Court of Appeals Schedule

We have received notice of the following scheduled dates for the lawsuit:

4/23/12 – Appellees  to Supplement Record

5/29/12 – Appellee’s Answering Brief

6/12/12 – Appellant’s Reply Brief

PERA and the State of Colorado are the appellees. Gary R. Justus et al are the appellants.

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34 Responses to Court of Appeals Schedule

  1. Al Moncrief says:

    COLORADO PERA OFFICIAL ENDORSED A “LESS DRASTIC” ALTERNATIVE TO ADDRESSING THE PENSION’S UNFUNDED LIABILITIES.

    Jennifer Staman, Legislative Attorney at the Congressional Research Service wrote the following in her paper, “State and Local Pension Plans and Fiscal Distress: A Legal Overview”, March 31, 2011:

    “As the Supreme Court has explained with respect to the impairment of public contracts, reasonableness must be considered “in light of the surrounding circumstances.” Necessity depends upon two considerations: first, whether the impairment was essential or whether a less ‘drastic modification’ was available, and also whether a state could have adopted an alternative means to bring about the desired end without impairing contract obligations.”

    In my mind, the issuance of pension obligation bonds (POBs) to cover PERA’s unfunded liabilities is significantly “less drastic” alternative than breaching fully-vested public pension contracts. Many states across the country have taken this path, and apparently the Colorado PERA Board has considered POBs. Some Colorado PERA officials consider POBs “a useful tool to cover the liability.”

    “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.”

    Article:

    https://www.cu.edu/sg/messages/4467.html

    Here’s a primer on pension obligation bonds from Orrick:

    http://www.orrick.com/fileupload/247.pdf

  2. Al Moncrief says:

    WHY BOTHER WITH BOND DISCLOSURE OF PUBLIC PENSION OBLIGATIONS IF THE OPTION OF BREACHING PENSION CONTRACTS IS AVAILABLE TO STATE AND LOCAL GOVERNMENTS?

    According to a recent Reuters article, “a coalition of bond lawyers, analysts, auditors, state treasurers, pension administrators, securities professionals, bond dealers and issuers released on (last) Thursday a framework for describing financial strains on state and local governments caused by pension funding obligations. This answers not an accounting question, but a securities law question: what should be disclosed to an investor?” said National Association of Bond Lawyers Governmental Affairs Director William Daly.”

    Reuters article:

    http://www.reuters.com/article/2012/05/17/us-usa-states-pension-idUSBRE84G1DE20120517

    Specifically, the paper addresses disclosures that state and local government issuers of bonds should make regarding the credit quality of those bonds in the bond issuance’s “official statements.” The paper, Considerations in Preparing Disclosure in Official Statements Regarding an Issuer’s Pension Funding Obligations (Public Defined Benefit Pension Plans), was published on May 15, 2012.

    Participating organizations include the:

    National Association of Public Pension Attorneys;

    National Association of Bond Lawyers Task Force on Public Pension Disclosure; and

    National Council on Teacher Retirement (where our own Meridith is heading.)

    I read through the recommendations that this group makes regarding bond disclosure of pension obligations and wondered “why does the coalition not propose including in bond official statements the possibility of raising the credit quality of outstanding bonds through breach of pension contracts on the part of the issuers?”

    There are certain parties in Colorado who believe that this is a viable option for governmental entities, even while those governments provide discretionary tax relief.

    As we noted a few days ago, the sponsor of Colorado’s Senate Bill 10-001 is an exception. He has stated that the Colorado PERA retiree COLA is a contractual obligation of the PERA pension plan’s sponsors, and that the state must achieve “actuarial necessity” to breach its pension contracts.

    I’m also interested in knowing if the official statements for all outstanding Colorado state and local debt securities anticipated Colorado PERA and the State of Colorado reneging on their contracted pension COLA obligations? This action on the part of the General Assembly materially impacted the value of bonds that are currently trading in securities markets. Some debt investors making trades may have received less value than they were due if they had known that the state would attempt to breach the pension COLA contractual obligation.

    The coalition report makes recommendations for questions that the drafter of a bond official statement should ask, for example:

    “How much is the current annual required contribution to such plan?” (Don’t bother putting this question to a Colorado legislator.)

    “Is the issuer expecting to make such annual required contribution in full? If not, what is the shortfall? If not, why is the issuer unable to make the full contribution?” (In Colorado, this year we skipped the ARC to grant $100 million is discretionary tax relief.)

    “How do the budgeted amounts of pension contributions compare to ARC? To payments actually made in prior years? Consider including a chart showing comparisons of ARC to budgeted contributions and to actual contributions for last ten years.” (In Colorado, the skipped ARCs now exceed $3.5 billion.)

    The drafter of a bond official statement should:

    “Describe all material litigation brought in connection with the pension plan or system or involving members of the governing body,” (See saveperacola.com);

    “Include any legislative committee or governing body that has commenced a study or published a report regarding the issuer’s pension funding requirements, or the pension plan itself” (in Colorado we delegate this task to lobbyists);

    Note “whether the issuer participates in the Federal Social Security System.” “Currently Alaska, Colorado, Louisiana, Massachusetts, Maine, Nevada and Ohio do not participate in the Federal Social Security System,” (thus Colorado’s theft of contracted pension benefits is rendered more egregious);

    “Include a description of the legal status or priority of payments or obligation to fund contributions vis-à-vis other obligations of the issuer such as debt service payments”; (unnecessary if you live in a state that casually breaches pension contracts);

    “If the issuer is aware of a material adverse trend related to the annual required contributions, the issuer should explain the relevant factors, whether underfunding, smoothing of investment gains and losses, amortization methods, plan changes, or other factors, that are likely to materially impact an issuer’s annual required contributions in the future.”;

    “If pension obligation bonds have been issued, or are authorized to be issued in order to help meet the need of the issuer’s pension obligations, describe the aggregate principal amount of all outstanding pension obligation bonds, including any specific covenant or bond provision that may affect pension funding, a description of each issuance of outstanding pension obligation bonds.”;

    “Any reports, studies or analyses related to the funding of the pension plan that may have been commissioned by the issuer, plan sponsor or the plan itself should be taken into consideration and disclosed, if material.” For example, our Colorado’s Treasurer’s Commission to Strengthen and Secure PERA , Governor Dick Lamm, and Senator Hank Brown, co-chairmen, found regarding the PERA COLA:

    “Rather than tying this core actuarial variable to a formula related to the rate of inflation, in 2000 the Legislature set the COLA at a fixed 3.5 percent per annum – regardless of changes in the economic environment.” Further, the Colorado Treasurer’s report states that “The Commission believes that the overreliance by the Legislature on information provided by PERA’s staff and contract lobbyists during past legislative sessions was a key factor in enacting changes that directly contributed to PERA’s poor financial condition.” “Equally troubling is the limited ability – due to the Contract Clause protection in the US and Colorado constitutions- of the Legislature to modify the plan, particularly its benefit structure, once enacted.” (The Treasurer’s Commission agrees with me on the abdication of pension policy to lobbyists, and on the contractual nature of PERA pension obligations.) Finally, the State Treasurer’s Charge to the Commission: “The Commission may not make any recommendations that materially affect current retirees.”

    Returning attention to the “Considerations” paper, I found the following passages of interest:

    “An element of a cause of action against issuers, by either the Securities and Exchange Commission (the “SEC”) or a private plaintiff, is either an ‘untrue statement of a material fact’ or an omission ‘to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.’ ‘Materiality for federal securities law purposes means whether there is a substantial likelihood that a reasonable investor would consider the facts at issue to be important to an investment decision.’;

    “The overall point of the disclosure of pension funding obligations is to indicate whether the state or local government will likely struggle in meeting such obligations without making difficult financial decisions. One of those decisions may be related to the payment of debt service on bonds. Thus, in circumstances where there is expected to be financial strain caused by an issuer’s pension funding obligations, being clear and plain about this point to investors is very important.”;

    “An issuer has a legal obligation, when accessing the capital markets, to not omit to state any material fact necessary to make the statements made not misleading. As the municipal market has learned from recent SEC enforcement actions relating to disclosures regarding the obligations of state and local governments to their pen¬sion plans, governmental pension plans may have problems that may not be apparent to investors and analysts from either the basic information about a pension plan or system or even from the actuarial valuation.”

