3/15 UPDATE: House State Affairs committee killed SB 158 on a 6-3 partisan vote.
3/8 UPDATE: SB158 passed on 3rd reading out of the Senate and is headed to the floor. It has been assigned to House State Affairs and will be heard March 15th at 1:30 pm in the Legislative Services Building (across the street from the Capitol) in Room A.
2/21 UPDATE: SB158 passed out of Senate Finance to the floor on a partisan vote.
UPDATE: SB 158 has been assigned to Senate Finance
Senate Bill 158 is sponsored by Senator Tate (R- Arapahoe County) and Representative Nordberg (R – Colorado Springs)
You can read the bill in its entirety by clicking here.
Senate Bill 158 would change the composition of PERA’s Board of 15 Trustees. It would reduce the number of Trustees elected by members and increase the number of Trustees appointed by the Governor.
The current board consists of:
- The state treasurer;
- Three elected members of the state division;
- Four elected members of the school division;
- One elected member of the local government division;
- One elected member of the judicial division;
- Two elected retirees;
- Three trustees appointed by the governor and confirmed by the senate who are not PERA members or retirees and who are experts in certain fields;
- And, one ex officio trustee (non-voting) from the Denver Public School division.
Senate Bill 158 would:
- Eliminate one elected member trustee position from the state division;
- Eliminate 2 elected member trustee positions from the school division;
- Require at least one elected member from both the state division and the school division to be at least 20 years from retirement eligibility; and
- Add 3 more trustees appointed by the governor and confirmed by the senate who are not PERA members or retirees and who are experts in certain fields to replace the eliminated elected member trustee positions. The additional appointed trustees must have significant experience and competence in investment management, finance, banking, economics, accounting, pension administration, or actuarial analysis.
- Current Trustees have the skills, knowledge, and 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 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.
- Board composition was modified in 2006 when three Governor-appointed and Senate approved Trustees were added to the Board.
- The Board makes recommendations to the General Assembly but it is the General Assembly that ultimately decides what the benefits structure should look like and what the contribution amounts should be – not the PERA Board.
- The provisions of the bill are discriminatory due to the mandate that two seats be held by members who are more than 20 years away from retirement. No one older than 45 could be elected for his or her first term for a seat with the 20 years from retirement eligibility criteria since members can retire at age 65 with any amount of service. This bill may also exclude some members older than 30 from being on the Board when first elected since some members can retire at age 50 with 30 years of service.