State legislators on Tuesday seemed unwilling to either disclose or divest their personal state pensions, despite a call for both.

John Andrews, former state Senate president, said lawmakers can't make ethical, impartial decisions on reforming the Colorado Public Employees' Retirement Association when they're slated to receive PERA pensions.

But House Minority Leader Mike May, R-Parker, said it's unreasonable to suggest lawmakers must divest themselves of PERA before they can take a vote on reform.

"We wouldn't be able to vote on anything" according to that reasoning, he said. "Somebody has to be able to do the business of the state."

Andrews said in a Tuesday news conference that "full public confidence requires every legislator's vote be above reproach and be free from even the appearance of conflict of interest."

He was joined by three lawmakers, including Rep. Dave Schultheis, R-Colorado Springs, who said they will ask that debate be stopped on several PERA bills until legislators disclose their pensions and pull out of the plan.

Gov. Bill Owens also thinks lawmakers should disclose their PERA investments, but his spokesman stopped short of calling on legislators to give up their pensions.

"He certainly doesn't see any reason why legislators would not want to disclose what their retirement plan is," Dan Hopkins, the governor's spokesman said Tuesday.

PERA has more than 378,000 active, inactive and retired members, including state employees and teachers in all districts outside Denver. Its members do not earn Social Security benefits, making PERA the primary provider for its members' retirements.

The plan was flush after the stock boom but now has an $11.3 billion unfunded liability. More important, PERA's own projections show the liability will not be paid off without hundreds of millions of dollars in new taxpayer money each year or a big stock-market rebound.

Legislators were once required to be in PERA. But after term limits were introduced, legislators were given the option of participating in a defined-contribution plan, where they invest their own money. Many now do.
Senate Minority Leader Andy McElhany, R-Colorado Springs, called Andrews' demands "immaterial and irrelevant. . . . The problem is not the 100 members of the legislature who may or may not be members of PERA. The problem is unfunded liability and who pays it."

"I don't know where John Andrews is coming from," said Sen. Dave Owen, R-Greeley, who is sponsoring one of two major PERA reform bills this session. Owen has 14 years in PERA, some of which were accumulated at a time when legislators were required to participate in the pension.

"I make decisions every day down here on car insurance, seat belts, auto registration and such. Does that mean I have to give up my car? John didn't give up his car when he voted on those kinds of issues," Owen said.

Andrews is currently a senior fellow at the Claremont Institute, a California think tank that advocates limited government.

He said he tried to get information from PERA on legislators' participation, but he says the Open Records Act request was denied because of Colorado law that prevents PERA from releasing member account information.

He then surveyed legislators, but got just 17 responses, 16 from Republicans and one from Democrat Fran Coleman of Denver. Of the 17 who replied, just four are members of PERA, Andrews said.

Potential PERA pension payments are not part of the standard financial disclosure form legislators fill out each session, Andrews noted. PERA spokeswoman Katie Kaufmanis could not address the legal reasons behind PERA's refusal to disclose the data. But she said "in PERA's dealings with the Colorado General Assembly over the years, we have found legislators to be thoughtful, deliberative and focused on the best interests of Colorado's citizens."

Owen's bill has the backing of the governor, who says PERA reform is one of the most important items on the legislature's agenda this year. He's threatened a special session if a comprehensive reform bill is not passed.

Spokesman Hopkins said the governor participated in PERA for seven-plus years, then pulled his money and rolled it into the state's defined contribution plan. He did not purchase any extra years of service credit, Hopkins said, and he is not eligible for PERA pension payment.

"He's certainly been open about it," Hopkins said.

milsteadd@RockyMountainNews.com
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Is PERA pension fund in trouble? NO
Facts contradict predictions of fiscal doom
By JAMES CASEBOLT
From the Pueblo Chieftan
March 12, 2006
James Casebolt is a judge on the Colorado Court of Appeals and is chairman of the Colorado PERA Board of Trustees.