    “Annual Required Contribution of the Employer (or ARC)” is defined as “the aggregate in a particular year as calculated by the actuary comprised of (i) the Normal Cost and (ii) payments made to amortize the UAAL in accordance with the adopted actuarial method of the pension plan or system.”

    See a PDF of the complete coalition paper here:

    http://www.nabl.org/uploads/cms/documents/pension_funding_obligations_document_5-16-12_a.pdf

  3. Al Moncrief says:

    PENNSYLVANIA PENSION REFORMERS REJECT OUT OF HAND COLORADO’S SCHEME TO STEAL FROM THE ELDERLY. REVENUES FROM CASINO OPERATIONS CONSIDERED TO SHORE UP PENSIONS.

    “When your bills come due and you don’t want to talk about raising revenue, you’ve got a real problem on your hands.”

    “Republican Gov. Tom Corbett has put pension reform next on his to-do list.”

    State Rep. Scott Boyd, a Republican from Lancaster County, has “introduced one of several reform proposals in the state House. Under his proposal, the state would create a ‘cash balance’ plan, which would provide retiring employees with an annuity equal their contributions and the state’s contributions, plus 4 percent interest.”

    “The pension system would remain for current employees, who would be offered incentives to switch.”

    “Other proposals would enroll all new employees in a 401(k)-style plan, give current employees the option of enrolling in that type of plan, or switch the pensions for legislators to a 401(k) plan.”

    “David Fillman, executive director of AFSCME Council 13, which represents the bulk of the state’s unionized workforce, said employees have consistently paid their share, and regardless of what solution it pursues, the state must continue to uphold its obligation to current employees.”

    “We knew this 10 years ago, we knew this was coming,” Mr. Fillman said. “When your bills come due and you don’t want to talk about raising revenue, you’ve got a real problem on your hands.”

    “Mr. Fillman did quip that he’s heard one creative proposal: a plan from state Rep. Paul Clymer, a Bucks County Republican, would charge casino-goers a $2 entrance fee and direct the proceeds toward pension costs.”

    “Mr. Boyd said. “The state can’t file for bankruptcy. We have a responsibility that we have to deal with.”

    Post-Gazette Article:

    http://www.post-gazette.com/stories/local/state/gov-corbett-adds-pension-reform-to-budget-agenda-636794/

    . . . and from CentreDaily.com:

    “Don’t be quick to point the finger at the workers. For the past decade, the state has been putting about 50 cents into the pot for every $1 those workers contributed — even though the shares were to be equal.”

    “The state gambled on the market, which was booming when the game began.”

    “So the state will have few options:

    • pass the full cost on to taxpayers, which we strongly oppose and which would be political suicide.

    • engage in pension reform, which means future state workers would pay a higher share, and that standard pensions would be replaced with 401(k) or similar systems. That we support.

    • have all state employees — from lawmakers to college professors to road workers — pay a higher percentage of their pension costs to ease the burden on taxpayers. That we would wholeheartedly support.”

    Article:

    http://www.centredaily.com/2012/05/20/3201955/pension-problem-demands-action.html#storylink=cpy

    “The Pittsburgh Post-Gazette highlights a plan that would impose a $2 per person entry fee to all state casinos, which would send the bulk of the raised funds to cover the state pension system.”

    Article:

    http://news.yahoo.com/pennsylvania-puts-pension-reform-spotlight-153600447.html

  4. Al Moncrief says:

    MICHIGAN SENATE BILL WOULD PUT NEW TEACHERS INTO 401K – LAWSUIT THREATENED – NO ATTEMPT TO TAKE FULLY-VESTED RETIREE BENEFITS.

    “Legislation that would end pensions for new public school employees and switch them into a 401 (k)-style retirement plan passed the Michigan Senate on Thursday.”

    “A key provision would end the pension plan for teachers hired after Jan. 1, 2013. Current employees would keep their pensions though certain compensation caps would be placed on them.”

    “Under the measure, employees hired before 1990 would go from making no contribution to their pension to 5 percent of their salary. The majority of public school employees who contribute about 4 percent of their salary currently would see that increased to 8 percent. Employees could opt out of the increases by taking a smaller multiplier — the factor by which a retiree determines his or her annual pension payout — or switching to the 401(k)-style system.”

    “Many current and retired teachers say the proposed changes are unfair. The Coalition for Secure-Retirement-Michigan says the state constitution requires Michigan to live up to its pension promises and a lawsuit is likely if the measure is enacted.”

    From NECN.com

    http://www.necn.com/05/17/12/Mich-Senate-OKs-bill-ending-new-teacher-/landing.html?&apID=7774f59b384a4d6eb52cd5d1abdf3d6e

  5. Al Moncrief says:

    MARYLAND SHIFTS TEACHER PENSION COSTS TO COUNTIES – HIKES INCOME TAX.

    Yes, there are aspects of this Maryland plan that will be unpopular, but it beats squandering taxpayer dollars on endless pension lawsuits that the state will eventually lose.

    From the Baltimore Business Journal:

    “The state’s House of Delegates passed bills on Wednesday hiking the income tax rate on higher-income Marylanders and transferring a portion of teacher pension costs from the state to counties.”

    Here’s what Governor O’Malley has to say in his 2013 Budget
    Highlights document about his pension cost-shifting plan:

    “The Administration is proposing an equitable cost-sharing arrangement with local governments for teachers’ retirement. Currently, the State pays the entire cost of teacher pensions, totaling $946 million in FY 2013. Teacher salaries, the key cost driver of pension costs, are determined by local jurisdictions. The proposal requires locals to pay 50% of the combined costs of social security and teacher’s retirement contributions. Locals currently pay for social security only, which accounts for one-third of the combined costs. The administration is proposing several measures to mitigate the impact of this cost shift. These include increasing local revenue, enhancing aid to less wealthy jurisdictions, and providing targeted budget relief.”

    The Gov’s Budget Summary document:

    http://dbm.maryland.gov/agencies/operbudget/Documents/2013/FY2013BudgetHighlights.pdf

    The Baltimore Business Journal article:

    http://www.bizjournals.com/baltimore/news/2012/05/16/maryland-house-passes-income-tax-hike.html

  6. Al Moncrief says:

    MICHIGAN PENSION PROPOSAL AVOIDS ASSAULT ON FULLY-VESTED RETIREE BENEFITS.

    “The Michigan State Senate is scheduled to vote on a series of changes to the state’s teacher retirement system: A key debate within the GOP caucus is whether to force all newly hired teachers and school employees into a 401(k)-style retirement plan and eliminate their eligibility for a pension. Current employees and retirees would still get a pension in retirement.”

    From the Milwaukee Journal Sentinel:

    http://www.jsonline.com/blogs/purple-wisconsin/151903065.html#!page=1&pageSize=10&sort=newestfirst

  7. Al Moncrief says:

    ILLINOIS JUDGES TO GOVERNOR QUINN, BREACH OUR PENSION CONTRACTS AND WE WILL SUE YOU – ILLINOIS’ LAST COLA THEFT ATTEMPT WAS STRUCK DOWN IN 2003.

    “Government employees unions have vowed to sue if legislators and Quinn reduce their pension benefits. The Illinois Judges Association, which represents 1,250 active and retired judges, indicates it may file a lawsuit too.”

    “Jorgensen v. Blagojevich may provide a glimpse. The judges sued former Gov. Rod Blagojevich and the Legislature in 2003 after he stripped their automatic 3 percent cost-of-living pay increases from the budget, saying Illinois taxpayers couldn’t afford them.”

    “A circuit court ruled in favor of the judges.”

    Article:

    http://capitolfax.com/2012/05/16/judges-may-sue-over-health-insurance-bill/

    Why don’t politicians support the rule of law? After all, they swore to do so when they took their oaths of office? Here’s the judges website:

    http://ija.org/

  8. Al Moncrief says:

    APPARENTLY, THE PERA PENSION REFORM INITIATIVES PROPOSED FOR THIS FALL’S BALLOT ARE DEAD.

    Remember a few months back we were looking at initiatives that had been filed to place a PERA reform measure on this Fall’s General Election ballot? Well, I just checked the Secretary of State’s website and it looks like they are toast.

