May 27, 2013 08:32 PM UTC

Treasurer Stapleton: Having Enacted SB10-001, the Colorado Legislature will Continue to Break Colorado PERA Pension Contracts as Needed. Comments from Priola, Labuda, DelGrosso, Holbert, Kerr, Hullinghorst, Swalm, and Kefalas.

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• by: PolDancer

TREASURER STAPLETON: THERE WAS NO "ACTUARIAL EMERGENCY" IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

COMMENTS OF COLORADO PERA DIRECTOR WILLIAMS, PERA TRUSTEE CAROLE WRIGHT, PERA GENERAL COUNSEL SMITH, AND TREASURER STAPLETON.

In 2010, the Colorado Legislature enacted legislation breaking Colorado PERA pension contracts.  Members of the Colorado Legislature, generally, have little respect for Colorado PERA pension contracts.  Thus, in 2010, the Colorado Legislature recognized no constraints on its power to take property from Colorado PERA pensioners.

Offering low public sector salaries in order to maintain Colorado's status as a "tax haven" is one thing.  No one is forced to accept a job with a Colorado PERA-affiliated employer, but taking back compensation that has already been earned crosses both moral and legal lines.  For some reason, in 2010, lobbyists were able to push a majority of Colorado legislators across these lines.  Twenty-seven lobbyists successfully persuaded state legislators that breaking pension contracts is acceptable here in Colorado.

A century ago, public pensions in the United States were considered "gratuities granted by a benevolent sovereign."  Although this idea was eradicated from public pension jurisprudence nearly a century ago, it remains predominant at the Colorado Legislature well into the twenty-first century.

In 2009, members of the Colorado Legislature were unlikely, of their own accord, to plumb the depths of public pension contractual obligations.  It was incumbent on the Leadership of the Colorado Legislature that year to perform due diligence . . . to appoint an interim study committee to explore legal, prospective pension reform options for the Colorado PERA pension system, but no interim study committee was appointed.  The Leadership of the Colorado Legislature, recognizing that well-informed Colorado legislators would not support a planned breach of Colorado PERA pension contracts, opted against legislative examination of prospective pension reform options.  Colorado PERA's hired lobbyists would be unable to manipulate state legislators who might easily refute specious arguments relating to public pension contractual rights.  In early 2009, the Colorado PERA Board was already shopping for a law firm willing to create a legal rationale for breaking Colorado PERA's contractual obligation to provide total, accrued pension benefits via a pension "escalator," i.e., a COLA.  Why should Legislative Leadership and the Colorado PERA Board work against their own interests in taking COLA benefits by educating the members?

Therefore, Leadership controlled the flow of information relating to public pension contractual rights in 2009 and 2010; by failing to appoint an interim study committee to examine prospective reforms, by abdicating policy-making authority in this area to outside groups with an agenda to protect their own financial interests, and by failing to send an interrogatory to the Colorado Supreme Court requesting an opinion on the constitutionality of SB10-001's proposed changes to PERA contracts.

There is an apparent disconnect between the prevailing view of Colorado state legislators regarding contractual public pension obligations, and the sanctity of public pension contractual obligations as recognized in case law across the United States.  The nonchalant treatment of public pension contractual rights by Colorado legislators conveniently aligns with their desire to break Colorado PERA pension contracts . . . their desire to force a group of elderly Coloradans to pay for the Colorado General Assembly's past public pension mismanagement.

In 2010, 27 lobbyists told our state legislators that they were free to break the state's contractual obligations; hence, it must be true.

The Colorado PERA pension system is an alternative to Social Security for Colorado state and local government workers.  These workers are not eligible to participate in the Social Security system, they are completely dependent on the Colorado General Assembly to ensure that contractual obligations of Colorado state and local governments are honored.  Instead of acting responsibly, and paying its annual pension bills, the Colorado Legislature has mismanaged its pension system, and enacted legislation, SB10-001, under which Colorado PERA pension benefits are no longer "definitely determinable" under IRS regulations.