A recent column in The Pueblo Chieftain about the Colorado Public Employees' Retirement Association suggested that Colorado taxpayers will have to “pony up” millions of dollars annually to fund the retirement benefits for thousands of public employees. Unfortunately, the column was unnecessarily alarmist and mistaken on key points. Here are the facts:

Colorado PERA is the retirement plan covering most public employees in Colorado, including those who work for the state, local governments, and school districts. In fact, there are over 4,600 residents of Pueblo County receiving monthly benefits from PERA and 8,800 active participants in PERA in the county. Most PERA members do not contribute to Social Security, so they do not receive Social Security benefits in retirement. The average annual benefit received by retirees from PERA is less than $30,000, which is hardly lavish.

But the total benefits paid to all retirees (over $2 billion in 2005) together create an economic boost to the Colorado economy, as almost 90 percent of all PERA retirees and benefit recipients reside in Colorado. Colorado PERA also invests in Colorado businesses and owns Colorado real estate. Contributions are invested on the members’ behalf by PERA’s investment staff, saving taxpayers tens of millions of dollars annually that would otherwise be paid in fees to money management companies headquartered outside of Colorado.

The column’s most sensational and misleading charge is that PERA will “run out of money to cover all retirees by the mid-2030s” without reforms. This simply isn’t the case. In fact, PERA’s assets are estimated to be in excess of $60 billion in 2034.

Colorado PERA is like many other pension plans (whether corporate or governmental) across the nation that have what are known as “liabilities.” If you think of PERA in terms of your home mortgage, PERA’s “mortgage” is 74 percent paid off. You wouldn’t expect to have to pay off your home the first day you moved in, would you? Of course not. The same is true for PERA - not every dollar of the benefits PERA owes to future retired public servants of Colorado is due and payable today.

Nevertheless, PERA believes that thoughtful legislative reform is a prudent course of action to protect both current and future retirees and taxpayers. Specifically, PERA is proposing that the Colorado Legislature and Gov. Bill Owens consider accelerating the increase in employer contribution rates - increases that are already called for in state law.

Historically, PERA’s employer contribution rate (the amount contributed by the state, local government, or school district that employs the PERA member) has averaged about 12 percent of salary. As PERA grew to be 100 percent funded in 2000, this rate was decreased to below 9 percent, saving the public employers in Colorado more than $325 million. We don’t think it’s unreasonable that these contribution rates be restored to the levels they were in the past.

The column erroneously states that member contributions would decrease under the reform plan that PERA supports. In fact the member contribution of 8 percent would be maintained for all current members. Only in the proposed new tier of membership that begins after 2007 would the new member contribution rate be reduced by 1 percent. This is in recognition of a lower benefit that would be earned by these new members.

It’s simply common sense. Members who will receive decreased benefits should not have to pay as much into the system. (Details on PERA’s proposed legislation can be found at http://www.copera.org/pdf/legislation2006.pdf.)

Is PERA in a crisis situation where immediate and drastic action needs to be taken? No, it is not. Certainly, we would like for employer contribution levels to be immediately restored to past levels. But we also know that the state and our other public employers are also recovering from financial stress. We believe the solution to improving PERA’s financial health is a measured approach that includes the gradual restoration of the employer contribution rate as well as benefit changes for new PERA members.
The solution to PERA’s funded status is not a quick fix that would throw the baby out with the bath water. Prudent people know that complex problems require intelligent, well-thought out responses that are seasoned with political and economic reality. We welcome the constructive suggestions for change that have been presented. However, we also want to set the record straight on the issue of PERA’s reliance on the Colorado taxpayer.

The Colorado PERA Board of Trustees and staff believe that accountability and transparency are hallmarks of good pension plan management. The alternative to Colorado PERA would neither be in the best interests of Colorado PERA members nor the taxpayers of the state of Colorado.

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Legislature at the halfway point
written by Adam Schrager 9NEWS Reporter
DENVER - Important issues such as the state budget, education, transportation, health care and immigration reform remain for state lawmakers as they reach the halfway point of the 2006 legislative session.

Hovering over the remaining 60 days is the possibility of a special legislative session if lawmakers can't come up with a plan to reform the state's pension plan or PERA and ethics complaints against members of both political parties.

"We will enforce the rules. We will hold accountable any member, Democrat or Republican, who violates the ethical standards of the General Assembly," said House Speaker Andrew Romanoff (D-Denver). "But I will not allow that process to sidetrack our work on other important issues. Our time is too short.

Our resources are too scarce and the states are too high to do anything else. "Romanoff said lawmakers still have to decide how to spend the roughly $4 billion in surplus tax revenues as a result of the passage of Referendum C in November, but that the extra revenue has already allowed state lawmakers in both parties to provide services to 613 Colorado children with developmental disabilities.

"A lot of these kids will lead healthier, longer and more productive lives because we are able as a state to provide the assistance until now had been denied (to) them," said Romanoff. "If we did very little else this year, I think we could all take credit in that."

Governor Bill Owens (R-Colorado) said the majority of the major issues have yet to be resolved, but that he "was disappointed" that tenure reform at the state's universities was not accomplished. He said the issue may come back in the next two months.

The Governor insisted PERA could be fixed and that he expected lawmakers to do that. He also lobbied for more transportation funding and said he would continue to insist that the Referendum C money be spent as promised to voters, on education, health care and transportation.

"I know this Legislature and this Executive are going to, we're going to keep to the commitment on Referendum C and the budget will reflect that," Owens said.

Colorado law requires the legislature meet for 120 days and no longer without a special session called by the Governor.

The 2006 General Assembly is set to adjourn on May 10.

(Copyright by KUSA-TV, All Rights Reserved)

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PERA reform just snake-oil political ploy
Richard Trahan, Ph.D.
From the Fort Collins Coloradan
Originally published March 8, 2006

PERA is the state of Colorado's Public Employees' Retirement Association established by state law in 1931. Members include employees of the Colorado state government, most public school teachers, many university and college employees, judges, state troopers and many employees of cities and towns and other public entities.

For most of these public employees, PERA is a substitute for Social Security. Benefits are pre-funded, which means that while a member is working, he or she contributes a fixed percentage of salary to the retirement trust funds. This percentage is usually 8 percent. Employers also contribute a percentage of pay to the trust fund, approximately 10.65 percent. PERA's administrative and investment costs (less than 1 percent) are well below other pension funds in both the private and public sector according to "The Buck Study" commissioned by the State Auditor's Office.

Is there an immediate financial crisis facing PERA? No. PERA's funding status is not in any immediate crisis. The funding status of PERA for the payment of retirement benefits is essentially the same as it was 25 years ago and significantly better than it was in 1970. PERA has the assets it needs to fund current and future retiree benefits. In fact, because 65 percent of PERA benefits are paid from investment earnings, the fund could continue to pay retiree pensions for over 40 years, even if there were no additional investment earnings.

So why are there calls for "reform?" At this time, PERA is not fully funded, only in 1999 and 2000 was PERA over 100 percent funded. PERA, like all other pension funds, is heavily dependent on the investment market. Although PERA's funding was greatly affected by the market downturn in the years from 2000 to 2002, the historical earnings of PERA over the last 10 years has been 10.4 percent, and 10.9 percent over the last 25 years. Further, during the last two years, PERA's rate of return has been approximately 24 percent (2003) and 14 percent (2004), respectively. These rates of return now and future rates of return will likely continue to improve the funding of PERA. The PERA Board has proactively proposed legislation to stabilize the funded level of the plan for its nearly 400,000 active and retired members.

The central goal of some of the "reformers" is ultimately the privatization of PERA under the guise of cost-savings. PERA costs the taxpayers less than most retirement programs in the private sector. PERA's employer contribution rate (10.65 percent state and school divisions) is below the employer contribution rate for all private employers (11.65 percent), according to Chamber of Commerce data from 2004. The average employer contribution for a privatization "fix" will cost taxpayers more than what is currently being paid to PERA public employees.

While there is a right-wing ideological move to privatize all public pension funds such as Social Security, privatization also means profits for special interests. PERA currently has $35 billion in assets and is projected to have over $60 billion in 30 years. Privatization will turn those assets over to Wall Street investment brokers and large brokerage firms. Colorado taxpayers would lose significant amounts in costly fees to these firms.

PERA's long track record of successful fiscal management provides a cost-effective retirement program for Colorado. Maintaining PERA as a defined-benefit plan ensures a predictable retirement for public employees without Social Security. We will continue to see efforts from out-of-state ideological and special-interest groups that hope to profit by convincing voters that it is to their benefit to "reform/destroy" PERA.

Richard Trahan, Ph.D., is a retired professor and associate dean from the University of Northern Colorado.
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