    The measure, #72, that the proponents decided to run with had a Colorado Title Board hearing on April 18, and according to the SOS website the Title Board refused to set its ballot title because the proponents made some changes to it after it had its hearing over at the Legislature . . . and that’s verboten!

    (Proposal #72 was one of three that were originally submitted to the Legislature.)

    The SOS website also notes that April 18 was the last meeting at which the Colorado Title Board may consider measures that might appear on the November 6, 2012 General Election ballot. So, that takes care of that. Making the ballot in Colorado requires a stack of money and volunteers and organization in any event.

    This is from the SOS website:

    “April 18, 2012, 8:30 AM – Commenced 12:01 PM; title setting denied – substantial amendment after legislative staff review and comment meeting, contrary to CRS 1-40-105(2); hearing adjourned 1:07 PM.”

    SOS initiative status:

    http://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/index.html

  9. Al Moncrief says:

    SOUTH CAROLINA DEFLECTS PUBLIC PENSION RETIREE LAWSUITS.

    AikenStandard.com is reporting that a public pension reform bill has been adopted by the South Carolina Senate.

    “Sen. Greg Ryberg said the bill shores up the state retirement system, ensuring workers receive checks decades from now, in a way that honors promises to current employees, thereby avoiding a lawsuit. Advocates for public workers have praised the Senate’s plan.”

    “I feel confident from a legal standpoint, we’re on firm ground,” said Ryberg, R-Aiken, who led a panel that put together the plan.”

    “The changes would increase the funded ratio in the state’s main retirement system from 65 percent this year to 84 percent in 29 years.

    “Under both plans, current employees could continue to retire with full benefits after 28 years of working. The House increases that to 30 years for new employees, while the Senate panel applies a so-called “rule of 90,” meaning that the worker’s age and years of service must equal 90.”

    “All employees would contribute more — an additional 1.5 percentage points over three years, to 8 percent, instead of 1 percentage point over two years under the House plan. Both plans lock in the 1-percentage-point increase in employers’ contribution to their workers’ pensions — the taxpayer-funded portion — that a state panel approved last fall, to 10.6 percent.”

    (Colorado PERA retirees note that once again a state with a lower pension funded ratio than any of Colorado PERA’s Divisions is reforming their pension plan without a raid on vested retiree benefits. During Colorado PERA’s political, lobbying and legal campaigns to take retiree benefits they were told hundreds of times that legal, prospective, moral pension reform options were available, and were being considered by legislative bodies across the nation. As you know, they donned their blinders and charged forward.)

    Article:

    http://www.aikenstandard.com/story/051712-ap-SC-Senate-approves-pension-reform-plan–4005692

  10. Al Moncrief says:

    KANSAS OPTS AGAINST BREACH OF CONTRACT – RETIREES CONTRACTED BENEFITS REMAIN INVIOLATE.

    “The governor and key members of both parties are endorsing a conference committee agreement to move new public employees to a cash balance retirement plan.”

    “Starting on Jan. 1, 2015, all new hires would be enrolled in the cash balance program, which is similar to Nebraska’s.”

    “Employees will be guaranteed 5.25 percent interest on their investment, with the state making up the difference if market returns are below that. Dividends above that will be divvied up among employees if KPERS, currently funded at 62 percent, becomes funded at 80 percent or higher.”

    (Colorado PERA retirees, note that the bill sponsors are not trying to hoodwink anyone into believing that a 100 percent pension funded ratio is needed. Public pensions are well-funded at an 80 percent funded ratio according to Fitch Ratings. Also note that KPERS has a lower funded ratio than any of the Colorado PERA Divisions and yet they have not even considered a breach of contract in Kansas.)

    “I really think it’s a fair and balanced plan,” said Sen. Laura Kelly, D-Topeka. “It reduces the (investment) risk on the employer, and it provides a reasonable, sustainable benefit for employees.”

    “I want to applaud the KPERS conference committee for reaching an agreement on how to move our state’s employee retirement system forward and to ensure state employees have a pension system that is stable,” Governor Brownback said.

    “To further address the unfunded liability, starting in July 2013 it sets aside 50 percent of all new gaming revenue above what it already earmarked for other purposes to pay the KPERS debt.”

    (FYI, Kansas KPERS retirees receive statutory “ad hoc” COLAs that can be adjusted by the Kansas Legislature, as opposed to Colorado’s statutory “automatic” contracted COLAs that can legally be altered only on a prospective basis.)

    Article in Topeka Capital Journal:

    http://cjonline.com/news/2012-05-16/kpers-cash-balance-plan-gains-favor

  11. Al Moncrief says:

    THE COLORADO RECESSION CAN’T BE OVER! COLORADO NEEDS ITS ACTUARIAL EMERGENCY! OTHERWISE, WE CAN’T AVOID OUR DEBTS!

    “The chief economist at Wells Fargo says Colorado’s economy is better than average and will continue to improve over the summer.”

    “I congratulate you folks for having made it through the Great Recession, and the improvement continues to move,” Silvia said.

    Article at 9News:

    http://www.9news.com/money/268240/344/Bank-economist-Great-Recession-in-Colorado-is-over

    (P.S. Friend Save Pera Cola on Facebook.)

  12. Al Moncrief says:

    MONTANA GOVERNOR BRIAN SCHWEITZER PROPOSES USING REVENUE FROM NATURAL RESOURCES DEVELOPMENT TO MEET THE STATE’S PENSION DEBT.

    No COLA theft in Montana.

    “Schweitzer proposes separate rescue plans for the two retirement systems.”

    “In the case of the Teacher Retirement System, he would divert $25 million per year from State Lands revenue that is dedicated by law to benefiting education. He would also increase the employee contribution by 1 percent, raising $8.5 million per year, and would add a one-time-only $14.7 million employer contribution.”

    “For the Public Employees Retirement System, Schweitzer proposes that employers and employees each contribute an additional 1 percent to the retirement plans, raising $13.7 million per year from each source, and the state would contribute an additional $18.1 million per year from coal-tax severance funds. There would be an additional local government contribution as well, which for Flathead County would amount to an additional $158,451 out of current spending of $78 million.”

    Article:

    http://www.dailyinterlake.com/news/local_montana/article_84a70560-8907-11e1-bdd6-001a4bcf887a.html

  13. Al Moncrief says:

    DELAWARE GOVERNOR MARKELL SIGNS PROSPECTIVE PENSION REFORM LEGISLATION – COLORADO INCREASINGLY A PENSION THEFT PARIAH STATE.

    “‘Our state employees and public officials worked together to create a solution that works. While other state’s reform efforts were marked by anger and protests, Delaware’s discussions were marked by collaboration, cooperation and results,’ Markell said.”

    “Over weeks of meetings, the working group coalesced around the final proposal, which asks future state employees to pay 5% instead of 3% of their salary towards their pension after the first $6000 earned and increases the time required to be vested in the state pension system.”

    “The bill received broad bipartisan from both houses of the legislature and the endorsement of the public employee coalition.”

    Article:

    http://www.newarkpostonline.com/news/local/article_e875e9af-2efa-5d71-ad0f-3d02fcba49db.html

  14. Al Moncrief says:

    OREGON’S PROSPECTIVE REFORMS FIXED THEIR PENSION, THE OREGON SUPREME COURT STRUCK DOWN THE STATE’S COLA THEFT.

    “PERS was ranked as the 11th-best-funded system in the country by Pew researchers last year.”

    “Pension systems are considered healthy if they are at least 80 percent funded.”

    “In rulings that could serve as a warning to other states, the Oregon Supreme Court in 2005 overturned key portions of the 2003 reforms that affected the benefits of current employees. The court said that Oregon had to stand behind an 8 percent guarantee on investment returns for Tier 1 members, and could not suspend promised cost-of-living increases.”

    “The court based its ruling on the Contracts Clause of the U.S. Constitution, judging that a pension plan represents a contract between a public employer and its employees.”

    From the StatesmanJournal.com:

    http://www.statesmanjournal.com/article/20120507/NEWS/305070006/Oregon-s-previous-public-pension-reforms-2003-place-ahead-other-states

  15. Al Moncrief says:

    IS JIM PRENTICE RIGHT? THE PERA COLA THEFT WAS TO PAY FOR THE DPS MERGER?