According to our State Treasurer, (a Trustee on the Colorado PERA Board of Trustees) the Colorado Legislature, having abrogated Colorado PERA pension contracts in 2010, will continue to break Colorado PERA pension contracts in the future at its convenience.  Here are Colorado Treasurer Walker Stapleton's comments made in testimony to a committee of the Colorado Legislature (recorded March 1, 2012, House Finance Committee):

"That's what happened in Senate Bill 1, and if the plan becomes insolvent or the liabilities grow again, it will happen in 'Senate Bill 2,' and who knows how many more bills."

" . . . make no mistake that will happen."

"And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it."

If the Colorado Legislature's breach of Colorado PERA public pension contracts is upheld by the Colorado Supreme Court, Colorado's Treasurer assures us that the Colorado Legislature will break Colorado PERA pension contracts repeatedly.  Future breach of Colorado PERA public pension contracts by the Colorado Legislature will occur in accordance with the following formula that was employed for the 2010 PERA contract breach: "Underfund the PERA pension to lower its funded ratio, claim that the low funded ratio represents a 'fiscal crisis' justifying seizure of accrued PERA pension benefits, break PERA pension contracts to lower taxpayer obligations, repeat . . ."

Recently, I discovered that Senate Bill 10-001, the legislation enacted by the Colorado General Assembly in 2010, breaking "fully-vested" Colorado PERA pension contracts and taking PERA COLA benefits, was discussed at length during hearings of the Colorado Legislature's House Finance Committee in 2012.  A number of comments relating to SB10-001 were made by members of the Colorado General Assembly (on the record) who voted in favor of SB10-001 during the 2010 Colorado legislative session, as well as other witnesses.  (PERA members and retirees, I apologize for my failure to discover these comments by SB10-001 proponents made at 2012 House Finance Committee hearings earlier.)

Below, I provide quotations of state legislators, and witnesses from testimony relating to Colorado PERA contractual pension rights given during 2012 House Finance Committee hearings.  Note that the bulk of the comments presented in this article, (many demonstrating a somewhat limited grasp of public pension contractual obligations) were made by members of the Colorado House Finance Committee.  The Finance Committees of the Colorado General Assembly are designated as the committees of reference of the Legislature with oversight responsibility for Colorado public pension systems.  The members of these committees ostensibly possess the greatest degree of sophistication on the subject of public pensions at the Colorado General Assembly.

It is important, (not just for litigation of the breach of public pension contractual rights in SB10-001), but for the integrity of the Colorado legislative process, that these comments be readily available for those who will, in the future, consider reforms addressing Colorado legislative ethics, legislative procedure, and administration.

2012 HOUSE FINANCE HEARINGS ON PERA LEGISLATION:

Representative Chris Holbert – Feb 23, 2012, House Finance Committee, hearing on HB12-1250: "We have a contract, an obligation to the vested members of PERA, and we have to meet that . ."

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

Representative Kevin Priola – Feb 23, 2012, House Finance Committee, hearing on HB12-1150:  " . . . taxpayers know that in the end they're on the hook, State of Colorado taxpayers are on the hook for any (PERA) unfunded liability down the road . . "

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee: "Those people all have a contract with their employer with the plan.  You made changes to impact people like that in SB1."

"The only reason you could do that in Senate Bill1 . . . and to unilaterally change the terms of the contract, is because the sustainability of PERA was significantly in question."

(My comment: Sustainability?  Here, Colorado PERA's Executive Director Meredith Williams tells us that the sustainability of PERA was in question in 2010 when the Colorado PERA actuarial funded ratio [AFR] stood at 69 percent.  Yet, Meredith Williams has informed us earlier, that the sustainability of PERA was not in question when the Colorado PERA AFR was at 54 percent.

From the Silver and Gold Record:

“One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent.  Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.  Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”

https://www.cu.edu/sg/messages/5245.html

When one compares the past comments of Meredith Williams arguing that a PERA funded ratio [AFR, not "market-based"] in the mid-50s is not a crisis, with recent comments of Meredith Williams that a 69 percent PERA AFR IS a crisis of sufficient proportion to warrant the breach of contracts, only herculean restraint allows one to limit one's characterization of Meredith Williams comments to simply "disingenuous."

