSIONS ARE REFORMED OVER MANY DECADES.

    In Lobato oral arguments, Terry Miller of the law firm Davis, Graham and Stubbs suggested that the Colorado General Assembly address its funding problems incrementally . . . over many years. This is precisely the manner in which the Colorado PERA trust funds should be strengthened.

    From the Lobato oral arguments:

    “(Justice) Bender asked if that wouldn’t require a lot of time.”

    “It doesn’t have to happen in one year, as long as they’re making reasonable progress toward a constitutional fix,” (Terry) Miller said.

    http://www.denverpost.com/breakingnews/ci_22738785/colorados-high-court-hears-school-funding-lawsuit-arguments

    The actuarial funded ratio (AFR) of the Colorado PERA trust funds declined from a high of 105% to reach about 70% in 2010. The PERA AFR has been as low as the 50s, back in the 1970s. In 2010, the Colorado Legislature decided to use the recent market volatility as an excuse to eliminate a large part of the pension debt of Colorado PERA-affiliated employers through breach of contract. But, dips in the Colorado PERA AFR need not be fixed overnight by breaking contracts. The most recent decline in Colorado PERA’s AFR can be addressed over as many as seven decades.

    Colorado PERA:

    “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#41211

    Colorado PERA Board Trustee and Court of Appeals Judge Casebolt: “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.”

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

    Deputy Colorado Attorney General Bernie Buescher, “who spent 20 years as a pension attorney,” has “said that he believes Colorado PERA needs changes, but not drastic ones, pointing out that the ‘beauty’ of pension plans is that small changes compound interest over time. ‘When you’re talking about something as complex as retirement plans, the planning horizon is 30 to 50 years — even 20 years is too short.’”

    https://www.cu.edu/sg/messages/4829.html

    http://m.rockymountainnews.com/news/2006/feb/11/governor-demands-pera-solution/

    Bernie Buescher currently serves as Colorado’s “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

    Meredith Williams, Colorado PERA Executive Director, Pueblo Chieftain, August 13, 2005:

    “The liabilities of the system, frankly, will be paid out over multiple decades, and we’re talking 70 or 80 years. We’re kind of designed for the long haul and we know we’re going to experience ups and downs in the marketplace. Unfortunately, we’re just coming off the worst three years of market performance in history.”

    http://www.chieftain.com/metro/slow-stock-market-retiree-boom-hurts-pension-system/article_da58863b-1799-50b4-8ff3-0548d16be68c.html

    Meredith Wiliams, CAFR Summary to Members, 2002, December, 5/21 (REV 6/03):

    “While the investment markets will always have ups and downs, PERA is a long-term investor and we can ride out the bad times the market experiences.”

    http://www.copera.org/pdf/5/5-21-02.pdf

    Meredith Williams, Silver and Gold Record, December 4, 2008:

    “‘The beauty of a defined benefit plan is that it rolls in a lot of people from different employers and age groups,’ Williams said. ‘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 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

    Meredith Williams in a 2008 “Shareholder Presentation”:

    “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.”

    https://www.copera.org/pdf/Shareholder/ShareholderPresentation08.pdf

    Colorado PERA: “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.”

    http://www.friendsofpera.com/Setting%20the%20Record%20Straight.pdf

    Keith Brainard of the National Association of State Retirement Administrators (NASRA):

    “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.”

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

    SB10-001 Proponent, Colorado Association of School Executives (CASE) in a 2006 CASE (PERA) Issue Brief:

    “What is PERA’s financial condition? Is PERA stable? Yes. PERA is quite stable. As of this writing, PERA’s market value is in excess of $35 billion. If there were flat investment returns in the future, PERA would have enough cash to pay benefits or over 40 years. By almost every standard, PERA is solvent.” “Now, some of the same politicians who voted for increased benefits and lower contribution rates are the ones pointing fingers and talking about a ‘crisis.’”

    http://www.friendsofpera.com/facts/PERAIssuebrief.pdf

    SB10-001 Proponent Friends of PERA:

    “Equating PERA’s amortization period (number of years when it will have the unfunded portion paid off) to an actuarial emergency or necessity is erroneous. PERA continues to have a positive cash flow without selling off assets.”

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

    Colorado PERA active and retired members, support public pension rights and the rule of law! Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  46. Al Moncrief says:

    SEC ISSUES CEASE AND DESIST ORDER ADDRESSING ILLINOIS PUBLIC PENSION UNDERFUNDING. WHY DOESN’T ILLINOIS AVOID THIS CRITICISM BY SIMPLY BREAKING PENSION CONTRACTS LIKE COLORADO?

