SB12 84 – PERA Transparency

SB12 84 – PERA Transparency – PIed

SB 12-084 is sponsored by Senator  Kent Lambert (R-Colorado Springs) and Representative Spencer Swalm  (R-Centennial). Currently, law provides that all  information contained in records of members, former members, inactive members,  and benefit recipients, as well as records of participants in PERA defined  contribution plans, be kept confidential by PERA. The bill would create an exception to current law and require PERA publicly disclose certain PERA information on individual elected officials and cabinet-level  appointees of elected officials on a yearly  basis.

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.

  • The PERA Board of Trustees voted to oppose SB 84, as 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 to the public serve the members’ best interests. In addition, to break out a specific class of members violates the principle of equity.
  • One of the major flaws of the bill is that there is no precise definition of what is an “elected official” or “cabinet member of elected official.”
  • Even if PERA did know the definitions of these “officials,” PERA has no records for current or former active members that contain their title or position. To acquire this information would mean surveying all of our members and employers. Therefore, the provisions of the bill that require the release of such information prior to the end of 2012 would place a high administrative burden upon PERA that would likely be in the millions of dollars and require additional staff.
  • There are probably many PERA members or retirees who hold or have held positions as elected officials such as special district board members, city council members, county commissioners, legislators, as well as statewide elected officials such as the Governor, State Treasurer, Secretary of State, and Attorney General. PERA would have to rely on all of our 485,000 members to accurately report to us if this applies to them. This would be a process that would be very difficult to verify as being thoroughly correct.
  • SB 84 may have a chilling effect on public employees considering running for public office, and conversely, a potential employee for a PERA employer may be discouraged from taking a PERA-covered job if they have ever received compensation as a result of being an elected official for a PERA employer since their member record would be made public.
  • The term “Member Plan Solvency Information” contained in the bill has no relation to how a pension plan really functions. Information required to be disclosed by this bill does not represent the entire funded status picture of the retirement plan.
  • 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. The CAFR contains information based on an analysis of all of PERA’s 485,000 members, rather than a specific subset.
  • Legislation enacted in 2010 (Senate Bill 1) returned PERA to long-term sustainability.
  • PERA takes membership record confidentiality very seriously and SB 84 is a step toward having all member and retiree financial information publicly available.

You can read the bill in its entirety here.

HB11 1248 – Modify the Composition of the PERA Board of Trustees

Secure PERA Opposes HB11 1248 and all efforts to change the PERA Board of Trustees. The bill was “postponed indefinitely” (PIed) on May 6, 2011 in the House State, Veterans, & Military Affairs Committee.

House Bill 1248 is sponsored by Rep. Jim Kerr (R-Littleton) and Sen. Ellen Roberts (R-Durango). The bill modifies the composition of the PERA Board of Trustees so that it is comprised of:

6 Trustees appointed by the Governor and confirmed by the Senate who are not PERA members or retirees and who are experts in certain fields;

  • The State Treasurer;
  • 2 elected members from the state division;
  • 3 elected members from the school division;
  • One elected member from each of the local government and judicial divisions;
  • One elected retiree; and
  • The ex officio trustee from the Denver public school division.

The bill also requires that one elected member from each of the state and school divisions be at least 15 years from retirement eligibility when the member begins serving his or her first term on the board. The bill allows current trustees to finish serving their terms and eliminates trustees who represent each of the divisions and retirees as their terms expire.

SB11 76 – Continuation of A Temporary Modification to The Contribution Rates For Certain Divisions Of The Public Employees’ Retirement Association

UPDATE: The amendment was removed that included the school, DPS and local government divisions. Only state and judicial divisions remain in the swap. It passed and was signed by Governor Hickenlooper.

Secure PERA Opposes Senate Bill 76. We all learned what shared sacrifice was during the 2010 session by accepting the changes in Senate Bill 1, and this bill seeks to shift that balance. The bill in its final form shifts 2.5% of the total contribution from employers to employees for FY 2011-12 only for the State and Judicial divisions.

SB10 1 – Comprehensive Changes to PERA

In 2009, Secure PERA began meeting with PERA and state legislators to talk about this groundbreaking legislation that would help correct the downward trajectory of PERA’s fiscal stability. Our approach was to make sure that no sacrifices were taken unnecessarily and that the sacrifices were shared between the employer, employees, and retirees.

Senate Bill 1 (SB1) reforms had a significant impact on PERA’s sustainability; it went from projected to run out of money within 30-35 years to on track to reach 100% funded.

In a nutshell, SB1 did the following:

  • Increased employee contributions by 2% via SAED* increases
  • Increased employer contributions 2% via AED** increases
  • Retiree COLA***  annual increase was reduced to 2%, and there was a 1-year holiday
  • And some additional benefit reductions

*SAED = Supplemental Amortization Equalization Disbursement. The SAED is an amount contributed by employers and is, to the extent permitted by law, to be funded by moneys otherwise available for employee wage increases. The SAED also has gradual increases.
**AED = Amortization Equalization Disbursement. The AED is an additional amount contributed by PERA employers that has gradual increases.
***COLA = Cost of Living Adjustment. This is the amount a retiree’s payment is increased each year to account for things like inflation.


WHAT DID THESE CHANGES MEAN FOR PERA MEMBERS?

Employees and retirees contributed $14.9 billion in reductions. When all was complete, 90% of the “cost” of making PERA secure came on the backs of retirees and employees.

Retirees who already retired by 2010 took a one year COLA holiday, and all current and future retirees sustained an annual reduction in COLA from 3.5% to 2% (unless PERA’s market returns are negative, in which case the COLA will be indexed to CPI-W).

Employees added an additional 2% in contributions through SAED.  These additional contributions were paid for using funds that would have otherwise been used for raises. Many employees also extended the length of their careers with the increased Rules of 85 & 88, thereby decreasing their overall benefit.  An employee that starts work today will have a benefit worth 1/3 less over the life of their benefit.

Employers committed to contributing an additional 2% through AED contributions. This amounted to $125 million.


HOW DID SB1 IMPACT THE FUND?

Senate Bill 1 worked. It was designed to get PERA back on a path towards 100% funding  in the wake of the disastrous 2008 stock market crash – and it was successful. Today, PERA is paying out benefits and is not predicted to run out of money.

SB1 was designed with a 30-year expected rate of return of 8%.  Contrary to common belief, we are hitting that mark.  Since the passage of SB1, the average rate of return has been 8.62%.