Why did Meredith Williams support the breach of Colorado PERA pension contracts in 2010?  Was he embarrassed that, on his watch, the Colorado Legislature underfunded the PERA pension?   Embarrassed that he failed to do his job, to impress upon the Legislature the importance of paying its public pension bills?  Did the PERA Board and education establishment lobbyists persuade him that historical PERA underfunding should be solved by taking money from PERA retirees?

At the end of 2009, just prior to the breach of Colorado PERA pension contracts, the actuarial funded ratio of the Colorado PERA trust funds was nine percent below its 40-year average, and three percent below the national average actuarial funded ratio of public pension funds.  If public pension funds are in crisis at this funding level [a 69 percent AFR] should half of the pension contracts in the United States be abandoned at this funding level?)

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee relating to the Legislature's historical underfunding of its PERA pension obligations:

"We've had a significant problem over the years, in that . . . contributions, payments by (PERA) employers into PERA have been kind of the last thing in the budget building process, and we have not made the required payments. Unfortunately, in our line of work, where we're involved in compounding shortfalls grow, particularly when the shortfalls continue year after year after year."

(My comment: Recall the words of Colorado PERA's General Counsel Greg Smith.  On August 11, 2009, at the Denver meeting of the Colorado PERA “Listening Tour” Colorado PERA’s General Counsel Greg Smith blamed the Colorado General Assembly for the decline PERA’s actuarial funded ratio: “We have not been paid what’s called the actuarially required contribution.” “We’ve not been receiving that full contribution in any of our divisions for many years . . . seven years to be specific.”

http://www.copera.org/pera/about/listeningtour.htm

So, here we have Colorado PERA officials acknowledging that the Colorado General Assembly has not paid its public pension bills.  Instead of proposing that the Colorado General Assembly make the PERA trust funds whole, and commit to meeting its future pension obligations, these PERA officials propose that money be taken by force of government from a relatively small group of Colorado's pensioners.  These are our leaders in Colorado state government.)

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee on SB10-001:

"What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor's edge.  You can't fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in  Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers.  No one has ever done anything quite like that.  I am quite anxious for the litigation to get behind us."

(My comment: Meredith Williams states that the SB10-001 "90 percent" cost-shift from PERA employers onto PERA retirees was "dicey."  Webster's dictionary defines "dicey" as "risky."  I consider this unnecessary, planned breach of public pension contracts beyond "dicey," I consider this action to be immoral, ill-advised and foolhardy.

From “Colorado PERA on the Issues”:

“In all, about 90 percent of the changes enacted by Senate Bill 1 will fall on the shoulders of current and future PERA members and retirees – not other taxpayers.”

http://www.copera.org/pera/about/issues.htm

Senator Brandon Shaffer, in the Denver Post, April 17, 2011:

“I sponsored last year's legislation, known as Senate Bill 1, to protect PERA.  The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”

http://www.denverpost.com/opinion/ci_17858107

Meredith Williams, PERA Executive Director, in the Pueblo Chieftain, May 29, 2011:

“In fact, about 90 percent of the changes enacted by Senate Bill 1 are falling on the shoulders of current and future PERA members and retirees — not other taxpayers.”

http://www.chieftain.com/opinion/ideas/legislative-changes-have-put-pera-fund-on-a-solid-footing/article_3080a01c-88cd-11e0-ad01-001cc4c03286.html

SB 10-001 co-prime sponsor Senator Josh Penry and sponsor Senator Greg Brophy in the Denver Post, January 22, 2010:

“Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees . . .”

http://www.denverpost.com/search/ci_14242354

Colorado PERA Executive Director Greg Smith, at the “Fall 2011 PERA Shareholder’s Meeting,” [thirty-six minutes into the video]:

“‘Only ten percent of the fix” of the [SB10-001] reforms in 2010 came from additional employer contributions.

http://www.copera.org/pera/about/shareholder.htm.)

Back to the House Finance Committee hearings:

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee:

"I had something cross my desk earlier this week that appears that it could be the beginnings of another Senate Bill 1 lawsuit, on a completely different and very bizarre issue."

(My comment: What is that about?  PERA retirees?)

