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June 25, 2013 11:13 AM UTC

PERA News Undermines Stapleton, Talk Radio Message of “Fantasy” Projections

  • 7 Comments
  • by: Michael Lund

Promoted by Colorado Pols — The sky may not be falling after all. Again.

The news out of Public Employees’ Retirement Association today is good news for Colorado and Coloradoans.

PERA’s Comprehensive Annual Financial Report announced a realized 12.9% return on investments for 2012, and a 22 year average of 10%. This return outpaced PERA’s projection which had been set at 8%.

However, for Colorado State Treasurer Walker Stapleton and his sycophantic chorus of talk radio hosts, the news undermines a centerpiece of their talking points.

Since taking office in 2011, Stapleton has been making the rounds of right-wing talk radio shows, inciting GOP and Tea Party posses with predictions of looming financial Armageddon due to an unsustainable pension system for Colorado’s public employees. Without a squeak of protest from his hosts, he asserts the root of the problem to be unfunded liabilities resulting from the PERA board’s unrealistic projection on the rate of returns for their investments.

Here’s an exchange with Jon Caldara on Devil’s Advocate from November 2011:

Walker Stapleton: In Colorado, we have set an expectation that people will be guaranteed effectively an 8% rate of return on the investments that the pension fund makes over a 30 year time period.

Jon Caldara: Eight percent?!

Stapleton: Eight percent. So —

Caldara: Wait, wait, wait, slow down, here! Because I’m not a financial genius on this, but I’ve been looking at my 401K plan and it’s not getting anywhere close to 8% — more like negative 8%. But it doesn’t seem that 8% as a guaranteed rate of return has anything to do with reality. Does it?

Stapleton: Right. I don’t believe that it does. And if you look, you know, markets go up and markets go down. We’ve witnessed the stock market lose more than five percent in one week alone this year. So to guarantee a 8% rate of return is a very difficult benchmark to achieve […]

Caldara: Am I wrong, or is this just fantasy […]?

Fantasy? Apparently not. Despite a desperately challenging economic climate for investments since 2008, PERA has proved to be a capable and responsible steward of the retiree’s assets. Sound decision-making based on actuarial data and smart investment strategies have quelled the hyperbolic fearmongering on talk shows, for now.

Perhaps we should just feel thankful that talk show hosts aren’t managing our portfolios. Their “realistic” rate of return would miss the mark of actual earnings by a factor of ten. On Grassroots Radio last year, hosts Ken Clark and Jason Worley, along with their guest, CO Senate candidate Dave Piggot, scoffed at PERA’s projections.

Ken Clark: […] You tell me where on this planet right now anybody can get an 8% return.

Jason Worley: Guaranteed.

Dave Pigott: [laughs] I can’t do it. I don’t know where you can get near 8% rate, unless you work for a payday lender, or you are on the receiving side of VISA or MasterCard.

Clark: Guido and Rocco—

Worley: Yeah, there might be some loan sharks out there who—

Clark: Guido and Rocco, I think, are getting about 8% but that’s about it. There isn’t any place you can go. We just talked about in our very first segment how the market and this last week has lost all of the 2012 games. You think the mutual funds are doing well? You think Oppenheimer is really having a great day? I don’t think so.

Worley: Do you think that all the money that PERA has out there invested—

Clark: […] oh yeah! PERA just took a hit as well. If you want a guaranteed rate of return, you’re talking 1.2%.

Projections are not guaranteed, granted. But PERA realized returns above the short- and long-term projections. For that, we should all be happy.

Considering the optimistic indications, perhaps Stapleton, Caldara, Worley, and Clark will reform their message to a more upbeat, accurate representation of reality. But then again, considering the ideology that drives them, perhaps we shouldn’t hold our breath.

 

Comments

7 thoughts on “PERA News Undermines Stapleton, Talk Radio Message of “Fantasy” Projections

  1. Makes you wonder what Stapleton's returns on Colorado's funds has been the last couple of years?  The hyperinflation he was expecting back in 2010 didn't pan out.  Gold prices are down several hundred dollars from its peak too.

    I don't have a good feeling about his investing skills…

  2. The sails of Walker Stapleton's PERA-boat will surely lose most of its wind after word gets out of PERA's 12.9% return for 2012.  Last year, his activitiies were greatly enhanced, and he attracted audiences across the state, after the dismal 1.9% return in 2011.  If there is a stock market correction later this year, then he'll continue his crusade to "reform" or end PERA's defined benefit.  However, if the markets continue a steady upward progress, I believe he'll start focusing on either reelection or some post elective office endeavor … probably the financial industry, which is his real home, not politics.  

    1. 1.9% huh?   Cary Kennedy managed to get 3% during the worst of the market crash. No doubt, Stapleton's 1.9% was due to the funds left where Cary had put them.  In a bull market, for him to only make 1.9% is, well, to be expected of a financial idiot.

      Recall, his only claim to fame is running his (inherited) family business, and a whopping 1-in-a-row financial windfall several years ago.  Otherwise, he's just a case study in how the Bush family gene pool is getting pretty shallow.

      1. Hey Harry, the State Treasurer is just one member of the PERA Board.  The PERA Board sets the asset allocation for the PERA trust funds, but individual investments are seleted by PERA's investment staff.

        Hey gaf, the average return assumption for PRIVATE sector defined benefit plans is now 8.1 percent.  Good enough for the PRIVATE sector, but not good enough for PUBLIC sector pension plans?

        Stapleton

        "In June 1999, GOP candidate state Treasurer Walker Stapleton was charged with DUI and leaving the scene of the accident in San Francisco where two women were injured."

        "He blamed the victims. (The reality is that he accepted a plea bargain down to a DUI, with three-year probation, twice weekly AA meetings and court-ordered community work.)"

        "That charge was amended several days later, to charges of running a flashing light and hitting a cab in the intersection, causing injuries and leaving the scene."

        "One of the victims, Ginger Vasquez of Santa Monica, CA, was alone in the backseat of the cab that was hit by Stapleton.  She describes the vehicle spinning after the impact and seeing Stapleton's car driving away."

        "After Stapleton's car stopped down a steep hill, she says, two cabs boxed in his vehicle to prevent him driving any farther. She has never talked to Stapleton and did not know his name until recently. She does not know the other woman injured in the accident. Stapleton never approached the cab to find out if everyone was all right. Most importantly, she has no motive to lie about events that night."

        "Stapleton, who has an obvious motive not to tell the whole truth, continues to shift the blame and will not produce police reports (unavailable to the public) of the accident."

        (My comment: Have complete police reports relating to the incident been released by our State Treasurer?)

        "Ironically, Stapleton was born into one of the country's wealthiest, best-connected families, sharing a family tree with the Bushes. He attended prep school in Connecticut and expensive colleges and universities. The truth is that Stapleton has never had to find a real job outside his wealthy family's umbrella."

        Link to Huffington Post article:

        http://www.huffingtonpost.com/ellen-dumm/why-walker-stapletons-11y_b_776122.html

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