    I read this post some time ago, but recently came across it again and thought I would share it with you all. You can decide if you agree with the Prentice analysis. Below are some excerpts from his 2009 blog post. The full post can be read here:

    http://coloradoperaanalysis.blogspot.com/

    Problems with Colorado PERA’s 2010 Legislative Proposal by Jim Prentice, a PERA retiree, December 20, 2009

    (Prentice) “My analysis raises serious doubt about the validity of PERA’s assertions that drastic changes are needed in the state-wide retirement program, and it brings to light what I believe is the real agenda behind PERA’s proposal — something that results from the required merger with the Denver Public Schools Retirement System (DPSRS) on January 1, 2010. Justification does not exist for PERA to breach its contracts with tens or hundreds of thousands of members and retirees regarding fully vested, guaranteed benefits and the benefits promised for both earned and purchased service credit.”

    (Prentice) “During the PERA Board meeting on December 18, 2009, a representative of ColoradoWINS suggested making lesser changes at this time and then seeing what else might be needed later. PERA Board member Marcus Pennell replied, “I’d like to address the discussion you had about stabilizing the patient. One of the problems with that approach is simply that we can’t make changes of this nature to the pension plan without actuarial necessity. If you make some percentage of changes that need to be made and it gets you out of actuarial necessity but not healed, you don’t have the opportunity to treat the patient anymore and they live with the injury as it is.” Mr. Pennell was advocating for the need to approve the proposal as a complete package because doing something less may take away the actuarial necessity argument and thereby prevent PERA from getting all of the changes it seeks. Isn’t that an admission that all of the proposed changes really are not needed but PERA is trying to make unjustified changes by bundling the package and claiming that it is an inseparable whole?”

    (My comment on the PERA quest for “actuarial necessity”: This perspective from Jim Prentice comports with the comments of Representative Jack Pommer, Joint Budget Committee Chairman to his JBC colleagues on December 17, 2009: “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?”)

    (Back to Jim Prentice) “It is my conclusion that published material from PERA’s own actuarial consulting firm shows that actuarial necessity for PERA’s legislative proposal does not exist. PERA seems to be inheriting a significant cash flow problem regarding the acquisition of DPSRS, but that problem should not be solved by reducing the fully vested, guaranteed benefits of retirees and future retirees. Updated, verified information is an absolute necessity before proposed legislation goes forward. PERA’s funded status should be improved, but changes that result in breach of contract or violation of the Colorado Constitution are not justified.”

  16. Al Moncrief says:

    COLORADO PERA’S DIVIDE AND CONQUER PENSION THEFT STRATEGY TO BE EMPLOYED IN LOUISIANA.

    In The Art of War, Sun Tzu writes:

    “…the art of using troops is this: When ten to the enemy’s one, surround him; When five times his strength, attack him; If double his strength, divide him…”

    Part of the strategy to take fully-vested PERA retiree benefits in Colorado was precisely this “divide and conquer.” The 2009 Colorado PERA political campaign (that traversed the state) split active PERA members from PERA retirees, and went further in dividing the PERA retiree community itself.

    The goal of PERA’s lobbying and political campaigns was seizure of fully-vested PERA retiree pension benefits. The theme of the political campaign was “shared sacrifice.” (At the time, I wondered why our banks in the United States are unwilling to make a “shared sacrifice” with bank robbers.)

    The campaign relied on the fact that most PERA retirees were unaware of their legal rights to fully-vested PERA pension benefits, and the fact that PERA retirees trusted Colorado PERA and the State of Colorado to defend their interests. The retirees were unorganized and rightly focused on enjoying their earned retirement after decades of serving the Colorado public.

    Colorado PERA succeeded in frightening a handful of PERA retirees to the point that they agreed to “sacrifice” their property. The support of these retirees was then used to sell the PERA case that the property of the remaining 98 percent of PERA retirees should be “sacrificed, (i.e. confiscated.) One of SB 10-001’s prime sponsors, Senator Josh Penry, was sufficiently forthright to tell us that 90 percent of the “sacrifice” would come out of the hides of PERA retirees, “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.” PERA argued that the pension was “unsustainable” when in fact it is the under-funding of public sector pension plans by plan sponsors in the United States, including the State of Colorado, that is “unsustainable.”

    In Colorado, active PERA members were divided from retired PERA members. Sadly, Colorado public sector unions went along with the plot. As far as I can tell, our public sector unions are unique in the nation in supporting the breach of fully-vested public employee pension contracts. It sickens me that Colorado public sector unions would casually toss their retired “brothers and sisters” under the bus. Public sector unions across the country are presenting a united front in the fight for their pension rights. What has occurred in Colorado is truly bizarre.

    It’s still early in the Louisiana pension fight, but Governor Jindal is already employing the same tactics used in Colorado. In this morning’s Jennings Daily News, Dayne Sherman of Ponchatoula, Louisiana writes:

    “No one is grandfathered in with the changes except for elementary and secondary school teachers, judges, and hazardous duty workers.”

    “Why exempt some employees from the new (pension) rules? By separating certain employees from others, the governor is able to divide the employees into manageable groups and sink all of the pensions a little at a time.”

    “I like to call this the ‘Cat Food Retirement Plan.’ Listen to Gov. Jindal, and you’ll be lucky to eat cat food in your retirement years,” writes Sherman.

    “His approach is unconstitutional, as the recently released 38-page Louisiana Legislative Audit report makes clear. But Governor Jindal is cut out of the same cloth as Huey P. Long, who once said, ‘I am the constitution around here now.’”

    Article in Jennings Daily News:

    http://www.jenningsdailynews.net/?p=10733

    Louisiana Legislative Auditor’s report:

    http://businessreport.com/editorial-pdfs/LegalAnalysisPensionBills.pdf

    “Case law from other jurisdictions demonstrates that changes to members’ retirement age, contribution rate, and final average compensation formula retroactively affect members who have accrued and vested benefits based on their past service. Consequently, a reasonable likelihood exists that these bills as currently drafted will not survive constitutional scrutiny.”

  17. Al Moncrief says:

    HIGHLIGHTS FROM THE SECUNDA PENSION LITIGATION PAPER.

    I just had a look at Paul Secunda’s paper addressing public pension law in the United States. The title of the paper is “Constitutional Contracts Clause Challenges in Public Pension Litigation.” Secunda is Associate Professor of Law at the Marquette Law School.

    You can read the paper here:

    http://lawarchive.hofstra.edu/pdf/academics/journals/laborandemploymentlawjournal/labor_vol28no2_secunda_final.pdf

    I took note of the following passages from Professor Secunda’s paper:

    Secunda:

    “Additionally, as mentioned above, a law is even more stringently examined when the law impairs a contractual relationship that the state is a party to, as opposed to a contractual relationship between two private parties.” (Spannaus, 438 U.S. at 244 n.15.)

    The State of Colorado is a party in the case Justus v. State. Why has the contractual nature of the Colorado’s PERA COLA provisions not been “stringently” examined by the Colorado judicial system? I don’t believe that a summary judgment constitutes “stringent” examination.

    Secunda:

    “To determine whether a state law is unconstitutional pursuant to the Federal and State Contracts Clause, courts essentially ask: (1) is the contractual obligation impaired; (2) is the impairment substantial; and (3) is the impairment justified?”

    First, the plain language of the Colorado PERA COLA statutory provisions grants an “automatic,” fixed COLA to vested PERA retirees going forward. The statute provides that the COLA “shall” be paid. The sponsors of HB 00-1458, and the Governor who initiated the bill, clearly intended that the COLA rate of 3.5 percent act as an inducement for early retirement of older “expensive” employees (to save the state money.) Employees who retired based on this statutory contract would not have left their careers in exchange for a temporary “ad hoc” COLA. Why would they do that? Why would they take the risk that the COLA would be reduced again in a year or two? PERA members who sent PERA money from their 401Ks to purchase “service credit” in the pension would not have entered that contract if they knew that the state intended to renege on its contractual 3.5 percent COLA obligations. Why would they pay thousands of dollars for a benefit that the Legislature could legally eliminate at the next legislative session? Why would these PERA members agree to such substantial financial commitments if they lacked a “reasonable expectation” that the General Assembly would honor the 3.5 percent COLA obligation?

