July 27, 2013 11:17 PM UTC

Colorado PERA's Executive Director Drops a Load of PERA Propaganda on the Denver Post.

• 1 Comments
• by: PolDancer

There is a pervasive stench about the 2010 Colorado PERA pension contract breach conspiracy.

Where to begin?

Today's Denver Post (July 27, 2013) includes an editorial by the Executive Director of the Colorado PERA pension system, Greg Smith, attempting to defend the Colorado Legislature's 2010 breach of state and local government contractual obligations.

http://www.denverpost.com/opinion/ci_23740082/what-detroit-could-have-learned-from-pera

Why does Colorado PERA's Executive Director, Greg Smith, continue to defend this breach of the contracts of the State of Colorado?  The organization that he represents, Colorado PERA, has more than 200 employees.  Many of these employees have worked in public pension administration for decades.  They know perfectly well that accrued public pension benefits in DEFINED benefit pension plans are contractual obligations of public pension plan sponsors.  Unlike most members of the Colorado Legislature, many members of the Colorado PERA staff have actually read Colorado's public pension case law, public pension legal theory, and the recent (2012) Colorado Court of Appeals ruling confirming the contractual status of Colorado PERA COLA benefits.

These employees know that their employer, Colorado PERA, is attempting to base the breach of Colorado public sector pension contracts on a fiction, a contrivance.  These employees know that the contrivance (PERA's recently developed argument that the "automatic" PERA COLA is not a contractual obligation) . . . is a crock.

When the boss feels compelled to regularly spout propaganda that the rank and file knows is a crock, many employees find that quite embarrassing.  It embarrasses the employees of Colorado PERA, and it is embarrassing to the State of Colorado.  It is embarrassing that Colorado, the 15th wealthiest state in the nation is attempting to break its contracts to minimize taxes in the state.  It is embarrassing that, in 2010, a majority of the members of the Colorado Legislature, decided to try and pay off state and local debts by taking money from old people.  That action was sick, immoral, unjustifiable.  Public pension funds can be legally bolstered with PROSPECTIVE pension reform that does not break pension contracts, such as SB12-149 adopted by the Legislature last year.  In 2010, the first choice of Colorado PERA and the Colorado Legislature was breach of fully-vested Colorado PERA retiree pension contracts.

Why does Greg Smith continue to support the breach of the contracts of the State of Colorado?  In my opinion, it's because he simply screwed up in 2009, and now he's trapped.  He was the General Counsel for Colorado PERA before, and during the 2010 pension contract breach in SB10-001.  It was his job to steer the Colorado PERA Board clear of this legal fiasco.  He failed.

When, as I suspect, one or more sharp attorneys (you know who you are) for Colorado public sector unions showed up armed with a ridiculous legal contrivance to unload the debts of PERA-affiliated employers onto PERA retirees, Smith should have stood his ground, shown them the door, warned the PERA Board of Trustees, and performed his fiduciary duty regardless of the consequences.  But, it appears that he caved, and joined the conspiracy.  We can't know the extent to which Greg Smith objected to the proposed PERA contract breach prior to caving, since such discussions at the "transparent" organization Colorado PERA are conducted in Executive Session.

Instead of shopping for a law firm (Dubofsky) that would create a legal opinion attempting to justify the taking of the contracted pension COLA benefit in early 2009, Greg Smith should have been informing PERA employer lobbyists that shoring up the pension plan may very well involve altering the rate of FUTURE accrual of PERA pension benefits, that is, the multiplier.

But, it's too late now.  Greg Smith had his chance to aggressively defend Colorado PERA pension contracts in 2009/2010, as has been his practice historically, but instead, he appears to have joined the conspiracy.  Was he forced to hop on the PERA contract breach bandwagon as a condition of employment?  Did Meredith Williams begin looking for a new job shortly after the PERA contract breach in order to escape an environment where ethics were being casually tossed in the trash bin?  (Meredith was seeking a job in Texas in the months following the PERA contract breach.)  Did Greg see a Meredith Williams rift with the PERA Board over the breach as his opportunity to ascend to Executive Director?  He just had to play along with the PERA contract breach?  PERA retirees want to know the truth.

Taking money from old people to pay off state and local government debts, breaking the contracts of people who have dedicated their lives to public service, ignoring prospective, legal pension reform alternatives that have been adopted across the nation, conspiring with union officials to minimize future contributions from their active dues-paying members (follow the money) through breach of contract, all of this is manifestly immoral.