    Last week the SEC issued a cease and desist order condemning inadequate disclosure of chronic state public pension underfunding in Illinois:

    “The Securities and Exchange Commission deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 against the State of Illinois.”

    “On the basis of this Order and the State’s Offer, the Commission finds that:

    “1. In connection with multiple bond offerings raising over $2.2 billion from approximately 2005 through early 2009, the State of Illinois misled bond investors about the adequacy of its statutory plan to fund its pension obligations [pension actuarially required contributions, ARC] and the risks created by the State’s underfunding of its pension systems.”

    “2. The State omitted to disclose in preliminary and final official statements material information regarding the structural underfunding of its pension systems and the resulting risks to the State’s financial condition.”

    “This methodology structurally underfunded the State’s pension obligations and backloaded the majority of pension contributions far into the future. The resulting systematic underfunding imposed significant stress on the pension systems and on the State’s ability to meet its competing obligations.”

    “3. During this same time period, the State also misled investors about the effect of changes to the Statutory Funding Plan, including substantially reduced pension contributions in 2006 and 2007 (‘Pension Holidays’).”

    Colorado’s public pension administration arm, Colorado PERA, hires actuaries who prepare an annual financial report for the pension system (CAFR.) These actuaries are required to inform the State of Colorado and other PERA-affiliated employers of the annual underfunding of the state’s (PERA) pension system. They provide this information in the annual Colorado PERA CAFR. Over the last decade, the members of the Colorado General Assembly have preferred to make discretionary state expenditures in lieu of meeting the contractual pension obligations of the State of Colorado.

    Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” (ARCs), from the Center for Retirement Research at Boston College Public Plans Database:

    2001 Colorado School – 100% ARC Paid
    2002 Colorado School – 100% ARC Paid
    2003 Colorado School – 69% ARC Paid
    2004 Colorado School – 51% ARC Paid
    2005 Colorado School – 48% ARC Paid
    2006 Colorado School – 62% ARC Paid
    2007 Colorado School – 60% ARC Paid
    2008 Colorado School – 68% ARC Paid
    2009 Colorado School – 65% ARC Paid
    2010 Colorado School – 70% ARC Paid
    2011 Colorado School – 89% ARC Paid
    2001 Colorado State – 100% ARC Paid
    2002 Colorado State – 100% ARC Paid
    2003 Colorado State – 69% ARC Paid
    2004 Colorado State – 51% ARC Paid
    2005 Colorado State – 48% ARC Paid
    2006 Colorado State – 58% ARC Paid
    2007 Colorado State – 56% ARC Paid
    2008 Colorado State – 63% ARC Paid
    2009 Colorado State – 61% ARC Paid
    2010 Colorado State – 62% ARC Paid
    2011 Colorado State – 85% ARC Paid
    2001 Colorado Municipal – 100% ARC Paid
    2002 Colorado Municipal – 100% ARC Paid
    2003 Colorado Municipal – 69% ARC Paid
    2004 Colorado Municipal – 62% ARC Paid
    2005 Colorado Municipal – 64% ARC Paid
    2006 Colorado Municipal – 85% ARC Paid
    2007 Colorado Municipal – 84% ARC Paid
    2008 Colorado Municipal – 98% ARC Paid
    2009 Colorado Municipal – 96% ARC Paid
    2010 Colorado Municipal – 101% ARC Paid
    2011 Colorado Municipal – 139% ARC Paid

    (According to the 2011 PERA CAFR, the dramatic increase in the percentage contributed for the Colorado PERA Local Government Division is a “result of the changes contained in SB10-001,” [2011 PERA CAFR Financial Section, page 82.] Apparently, when the State of Colorado breaks its public pension contracts it really facilitates the payment of the full ARC in some PERA divisions.)

    Many state legislatures have kept up with their contractual public pension obligations, and accordingly, their public pension systems have been much less impacted by the 2008-09 market volatility:

    “An April 2010 issue brief authored by the Center for Retirement Research at Boston College found that for the public pension community as a group, receiving the full ARC would require additional pension contributions of two percent of payroll, an amount that varies by plan.”

    Link:

    http://www.publicfundsurvey.org/www/publicfundsurvey/SummaryofFindingsFY10public.pdf

    But, Colorado legislators are indifferent to Colorado’s contractual pension obligations:

    “July 14, 2009 – However, Rep. Frank McNulty (R-Highlands Ranch) said he did not want to ask for higher contributions from governments, which are supported by taxpayers.

    ‘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

    (In 2009, Rep. McNulty stated that those who legally owe the Colorado PERA pension debt, Colorado PERA-affiliated employers, should not “be part of the solution.” Indeed, the bill adopted by the Legislature to break Colorado PERA retiree contracts, SB10-001, asked that those who legally owe the debt contribute a mere “ten percent” of the “fix” proposed in the bill.)

