PERA compromise wins panel support

The proposed Public Employees’ Retirement Association rescue plan passed the Senate Finance Committee 5-2 Tuesday after members approved key changes of interest to school districts, to teachers and classified employees and to retirees.

The committee vote was the first formal test of Senate Bill 10-001, although the bill has gone through plenty of informal tests during intensive negotiations between lawmakers, PERA officials and a coalition of employee and retiree groups.

Read the full article from Indenvertimes.com here.

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14 Responses to PERA compromise wins panel support

  1. David Metsch says:

    As a retiree who worked for The State Of Colorado I was involved in signing many contracts. If a vendor could not meet that contract there were negative consequences (performance bonds, removeal from bidder’s list, etc.). The only condition that had merit was an Act Of Nature (or Act Of God, if you will). I do not see that PERA can change my COLA under contract law. Help me to understand this or don’t change my COLA.

  2. The question to ask:
    Skip paying COLA now, and let Colorado State legislators of the future worry about the Colorado elderly, taxing State funds for assistance?

    Yes promises were broken, none of us retirees(except those of higher ed) can decide if we can have our old job back or to redetermine if I wish to retire or not. I too relied on A.G. Ken Salazar’s opinion, with a contract, planning for the rest of my life.

    But just remember who they are, how they voted, and what they said. And when the time comes when the legislature/Governor/PERA staff ask for pay increases–well I will know the answer. If I haven’t left for cheaper pastures.

    • Darlene says:

      I don’t think the legislature/Governor ask for pay increases-they just vote themselves a raise-just like they do with all their other little perks. The public really doesn’t know how underhanded they are.

  3. Jim Lipscomb says:

    All of those are reasonable options, but only 2 provide the short-term relief that PERA needs. There is another alternative. Immediately increase the retirement age to 66 (like Social Security) for PERA employees who are not yet eligible for retirement. This would slow retirements to a dribble for 8 to 10 years and would be much better public policy than letting inflation destroy the value of retirees’ pensions by the time they are 80 or 90. Current employees wouldn’t like it, but it would be better to work a little longer and get a pension that retains its value. The best alternative is some combination of all the constitutional options, but it will be important to show in the lawsuit that breaking the contract is not the only option.

  4. Jill says:

    I’m curious, what do you belive is the alternative to this legislation? Do you think that the dollars lost can be recovered by current and future investments?

    It’s obvious to me that there is a problem, what is your solution?

    • saveperacola says:

      There are several that have been suggested and ignored. Target an 80% funding ratio rather than 100%. PERA has survived with that or less for decades. 80% is the pension industry standard. Change to a 40 year amortization period rather than 30 years. Have the state take responsibility for the over $6 billion in underfunding of its contributions. Include the 2009 investment gains into the calculation rather than just end of 2008 numbers. Have the state fully fund the early retirement incentives it handed out to state employees in the late 1990s. Sell Pension Certificates of Participation for at least part of the unfunded liabilities. Share the actuarial report and make the actuarial software calculator available so others can explore scenarios. Appoint an interim legislative task force to adequately explore the PERA finances and alternatives to their plan, as they did for Pinnacol insurance.

    • Jim Lipscomb says:

      A comprehensive response might go something like this: 1. Recognize that retirees who were promisd a 3.5% annual increase are entitled to it, but because PERA needs funds in the short term, defer those claims for 3 years. Beginning March 1, 2013 the 3.5% rate would be restored. The difference between what would have been received at the 3.5% rate and what was actually received over these 3 years plus interest at PERA’s assumed rate of 8% would accrue until inflation exceeded 3.5%. At this point, the accumulated funds would be used to pay an annual increase of 3.5% or actual inflation (whichever is more) until the funds were exhausted, at which point the annual increase would revert to 3.5%. 2. Immediately increase the retirement age for those not yet eligible for retirement to 66 (like Social Security), or any age with 40 years of service. This would increase purchase of sevice credit (at actual actuarial cost) and decrease retirements for up to 10 years. Both effects would help with PERA’s short-term funding need. 3. Beginning in 2013, require that PERA employers contribute 100% of the actuarially required contribution (ARC). Substantially underpayment of the ARC by public employers for the last 10 years is the reason that PERA is in worse shape than most public retirement programs in the US.

  5. Charles Roberts says:

    I’ve reviewed Ken Salazar’s Attorney General Opinion in full and believe it’s correct. However, some may be mis-interpreting it’s meaning. I believe that Ken said that those that were FULLY vested (i.e. retired during) the effective dates of the 3.5% COLA (2001? to 2006?)are indeed protected under a completed contract with the State of Colorado. Those who retired at date outside this period did so under a different completed contract set of laws (no 3.5% COLA) and may not enjoy that protection.

  6. Jeannie B says:

    How can something like this possibly pass? I thought I had a contract for a 3.5% cost of living raise when I retired! This can’t be constitutional. How can someone decide that are contyracts are no longer valid?

  7. Lynne says:

    Email Gov. Ritter – I already have asking for at least an interrogatory to the Colorado Supreme Court before he signs this.

  8. Yvonne says:

    Every single State of Colorado employee who is on the PERA retirement plan should stand up and speak out against any and all changes to the COLA. Take the time to read the bill….you will work longer, pay more into PERA, receive a lower pension AND get very little post-retirement increases. Speak out!

  9. Lynne Popkowski says:

    Is there a Facebook page set up for this issue? I think that would be pretty powerful.

  10. Durango L says:

    INFORMING THE PERA DEBATE – “BECAUSE THAT’S WHERE THE MONEY IS.”

    Well, the SB 1 freight train pulled by the dozen or so PERA lobbyists is still running down the track toward its eventual legal wreck.

    I listened to the debate in the House Finance Committee on Senate Bill 1.

    Greg Smith testified that PERA’s return on its trust funds for 2009 “will be well north of 15 percent.” So, how is it then that they still claim that there is an actuarial necessity? At this point PERA is clearly back into its historical funded range, which has averaged 77 percent for the last 40 years. It was around 70 percent even before last year’s 15 percent gain, which I expect to be quite a bit higher when the final number comes out in June. In 2009 the S&P was up 22 percent.

    Greg Smith again testified that the pension is a protected contract. Everyone in the world agrees that this is the case, PERA officials, opponents of SB 1, and proponents of SB 1. However, Smith again argued that he believes the COLA can be changed because it is not part of the contract. He refuses to see that the COLA (annual benefit increase) is set forth in Colorado law with the same force, status and weight as is the base benefit. Only tortured legal reasoning, and wishful thinking, has lead him to his conclusion.

    Colorado’s COLA (and those of 36 other states) are “automatic COLAs” as opposed to “ad hoc COLAs” (which exist in about a dozen states and can be periodically altered.) Colorado’s COLA of 3.5 percent is guaranteed in statute in an identical fashion to the base retirement benefit itself. PERA has put it in writing over the years that the COLA “is guaranteed”. These documents will go to the lawyers.

    Greg Smith does not seem to understand that actuarial necessity (even if it existed) does not permit the alteration of retiree benefits. With the 15 percent + returns in 2009 there is no doubt now that actuarial necessity does not exist. Why has PERA not updated its charts to reflect this new information? Do they expect the Legislature to act in ignorance? Apparently, that is their hope.

    Again, PERA refused to release its claimed legal opinion permitting it to break the retiree contract. The committee did not request the legal opinion, nor did they state a desire to have an interrogatory from the Supreme Court prior to moving the bill forward. It’s “damn the torpedoes” out here in the West!

    The committee did not conduct due diligence. They acted without legal advice and without an independent or current assessment of the status of the PERA trust funds. PERA will not reveal the current funded level of the trust funds.

    Greg Smith said that they cannot “fix” PERA without taking the retiree’s COLA. Well then, how is it that every other state in the nation is able to address their pension problem without breaking contracts and seizing retiree COLAs? Why are we so special here in Colorado?

    Greg Smith should accept that states cannot legislate away a debt for work that was completed in the past. He should accept that states cannot avoid their contractual obligations simply because they prefer to spend resources on alternative public services or obligations.

    One opponent of the bill even read Greg Smith’s own words back to him from a 2008 Denver Post article saying that a COLA seizure would be illegal. No reaction.

    Dr. Paulson noted that it is nonsense for the Legislature to believe that there is only one solution to improving PERA’s funded status. On numerous occasions now the Legislature has received a menu of pension reform options that are being studied and implemented by dozens of other states. These options can be viewed at this link on the Vermont Treasurer’s website:

    http://www.vermonttreasurer.gov/sites/t … 009_10.pdf

    It was revealing that the Chairman of the House Finance Committee concluded the hearing by saying that the Legislature is forced to try and illegally seize retiree COLAs, “because that’s where the money is.” Pathetic.

    Rep. Swalm noted that PERA and Colorado are the first in the nation to attempt to break retiree pension contracts. He called it “blazing new ground.”

    Rep. Gerou asked the committee why there has been no interim study committee of the PERA issue as there was with the Pinnacol insurance company. This would have been due dilligence.

    Rep. Kagan noted that high inflation in the future will tremendously burden retirees without the COLA.

    Meredith Williams again lied to the committee by telling them that the Colorado Legislature is the only one in the country addressing pension reform. He said this to a committee that just a few weeks ago had a briefing from a national pension expert on reform efforts that are occurring in at least half of the states. Incredible.

    Meredith Williams said that PERA “looked at every option” in pension reform. How do we know that? Much of the PERA Board’s discussions occurred in executive session. Did they look at PCOPs? Did they consider the myriad of reforms that are being enacted in other states? Should we just trust him? Rep. Kagan seemed to believe that these reform efforts are not occurring across the nation. It seems he has not read the NCSL summary of 2009 state pension reform legislation.

    Rep. Gerou said that it is a disservice to the state to rush a bill through when the committee knows that it will go to litigation, and said “what we are doing to the retirees is wrong.”

    Rep. Delgroso said that it is “tough for him to tell people that he is going to break their contract.”

    The money that PERA has spent on lobbyists is paying off for them. Apparently, if you spend enough money on lobbyists you can force the General Assembly to act irresponsibly, to enact an unconstitutional bill, to abandon morality in the pursuit of more money.

    • I agree 100%. Is this group still operational? It seems dormant at best. Where’s the outrage? Where do I sign onto the class action lawsuit? What about the promised injunction?
      I am waiting for someone to give me a coherent argument why Governor Ritter and every legislator who voted for this shameless bill did not violate their oath to uphold the constitutions of the United States and the State of Colorado. The argument that the 3.5% COLA is not part of the contract is blatantly specious. Since when is a set annual contractual increase not a part of a contract – no one really believes that. PERA will most likely never reach funding of 103% (now the requirement to increase the COLA from 2%) because as inflation takes off, so will state and school employee salaries and consequently the retirement checks for future retirees. With the 2% cap, after less than 20 years our benefits will be reduced by more than 25% from what they would have been had the State of Colorado fulfilled its obligation to its retirees. Add in a few years of 1970s style inflation (105.82% for the decade) and the purchasing power of our retirement checks could easily be eroded by well more than half. That was not our deal. Some PERA retirees will be eating cat food while Social Security recipients enjoy actual cost of living increases (they can buy more expensive cat food).
      In this historically unusual brief period of low inflation, the 3.5% COLA makes punks like Josh Penry jealous. I am afraid that a few years down the line even the 3.5% COLA will look pretty pathetic, and 2% will be completely and ridiculously inadequate. I’d much prefer a system with actual inflation-indexed COLAs such as the Federal pension plan and Social Security to the 3.5% COLA of our PERA contracts, but that was our contract so I would not argue with it. At least it would give us some chance to keep up with inflation. Evidently, the morons who now govern this state do not care about our contractual and constitutional rights. Another myth that should be dispelled is that any shortfall of PERA funding must be made up entirely from within PERA and their investments. PERA is a tool created by the state to effectuate a state retirement plan wholly created by the state legislature pursuant to laws enacted by the state legislature. I do not see how the state legislature can turn its back on their obligation to the people that made this state the great place is became before this current economic turmoil hit the fan. We were stabbed in the back and the attack party was led by Meredith Williams in order to save his own neck. He flat out lied to us. Now he acts as if retirees who complain are greedy whiners who refuse to accept their … what’s he call it – the “principle of shared responsibility” or some made-up bullshit like that. That is not a principle at all. It’s a cop out. A true principle would be to honor their obligation to the retirees and the Constitutions of the United States and the State of Colorado. The sad thing is that the legislature and the governor followed along like sheep as if they knew no better. “That is where the money was” – that is indeed the bottom line.
      One more thing – anyone reading this who is not a PERA retiree with go along with the greedy whiners argument. “Why should I support your retirement,” they will say. If they stopped to think about it, they’d realize there is a big difference between a current state worker and a retiree. (Don’t get me wrong, I think current workers are getting screwed too.) We had a contract and we fully upheld our end. We cannot turn back the clock. We relied on the promise of State of Colorado to hold up their end of the bargain. We worked many years for the public good, at a lower rate of pay than in the private sector, often because of the retirement plan the state offered. We don’t receive Social Security like other workers because we worked for the state. If we get any Social Security at all, it is greatly reduced because we receive a state retirement. We do not get paid for doing nothing. We get paid for what we did. When I retired from the state, I was fully aware of Ken Salazar’s Attorney General Opinion: “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.” I relied on that and on the promises made by the two-faced traitor Meredith Williams and PERA while making decisions about the rest of my life. I felt financially secure – Bill Ritter wiped out my financial security with the stroke of his pen. I cannot go back now and change the decisions I made. I never thought this state that I love so much would treat its retirees like this.

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