    Further, the impairment of the PERA retiree’s pension contract by SB 10-001 is undisputedly “substantial.” Some PERA retiree’s will lose hundreds of thousands of dollars over the course of their lives if SB 10-001’s COLA provisions withstand court muster. In some cases the taking could reach one-quarter of a retiree’s lifetime pension benefit. This amount of money is “substantial” in the lives of nearly every citizen of the United States . . . it is life-altering.

    Finally, the impairment inflicted by SB 10-001 was not justified. Legal, prospective pension reform options such as those that are being adopted across the country were intentionally ignored by the Colorado General Assembly. The General Assembly conducted no due diligence prior to adopting SB 10-001 . . . it did not appoint a public pension study committee, instead adopting without scrutiny legislation initiated by outside, narrow interests. The General Assembly abdicated its responsibility to protect fully-vested public pension rights to a few dozen hired lobbyists.

    In the last ten years, the Colorado General Assembly has created a study committee whose task it is to manage the building in which the Legislature meets. The General Assembly has created a dedicated committee to study record keeping . . . the Legislative Interim Study of the Management, Storage, Retrieval and Archiving of State Records. One would think that a matter of such consequence as meeting the state’s contractual pension obligations would warrant similar attention from the Legislature. The typical member of the Colorado General Assembly has scant knowledge of the structure and management of public defined benefit plans, much less the contractual nature of public pension obligations. (My guess is that only a handful of Colorado state legislators can tell you the difference between an “ad hoc” and an “automatic” pension COLA. You can rest assured that Colorado public unions and Colorado PERA failed to educate legislators in this regard during their political, lobbying and legal campaigns to take retiree contracted benefits.)

    The General Assembly’s breach of fully-vested pension contracts cannot be justified based on an economic argument. In the last ten years the General Assembly has ignored approximately $3.5 billion in “annual required contributions” to the PERA pension. (Again, perhaps half a dozen members of the Legislature know what an “annual required contribution” is.) Colorado PERA’s funded ratio at the time of the contract breach was in the middle of the pack of U.S. public pension funds. In the 1970s, Colorado PERA’s funded ratio was as low as 54 percent and yet pension contracts were honored. Colorado PERA has told us in writing: “PERA’S funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.” Two weeks ago, the Colorado General Assembly provided conclusive evidence that it does not believe that the State of Colorado is in the midst of a financial emergency when it granted $100 million in discretionary tax relief. In any case, members of public defined benefit plans do not bear “market risk.”

    Secunda:

    “In short, most courts to have considered Contracts Clause challenges regarding pension obligations have concluded that even rather minor impairments of employee contract rights involving compensation are legally unjustified.”

    “The Contract Clause ‘is especially vigilant when a state takes liberties with its own obligations.’”

    “When a State itself enters into a contract, it cannot simply walk away from its financial obligations. In almost every case, the Court has held a governmental unit to its contractual obligations when it enters financial or other markets.”

    Secunda concludes:

    “Because of the lack of legal uniformity in public pension regulation from one state to the next, the only possible way to determine whether state curtailment of public employee pension rights will be constitutional is by undertaking an in-depth legal analysis of the applicable pension laws, regulations, ordinances, court opinions, and prior settlements.”

    (As noted above, the Colorado General Assembly did not conduct this analysis prior to adopting SB 10-001. The Colorado Attorney General conducted an analysis that was ignored by the General Assembly. The matter deserves a thorough vetting by the Colorado judicial system.)

    PERA retirees, type “Facebook” into Google, and create a Facebook page. Then, type in Save Pera Cola and “Friend” them. There’s alot of entertaining stuff on the Save Pera Cola Facebook page, and it’s easy to set up. Also, if you have a few bucks you can spare send them to saveperacola. It says how to do it on their website. While you’re at it, call all the PERA retirees you know and get them to do these things! We can win this!

  18. Al Moncrief says:

    PENSION RIGHTS VICTORY IN ARIZONA!

    The National Public Pension Coalition is reporting that Arizona Governor Jan Brewer “has signed off on legislation to reverse her illegal pension-slashing measure.”

    Colorado PERA retirees take note that the win in this case was for active pension members, trivial petty theft next to Colorado’s Grand Theft Pension.

    Nevertheless, there is something about seeing the rule of law prevail that just warms the heart.

    “On Tuesday, Arizona Governor Jan Brewer finally relented after suffering a major defeat in the Courts and signed off on legislation to reverse her illegal pension-slashing measure that placed a larger burden on the backs of teachers and other dedicated public service workers.”

    “This decisive victory for Arizona’s public service workers has set a legal precedent and wakeup call for politicians nationwide attempting to completely undermine the retirement security of teachers, firefighters, cops, nurses and other middle class workers. It’s not only unfair and morally wrong for politicians beholden to Wall Street to break promises with working people who have always paid into their retirement, it is also illegal.”

    “The state, which wasted millions of taxpayer dollars in court fighting for its illegal pension-slashing scheme, has said it will not appeal the court’s ruling on constitutionality.”

    Article:

    http://www.truthaboutpensions.org/media/releases/az-gov-brewer-forced-to-reverse-course-on-unconstitutional-pension-slashing-scheme

  19. Al Moncrief says:

    MUSINGS ON JUSTUS V. STATE BY A. MONCRIEF: “REASONABLE EXPECTATIONS.”

    It is with great respect for the Denver District Court and Judge Hyatt that I offer a few opinions, make a few observations, and raise a few questions regarding Judge Hyatt’s June 29, 2011 decision in the case Justus v. State. I have excerpted key passages from the Hyatt decision and comment on them below. (I intend to comment on additional passages from the decision in the future.)

    (From the Hyatt Decision, page 4) – “ . . . the latest COLA changes do not impair the parties’ reasonable expectations.”
    (Hyatt Decision, page 8) – “Plaintiffs could not have had a reasonable expectation that the COLA formula that happened to be in place at the date of their retirement would be unchangeable for the rest of their lives.”

    I don’t intend to be combative, but the 3.5 percent COLA formula (non-DPS) did not “happen to be in place.” It was deliberately placed in the law by the Colorado General Assembly and Governor Bill Owens to provide a fixed, automatic COLA that would be paid for life to fully-vested PERA members. As has been noted by Colorado PERA, the changes enacted by HB 00-1458 (including the fixed, automatic COLA) were incentives for early retirement . . . to encourage the departure of older, more expensive employees.

    The Hyatt decision mentions the “reasonable expectations” of PERA members frequently, and thus these expectations appear to be central to the case. Below, I point out that plaintiffs in the case and all other Colorado PERA members and retirees are not alone in holding the expectation that the 3.5 percent COLA would be unchangeable for the rest of their lives.

    I will now demonstrate how such a “reasonable expectation” was conceived, born, nurtured and raised to maturity.

    First, the organization Colorado PERA itself had the “expectation” that fully-vested retiree COLA benefits are fixed and automatic. Colorado PERA’s communicated this to PERA members in writing:

    Colorado PERA: Retirees “will receive an automatic increase of 3.5 percent in their monthly retirement benefit to help keep up with the cost of living.”

    Colorado PERA: “If you began PERA membership on or before June 30, 2005, you will receive an annual increase of 3.5 percent.”

    Greg Smith, PERA’s General Counsel seems to have had a reasonable expectation that fully-vested PERA pension COLA benefits are a fixed, contractual obligation of PERA plan sponsors. One can logically arrive at this conclusion after reading Mr. Smith’s statement published 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)

    If PERA’s General Counsel has this reasonable expectation, why should fully-vested PERA members and retirees not also have this reasonable expectation?

    Meredith Williams, Colorado PERA Executive Director, seems to have held similar expectations: “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.”

    Expectations of a fixed, automatic COLA have historically been made explicit in Colorado PERA’s annual financial reports:

    From December 31, 2001 PERA CAFR:

    “The annual increase for PERA benefit recipients was fixed at 3.5% compounded annually.”

    From the June 30, 2000 Colorado PERA CAFR:

    “In addition, beginning March 1, 2000, the annual increase for PERA benefits will be 3.5 percent compounded annually, and it will no longer be tied to the Consumer Price Index.”

    From December 31, 2000 PERA CAFR:

    “The Board agreed to support legislation designed to encourage earlier retirement and reduce the state’s costs, provided that this legislation would also change PERA’s post-retirement adjustment to an automatic increase of 3.5 percent compounded annually and increase the contribution to PERA’s Health Care Trust Fund once PERA is fully funded. Since House Bill 00-1458 included these provisions, the Board supported this bill.”