    Back to the SEC Cease and Desist Order:

    “This underfunding also compromised the creditworthiness of the State and increased the State’s financing costs.”

    “Concern about the State’s pension financing was a significant factor prompting downgrades of the State’s credit rating from 2010 to 2012.”

    (My comment: Recently, the credit rating firm Standard and Poors (S&P) downgraded the State of Illinois due to pension underfunding:

    “Standard & Poor’s rating service said Friday that the rating on the state’s general obligation bonds was downgraded to A- from A.” “The agency says the outlook is negative, an indication it could take the unusual step of further downgrading the state if conditions don’t improve.”

    Link to Breitbart.com:

    http://www.breitbart.com/Big-Government/2013/01/26/S-P-lowers-Illinois-credit-rating–blames-pensions

    S&P warned the Illinois Legislature about the adoption of unconstitutional pension reform:

    “Today, Standard & Poor’s warned lawmakers that unconstitutional pension cuts would invite ‘legal challenges’ and cause ‘several years’ of budget uncertainty.

    Link:

    http://www.weareoneillinois.org/news/coalition-comments-on-sp-downgrade-points-to-summit-as-critical-step-forward

    Colorado has adopted the type of unconstitutional public pension reform (SB10-001) that S&P warns against – breaching public pension contracts – yet S&P has actually upgraded Colorado’s credit rating from AA- to AA. That is, while the State of Colorado suffers through its recently claimed “actuarial emergency,” it has somehow managed to achieve an improved credit rating. Let’s add this situation to our list of life’s great mysteries.

    Colorado’s S&P rating in 2012: AA
    Colorado’s S&P rating in 2009 and 2010 at time of contract breach: AA
    Colorado’s S&P rating during 2002 to 2006: AA-

    Link:

    http://www.pewstates.org/projects/stateline/headlines/infographic-sp-state-credit-ratings-20012012-85899404785)

    Back to the SEC Cease and Desist Order:

    “The State’s current funding deficit was created in significant part by the State’s historical failure to fund its pension systems in a manner to avoid the growth of the unfunded liability.”

    “Rather than controlling the State’s growing pension burden, the Statutory Funding Plan’s contribution schedule increased the unfunded liability, underfunded the State’s pension obligations, and deferred pension funding. This resulting underfunding of the pension systems [“Structural Underfunding”] enabled the State to shift the burden associated with its pension costs to the future and, as a result, created significant financial stress and risks for the State.”

    “For the majority of the years under the Statutory Funding Plan, the State’s annual required contributions were insufficient to prevent the growth of its unfunded liability.”

    “The State’s pension contributions were calculated in accordance with State law, not in accordance with the ARC, and therefore the Statutory Funding Plan deferred funding of the State’s pension obligations and compounded its pension burden.”

    “By failing to amortize the UAAL completely, the State was able to lower its contributions. However, by assuring that some portion of the UAAL would remain outstanding, it also increased the economic cost of the pensions and delayed the cash outlays necessary to fulfill its pension obligations.”

    “The State’s insufficient contributions under the Statutory Funding Plan were the primary driver of this increase, outweighing other causal factors, such as market performance and changes in benefits.”

    From the Silver and Gold Record:

    “PERA Executive Director Meredith Williams told the committee that PERA is ‘rock solid, even in the face of volatility and financial insecurity.’ At least one committee member saw no reason to adopt the more drastic changes. Sen. Norma Anderson (R-Lakewood), who said she has been following PERA for many years, told S&GR after the hearing, ‘The plan is solid, one of the best in the nation. Why change it?’”

    (My comment: Note that former Senator Norma Anderson testified in favor of SB 10-001, the bill that breached Colorado PERA retiree pension contracts.)

    https://www.cu.edu/sg/messages/551.html

    Back to the SEC Cease and Desist Order:

    “The State did not disclose in its official statements its failure to contribute to the full amount of the ARC and the consequences of not funding the full amount of the ARC.”

    “ . . . the CAFR disclosures did not describe the risks and implications of the Statutory Funding Plan and deviations from that plan.”

    “In its official statements, the State cited a number of factors that, in the past, contributed to the increase in unfunded pension liability, such as statutory benefit enhancements and market performance, but did not disclose that the State’s insufficient contributions were the primary driver of the increase.”

    (My comment: Have Colorado’s bond official statements and Colorado PERA financial documents adequately disclosed Colorado’s underfunding of the PERA pension? Colorado PERA’s CAFRs do set forth the failure of the Colorado Legislature to pay annual ARCs during the last decade.)

    SEC Cease and Desist Order:

    “On June 1, 2005, the State legislatively enacted Pension Holidays, lowering the contribution in 2006 and 2007 by 56 and 45 percent, respectively.”

    “Reasonable investors would have viewed such information as significantly altering the total mix of information available regarding the State’s financial condition and the State’s future financial prospects. Such information allows investors to weigh and price the risk associated with the State’s debt obligations.”

    “GOMB’s procedures were inadequate for ensuring that material information concerning State Pension Funds or the State’s financing of State Pension Funds was disclosed and accurate in bond offering documents.”

    “The result was a process in which no one person fully accepted responsibility for identifying and analyzing potential pension disclosures.”

    “In late 2009, the State made a series of personnel changes in the GOMB, including in its most senior positions. These new officers worked to formalize the disclosure and underwriting process.”

    (My comment: I want to pause here and caution Colorado PERA active and retired members against prematurely laying blame for the SB10-001 taking of fully-vested PERA COLA benefits at the doorstep of Colorado PERA Executive Director Greg Smith. It would be wrong to blame him for SB10-001 and find out later that he may very well have attempted to dissuade the Colorado PERA Board of Trustees from promoting the breach of PERA retiree contracts.

    Here’s why I think we should be cautious in this respect: Greg Smith has provided written testimony to the Colorado Legislature’s Joint Budget Committee that the PERA COLA is a contractual obligation. He has described his own legal research in the press finding that “actuarial emergencies” occur only when a public pension system is broke, and cannot pay current benefits. He has also pointed out that the Legislature has failed to meet the required ARC payments. We don’t know what Greg Smith’s initial reaction was to the proposal to seize PERA retiree COLA benefits, so, at this point, I don’t think we can fairly criticize him.

    But, some have criticized Greg Smith. A member of the Colorado General Assembly asked why Colorado PERA’s Greg Smith and Meredith Williams remain employees of the PERA pension system:

    “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.”

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

    Colorado Senate President John Morse (a co-sponsor of the COLA-taking bill, SB10-001) is not among those who criticize Colorado PERA Executive Director Greg Smith:

    From the January 16, 2013 Colorado Senate Journal, the Colorado Senate honors Greg Smith for his appointment to the position of Colorado PERA Executive Director:

    “TRIBUTES: Honoring: Greg Smith, for his recent appointment with PERA — By President John P. Morse.”

    Link:

    http://www.leg.state.co.us/CLICS/CLICS2013A/csljournals.nsf/(jousen)/6F8152ABB6CFAA3D87257AF50052F652/$FILE/jour_008.pdf

    A few more excerpts from the SEC Cease and Desist Order:

    “Issuers of municipal securities are responsible for the accuracy of their disclosure documents.”

    “The Commission has repeatedly emphasized that disclosure in municipal debt offerings may be rendered materially misleading due to the omission of other material facts.”

    “The antifraud provisions of Section 17(a) of the Securities Act prohibit fraudulent or deceptive practices in the offer or sale of securities by the issuers of municipal securities.”

    “A fact is material if there is a substantial likelihood that a reasonable investor would have viewed the information as ‘having significantly altered the ‘total mix’ of information available.’”

    “As a result of the negligent conduct described above, the State violated Sections 17(a)(2) and 17(a)(3) of the Securities Act.”

    “ . . . the State misled bond investors by omitting to disclose information about the adequacy of its statutory plan to fund its pension obligations . . .”

    “Accordingly, it is hereby ORDERED that, pursuant to Section 8A of the Securities Act, the State of Illinois shall cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act.”

    “By the Commission. Elizabeth M. Murphy Secretary”

    Link to the complete SEC Cease and Desist Order:

    http://www.sec.gov/litigation/admin/2013/33-9389.pdf

    Colorado PERA active and retired members, support the rule of law in Colorado. Contribute at saveperacola.com, and “Friend” Save Pera Cola on Facebook!

  47. Al Moncrief says:

    KENTUCKY GOVERNOR BESHEAR: REFORM STATE TAX CODE TO MEET PUBLIC PENSION CONTRACTUAL OBLIGATIONS.

    In 2010, the Colorado General Assembly looked first to break Colorado PERA retiree contracts.

    A June 26, 2005, Rocky Mountain News editorial encouraged the Colorado General Assembly to seek new revenue to meet its contractual obligations, but this advice was ignored:

    “The New Mexico legislature, for example, passed a measure requiring increases in employer and employee contributions. In Oklahoma, voters earmarked a portion of the state’s lottery proceeds to pay down $6 billion in pension liabilities. Other states, including New Jersey, Illinois, Kansas and Maine, have sold bonds to pay off the unfunded pension liabilities. Not that any of these actions are necessarily the right solution for PERA – but clearly something must be done about the looming shortfall.”