Let's spread Greg Smith's latest Colorado PERA propaganda piece from the July 27, 2013 Denver Post out on the table for dissection.  This new Colorado PERA propaganda piece is entitled: "What Detroit could have learned from PERA," and is it ever rich!

Greg Smith in the July 27, 2013 Denver Post:

"The PERA board's proactive recommendation called on members to pay in more of their salaries and retirees to take modest reductions to their benefits.  These decisions were painful, but necessary.  PERA members and retirees shoulder 90 percent of the burden to restore PERA to financial stability and ensure a solid, modest retirement for Colorado's public employees.

(My comment: Incredibly, here, Colorado PERA's Executive Director, Greg Smith, has written and published a claim that SB10-001, resulted in PERA retirees taking a "modest reduction to their benefits."  The mendacity of this claim is shocking, to the point that Smith appears to be delusional.

Depending on the number of years that a PERA retiree remains alive, the provisions of SB10-001, illegally seize 30 to 40 percent of total, earned, accrued contracted PERA retiree pension benefits.  Greg Smith is attempting to minimize the extent of the "crime" I perceive.  Under SB10-001, some Colorado PERA retirees who live long enough will lose more than half of their contracted benefit.  If half of Smith's 401K balance were seized by the State of Colorado, would he find that taking "modest"?

The Ritter Administration on the "modest reduction" resulting from the 2010 Colorado PERA pension contract breach:

“In Colorado, a class action lawsuit has been filed challenging recently passed statutory reductions in annual COLA increases which for an average member would result in $165,000 of reduced benefit over a 20 year period.”

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

[Recall that Governor Ritter signed SB10-001 breaking PERA pension contracts.]

I find that the "2/2/2" descriptor that was used in Colorado PERA's original contract breach propaganda nicely illustrates the deception that is the foundation of SB10-001.  Colorado PERA's idea of "shared sacrifice" under their "2/2/2" plan was that pension plan contributions be increased by two percent, while PERA retiree contracted COLA benefits be diminished by 42 percent, that is, (from 3.5 percent to 2 percent.)  Pension contributions raised by two percent, contracted pension COLA benefits slashed by 42 percent.  Greg, PERA retirees are old, but they are not stupid.

As PERA officials and the sponsors of SB10-001 have bragged repeatedly, 90 percent of the cost-shift in SB10-001 was pushed onto Colorado PERA retirees.  Was the idea that these old people were not paying attention?  Too sick or preoccupied to fight for their constitutional rights?  A subclass that did not deserve equal rights under the Colorado and U.S. constitutions?)

Greg Smith in the July 27, 2013 Denver Post:

"It is my firm belief that other cities, states, and our national government need to take the steps we took in Colorado to ensure that all Americans have a secure retirement."

"It's good public policy and, as we've demonstrated in Colorado, it makes sense for our economy."

(My comment: In my opinion, this is what we are hearing from Greg Smith, it is his "firm belief" that other cities and states need to break their public pension contracts like Colorado PERA. Contract breach is "good public policy."  Colorado PERA officials have been hoping that many other states would join them in attempting a public pension COLA theft.   Where a "crime" is ordinary, the conscience of the "criminal" is assuaged.

I also note that Greg Smith has changed his tune since embracing pension contract breach, it looks like this "good public policy" that should be emulated by other states was quite recently considered by Greg Smith to be breach of contract.

Greg Smith in the Denver Post:  “The attorney general's opinion seems clear that fully vested employees — those retired or with enough years of service to retire — cannot see any benefits reduced, including cost-of-living adjustments.”

Link:
http://www.denverpost.com/news/ci_11105271#ixzz0eEZGoxly

Colorado PERA in a written document, to the Colorado General Assembly’s Joint Budget Committee on December 16, 2009 states that the PERA COLA benefit IS a contractual obligation of PERA, “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

Link:
http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf)

Greg Smith in the July 27, 2013 Denver Post:

"Coloradans are known for their willingness to step up and find solutions to problems.  So, as the country was beginning to feel the effects of the recession several years ago, PERA, the retirement plan for most of Colorado's public employees, was one of the first such plans in the country to recognize that our long-term sustainability was in jeopardy."

(My comment: Greg, give it up, you don't get to break public pension contracts in a recession.  Public pension contracts were upheld even during the Great Depression.  Public pensioners bear no market risk in their defined benefit pension plans, for God's sake ask your staff!

Greg, it was not "Coloradans" who stepped up and proposed the breach of Colorado PERA pension contracts.  It was public sector union officials, members of the Colorado PERA Board of Trustees, Colorado PERA pension administrators, lobbyists hired by PERA-affiliated employers looking to cut their debt, uniformed politicians, and easily manipulated politicians.