House Finance Committee Chairman Brian DelGrosso, February 23, 2012:

"I voted against Senate Bill1, and I voted against Senate Bill 1 not because I felt like we didn't need to fix PERA, I agreed with that part of it, but I voted against Senate Bill1 for the fact that it did adjust some of the COLAs and it did adjust stuff for folks that were already retired and people that were about ready to retire, and to me I felt like that was violating a contract that those people had got into . . . they played by the rules that were of the game at the time, and these folks . . . got up to where they about to retire or were retired, and now all of a sudden we were going to change the rules of game on them after they were done playing.  So to me, that was why I voted against Senate Bill 1, because I felt like that violated some of the contractual issues that we had."

House Finance Hearing on HB 12-1179:

Representative Jim Kerr, February 23, 2012: "The taxpayers . . . are obligated to fulfill the (PERA) benefits as soon as someone starts drawing those benefits down."

Rep. Jim Kerr, February 23, 2012: "They've earned those benefits . ."  ". . . The taxpayers . . . they're the ones who ultimately have to make the (PERA) fund whole . . ."

(My comment: According to Representative Jim Kerr, Colorado taxpayers are obligated to meet the state's contractual obligations to Colorado PERA retirees.  So, why is the Colorado General Assembly attempting to shift 90 percent of the costs of their 2010 pension reform bill from Colorado taxpayers onto PERA retirees?)

Rep. Jim Kerr, February 23, 2012: "If you're in a defined benefit program, you have a guarantee."  "PERA does have a guarantee." "A defined benefit plan is a guarantee."

Rep. Dickey Lee Hullinghorst, February 23, 2012: "Our state employees earn retirement benefits when they work."

(My comment: Representative Hullinghorst agrees with officials of the Ritter Administration who write:

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits [such as COLAs] . . . serve[s] to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

Here the Ritter Administration states clearly that a reduction in a COLA benefit [that is earned in an “exchange transaction”] changes the “net economic benefit” to the employee under the employee’s pension “agreement.”  Under SB 10-001, the “net economic benefit,” for an average PERA member was “reduced,” according the Ritter Administration, by “$165,000.”

Read the entirety of the Ritter Administration letter on the GASB site here:

http://www.gasb.org/cs/ContentServer?site=GASB&c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176157387791)

Colorado PERA Board Trustee Carole Wright, February 23, 2012: "Only 18 percent of the money that comes into the (PERA) trust comes from taxpayers or from employers."

(My comment: PERA Trustee Carole Wright knows that the taxpayers provide a mere 18 percent of the resources that support the Colorado PERA pension system.  In light of this relatively small burden on Colorado taxpayers, [amounting to just 2-3 percent of all Colorado state and local government expenditures] why did PERA Trustee Wright support a further diminution of the taxpayer's PERA contribution in 2009 by shifting 90 percent of the costs of the PERA Board's pension reform proposal onto PERA retirees?)

Representative Spencer Swalm, February 23, 2012: "There is a contractual obligation here.  This is a defined benefit plan, those benefits are guaranteed, and ultimately the taxpayers of the state are on the hook."

Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board's historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

"Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization.  We were very aggressive in what I'll call private equity or alternatives.  At the board's direction we've pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each.  I think that the portfolio as we headed into the dotcom bust was far riskier than it is today.  We paid the price for that."

(My comment: Meredith Williams tells us here that PERA "paid the price" for its past investing mistakes.  Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds.  I ask: Why should Colorado PERA retirees, who bear no "market risk" in their "defined benefit" pension plan, whose contractual public pension rights are "fully-vested," why should these Colorado PERA retirees pay the cost of the PERA Board's past investing mistakes by relinquishing their contracted pension benefits?)

Rep. Dickey Lee Hullinghorst, February 23, 2012: "I would like to know exactly what that (PERA) contractual relationship is."  "We are employers and we pay into PERA as a part of a benefit that's earned by our employees."

Colorado PERA Executive Director Meredith Williams in response to Representative Hullinghorst's question, February 23, 2012, (after preliminary remarks):

"We never have to answer that question.  It's not a black and white answer."