    A November 15, 2009 Denver Post editorial encouraged the Colorado General Assembly to send an interrogatory to the Colorado Supreme Court seeking guidance on the constitutionality of proposed Colorado PERA pension reforms. The Legislature also ignored this advice:

    “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.”

    “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?”

    (My comment: Here the Denver Post editorial board identifies a pension reform that is “less drastic” than the breach of fully-vested Colorado PERA pension contracts.)

    “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.”

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

    In 2009, Colorado PERA campaigned for breach of pension contracts on a statewide “Listening Tour.” Nine members of the Colorado Legislature attended the Denver meeting of this PERA “Listening Tour.” But, what was the point of conducting a “Listening Tour,” when the proponents of breaking Colorado PERA retiree contracts had no intention of “hearing”?

    A few days ago, the Kentucky Center for Economic Policy released an analysis of their state’s chronic underfunding of state public pension obligations.

    http://www.kypolicy.us/content/not-paying-pension-bills-adds

    A few excerpts:

    “Not Paying Pension Bills Adds Up:”

    “A major contributor to Kentucky’s pension funding problem is the legislature’s failure to make the full required contribution to the retirement system in recent years.”

    (My comment: As we know, the Colorado General Assembly has failed to make approximately $5 billion in annual required contributions identified by its own actuaries in the last decade. In 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed 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/about/listeningtour.htm)

    Kentucky Center:

    “Shortfalls in payments started as early as 1993, but began in earnest in 2004. As the first figure below shows, the state has shortchanged the pension system by at least $100 million a year since 2007 (total $1.8 billion.)”

    “Since the contributions were not in the system to earn investment returns, the full impact of underfunding is even worse. Taking those lost returns into account brings the total shortfall for the pension fund alone up to an estimated $2.4 billion by the end of 2014.”

    (My question: What is extent of the General Assembly’s underfunding of its Colorado PERA pension contractual obligations when corresponding lost investment returns are also taken into consideration?)

    Kentucky Center:

    “How big a number is $2.4 billion? At the end of 2012, the Kentucky Employees Retirement System pension fund had $3.8 billion in assets. So without the shortfalls the system would have around 63 percent more assets.”

    (My question: What percentage of Colorado PERA’s trust fund assets have been lost due to the Colorado General Assembly’s combined PERA underfunding and lost investment returns in the last decade?)

    Kentucky Center:

    “Some of the benefit changes were made to encourage experienced employees to retire in order to save money in the already-lean budget—but the changes just shifted new costs over to the retirement system.”

    (My comment: The Kentucky Legislature has followed the Colorado General Assembly’s PERA playbook:

    “PERA bill expected to be retirement incentive,” by Marianne Goodland, April 6, 2000.

    “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.”

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

    “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

    December 31, 2000 Colorado PERA CAFR:

    “The Governor’s office initiated HB 00-1458 to make early retirement more feasible and to achieve cost reductions, and the PERA Board of Trustees supported the bill. PERA’s Board supported HB 1458 after it received assurance that this legislation would not affect the actuarial soundness of the PERA plan.”

    From the PERA document “2000 PERA legislation,” updated May 4, 2000:

    “The bill was initiated by the Owen’s administration and includes some features to make it more attractive for some long-term employees to leave state service and retire.”

    Kentucky Center:

    “Poor investment returns resulting from two recessions in the 2000s also worsened the problem, but Kentucky’s pension system wouldn’t be a subject of such scrutiny if it were for investment results alone. Kentucky’s losses were on par with other states, but most of those states will return to adequate funding levels in the next few years because they did not underfund promised benefits.”

    Link:

    http://www.kypolicy.us/content/not-paying-pension-bills-adds

    (My comment: Public pension systems have significantly recovered in states that have kept up with their contractual obligations. The fact that the Colorado General Assembly is now trying to push a debt that is the obligation of all Coloradans onto the backs of PERA pensioners is beyond the pale.)

    The members of the Colorado PERA Board of Trustees are fiduciaries. It is their fiduciary responsibility to ensure that the Colorado PERA trust funds are sound. Colorado PERA officials have met with committees of the Colorado Legislature at least three times per year for decades. Why have these PERA officials not been in the faces of legislators during those meetings? Why have they not emphatically pointed out to the legislators that contractual public pension obligations take precedence over discretionary expenditures?

