Colorado and PERA file final brief; request oral arguments

PERA and the State of Colorado have filed the final of four briefs that the Colorado Supreme Court requested of the plaintiffs and defendants in Justus et al v. Colorado et al. You may view it at www.SavePERACOLA.com/resources . Defendants also submitted a motion for oral arguments before the court. That motion is also available on the website. Take some time to read through the Colorado/PERA document. We’ll notify you when we know more.

About these ads

3 Responses to Colorado and PERA file final brief; request oral arguments

  1. Al Moncrief says:

    Here are a few excerpts from the PERA Reply Brief, and my reactions:

    PERA:

    “First, Plaintiffs’ claimed contractual right never existed.”

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

    Link:

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

    PERA:

    “The SB-1 adjustments, including to future COLAs, were reasonable and necessary based on PERA’s undisputed financial condition at that time.”

    (Not exactly . . . the COLA provisions of SB1 were an attempt by the state and PERA-affiliated local governments to escape their contracted debts, in collusion with public sector unions seeking to minimize future “dues-paying” union member contributions. As the bill sponsors and PERA officials stated at the time of the contract breach, “ninety percent” of the cost-shift in the bill is on retirees through the COLA reduction. This is not exactly the “balanced approach” PERA’s lawyers argue in the reply brief.

    The PERA lawyers write that SB1 required “shared sacrifices by state employers, current employees, and retirees.” The shifting of 90 percent of the state’s financial obligations, under SB1, onto the backs of elderly retirees renders the term “shared sacrifice” a misnomer.

    In regard to PERA’s financial condition at the time of the contract breach [69 percent funding ratio, AFR,] this funding ratio was, as we have seen, well above PERA funding ratios in the 1950s, a period during which no “crisis” was perceived or used as a manufactured rationale for breach of contract. The 69 percent PERA AFR at the time of the contract breach was hardly the “unprecedented emergency” PERA’s lawyers refer to in the brief. My belief is that the COLA-taking in SB1 was unconstitutional, even under DeWitt’s ostensibly lower standards for contract breach.)

    Note that PERA continues to cite “market-based” funding ratios in the brief, instead of the AFR funding ratio used by PERA historically . . . an effort to mislead.

    As we have seen (and as noted by PERA’s Executive Director) the Colorado Legislature has been one of the worst legislatures in the nation in regard to making the public pension actuarially required contributions for the PERA pension. Paying the ARC has simply not been a priority for lobbyists at the Capitol over the last fifteen years.

    PERA:

    “If so, the challenging party must ‘prove substantial impairment’ of that contract by ‘demonstrat[ing] that the law was not foreseeable and thus disrupts the parties’ expectations.”

    “given the many past COLA changes, statutory changes to future COLAs were foreseeable.”

    (I ask, why should PERA retirees who read PERA’s materials stating that the COLA was “guaranteed,” not have a reasonable expectation that their contracts will be honored? Since PERA attorneys have testified to the Legislature that the right to PERA COLA benefits is a contractual obligation, and accordingly these attorneys have had a reasonable expectation that PERA’s COLA obligations will be met, why should PERA retirees not also have this reasonable expectation? The average PERA retiree does not possess the legal sophistication of a PERA lawyer. Further, taking up to one-third of the value of a contract is without question a “substantial” taking, and thus “unreasonable.” Would these PERA attorneys argue in court that insurance companies in the United States should be free to abandon their contractual COLA obligations on annuity contracts they have sold? Should all insurance companies be allowed to escape their contractual obligations in order to spend money elsewhere, on non-contractual obligations? This is what the state is attempting to do.)

    In regard to PERA’s citation of the recent New Mexico decision in its reply brief, I provide below an excerpt from a legal guide, and a link to the guide. It is apparent that public pension legal doctrine in the two states, Colorado and New Mexico, is not comparable. Note that Colorado has traditionally embraced “the California Rule” relating to public pension rights. Why does PERA bother mentioning the New Mexico case? Why does PERA fail to mention the Arizona case where a COLA-taking was recently struck down by the courts?

    From the “legal guide”:

    “In 1998, New Mexicans voted to approve a state constitutional amendment that provides a property interest protection for public employee pensions once employees meet minimum service requirements. The amendment, however, allows for modifications to retirement plans that enhance or preserve the plan’s actuarial soundness—a significant loophole in the protection otherwise granted.”

    “Property protection: In a minority of states, state courts have held that public employee pensions create not a contract, but a property right prior to retirement. A property right is a right that is protected by procedural due process requirements (generally meaning that participants have a right to notice and comment on proposed changes) and also protected against arbitrary and capricious government action. This offers relatively little protection to participants prior to retirement.”

    http://www.ihsdo.org/modules/groups/homepagefiles/cms/2343937/File/PensionLegalGuide_RELEASE.pdf

    The PERA COLA in dispute is, as PERA and its actuaries have noted many times, an “automatic” COLA, as opposed to an “ad hoc” COLA. Why is it that the words, “automatic” and “ad hoc” do not appear in PERA’s reply brief?

    The PERA brief mentions “legislative intent,” but fails to note that PERA’s own representative in testimony to the Legislature described the original “automatic” PERA COLA as a PERA “liability,” making “permanent changes,” allowing retirees to “know how their future increases are going to be determined.” Why does PERA ignore this clear statement of original legislative intent?

    PERA’s lawyers refer to “retiree organizations unanimously supporting the ultimate reforms.” Remember that, significantly, one retiree organization sued the state for breach of contract over these “reforms.”

    PERA:

    “Rather, as part of shoring up PERA, SB 10-1 . . . kept more money in the trust so the trust corpus could grow.”

    (If I could manage to abandon my contractual obligations to my mortgage company, and redirect this money to my 401K, my 401K corpus would also “grow.” These are the type of keen insights available to persons possessing a law degree . . . abandonment of one’s contractual obligations can alleviate financial pressure.)

    I ask, why is PERA, the self-described “transparent” organization, opposed to discovery? Why not get all of the facts out? Would this not bolster PERA’s “transparency”? It doesn’t seem to me that PERA has had all relevant legislative hearings transcribed. Hundreds of pages of relevant information has been posted on just the website saveperacola.com alone. I support complete, exhaustive discovery, and cleaning up this embarrassing PERA-initiated Colorado legal fiasco.

    FYI, here is an earlier summary of material that I find germane to the case:

    http://coloradopols.com/diary/44622/the-top-ten-damning-evidence-in-the-colorado-pera-retiree-lawsuit-justus-v-state

    • deborahapy says:

      I am almost speechless when I read PERA arguing that we had no reasonable expectation of a 3.5% annual increase, when year after year and publication after publication and newsletter after newsletter and presentation after presentation, we were assured to expect that. Regardless of their “legal sophistication,” this is an unethical argument…sleazy and deceptive. How do people associate themselves with that?

      Should we simply throw out every PERA update that we are now receiving in the mail, knowing, should they win, everything they say is equally untrustworthy?

  2. Terrie says:

    Recently I found the paper that PERA gave me when I was doing my planning for retirement and it stated the 3.5 % raise — I still have this paper if it would be helpful to the case!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 375 other followers

%d bloggers like this: