Legislative Council Staff Publishes SB1 Paper

The staff at the Colorado Legislative Council has posted a new summary paper of SB1 on their website. The description of how retirees’ Annual Benefit Increases (ABI) are affected begins in the middle of page 11, and there is a table on page 13 that compares increases pre- and post- SB1. PERA Executive Director Meredith Williams has publicly estimated a savings to PERA of $9 billion over time due to the ABI cuts. We estimate it as four times that amount. To see the report, click on Colorado PERA 2010 Reform Legislation and Historical Funded Status .

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14 Responses to Legislative Council Staff Publishes SB1 Paper

  1. Thomas Thielemier says:

    Each PERA Retiree signed a contract with PERA at the time they elected to retire. This contract, which can be found in the Colorado Revised Statutes, sets out the terms of the benefits each retiree is to receive during retirement. Once a election was made on how the benefits were to be paid the retiree authorized the payment of funds to purchase the selected benefit.

    Now we find that PERA and the Colorado Legislature were just kidding about the benefits and decided to retroactively change the contract signed by each retiree.

    Constitutional law and contract law do not allow retroactive changes to contracts by one party and I for one was not asked to forfeit the benefits I was guranteed by PERA and the State of Colorado at the time of my retirement.

    Perhaps this is the Social Justice that everyone has been clamoring for. I,for one, much prefer the rule of law. SavePeraCola is doing a fine job of working to insure that current retirees are made whole and nothing more. Keep up the great work.

  2. Algy Moncrief says:

    Please note the typo, Smith said that a trial is expected to be set for 2012, NOT February 2010.

    Algy

  3. Algy Moncrief says:

    PERA’S EXECUTIVE DIRECTOR ON SENATE BILL 1: “I WAS GOING TO USE THE WORD RADICAL.”

    This morning (1-20-11) PERA presented to the Joint Finance Committees of the Colorado General Assembly in the Legislative Services Building Hearing Room A. Here are some notes:

    In regard to Senate Bill 1, PERA Executive Director Meredith Williams said to the Legislative members “no one else has done what you did.” He said that he was going to use the word “radical” to describe SB1, but restated.

    Meredith said that the 8% return assumption adopted by the PERA Board of Trustees last December was “contentious,” and that some board members wanted the return assumption lowered by an additional 1/4 to ½ percent.

    PERA General Counsel Greg Smith said that people have a poor record of saving for their retirement in 401K plans.

    Greg Smith said that PERA had been asked by the Legislature’s Joint Budget Committee to address the legality of SB 146 which shifted 2.5% of some PERA employer’s contributions to employees. Strangely, no one on the Joint Committee asked him “Well, was it legal?”

    Greg Smith commented at length on the SB1 litigation.

    He said that the SB1 legislation “was a leader in the nation.”

    He said that the court has not yet addressed the question of whether a class action is appropriate in the SB1 case.

    He noted that the plaintiffs have filed a motion for summary judgment, that a briefing schedule will be set soon, and that a trial is expected to be set for February 2012. He said that it will take 3-5 years to get a resolution of the case from the Colorado Supreme Court.

    He said that PERA believes that the General Assembly retains the ability to modify the contract with PERA members. It sounds like they will push the actuarial necessity argument, although PERA’s funded ratio has been as low as the 50s in the past, and in those years there was no call to breach contracts. (If the PERA trust funds cannot be sustained with their current funded ratio of about 69 percent, how were the trust funds sustained when the funded ratio in the 50 percent range?)

    As he has stated earlier, Greg Smith said that it was “imperative” that PERA “impact” the COLA, that there were no other alternatives. (Translation “impact” means seize up to one quarter to PERA retiree’s contracted lifetime benefits.) Funny that it is so “imperative” to seize the COLA in Colorado, while nearly every other state in the nation that is addressing DB pension reform (including those with much lower funded ratios) is finding other options (that are legal, prospective and moral) to improve their funded ratios. Funny that Greg can’t see other alternatives, when it just takes a few mouse clicks to get a list of legal, prospective pension reforms that have been adopted in the states (hint: look on the NCSL web page.)

    Greg Smith commented on potential remedies that could be awarded by the court if the plaintiffs prevail. These include a retroactive “truing up” with PERA retirees whose COLAs were not paid at the contracted 3.5% level, or simply paying the 3.5% COLA going forward.

    He was asked if PERA has looked at alternative models if SB1 is overturned. Greg Smith said that nothing has an immediate impact like changing currently payable benefits.

    He was asked if the plaintiffs have requested a temporary injunction. He responded that they have not, and said that this might be due to the requirement to post a large bond if you seek a temporary injunction.

    Greg Smith said that the SB1 case is a “significant nation-wide case.” He said that he is coordinating with counsel in the other states that are involved in COLA lawsuits, and that he has personal relationships with the lawyers handling these cases.

    He said that PERA had overwhelming support for the changes made in SB1 and that everyone recognized the need for “shared sacrifice.” (Remember that PERA went on a road trip and surveyed some of the PERA members and retirees who showed up, a minuscule fraction of the 80,000 PERA retirees. Note to Greg, a poll of the popularity of a bill is not how we gauge the constitutionality of legislation in the United States.)

    Greg Smith said “We don’t get a lot of negative feedback relating to SB1.” (In my opinion, being sued is a significant chunk of negative feedback.)

    Regarding the lawsuit’s request for a class action he said that “It’s PERA’s position that a class action is not necessary.” “We don’t see the logic in it.” “We’ve had a lot of contacts from retirees saying that they don’t want to be part of the class.”

  4. Algy Moncrief says:

    MEREDITH WILLIAMS NOT AMONG FINALISTS FOR TEXAS PENSION JOB.

    FYI SPC Crew, to follow up, according to this article in a Texas newspaper it looks like Meredith Williams is not one of the three finalists for the job with the Texas Teacher’s Retirement System.

    http://www.statesman.com/news/texas-politics/teacher-retirement-system-names-3-finalists-for-top-1184282.html

  5. Mike Harris says:

    Does anyone besides me think it is time for Meredith and Smith to go? I obviously don’t like SB-01, PERA refuses to put up the survey results they did online before SB-01 was passed, and don’t and haven’t thought much of their choice of CITI to handle our 401K’s. Citi in my opinion is as crooked as they ever have been. Don’t see the need for all the specialist PERA hires. Who’s auditing Meredith???

  6. Algy Moncrief says:

    SENATE BILL 1 SPONSOR SENATOR PENRY OUTLINES THE RIGOROUS LEGAL PENSION REFORM RESEARCH HE AND RITTER CONDUCTED EARLY THIS YEAR (OVER A BEER IN RITTER’S OFFICE.) See this article in today’s (12-29) Denver Post:

    http://blogs.denverpost.com/thespot/2010/12/29/ritters-meeting-with-penry-goes-ka-boom/19718/

    Here is an excerpt:

    “But we had a nice visit for 30 minutes. I think the meeting captured Ritter’s administration. He is a warm and honorable person, but he just struggled on execution — on getting it right.

    As with so many things for he and I, that meeting was a mixed bag. I got a dry-cleaning bill, but we agreed that we would work together on a plan to cut public-pension benefits, which we accomplished in his and my last session.”

    I agree with Penry, Ritter has difficulty in getting it right, for example, steering the General Assembly toward constitutional pension reform enactments.

  7. Hello SPC Crew:

    Unlike our Colorado Legislature, the Maryland General Assembly is recognizing that case law and constitutionality should be considerations when enacting pension reform.

    See this article:

    http://marylandreporter.com/pension-commission-cant-reduce-COLAs.aspx

  8. Joan C says:

    . . .and with all the verbiage I still have not seen or heard the mention that the PERA ANNUAL MEMBER STATEMENT as of 5-31-2000 clearly states the following: After Retirement – All benefit recipients will receive an annual benefit increase of 3.5 percent compounded annually from the date of his or her initial benefit. If this is not a guaranteed 3.5 benefit between July 1, 2000 and June 30, 2005 when the annual benefit was again returned to being based on the Consumer Price Index then what’s to believe anything PERA has confirmed in the past or present. Except that by dragging the issue through the courts, the owed compensation has been deferred.

  9. John M says:

    I was looking at the latest bulletin from PERA and contemplating William’s words on the lawsuit. Then it hit me:

    “…PERA’s attorneys will vigorously argue this in court. We anticipate that the final resolution to the lawsuit will occur in the Colorado Supreme Court…”

    I think he just admitted that they think they are going to lose in the district and appeals courts.

  10. Algernon Moncrief says:

    MEREDITH WILLIAMS, PERA EXECUTIVE DIRECTOR, WANTS OUT.

    Dear SavePERACOLA Crew:

    According to this article in Pensions and Investments Magazine our own Meredith Williams, Ex. Dir., Colorado PERA, wants to hit the road.

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

    The article lists him as a finalist for the job of running the Texas Teachers Retirement System. I’m sure that the PERA Board will miss his fine counsel and that retired teachers in Texas would benefit from his service, particularly if they are feeling too materialistic, or burdened by excessive income.

    Why the desired departure? Anyone know?

    • Barry Thorpe says:

      You teach 18 year-olds for 30 years, and you become pretty good at seeing the character of a person as they try to explain their reasoning. The shareholder’s meeting in Colorado Springs gave us an opportunity to judge the sincerity, honesty and acumen of Mr. Williams : evasive on answers to questions, trying to sugar coat the breach of contract he signed on to, and clearly trying to send subliminal signals that he does not favor a resolution of the lawsuit in favor of the retirees. Maybe he wants to go because he’s done all the damage he can here.

      • saveperacola says:

        The comments above are solely Mr. Thorpe’s and do not necessarily reflect those of Save PERA COLA’s leaders. What should be clear to everyone is the intensity of feelings that retirees hold over the issue of cuts in the annual benefit increases (ABI), regardless of whether they support or oppose them.

      • Chuck TenBroeck says:

        Give em hell, Barry. You ever hear from Toul? Chuck TenBroeck

  11. John Kiljan says:

    Wow! Figure 1 says it all. PERA’s financial collapse had little to do with its stock market returns.

    With all that verbiage, it’s a little strange that the report neglected to mention the whopping reduction in benefits that most senior retirees will suffer as a result of Senate Bill 1.

    –John Kiljan

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