(My comment: Why did Colorado PERA's Executive Director, Meredith Williams refuse to answer Rep. Hullinghorst's question?  One might expect a more sophisticated response from the head of an organization that recently recommended a breach of PERA pension contracts to the Colorado Legislature.  During his many years in public pension administration one might have expected Meredith Williams to explore such a foundational question in depth.

Why is Colorado PERA's Executive Director, Meredith Williams unable to succinctly state the contractual rights of PERA's members?  Are the employees of PERA-affiliated employers expected to work for decades without knowing clearly what their rights are under their PERA contracts?  Are they expected to work each day for pension benefits that are undefined?

Why did Representative Hullinghorst vote for SB10-001 in 2010 without knowing the contractual rights of persons impacted by the bill?  Without this knowledge, how could she be certain that she was not violating her oath of office to act only within the strictures of the Colorado Constitution?)

THE HOUSE FINANCE COMMITTEE DEBATES PROSPECTIVE, LEGAL PENSION  REFORM THAT WOULD IMPACT ONLY "NON-VESTED" PERA MEMBERS.

March 1, 2012, House Finance Committee, comments of members of the House Finance Committee made during the amendment phase of the committee's hearing on HB 12-1150:

Rep. Priola: "I would draw your attention to L.001."  "This amendment simply moves the universe of folks that the three to seven years would apply to, to new hires and to folks that are not yet vested, meaning five years of service credit or less."  "I think it strikes a fair balance to not change the rules of the game on people later in their working years."

(My comment: This amendment proposed a change to the method of calculation of the "highest average salary" used to determine Colorado PERA base pension benefits.  The change would affect ONLY new hires and those without vested PERA pension contracts.)

Rep. Hullinghorst: "My understanding is that when you go to work, and you sign up for PERA benefits, and you are required by the state to do that . . . that's a contract, and I think that this is potentially actionable."

(My comment: If this is Representative Hullinghorst's "understanding," why did she support the breach of Colorado PERA public pension contracts when she voted for SB10-001?)

Rep. Labuda: "In 40-50 years they're going to be seniors, and they're going to be living on less because of this amendment, and I can't support that."

(My comment: Here, Rep. Labuda tells us that she cannot support a prospective change FOR NEW HIRES and non-vested PERA members because they will be "seniors" forced to "live on less" in 40-50 years!  Yet, she voted for SB10-001 in 2010, forcing current "seniors" [who have fully-vested PERA contractual rights] to "live on less" when SB10-001 was signed into law.  I see two possible explanations for the inconsistency of Representative Labuda's position.  First, she was persuaded to abandon her belief system by the 27 SB10-001 lobbyists.  Second, her vote in favor of SB10-001 was entirely arbitrary.)

Rep. Priola: "Representative Labuda, that brings to mind something that I need to correct the record on as well.  When I was in testimony a week or so ago, I had stated that I voted for SB 1, I then checked the voting record, and realized that I voted against it, and I tried to think back to what was in my mind at the time.  Then I refreshed my memory that although I thought it was a much needed step in the right direction, I wasn't willing to make the vote that bought it lock stock and barrel."

(My comment: Two years after a legislator considers legislation that abrogates Colorado State contracts, the legislator cannot recall whether he supported or opposed the legislation?)

Rep. DelGrosso: "The problem that we ran into with Senate Bill 1 . . . is that when they start adjusting things like the COLA . . . that's where it opens us up to lawsuits, because people are like 'hey, I'm five years away from retirement, I'm ten years away from retirement, I'm one year away, I am retired,' and then we go and make changes that's where we have lawsuits, because hey this a violating a contract . . . "

Rep. Kefalas: "It still does affect those members that have signed contracts that are non-vested.  Is that correct?  And therefore I still have concerns about L.001."

(My comment: Here Rep. Kefalas expresses concern about impacting PERA benefits of "non-vested" PERA members, yet he supported Senate Bill 10-001, a bill abrogating "fully-vested" Colorado PERA pension contracts . . . a bill that took one-third of the accrued public pension benefits of Colorado PERA retirees.  This is stunning admission.