    “Beginning in March 2001, the annual increase for PERA benefit recipients will be 3.5 percent compounded annually.”

    “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.”

    Who provided this assurance? PERA’s actuaries? (It is not the responsibility of PERA members and retirees to hire an actuary.)
    It is Colorado PERA’s responsibility to hire professional public pension actuaries. It appears that these actuaries also held the expectation that the COLA was fixed, and automatic for fully-vested PERA retirees:

    Expectations of PERA’s actuaries from the December 31, 2000 PERA CAFR:

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

    (Here PERA actuaries’ clearly state their expectation that the 3.5% COLA is fixed and automatic going forward. Financial statements of the pension were prepared based upon this expectation.)

    Again, expectations of PERA’s actuaries from the December 31, 2001 PERA CAFR:

    (Actuarial section of the CAFR): “Benefits are assumed to increase at a rate of 3.5% after payments begin.”

    Further, PERA administrators have noted the fixed nature of the statutory COLA in testimony before legislative committees:

    From the document:
    PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) FY 2010-11 JOINT BUDGET COMMITTEE HEARING AGENDA, December 17, 2009

    “PERA Response: Cost of Living Adjustments for beneficiaries of the PERA Trust Fund are governed by statute. House Bill 2000–1458 changed the COLA from an indexed COLA based upon the lower of the national Consumer Price Index–W or 3.5 percent to fixed 3.5 percent.” (Note the use of the word “fixed.”)”

    Members of the Colorado General Assembly also hold the expectation that the 3.5 percent COLA is fixed and automatic, and that a legislative diminishment of the COLA would constitute
    a breach of contract.

    Representative DelGrosso (in February): “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.”

    From the SB 10-001 debate:

    Representative Lambert: “I have heard from my constituents, as many of you have, that this proposal will breach retiree’s contracts.”

    Representative 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.”

    Representative 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.

    Representative 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.”

    If members of the Colorado General Assembly (who have a much greater grasp of Colorado statutory construction than the typical PERA member) have such “reasonable expectations” that the COLA is fixed, and automatic why should PERA active members and retirees not also hold that belief?

    A Colorado State Treasurer’s commission has considered PERA pension reforms and concluded that the COLA was fixed and automatic:

    Mike Coffman’s “Commission to Strengthen PERA”: “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.”

    If pension administrators, state legislators, actuaries, and a State Treasurer’s commission have expectations that the 3.5 percent compounded COLA was fixed, automatic, “guaranteed,” and a contractual obligation of Colorado PERA plan sponsors why should PERA retirees (and in particular those who retired on this basis) not also hold such expectations?

    After hearing the expectations of these state officials why should PERA members who sent PERA money from their 401Ks to purchase service credit based on the guarantee of a fixed, automatic 3.5% COLA not have reasonable expectations that the COLA was a legal obligation of the state?

    In all likelihood this expectation of a 3.5 percent fixed, automatic COLA has been a factor in the underwriting of Colorado state and local debt obligations, and establishing the credit worthiness of such obligations. An investor in these bonds should expect an accurate prospectus.

    It appears that “reasonable expectations” that the statutory PERA pension COLA was fixed and unchangeable for the rest of a PERA retiree’s life are widespread.

    In fact, it appears that all parties with an interest in the question at the time had a reasonable expectation that the COLA was fixed and unchangeable for the rest of a PERA retiree’s life.

    As I mentioned above PERA, and elected officials supported HB 00-1458 (the bill that enacted the fixed, automatic 3.5 percent COLA) in part because it was assumed to reduce state costs.
    From the PERA document “2000 PERA legislation, updated May 4, 2000 (on the web)”

    “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.”

    From a news article at the time:
    https://www.cu.edu/sg/messages/2202.html

    “HB 1458 would create early retirement incentives for participants in the Public Employees’ Retirement Association defined benefits plan.”

    Noting this motivation on the part of PERA and the sponsors of HB 00-1458, is it fair to current PERA retirees, who have fully-vested pension rights, for the General Assembly and PERA to have induced them to retire in order to achieve the goals of saving the state money to later renege on that contract?

    The expectation of a guaranteed, fixed, automatic pension COLA held by these PERA retirees was sufficiently strong to induce them to alter the course of their lives . . .to leave their careers.
    Now that these PERA members have accepted the Legislature’s offer and retired based on the expectation that they would receive a fixed, automatic 3.5% COLA in their retirement years is it fair for the General Assembly to retroactively change the terms of the contract?

    Was it the intention of Governor Owens, PERA, or the General Assembly to dupe PERA members into retiring by offering a fixed, automatic 3.5 percent COLA, only later planning to renege on that obligation?

  20. Al Moncrief says:

    A NEW REVIEW OF THE MONAHAN PAPER, “PUBLIC PENSION PLAN REFORM: THE LEGAL FRAMEWORK.”

    Many of you are familiar with the public pension law analysis, “Public Pension Plan Reform: The Legal Framework,” by Professor Amy Monahan at the University of Minnesota School of Law. Monahan’s paper addresses the legal obligations of state and local pension plan sponsors in the United States.

    On page 28 of the 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.” Note the distinction “prior to eligibility for retirement.”

    Read Professor Monahan’s paper here:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1573864

    I recently came across a review of Professor Monahan’s paper by Paul M. Secunda, Professor of Law at the Marquette University Law School. Professor Secunda published his review on February 16, 2012 at this site:

    http://worklaw.jotwell.com/public-pension-plan-problems/

    Particularly intriguing is this passage in Secunda’s review:

    “Where states treat their pension promises as contracts, she (Monahan) discusses federal and state constitutional contract clause challenges when states seek to amend their state pension plans. She points out, quite rightly, that such states are subject to these constitutional challenges because pension changes tend to cause a substantial impairment of the contract without being able to show that it was reasonable and necessary to an important public purpose (i.e., saving money alone has not been deemed an important public purpose). The upshot is that it is very difficult for states with pensions based on contractual theories to reform their public pension plans even when the need to do so is obvious and dire.”

    Reading Secunda’s review I wondered what “important public purpose” other than insufficient public sector resources might exist in Colorado that could justify the breach of fully-vested public pension rights . . . particularly given that partially vested pension rights in Colorado were relatively unscathed by SB 10-001. (Recall the Penry/Brophy statement “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.”)

    It’s clear that the Colorado General Assembly no longer believes that the state faces a fiscal “crisis.” This fact was amply demonstrated a few weeks ago when the Legislature granted $100 million in discretionary tax relief. Does the Colorado General Assembly want the power to beach public pension contracts on a whim?

    Monahan’s paper also highlights a Nebraska Supreme Court decision relating to public pension COLAs:

    “For example, in Calabro v. City of Omaha . . . the City of Omaha sought to eliminate a supplemental pension plan that paid cost-of-living increases to participants. The Supreme Court of Nebraska found such a change to be an unconstitutional impairment of contract, even where third-party financial reports warned that “continued funding of the supplemental benefit would cause serious fiscal problems for the city.” (Calabro v. City of Omaha, 531 N.W.2d at 552). In reaching its conclusion, the court focused on the fact that the same third-party financial reports emphasized the need for a new, alternative funding source for the benefits, not the elimination of the plan. As a result, the court was unconvinced that terminating the plan was the “only viable alternative for correcting its alleged fiscal woes.’”

  21. Al Moncrief says:

    PUBLIC DEFINED BENEFIT PLANS OUTPERFORM IN FIRST QUARTER OF 2012.

    The periodical Pensions and Investments reports that public defined benefit pension plans have performed extremely well (in terms of investment returns) in the first quarter of the year, beating private sector DB plans.

    “Public plans fared the best; the median public fund returned 7.7%.”

    In 2010, Colorado PERA told us that a decline in markets made it “actuarially necessary” to breach fully-vested PERA retiree pension contracts. There are many intelligent people among the 200+ Colorado PERA employees. Surely a few of these employees know that fully-vested retirees in public defined benefit plans do not bear market risk. What cognitive dissonance SB10-001 must have generated among these Colorado PERA staffers.