    Why has the Colorado PERA Board of Trustees never adopted a resolution calling for the Colorado General Assembly to pay its public pension bills? Is it just easier to break contracts? At a minimum, public pension fiduciaries should ask governmental plan sponsors to meet their contractual obligations. Kentucky’s public pension board has adopted such a resolution calling for full-funding of the state’s pension ARC:

    “NOW THEREFORE, The Board of Trustees of the Kentucky Retirement Systems, by a vote of its members taken in public session at its regular quarterly meeting held February 21,
    2013, hereby resolves that the Commonwealth of Kentucky should begin funding the KERS and SPRS plans at 100% of the actuarially recommended contribution rate (ARC) in the next biennial budget and thereafter.

    Approved this 21st day of February 2013:

    Link:

    https://kyret.ky.gov/uploads/committees/02_21_2013_Trustee_Resolution.pdf

    Kentucky Governor Steve Beshear’s 2013 State of the State:

    “I agree that we need to reduce our unfunded (pension) liability – and the longer we put this off, the bigger the problem will be. The question – again – is: ‘Where will the money come from?’”

    “Well, the answer is obvious: We must modernize our out-dated tax code. Kentucky has commissioned 12 studies of its tax system since 1982. I created another one last year to update the work. And every study has reached the same conclusion: Kentucky’s tax code works against us, not for us. We need a tax structure that’s fair to all of our citizens and easy to understand; that helps recruit business, not drive it away; and that – because it’s aligned with a 21st century economy – is able to bring in the revenue we need to fund critical services.”

    http://www.governing.com/news/state/kentucky-beshear-2013-state-of-the-commonwealth.html

    Public pension reforms that are “less drastic” than Colorado’s breach of fully-vested pension contracts have been proposed at the Kentucky Legislature:

    “Stumbo, D-Prestonsburg, said Thursday that options under consideration include revenue from Internet keno, instant racing and lottery sales taxes but not casino gambling, which he predicted would not have a chance of passing the Senate this year.”

    http://www.courier-journal.com/article/20130221/NEWS0101/302210088/Senate-Majority-Leader-Damon-Thayer-argues-pension-reform-regular-session?nclick_check=1

    Colorado PERA active members and retirees, many in Colorado’s legal, media and political communities have conspired to break your pension contracts. Don’t let it happen, contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

  48. Al Moncrief says:

    JEAN DUBOFSKY: ONE OF A “DWINDLING BREED OF UNABASHED LIBERALS.”

    The Denver Post has referred to Jean Dubofsky as one of a “dwindling breed of unabashed liberals.”

    https://bulk.resource.org/gpo.gov/hearings/108s/90303pt2.txt

    I have to admit, I have a soft spot for these dwindling “unabashed liberals.”

    But, former Colorado Supreme Court Justice Jean Dubofsky is also an evaluator of Colorado judges, an appellate strategist, an education advocate (indeed the founder of a think tank that provides public education advocacy), a campaign contributor, a “well-known liberal figure,” a “current full-time activist,” a “crafty legal mind” and a “powerhouse” lawyer. This woman who considers herself “shy,” has drawn the attention of millions.

    We recently learned that Boulder’s Jean Dubofsky is the author of a legal opinion that the Colorado PERA Board of Trustees uses to rationalize the board’s attempted breach of Colorado PERA pension contracts. Over the course of her long legal career, Jean Dubofsky has fought for the rights of women and minorities. Why is Jean Dubofsky wrapping up her legal career with an attempt to take earned, accrued, contracted benefits from pensioners? I am utterly bewildered. Did Colorado’s public sector unions ask her to write this legal opinion? I think she is on the wrong side of the PERA contract breach debate.

    In 2009, Colorado PERA officials requested a legal opinion from Jean Dubofsky. The legal opinion she provided to Colorado PERA attempts a legal justification for the breach of Colorado PERA pension COLA statutory contracts. Colorado PERA Executive Director Greg Smith, before the Legislature’s Joint Budget Committee on December 17, 2009:

    “We have obtained outside counsel’s opinion on this issue.”

    Jean Dubofsky’s resume:

    “ . . . 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 . . .”

    Jean Dubofsky in a Colorado PUC deposition:

    “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.”

    Did the Colorado PERA Board order this “outside” legal opinion from Jean Dubofsky because the board disagreed with the legal opinion of PERA’s in-house counsel on this question of the constitutionality of clawing back PERA COLA benefits? Colorado PERA’s Executive Director, Greg Smith, has informed the Legislature’s Joint Budget Committee, in writing, that PERA COLA benefits are contractual, and he has maintained (in the press, and [possibly] before the JBC) that “actuarial emergencies” occur only when a pension plan is unable to pay current benefits. If you find yourself blocked by the opinions of your “in-house” attorney, perhaps it’s best to consult an “outside” attorney. Is this how it went down?

    On February 21, 2004, Rocky Mountain News journalist David Milstead reported Greg Smith’s description of his legal research as follows:

    “PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that’s not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.”

