Under the bill, the Board and the General Assembly are prohibited from increasing member and employer contributions, AED, or SAED amounts above the rates allowed by law as of December 31, 2011.

CCRS opposes this bill. This bill alters the structure created under Senate Bill 1 – we must let SB1 work!

You can learn more about Senate Bill 84 here.

SB -1 was passed by the Colorado Legislature signed into law by then Governor Bill Ritter in late February 2010. One of the provisions of the law eliminated the annual benefit increase for 2010 and effectively limited future annual increases to 2%.

Within days of the Governor’s signing, a group of retirees filed a lawsuit in the Denver District Court challenging this law and naming Colorado PERA and the State of Colorado as defendants. The lawsuit charged that SB-1 is unconstitutional because it impairs a retiree’s contractual right to receive a pension benefit at a promised level.

Many months of legal maneuvering by both sides ensued and in early 2011, both sides filed a request for summary judgment with the court. A summary judgment order by the court would mean the court feels that no factual issues remain to be tried and the complaint can be decided upon the facts presented by the two parties making a trial unnecessary.

On June 20, 2011 the Denver District Court Judge denied the plaintiff’s motion for summary judgment ruling that a retiree has a contractual right to the base PERA benefit but that there is no contract right to a specific COLA formula.

In a ruling nine days later, Judge Robert S. Hyatt granted the summary judgment motion sought by Colorado PERA and the State of Colorado. In his ruling, Judge Hyatt cited statutory provisions over the last 40 years, legislative history and retirement plan language.

On July 25, 2011, the plaintiffs appealed Judge Hyatt’s ruling to the Colorado Court of Appeals. The plaintiffs based their appeal on their original assertion that the COLA is part of a retiree’s contractual right and cannot be reduced. The case remains with the Colorado Court of Appeals as of this date. It is expected that this case will ultimately be decided by the Colorado Supreme Court or, possibly, the United States Supreme Court.

Stapleton Member Records Lawsuit

Another currently active lawsuit affecting PERA is one involving a June 2011 request by the State Treasurer, Walker Stapleton, for individual records of the top 20% of PERA recipients based on annual pension benefits. In making this request, Mr. Stapleton postured that he needed this information to carry out his role as a fudiciary and that, as a member of the PERA Board of Trustees, he is entitled to complete access to all PERA records.

Acting on the advice of outside counsel, the PERA Board of Trustees voted to deny Stapleton’s request stating that Colorado law requires PERA to maintain the confidentiality of “all information” in PERA’s member records. Stapleton’s response was to file a lawsuit in the Denver District Court to obtain these records. Subsequently,

PERA filed its own claim in the Stapleton lawsuit asking the Court to provide guidance on the circumstances under which PERA can lawfully disclose confidential member information to its Trustees.

Additionally, with this claim, PERA is asking the Court to determine that the Board of Trustees acted properly in concluding that the Treasurer is not entitled to information he requested regarding the top 20 percent of PERA benefit recipients.  Despite numerous opportunities to state a valid reason for requesting this information, The Treasurer has never done so. In addition, Stapleton could not describe any reasonable connection between the information he was requesting and any valid fiduciary purpose.

Every member and retiree record is analyzed each year by the PERA actuarial consultants. This analysis is reported to the PERA Board of Trustees and to the General Assembly’s Legislative Audit Committee. This information is publicly available on the State Auditor’s Web site and in the PERA Comprehensive Annual Financial Report.

Defined Benefit–This is what PERA and most statewide public employee pensions are for the most part. A defined benefit plan guarantees a certain payout at retirement, according to a formula that takes into account the member’s salary and the number of years’ membership in the plan. The defined benefit calculation allows for PERA to weather short-term “ups and downs” of the investment market in order to create a predictable payout upon retirement. A defined benefit plan is sometimes called a pension.

Defined Contribution–A defined contribution plan provides a payout at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilized minus fees. A commonly known type of defined contribution account is a 401(k). These investments are individually based, and fluctuate according to market conditions.

What does this all mean in the PERA policy conversation?

• PERA is primarily a defined benefit program, which provides a secure, predictable retirement for public employees. Keep in mind that most PERA members do not participate in Social Security, so their PERA retirement benefit may be their only source of income in retirement.
• Some say that PERA should become a defined contribution program, but moving to that model in lieu of the current defined benefit plan would require an annual state payment in the billions. It just does not make fiscal sense.
• What is sometimes missing from the policy discussion related to retirement plan structure or the DB/DC debate is the potential cost of keeping elderly Americans out of poverty. Research has shown that poverty rates among older households lacking pension income are about six times greater than those with such income.  (source is NIRS)
• Defined contribution plans, such as 401(k) plans require management and oversight by the account holder. As the person nears retirement, there is a risk that investments that fluctuate downward, such as in the 2008 market crash, would not recover to allow a secure retirement.

Senate Bill 82

Senate Bill 119

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.

You can view this bill in this entirety here.

CCRS opposes this bill as it violates the shared sacrifice compromise we came to under Senate Bill 2010-001.

You can read the bill in its entirety here.

CCRS opposes this bill as it undermines the principles of providing a secure retirement for all employees.

You can read the bill in its entirety here.

Information to be reported would include the member’s name, each  position held during employment with a PERA employer, the annual salary  paid for each position, the employer and employee contributions paid on  that salary, age of retirement, Highest Average Salary, and amount of any  benefits paid.

CCRS opposes this bill, as releasing this information would not give an accurate picture of PERA’s finances or serve any purpose to help secure PERA.

You can read the bill in its entirety here.

You can email the Senate Finance committee members about opposing this bill here.

CCRS opposed this and all bills that would affect the shared sacrifice we achieved in Senate Bill 2010-001.

You can read the bill in its entirety here.

You can email the Senate Finance committee members about opposing this bill here.