    Here’s the article:

    http://www.pionline.com/​article/20120503/DAILYREG/​120509947/​defined-benefit-plans-up-7-in-f​irst-quarter-northern-trust-re​ports

  22. Al Moncrief says:

    KANSAS SENATE PASSES PENSION REFORM BILL – ONLY NEW HIRES IMPACTED.

    The Kansas Senate has endorsed a “‘cash-balance’ system to be launched July 1, 2014. It would blend features of the state’s traditional defined benefit approach with elements of a 401 (k)-style private retirement savings plan.”

    “The new Senate bill wouldn’t change benefits of current retirees.”

    “Sen. Roger Reitz, R-Manhattan, said KPERS (Kansas Public Employees’ Retirement System) was floundering because employer contributions to the system had been inadequate for about 40 years. We have not, indeed, kept our promise,” Reitz said. “We as a body should have been doing something about this.’”

    Spot on.

    Here’s the article in the Topeka Capital-Journal:

    http://cjonline.com/news/state/2012-05-03/senate-advances-kpers-reform-bill

  23. Al Moncrief says:

    BYU PROFESSORS: OUR NEIGHBORING STATE, UTAH, FIXED THEIR PENSION PROBLEM WITH PROSPECTIVE, LEGAL PENSION REFORMS.

    From today’s Deseret News in Utah:

    “The 2010 pension reform rendered the expected balance of the fund to be solvent over the foreseeable future.”

    Here’s the article in the Deseret News:

    http://www.deseretnews.com/​article/865554955/​2010-pension-reform-a-plus-for-​retirement-fund-solvency.html?​pg=2

    Contrast Utah’s reforms with Colorado’s 2010 pension reform plan: retroactive, unconstitutional, immoral.

    I can remember what we were told about SB 10-001 back in 2010 by Colorado PERA’s absconding Executive Director.

    From “Ask Meredith” on the Colorado PERA website, (http://www.copera.org/pera/​about/ask.htm):

    “Question: Why was Senate Bill 1 necessary?

    Answer: Projections show the PERA trust funds running out of money in the next 30 years without the kinds of changes contained in SB 10-001.”

    Apparently, legal, prospective “kinds of changes” are also available to address pension unfunded liabilities.

    Will someone please explain how it can be “actuarially necessary” to breach fully-vested retiree pension rights of Colorado PERA retirees living in Grand Junction, but not “actuarially necessary” to breach fully-vested pension rights of a Utah Retirement System retiree living 112 miles away in Moab?

  24. Al Moncrief says:

    PROVIDENCE, RHODE ISLAND TO ATTEMPT SOME COLA THEFT, MONAHAN WEIGHS IN.

    Bloomberg is reporting that the City of Providence will attempt to take contracted COLA benefits from current retirees. “Paul Doughty, who leads the local firefighters union, called it ‘huge mistake’ that will be challenged in court. ‘If they lose this in court, almost certainly they will end up in bankruptcy. They’re playing a huge game of chicken.’

    Meanwhile the (typically reticent) Professor Amy Monahan of the University of Minnesota School of Law has weighed in: “Providence is one of the few municipal governments that has sought to roll back benefits already being paid to retirees or accrued by public workers, said Amy Monahan, a professor at the University of Minnesota Law School. In most cases lawmakers have sought to cut costs by increasing contributions for new workers or renegotiating current contracts, she said.”

    Here’s the Bloomberg article:

    http://www.bloomberg.com/news/​2012-04-30/​providence-eying-bankruptcy-cut​s-pensions-in-rhode-island.htm​l

    FYI, here’s the recent lower court ruling in RI “The case law does not preclude but rather supports this Court’s holding that Plaintiffs, as ten-year veterans of the State, possess a contractual relationship with the State pertaining to retirement allowances and COLA benefits which are not subject to collective bargaining.”

  25. Al Moncrief says:

    CNBC UPDATE ON STATE PENSION REFORMS: COLORADO CLEARLY AN OUTLIER IN BREACHING FULLY-VESTED PENSION CONTRACTS.

    CNBC has published article this morning (5-1) summarizing state legislative pension reform efforts. It’s clear that the Colorado Legislature is an outlier in this arena . . . only a handful of legislatures across the country have attempted to take fully-vested pension benefits from current retirees.

    “’People entered into state government with a state contract provided for specifically in the Constitution,’ said Roy Mongrue, general counsel for the Teachers’ Retirement System of Louisiana and a former assistant attorney general.”

    Thank God we have officials like Mongrue (a state pension general counsel, and former staff in the state Attorney General’s office) who are defending the contracted pension rights of public employees. (Hold that thought . . . I guess our Colorado PERA General Counsel and the office of the Colorado Attorney General might be considered exceptions.)

    Here’s the CNBC article:

    http://www.cnbc.com/id/​47242091

  26. Al Moncrief says:

    THE COLORADO EDUCATION ASSOCIATION HAS A NEW PRESIDENT.

    Kerrie Dalman, President of the Jefferson County Education Association is taking over the reins at the CEA. Current CEA President Beverly Ingle is retiring from the teaching profession, as well as the CEA board.

    (Beverly, now that you are a PERA retiree you are invited to join us in the defense of PERA retiree contracted benefits.)

    Ms. Ingle served as President of the CEA during the years of Colorado PERA’s lobbying and political campaigns and the Colorado Legislature’s enactment of SB 10-001, taking fully-vested teacher retirement benefits from retired CEA member teachers in Colorado.

    The President of the National Education Association had this to say about Ms. Ingle’s tenure at the CEA:

    “Beverly has been strong and fearless in fighting for CEA members and public schools,” said Van Roekel.

    (Heads up teachers, after you retire from the teaching profession you are apparently on your own . . . get ready to twist in the wind.)

    Perhaps with new leadership the CEA can be persuaded to support pension rights for their members. Teachers get on it!

    Here’s a link to a news release, and an Ed News Colorado article:

    http://www.ednewscolorado.org/​wp-content/uploads/2012/04/​For-immediate-releas1.pdf

    http://www.ednewscolorado.org/​2012/04/29/​37564-monday-churn-new-cea-chie​f

    • saveperacola says:

      CEA members often join CEA-Retired after leaving employment, including NEA-R and their local affiliate’s -R. These memberships permit retirees to have a voice in Association decisions at all levels. While the dissent to SB1 did not become organized in time in late 2009 and early 2010, teacher retirees should plan to be active in the future by becoming an elected delegate to CEA’s Delegate Assembly held in April of each year. This is where the CEA legislative agenda is approved and future changes negative to retirees can be opposed early in the process. In all other respects, Ms. Ingle’s tenure has been admirable. CEA apparently thought that SB1 was the best that they could get with PERA and the legislature in its “manufactured crisis” mode. We disagree. Even Pinnacol Assurance got a one year legislative study committee to responsibly study, propose and publicize major changes. We retirees got a carefully orchestrated PERA “listening tour” that seriously glossed over how much retirees were forfeiting in contracted annual benefit increases (COLA). Nowhere did PERA ever tell retirees about the hundreds of thousands of dollars SB1 would take from each of them. Nor did they mention previous statements by PERA Executive Director Meredith Williams, PERA General Consul Greg Smith (now interim Exec) or Colorado’s former Attorney General Ken Salazar that it would not be legal to take vested benefits from retirees. Had they done so in their PERA fiduciary capacities, retirees would have protested in much greater numbers and SB1 likely would have failed in the House of Representatives, where it passed by a vote of just 36-29 (a 4 vote margin). Integrity took a backseat to expediency.

  27. Larry Reedyt says:

    Thanks for all you do. What is the name(s) of the judges who voted agaainst us? I want to know before election day.
    Larry

  28. Douglas Pittman says:

    I have felt that for over ten years the State has renigged on paying their fair share into the Pera Pension fund, I believe that had they not stopped paying their fair share a decade ago when the pension fund was actually at +100% funding the 2008 crisis would have for the most part gone unnoticed by Pera. They keep claiming that this event hurt the fund to such a great extent, yet they fail to acknowledge that the crisis has passed and the investments are again performing way above the 8% that they expect. Thanks for posting the Illinois story, maybe all of us should send this to the courts hearing our case as well as our legislators. Oh and one more thing, don’t forget to vote out the ones that choose not to honor their contract with us!!

