Update: House State Affairs committee postponed House Bill 1111 indefinitely on a party line vote of 5-3.
House Bill 1111 is sponsored by Representative Everett (R- Jefferson County) and Senator Neville (R – Jefferson County).
You can read the bill in its entirety by clicking here.
House Bill 1111 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. It would also require certain elected members to be at least 20 years from retirement eligibility.
The bill would also provide any member of the PERA Board access to all records and information controlled by PERA.
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.
House Bill 1111 would:
- Eliminate one elected member trustee position from the state division;
- Eliminate 3 elected member trustee positions from the school division;
- Require both elected members from the state division and the members from the school division, the local government division, and the judicial division to be at least 20 years from retirement eligibility;
- Add 4 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; and
- Authorize any member of the Board to access all records or information controlled by PERA and forbid the executive director or the Board from denying a Trustee’s request for any reason.
- 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 certain 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.
- The PERA Board of Trustees under current law it owes the duty of confidentiality to all members.
- As fiduciaries, the Board of Trustees must act in their best interests of its members. It is highly questionable as to how releasing members’ records the members’ best interests.
- PERA already provides far more detailed information related to plan sustainability in the annual actuarial valuation which is contained within the Comprehensive Annual Financial Report (CAFR). The CAFR and the annual actuarial valuation are formally presented to the Joint Legislative Audit Committee of the General Assembly each year.