Greg, in spite of the fact that 27 lobbyists joined forces to break Colorado PERA pension contracts in 2010, in spite of the fact that public sector unions and many members of both political parties conspired to break PERA pension contracts, in spite of the fact that many in the Colorado Legislative Branch and the Colorado Executive Branch and numerous corporate interests sought to break PERA pension contracts, just three "No" votes in the House of Representatives would have killed SB10-001.  The assembled lobbying juggernaut barely squeaked out a win in the House in 2010.  What does that tell you?

It tells me that many members of the Legislature refused to casually discard their oaths of office, refused to disgrace the Legislature and the Colorado Constitution, knew what was happening ("a deal cut before this body met,") and rightly wondered why the Legislature had abdicated its policy-making authority in this area to self-interested lobbyists, and pension administrators.  Examples: Weissman, DelGrosso, Pace . . .

All of these political, legal and lobbying resources were brought to bear and yet SB10-001 just barely squeaked through.  Greg, why was it so difficult for the Legislature to adopt this "good public policy" that you refer to?

The extent of the power of Colorado PERA's hired lobbyists is interesting to me.  PERA's hired lobbyists conspiring with PERA-employer lobbyists were ultimately able to push SB10-001 through the legislative process in 2010 . . . some lobbying strength there.  On the other hand, PERA's lobbyists were not able to kill SB12-149, the bill that enacted PROSPECTIVE, legal public pension reform for Colorado county governments in 2012, a "less drastic" alternative to contract breach.

Colorado PERA administrators and the Colorado Coalition for Retirement Security wanted this bill, SB12-149, postponed indefinitely, since it hurts their case for the PERA COLA pension contract breach.  But, they couldn't pull it off.  This is evidence of the limits of Colorado PERA's lobbying power.

While we are on the subject of PERA lobbyists, please explain what the co-prime sponsor of SB10-001, Senator Brandon Shaffer, intends by labeling PERA's lobbyists "bad lobbyists"?  It would be very interesting to have full disclosure of all of the political machinations that went on behind the scenes while the SB10-001 scheme was developed, finalized and implemented.  Who are PERA's "bad lobbyists"?  They got the job done, why are they "bad"?

Senator Brandon Shaffer, co-prime sponsor of SB10-001:

“PERA is very good at crunching numbers, but they’re terrible at getting their message out.  They need to make it toxic for any politician to go up against PERA.  As individuals, you need to sit down with PERA and tell them you’ve spoken to President Shaffer, and he says you have bad lobbyists.”

Link:
http://www.bouldervalleyea.org/images/AdvocateJanuary2012.pdf)

Greg Smith in the July 27, 2013 Denver Post:

"That's when, in 2010, the PERA Board of Trustees recommended to the Colorado General Assembly that a plan was needed to ensure PERA's financial health for the long term."

(My comment: Greg, I notice that PERA is no longer claiming that the Colorado General Assembly requested that the Colorado PERA Board of Trustees develop and present pension reform recommendations.  Is this because PERA lobbyists were actually responsible for putting this "request" into statute?  Did PERA lobbyists take this request to the Legislature's Legal Services office and request that the amendment be drafted?  Or, did PERA lobbyists plant this idea in Senator Penry's head?

I can see that, if PERA lobbyists actually originated the idea to place this "request for pension reform recommendations" from the PERA Board into statute, the claims made in PERA legal briefs that the Colorado General Assembly "mandated" such pension reform recommendations by the PERA Board appear misleading and disingenuous.  Why would PERA submit such a brief to a court knowing of this misrepresentation?

Was this all part of an effort to make the preordained breach of PERA COLA contractual obligations appear to be the result of a thorough, fair deliberative process by the PERA Board?  Why did the PERA Board not insist that the Legislature conduct its own hearings and due diligence, instead of abdicating its policy-making authority?  The PERA Board, administrators and union officials did not want the members of the Legislature to be educated on this topic?  This would have hindered the contract breach?  Who persuaded Legislative Leadership to play along?

Greg Smith in the July 27, 2013 Denver Post:

"This shared sacrifice between members, retirees, and employers cut nearly $9 billion in future liabilities in 2010 alone."

(My comment: Greg, you are an attorney.  You know that a sophomoric argument for "shared sacrifice" is not a license to break contracts.  Should all existing contracts in the USA be scrapped when one party expresses a desire to retroactively change contractual terms for a "shared sacrifice."  Again, a crock.  If I walked into a bank and asked for a shared sacrifice, they would lock me up.