  29. Al Moncrief says:

    ILLINOIS RETIREMENT SECURITY INITIATIVE PUBLISHES PAPER DEFENDING PENSION RIGHTS: “IN SUM, WELCHING IS NOT A LEGAL OPTION AVAILABLE TO THE STATE.”

    The Illinois Retirement Security Initiative has published a very well-crafted and thorough legal analysis of the pension rights of Illinois’s public employees.

    The paper, written by Eric M. Madir, notes that the Illinois Supreme Court has invalidated the taking of vested pension benefits from public employees based on both the Pension Clause and the Contracts Clause of the Illinois Constitution. “The court’s principal holding that the Pension Clause (and the Contracts Clause in the public pension context) is an absolute bar to legislative impairments or reductions in pension benefits” cannot be ignored.

    The paper addresses the development of pension law in Illinois and other states, focuses on Illinois’s historical underfunding of its pension systems, and summarizes the past campaign for a constitutional pension protection provision in Illinois.

    Here is an introduction to the paper by the Illinois Retirement Security Initiative:

    http://www.ilretirementsecurity.org/reports?id=0059

    Here is a PDF (76 pages) of the paper:

    http://www.ilretirementsecurity.org/admin/reports/files/Pension-Clause-Article-Final.pdf

    I gave the paper a quick read last night and was struck by the fact that it exclusively addresses the pension rights of current workers. The idea of taking of fully-vested benefits from retirees (Colorado’s pension theft target) is so far beyond the pale that it is not even contemplated.

    Below are some excerpts from the paper (in no particular order) that I found interesting:

    First a quotation:

    “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.”

    —Franklin MacVeagh, former President of the Commercial Club of Chicago and U.S. Secretary of Treasury.

    Particularly relevant to the current Illinois Governor’s pension reform proposal is the following statement:

    “An Illinois Appellate Court has explained that “the [government] cannot whipsaw citizens into ‘voluntarily’ choosing one of two means by which they will be divested of an existing property interest.”

    “Public employees have paid their required fair share of pension costs; it is incumbent on the State to meet its end of the bargain.”

    “These unfunded liabilities, though, are not the fault of public employees. Public employees have historically paid their fair share of the normal cost of benefits through payroll deductions. Rather, the liabilities principally stem from the State’s decades-long failure to make its required contributions to the five pension systems.”

    “Illinois courts have long held that the General Assembly lacks the power to amend or repeal legislation that affects vested rights.”

    “The Legislature and various governors chose for decades to use the pension system as a credit card to fund public services and stave off the need for tax increases or service cuts.”

    “In sum, welching is not a legal option available to the State.”

    From the case Felt v. Judges Retirement System: “The court ‘found that a contract clause violation was not defensible as a reasonable exercise of police power.’”

    “These are the ill effects of decades of skipping pension contributions to avoid tax increases and service cuts—a circumstance Illinois Governor John Peter Altgeld described long ago as the “cost of [getting] something for nothing.”

    From an Illinois Appellate Court decision in: Sklodowski v. State: “Once rights are created by the constitution or statute, ‘It is within the realm of judicial authority to assure that the action of members of the executive branch do not deprive [individuals] of an institution of rights conferred by statute or by the Constitution.’”

    The paper includes a concept from the case Ziebell v. Forest Park Pension Fund that adds clarity to public employee pension rights where employee pension benefits have increased over time. An employee’s right to a pension benefit is protected where the employee made contributions to the pension system after an increase in a pension benefit takes effect (for example, Colorado PERA members have continued their pension contributions after past increases in the COLA benefit took effect, and therefore have a vested right to that statutory benefit.)

    The paper cites an Arizona Supreme Court decision in Yeazell v. Capins. In that case, the court held that since pension benefit rights of public employees became “vested” upon accepting employment, the legislature could not later change those rights retroactively without the mutual assent of the employee. The court also held that the fact that the employee continued to work after the statutory change took effect could not be construed as employee acquiescence or a waiver of rights.

    The Madir paper notes that even if Illinois’s pension funds were to default, pension recipients would have a cause of action to receive their pension benefits. “Pension recipients will receive their pension payments when due even if a pension fund defaults or is on the verge of default. Any state pension participant placed in such a position would have a cause of action in circuit court to enforce this guarantee and obtain payment directly from the State’s General Fund. A participant need not pursue payment before the Illinois Court of Claims and depend upon the largesse of the General Assembly.” The Illinois Supreme Court has held that “where a constitutional or statutory provision categorically commands the performance of an act, so much money as is necessary to obey the command may be disbursed without any explicit appropriation.”

    Can legislatures breach contracts and blame it on a recession?

    “Courts, though, “sit to determine questions on stormy as well as calm days,” and the Constitution was upheld during the Great Depression.”

    “As the Oregon Supreme Court stated in a similar context, “Once offered and accepted, a pension promise made by the state is not a mirage (something seen in the distance that disappears before the employee reaches retirement).”

    What can you do? Go to the saveperacola.com website, click on the “Support” tab, and send them a contribution. Call or e-mail every PERA member and retiree you know and ask them send support. Call your public employee union representatives and ask them how they can stand idly by while the Colorado Legislature attempts to breach its contracts with public employees. Colleagues of our public sector union officials across the country are aggressively defending the pension rights of their union members. What has happened in Colorado is truly bizarre.

    To follow developments in the Colorado pension theft lawsuit sign up as a Friend of Save Pera Cola on Facebook.

    Have your friends sign up as Friends of Save Pera Cola. Copy this post and e-mail it to PERA members and retirees you know.

  30. Kathy Ratz says:

    Thant you all for your commitment and the time you have dedicatd to this cause that involves so many PERA retiirees. Kathy Ratz

  31. Al Moncrief says:

    COLORADO PERA PENSION THEFT LAWSUIT SCHEDULE AND HOW TO HELP.

    Saveperacola is raising funds for attorney fees to combat the theft of retirement benefits that were earned by PERA members over decades.

    Are you a PERA member or retiree? Have you paid into PERA for many years? Do you expect the Colorado Legislature and Colorado PERA to honor their contractual obligations to you?

    Well, your expectations are not grounded in reality.

    It is pathetic, but the Colorado Legislature and Colorado PERA will not honor their legal commitments to you short of a court order. That has become quite clear during Colorado PERA’s political, legal and lobbying campaigns.

    If Colorado PERA members and retirees do not act, our interests will be brushed aside.

    In a nutshell, the Colorado Legislature and Colorado PERA are trying to avoid their debts to public employees. The Colorado Legislature has the ability to “define” a pension “crisis” into existence and then attempt to use that “crisis” to justify the breach of pension contracts.

    The Legislature can create a funding “crisis” by skipping its annual required contributions to the PERA trust funds. For a decade the Colorado Legislature has done just that. It has ignored the level of contributions that it must make every year to the PERA pension in order keep it financially sound. This level of annual contributions (called the ARC) is determined each year by Colorado PERA’s actuaries. To date, the skipped contributions exceed $3.5 billion. Just this week the Colorado Legislature is skipping in annual required pension contributions in order to provide $100 million in discretionary tax relief. Having ignored its obligations for years, the Legislature would like to compensate for its negligence by essentially stealing money from Colorado PERA members and retirees.

    The Colorado Legislature and Colorado PERA are also trying to use the volatility of investment markets to justify their breach of contracts. Remember that Colorado PERA members and retirees are members of a defined benefit plan. They do not bear any “market risk.” In a defined benefit pension, “market risk” is borne by the sponsors of the plan, that is, the State of Colorado and Colorado local governments. The Colorado Legislature and Colorado PERA want to retroactively change the terms of our statutory pension contract.

    Here’s a quote from the saveperacola website:

    “Remember, the bottom line here is that unless we prevail in this lawsuit, PERA is off the hook for keeping the promises it made to every member and retiree.”

    What can you do? At the saveperacola.com website, click on the “Support” tab, and send them a contribution. Call or e-mail every PERA member and retiree you know and ask them to send support. Call your public employee union representatives and ask them how they can stand idly by while the state attempts to breach its contracts with public employees. Their public sector union colleagues across the country are aggressively defending the pension rights of their members and retirees.

    To follow developments in the Colorado pension theft lawsuit sign up as a Friend of Save Pera Cola on Facebook. Have your friends sign up as Friends of Save Pera Cola.

    Copy this post and e-mail it PERA members and retirees you know.

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