More PERA Cuts?…or…Win the Lawsuit!

The attack on PERA retirees’ annual benefit increases is starting up again, this time by Governor John Hickenlooper. We are again seeking to raise additional funds to support our legal efforts in overturning in state court the serious reductions in those increases that Senate Bill 10-001 created two years ago.  We would like to take this opportunity to talk about the importance of winning this case for the economic well-being of current and future retirees, and to talk about the way in which we need to go about fund-raising and consciousness-raising.  Most importantly, we want you to understand the direction that the governor appears headed.  The governor’s comments illustrate quite clearly how precarious PERA’s promises about our pensions are.


For those of you who didn’t see it, you should read the account, published in the Pueblo Chieftain, of Governor Hickenlooper’s comments about pension issues.



The Governor stated that SB1 did not go far enough in cutting retiree benefits and that he supports further cuts, specifically further reductions in the annual increases!  This is exactly the scenario that we predicted in our last communication to you.


PERA cannot interpose any legal objection to such a proposal: Its court filings in our lawsuit assert that there are no contractual rights to the annual increase.  The Governor is merely moving further down a road already paved by PERA.  The governor is also taking PERA’s lead in proposing a 5-year Highest Average Salary for current employees and increasing the retirement age again.  The HAS change was part of the original Senate Bill 1 that did not make it into law as passed.


Curiously, PERA has rediscovered contractual rights in their opposition to some legislation (far less damaging to pension rights than SB1 was) introduced this session but has not retracted what it stated in its legal briefs. Nor has it, to our knowledge, said anything publicly about the governor’s proposal.  By placing our retirement benefits outside the constitutional firewall, PERA has enabled proposals like this as well as the other negative legislation introduced this session.  It then piously opposes some of this legislation – even though it was inspired by its own actions.


PERA could oppose the governor’s proposal on the grounds that it is unnecessary since the actuaries have estimated that PERA will be 100% funded within the 30-year period.  However, it is now well within the power of the legislature and the governor to overcome this objection.  How?  They can simply refuse to provide the amount of funding necessary, or change the investment assumptions, or increase the required funding percentage again, or just wait until the next market downturn and there will be an unfunded liability once again.  Having created a new and severe funding problem, they will again demand that the problem be “fixed” by cutting benefits.  PERA has acquiesced to actions like this in the past, so it we should not expect it to resist in the future.


We believe that this provides additional evidence that Colorado no longer considers its defined benefit (DB) pension plan to be a contract with PERA members, and instead considers it to be a “gratuity” (GP) to be paid only when politically expedient. We also believe that it supports the notion that PERA is not an effective advocate for those whose money they have taken for many years.  It is PERA itself that has put us on this slippery slope.  Take a few minutes and read its legal brief where it asserts that it had no contract with us to provide the promised benefits.    (See p18)

The need for prevailing in the lawsuit has never been clearer though we suspect it will continue to get clearer yet as proposals like the governor’s gain traction.  Given all this we believe that different options should be considered like a Social Security hybrid plan.  This would at least provide for real COLAs for that portion of the benefit and would eliminate the Social Security offset for those PERA members who have Social Security from other employment. 


Many public sector unions have strongly opposed attempts to roll back pension benefits, especially for the already retired, but some have not.   As far as we know the national organizations with which the Colorado unions are associated are all defenders of pension rights.  We would ask those of you who are present or former public sector union members to encourage your unions to support the efforts of SavePERACOLA and other similar organizations.


In order to raise funds for the appeal and to create understanding for the struggles to come, we are asking for your help.  We are up against an organization with

1) $40 billion of our money;

2) the willingness to spend as much as they need to in legal and lobbying expenses to prevail and;

3) the support of the political establishment in both parties


Other than minimal expenses for operating expenses (tax filings, purchase of contact lists and the like) all the funds raised thus far have gone to the attorneys to help cover their out of pocket expenses in what promises to be a lengthy legal process.  No person associated with SavePERACOLA receives any kind of salary or stipend.


We welcome additional contributions from our traditional supporters such as you, but we also need to broaden our support base.  To this end, we would request that each of you use your personal, email and social networking contacts to recruit additional supporters.  In this way, we can broaden our base and avoid asking for ever more money from retirees whose income is already at risk.


Please, make a donation today to Save PERA COLA and we will forward it to our law firm to meet our commitment to them. We are well over half way to our goal and want to reach it soon in conjunction with the expected ruling this year by the Colorado Court of Appeals.


Remember, the bottom line here is that unless we prevail in this lawsuit, the PERA is off the hook for keeping the promises it made to every member and retiree.   It will excuse itself again of any benefits it believes it cannot afford. There is nothing legally that you or I will be able to do about Governor Hickenlooper’s most recent proposals —unless we win in court. Are you with us?


Thank you for your continued support.


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