This bill had a public hearing in front of the House Finance committee on February 23rd. We are waiting for the committee to now schedule a vote on this bill. This bill was postponed indefinitely.
HB 12-1179 is sponsored by Representative Jim Kerr (R-Littleton). The bill would replace four of the elected positions on the PERA Board of Trustees with four Governor-appointed Trustees approved by the Senate. The new appointees would join the Board as the terms of elected Trustees expire. When fully implemented, seven Trustees would be elected by PERA members/benefit recipients and seven Trustees would be Governor appointees. The State Treasurer would remain on the Board as a voting member and a non-voting member or retiree from the Denver Public Schools (DPS) Division would remain on the Board.
The bill also provides that in both the State and the School Divisions, at least one of the two Trustees elected from each Division after January 1, 2013, be 15 or more years from retirement eligibility on the date the Trustee begins serving his or her first term on the Board.
CCRS opposes this bill as there are numerous studies about how member elected board do a better job managing the resources than appointed boards.
This bill would make elected member representatives a minority of the members on the Board of Trustees.
You can view this bill in this entirety here.
Colorado PERA was the first public pension fund in the United States to respond to the economic downturn and has been called a model for other states to follow by the Center for State and Local Government Excellence and The New York Times.
- Board composition was modified in 2006 when three Governor-appointed and Senate approved Trustees were added to the Board. These appointed Trustees are required by law to have relevant pension administration expertise and cannot be a member of the plan.. All benefit and contribution provisions of PERA are determined by the General Assembly. The preamble of HB 12-1179 falsely asserts that the Board has this capacity and is therefore inherently conflicted.
The provisions of the bill are discriminatory due to the mandate that two seats be held by members who are more than 15 years away from retirement. No one older than 50 could be elected for his or her first term for a seat with the 15 years from retirement eligibility criteria. This is true since members can retire at age 65 with any amount of service. Also, this may exclude some members older than 35 from being on the Board when first elected since some members can retire at age 50 with 30 years of service.
The PERA Board administrative model represents the best practices in governmental pension plan governance.
Research by Boston University Asst. Professor of Law David H. Webber shows that when there are elected or “beneficiary” members of boards, the investment returns are better.
Current Trustees have skills, knowledge, and the experience to effectively manage the fund. All Trustees are required to attend educational workshops on investments, actuarial practices, benefits administration, and other topics related to serving as a fiduciary. Additionally, the Board employs a professional staff and many consultants who are experts in all areas of the Board’s responsibility. The 11 Trustees who are members or retirees hold many advanced degrees including 11 master’s degrees. Two hold law degrees, one has a Ph.D. in public policy, two Trustees are C.P.A.s. and one is a Chartered Financial Analyst.