    Greg Smith elaborates:

    “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.”

    Link:

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

    Dubofsky’s law practice in 2008:

    “Currently, Dubofsky is a sole practitioner in Boulder, representing litigants in tort, workers’ compensation, commercial, criminal, civil rights and family law cases.”

    http://www.bizjournals.com/denver/stories/2008/05/12/smallb5.html
    Dubofsky is the author of hundreds of legal opinions:

    “ . . . successfully challenging the constitutionality of the workers’ compensation laws that reduced benefits.”

    “While on the bench she wrote several hundred opinions for the court, including a landmark water law opinion that protected the public interest.”

    “She continues a primarily appellate law practice to protect the civil liberties of Coloradans.”

    http://www.cogreatwomen.org/dubofsky.htm

    Dubofsky on appellate strategy:

    “Dubofsky concentrated ‘on the composition of the court and how to pull down as many votes as possible instead of working on hitting a home run,’ says Rick Hills, then an associate in Dubofsky’s practice in Boulder, Colo., and now an assistant professor at the University of Michigan Law School.”

    http://alumni.stanford.edu/get/page/magazine/article/?article_id=43530

    Dubofsky: Make your legal argument “appealing” to a court, “in the sense that they’re not going out on a limb in order to rule your way”:

    “I’ve also always liked cases involving governmental issues—public interest kinds of cases—and they almost always have some public policy involved that’s usually timely; and if you’re creative enough, you’re going to figure out some interesting ways to develop the law.”

    “I’ve always found that contract interpretation and statutory interpretation cases are the hardest to predict, because when you’re talking about whether something can be clearly interpreted, it usually means there’s more than one way of interpreting it. Those are pretty unpredictable.”

    “. . . because I’m a sole practitioner, I’ve been able to sit down and figure out, ‘OK, if I were judging this case, what would I want to hear and what would it take for the court to rule in my favor?’”

    “This may not be true of the U.S. Supreme Court right now, but certainly when I was on the Colorado Supreme Court people looked for ways to accommodate. An opinion written by one person may very well include ideas from others. So the cases resolved in a fashion that, if you thought about it, usually made sense.”

    “In practicing appellate law, my theory has been to figure out what is the more likely way a court is going to rule in your favor. There are lots of rules of the road. Like: You usually don’t raise sufficiency of evidence on appeal; you don’t say that the trial court was wrong in terms of interpreting what witnesses said or their credibility; and you don’t usually try to go against a trial court’s finding of fact. That just doesn’t work. But you do have to find some legal issues that are significant enough for the court; and you’ve got [to have] a good theory going for you. So you go back and look at some of the treatises, and figure out where the rule you’re talking about came from and why. Then you can start putting together an argument that you can make appealing to a court.”

    “I also oversaw a lot of the legal work that was done (at the Colorado Attorney General’s Office), kept track of the cases that were controversial; and if the governor or secretary of state had a legal question, I was the person from the attorney general’s office who would go over and talk with them and work through it.”

    “Q: You previously mentioned to me you would be retiring soon. Is this well-known in Colorado legal circles?

    A: I’ve never done any kind of a formal announcement. A lot of people who see me know that I’m not taking on new cases—that I am either consulting or serving as an expert. I’ve done some reports for state agencies and things of that nature.”

    http://www.superlawyers.com/colorado/article/Lone-Ranger/dce615f4-d7b2-4f82-853b-da8463e03a69.html

    “You can make it appealing in the sense that they’re not going out on a limb in order to rule your way.”

    http://blog.superlawyers.com/2012/04/judging-her-judicial-career-what-jean-dubofsky-learned-on-the-colorado-supreme-court.shtml

    Dubofsky’s political activity:

    “Boulder County District Attorney Stan Garnett officially announced his candidacy for the Democratic nomination for Colorado Attorney General Thursday and will challenge Suthers, the Republican incumbent.”

    “Garnett’s announcement came with two endorsements: Boulder County Sheriff Joe Pelle and former Colorado Supreme Court Justice Jean Dubofsky.”

    http://www.coloradostatesman.com/content/991745-dems-excited-about-garnetts-ag-candidacy

    “And Garnett has his ducks in a row, with endorsements from incumbent prosecutor Mary Lacy and former state Supreme Court justice Jean Dubofsky.”

    http://coloradoindependent.com/2330/boco-buzz-ch-ch-ch-changes-continue

    Dubofsky on Romney: “. . . can’t be trusted to stand up for working families.”

    http://coloradopols.com.lb.soapblox.net/main/50

    (My comment: Hey Jean, we PERA members are “working families,” [at least we were prior to retirement]. Stand up for us!)
    Dubofsky, public education advocate:

    “Dear Governor Hickenlooper, Attorney General Suthers, and Members of the State Board of Education: As Colorado taxpayers and public education supporters, we ask you to stop wasting our tax dollars defending an indefensible school funding system. We ask that you take into consideration those whom you represent: the children, parents, businesses and citizens of Colorado who all depend on a quality public education system.”