Again, in 2010 the Leadership of the Colorado General Assembly decided against appointing an interim study committee to examine prospective pension reform options in order to keep its members in the dark.  This is apparent from comments made by members of the House Finance Committee who supported SB10-001.)

Rep. Hullinghorst: "We got ourselves into this mess in the 1980s to begin with, in the 1980s and 1990s, when the Legislature just on a whim decided they were going to do this and that with PERA, and made some changes that were very detrimental to the system."

(My comment: Here, Rep. Hullinghorst adds her voice to the many voices that have condemned the Colorado General Assembly's historical mismanagement of the PERA pension system.)

Rep. Kagan: "This is a benefit cut to public employees who work hard all of their lives and one of their measures of compensation is their benefits package, that's how we manage to attract such fine public employees as we have on such low salaries is because they know 'yeah, the salaries aren't as high as I'd like, but I'm still very loyal to the state, I work very hard for the state for a very low salary because I do have a respectable benefits package, and I'm sure that that benefits package will be there for me when I retire.'  Now you come and you say we're going to cut those benefits, we're going to reduce the value of that package . . ."

Rep. Kagan: "(In adopting SB10-001) we had put PERA . . . on an actuarial sound footing without waiting for a crisis to hit, without waiting for exposés and pressure . . ."

(My comment: Here, Rep. Kagan notes that the Colorado General Assembly adopted SB10-001 in 2010, breaking PERA pension contracts, while Colorado PERA faced no financial "crisis."  Like Representative Labuda and Kefalas above, Rep. Kagan expresses concern regarding changes to "non-vested" Colorado PERA pension contracts, while he supported the breach of "fully-vested" PERA contracts in SB10-001.  Such inconsistency of logic is not found among persons with knowledge of public pension contractual rights.  It is truly surprising that this argument is propounded by a man of such discernment.)

Rep. DelGrosso: "These new hires know what their retirement will be, so when they're getting into the system they can choose to accept the job or not knowing what their retirement benefits will be."

"We are still involved in lawsuits over Senate Bill 1 on whether or not those were constitutional because we made changes to people that are currently in the system that were vested, current retirees.  So, Senate Bill 1 did affect people's current retirements and those that were retired."

Rep. DelGrosso: "We have to look 25 to 30 years into the future to avoid the lawsuits that we are currently involved in because of Senate Bill 1."

"We're forced to, to avoid lawsuits, to look that far into the future."

(My comment: Here Rep. DelGrosso notes that prospective, legal public pension reform options are available to the Colorado General Assembly.  In fact, just six weeks after Rep. DelGrosso made these remarks, the House Finance Committee [on April 19, 2012] adopted such legal, prospective pension reform options for thousands of members of Colorado county public pension systems [when the committee referred out SB12-149.]

Language from SB12-149:

“(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

Link to SB12-149, the Act:

http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/0E9F894D31C081EF87257981007DAF5A?open&file=149_enr.pdf

Note that House Finance Committee members, Representatives Priola, Jim Kerr and Labuda co-sponsored this legislation making prospective pension reform options available to Colorado county governments.  Note that Representative Labuda co-sponsored SB12-149, providing prospective pension reform options to Colorado county governments, AND voted in favor of SB10-001, breaking "fully-vested" Colorado PERA retiree pension contracts.  Completely arbitrary.)

Link to meeting summary of House Finance Hearing on SB12-149 (excerpts from hearings on this bill are available at saveperacola.com):

http://www.leg.state.co.us/clics/clics2012a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/b695bc1290e34d25872579e4006ba1bd?OpenDocument)

Rep. Hullinghorst: "The current suits are relative to COLA."  "There was some awareness that that possibly could draw some suits."  "It was much less a problem with cutting benefits than any other thing you could look at in that regard."

Representative Hullinghorst: "This is a more difficult . . . approach than the COLA situation."

(My comment: Incredibly, here we have Rep. Hullinhorst stating that enactment of PROSPECTIVE public pension reform for NEW HIRES is a "more difficult approach" for the Colorado General Assembly than is the outright, intentional breach of fully-vested Colorado PERA pension contracts of PERA members who had worked for PERA-affiliated employers FOR DECADES.  Here we see, manifest in Rep. Hullinghorst's remarks, the work of 27 lobbyists hired to enact SB10-001.  It is sickening that lobbyists have gained such control over the minds of Colorado legislators.  In 2010, Legislative Leadership served up pliable members for the 27 SB10-001 lobbyists . . . members who were ignorant of public pension contractual rights.)

Rep. Kefalas: "I believe that a fundamental premise, principle, value of this great State of Colorado, of this great country, is this idea of some semblance of retirement security."

"I am concerned that this will undermine the contractual obligations that we have made with folks who are state employees and that could invite litigation and I think that's something the state does not need."

(My comment: Again, Rep. Kefalas defends the interests of non-vested Colorado PERA members, members who have NO contractual right to any PERA annuity.  Two years earlier, he voted to take one-third of the accrued public pension benefits of PERA retirees with fully-vested pension contracts.)

Rep. Labuda: "I don't want to penalize anybody who is thinking of coming to work for PERA, or someone who is newly started for PERA."

(My comment: Again, note the members of the House Finance Committee who aggressively defend the interests of persons who have no vested PERA contractual pension rights, while having voted to take fully-vested PERA public pension benefits in SB10-001.)

Rep. DelGrosso: "This has nothing to do with those that are in the system, that are moving through the system, that are retired or not retired."  "This puts more money into PERA's coffers, this will actually put more money in there to shore up the sustainability of PERA."

(My comment: Here Rep. DelGrosso attempts to educate the members of the House Finance Committee.  He attempts to do the job that should have been done by the Leadership of the Colorado General Assembly during the 2009 interim.)

The amendment to HB12-1150, (L.001), passed, the bill was then postponed indefinitely.

House Finance Committee, March 1, 2012, Hearing on HB12-1142:

COLORADO TREASURER STAPLETON: THE LEGISLATURE'S SB10-001 PERA CONTRACT BREACH WILL BE REPEATED.

Colorado Treasurer Walker Stapleton:

"It's incumbent on a plan to make promises that are conservative to our public workers, so that at the end of the day . . . the plan is in a position that it's making promises that it can afford to make and it's not putting the plan at risk of having benefits cut and amended and retirement lengthened by the Legislature, because make no mistake that will happen.  That's what happened in Senate Bill1, and if the plan becomes insolvent or the liabilities grow again, it will happen in "Senate Bill 2," and who knows how many more bills."

(My comment: Here, the Colorado Treasurer assumes that state worker contracts are inferior to the state's contracts with corporations, that state worker contracts may be freely abrogated while other state contracts remain untouched.  The Treasurer assumes that the Colorado Legislature possesses power permitting it to ignore the provisions of the Colorado Constitution, that the Colorado Legislature is the one branch of government that is unrestrained by the Colorado and U.S. Constitutions.  The Treasurer assumes, erroneously, that the members of the Colorado PERA pension system are somehow subject to "market risk" in their "defined" benefit plan.  The Treasurer notes that no actuarial emergency existed in 2010 when the Colorado Legislature broke Colorado PERA public pension contracts.  In 2010, the Colorado General Assembly refused to act responsibly, refused to explore legal, prospective pension reform options.  The Colorado Legislature has ignored its PERA pension bills.  Having ignored its contractual public pension obligations, the Colorado Legislature finds a cavalier attitude toward the contracts of Colorado PERA retirees to be quite convenient. The Colorado Treasurer anticipates that members of the Colorado General Assembly will again break Colorado PERA contracts in the future at their pleasure.

Thus, if the Colorado General Assembly's legislation breaking Colorado PERA pension contracts, SB10-001, is upheld by Colorado courts, the Colorado PERA pension system becomes, for all practical purposes, a "gratuity."  In that event, Colorado public sector workers who are members of the PERA pension system will work each day for compensation that will be determined after the fact by their Colorado PERA-affiliated employers.)

COLORADO TREASURER AND PERA BOARD TRUSTEE WALKER STAPLETON: THERE WAS NO ACTUARIAL EMERGENCY IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

Colorado Treasurer Stapleton:

"And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it."