    “Please do not appeal the Lobato decision. Enforce it. Our children have already waited far too long for a school funding system that makes it possible for every child to succeed.”

    “Jean Dubofsky,” (and hundreds of other Great education Colorado supporters.)

    http://www.greateducation.org/wp-content/uploads/2011/12/dontappealletter010812.pdf

    Dubofsky’s past role in evaluating the performance of Colorado judges (was she involved in the evaluation of any sitting Colorado judges?):

    “Jean Dubofsky is a member of the state Judicial Performance Review Commission in Colorado. She was a justice on the Colorado Supreme Court from 1979 until 1987.”

    http://ir.lawnet.fordham.edu

    “She has also served on the state’s Commission on Judicial Performance; the Colorado Music Festival Board; the Commission on the Status of Women; the Judicial Performance Commission; Supreme Court Board of Continuing Legal and Judicial Education; and the Colorado ACLU Board of Directors.”

    http://www.zoominfo.com/p/Jean-Dubofsky/27068562

    Jean Dubofsky, in her efforts to protect the integrity of Colorado courts, and defend Colorado Supreme Court justices, tangled with the group Clear the Bench Colorado:

    “The group I am a part of, Courts: No Place for Politics (www.courtsnoplaceforpolitics.org), has launched a long-term effort to educate the public about the value and integrity of Colorado’s system of judicial selection and retention.”

    http://www.denverpost.com/opinion/ci_16401231

    “ . . . Matt Arnold appeared on the Your Show television program (moderated by Adam Schrager), debating former Colorado Supreme Court justice (and current full-time activist) Jean Dubofsky, representing the “Colorado Judiciary Project” (a legal-establishment special-interest group formed by Democrat state party attorney and Mark Grueskin.”

    http://www.clearthebenchcolorado.org/tag/devils-advocate/

    Dubofsky, target of conservative criticism:

    “Next, Jean Dubofsky, a former Supreme Court justice with a crafty legal mind and a penchant for legislating from the bench, proffered a clever legal strategy.”

    “Dubofsky is no neutral observer. She’s a board member of the Colorado ACLU and two liberal think tanks that despise TABOR.”

    http://m.rockymountainnews.com/news/2009/feb/25/hillman-dems-eye-another-end-run-on-voters/

    Dubofsky harshly (unfairly?) criticized in Denver Post (comments) and in blogs. (Clear the Bench Colorado has directed criticism at her . . . I’m not going to reproduce all of their criticism here.)

    “The integrity of the courts in persistently serving the interests of her clients and friends is Justice Dubofsky’s real concern.”

    http://www.denverpost.com/opinion/ci_16401231

    “Justice Dubofsky’s concern is less with preservation of the alleged integrity of our courts, which is demonstrably open to question, and more with continued control of appointments by special interests served by an inner circle of connected attorneys, including Justice Dubofsky. These attorneys ensure that no one who threatens those special interests will ever be appointed to the bench in Colorado.”

    “Justice Dubofsky knows this, but she would rather fool you into thinking all will be well so long as she and her friends in the inner circle run the judiciary free from interference from the masses.”

    http://brennanlawjustice.blogspot.com/search?q=Dubofsky#!/2010/10/of-judicial-retentiveness-which-is.html

    “Former Colorado Supreme Court Justice Jean Dubofsky and Democratic Party lawyer (and one-time CEA lawyer) Mark Grueskin are forming a nonprofit group to educate voters about the judicial performance evaluation . . .”

    http://www.clearthebenchcolorado.org/2010/05/10/former-colorado-supreme-court-justice-and-current-full-time-activist-jean-dubofsky-democrat-party-lawyer-mark-grueskin-roll-out-the-big-bucks-to-counter-clear-the-bench-colorado/

    “Mark Grueskin, best known in education circles as a lawyer for the Colorado Education Association . . .”

    http://www.ednewscolorado.org/news/capitol-news/gaming-bill-debated-delayed

    Dubofsky’s involvement with Amendment 54:

    “Speaking to reporters after the ruling, Mark Grueskin, who represented the unions in the suit, exhibited visible relief.”

    “In arguing against the amendment (54), Grueskin was accompanied by Doug Friednash and former state Supreme Court Justice Jean Dubofsky.”

    http://coloradoindependent.com/31997/unions-breathe-sigh-of-relief-as-judge-