(My comment: This statement by our State Treasurer is in conformance with the failure of the Colorado General Assembly to declare an "actuarial emergency" prior to adoption of SB10-001 in 2010.  Our State Treasurer observed no PERA "actuarial emergency," and the Colorado Legislature declared no "actuarial emergency."  And, why would the Colorado General Assembly declare an actuarial emergency in 2010?  That year, the actuarial funded ratio of the Colorado PERA trust funds was only nine percent less than the average PERA AFR over the prior 40 year period.)

Colorado PERA General Counsel Greg Smith on PERA's return assumption:

" . . if we fall short of the 8 percent, what it does is it takes us longer to pay off that unfunded liability, instead of doing it in 30 years it may take us 35 years, it may take us 38 years, it may take us 50 years."

(My comment: Here Colorado PERA's General Counsel admits that the 30-year time frame for amortization of PERA liabilities set in Colorado statutes is arbitrary.  The 30-year period is merely an arbitrarily set goal, however this "goal" in Colorado law was used to justify the breach of Colorado PERA pension contracts in 2010.  Thus, an important actuarial assumption used to justify the taking of fully-vested Colorado PERA benefits in SB10-001 was arbitrary.  This assumption, put in statute by the same General Assembly that enacted SB10-001, was used to calculate projections of PERA's future unfunded liabilities, placing unnecessary financial pressure on the PERA trust funds.  Note that just 15 years ago, Colorado PERA's "maximum amortization period" was set in statute at 60 years.)

Don Schaeffer, Colorado PERA retiree, "I actually worked at PERA for 20 years."  "In my job at PERA, I was the Communications Director, and that started somewhere back in the early 80s."
 
"In the year 2000 . . . we (PERA) were fully funded and they (the General Assembly) said 'Oh, we have too much money," and so then we had (pension contribution) cuts, and we had benefits added and so forth."

"If you look at the . . . State Division trust fund it is more underfunded than the School Division, because the School Division doesn't have choice (of a defined contribution alternative)."  "It's expensive to give choice."

(My comment: Here, Don Schaeffer, former Colorado PERA Communications Director, points out that legislation enacted by the Colorado General Assembly, allowing a defined contribution choice for certain members of that PERA Division, places an additional burden on members of the Division, and results in the underfunding of that PERA Division's trust fund.  I ask: Why should Colorado PERA retirees, who have fully-vested public pension contracts relinquish their constitutional rights to compensate for such policy decisions of the Colorado General Assembly?)

Dan Chapman, Legislative Advocate, AARP Colorado: "I am here today solely as a represent of AARP Colorado and its members."

"AARP also supports pension reform, but believes that modification to pension plans or plan formulas should have as a key objective to hold harmless current beneficiaries and employees . . ."
 
(My comment: Here we have a representative of AARP Colorado informing the House Finance Committee of AARP's position that public pension reforms should hold harmless current public pension beneficiaries.  In light of this AARP position, why did AARP Colorado fail to defend the contractual rights of Colorado PERA retirees in 2010?  Are Colorado PERA retirees an exception to AARP Colorado's policy that current public pension beneficiaries should be held harmless in pension reform legislation?

Does AARP Colorado support public pension contractual rights? or do they not support public pension contractual rights?  Or, did it happen in 2010, that certain self-interested parties successfully lobbied AARP Colorado officials, persuading AARP Colorado to remain on the sidelines while SB10-001 was pushed through the legislative process, that is, while one-third of the accrued public pension benefits of Colorado PERA retirees were seized by the Colorado Legislature?

In 2009/2010, the Colorado AARP decided to do nothing to defend Colorado PERA retiree constitutional rights.  Here is a statement from an AARP Colorado representative on SB10-001: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.”  I ask: How does the "monitoring" of a breach of contract protect the interests of retirees?)

Colorado PERA active and retired members, in 2010, we observed a willful, deliberate, breach of public pension contracts by the Colorado General Assembly.  If Colorado legislators did not take Colorado PERA statutory contracts seriously in 2010, as our State Treasurer warns, they will never take Colorado PERA statutory contracts seriously in the future.  Support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!