If public sector unions had decided to break PERA contracts by taking the entire PERA COLA benefit in 2010 your "savings" might have been $30 billion.  Why didn't you choose to "save" the taxpayers $30 billion if you had the opportunity?  I'm sure they would have appreciated that more than a mere $9 billion savings.

Greg, you point out that significant savings for some parties to a contract can be achieved through breach of contract.  Tremendous demand for your legal skills certainly exists among debtors in the United States.

Greg, if a private insurance company sold your mother an annuity with a COLA provision, and later notified her that, due to the need for discretionary expenditures at the insurance company, they intended to unilaterally reduce the COLA provision in your mother's annuity contract, I think we would see you pop a vein!

Greg Smith in the July 27, 2013 Denver Post:

"We now live in a world that is constantly changing, and requires us to continuously adapt to new circumstances."

(My comment: Well, Greg, the world may be changing, but the contract clauses in the U.S. Constitution and in the Colorado Constitution have not changed.)

Greg Smith in the July 27, 2013 Denver Post:

"We (PERA) are a not-for-profit economic engine that is adaptive, innovative, and consistently delivering value to Colorado's largest workforce."

(My comment: Colorado PERA is not a "not-for-profit" entity.  Colorado PERA is a governmental agency.  Colorado PERA is an arm of Colorado state government, an "instrumentality of the state.")

Greg Smith in the July 27, 2013 Denver Post:

"There are a lot of important lessons in the sad news of Detroit's serious economic woes."  "It will take time for that city to work its way back toward recovery, but it's hard not to think that such a crisis could have been averted if they had taken action sooner."

(My comment: I find it alarming that the leader of our state's largest public pension system, Greg Smith, is not above using a distressed Detroit to bolster his Colorado PERA contract breach propaganda.  Detroit's public pensions are relatively well-funded at 87 percent and 96 percent funded levels.  Detroit is trying to break its public pension contracts in bankruptcy.  Detroit's unfunded public pension liabilities represent about $2.5 billion of Detroit's estimated, total $18 billion debt.  The unfunded pension liabilities of the Detroit pension plans are due over the next 50-70 years.  This debt will be paid out incrementally over many decades.  It is not due tomorrow.

"Public pensions are not part of Detroit's problem.  In fact, its public pensions are well funded – over 96 percent for the Police and Fire plan and over 87 percent for other city employees."

http://www.ncpers.org/Files/NCPERS%20Response%20to%20Bloomberg.pdf)

Greg Smith in the July 27, 2013 Denver Post:

"I can't underscore enough the importance of this proactive, bipartisan, collective effort, especially as Detroit looks to shed its retirement obligations through bankruptcy."

(My comment: Greg, Detroit is a municipality, it is eligible to address pension obligations in bankruptcy.  Colorado PERA is attempting to shed its pension obligations outside of bankruptcy.  There is a world of difference.  Detroit is in a poor financial condition, although its public pension plans remain quite well-funded.  Colorado is the 15th wealthiest state in the nation.  The Colorado Legislature has just completed [last session] paying off $700 million in local government pension obligations that ARE NOT the contractual obligation of the State of Colorado, while ignoring its own PERA pension debts [failing to pay the full PERA pension ARC for a decade.]  The support of Colorado PERA pensions consumes three percent of all Colorado state and local governmental expenditures, such a "burden."  Further, as you know, state governments cannot file bankruptcy under federal law.)

From the July 27 Detroit Free Press:

"Michigan Attorney General Bill Schuette announced this morning that he will defend the state’s constitutional protections of public pensions in Detroit’s historic bankruptcy filing."

"Michigan’s constitution, Article 9, section 24, is crystal clear in stating that pension obligations may not be 'diminished or impaired,' Schuette said.  As attorney general, I will defend the rights of Michigan citizens and defend the Constitution of the State of Michigan."

http://www.freep.com/article/20130727/NEWS15/307270059/Michigan-AG-to-defend-public-pensions-in-Detroit-s-bankrputcy-filing

Greg Smith in the July 27, 2013 Denver Post:

"One can't help but wonder if Detroit had been more proactive about finding common-sense solutions for public employees, retirees and taxpayers, perhaps its future would look more like ours."

(My comment: To me, it looks like Greg Smith is attempting to conflate Detroit's financial predicament, of which public pension unfunded liabilities are a small part, with Colorado's financial condition.  It appears that he does so in an attempt to somehow justify the breach of Colorado PERA pension contracts.
Again, Detroit is a municipality attempting to alter its well-funded public pension plans in bankruptcy.  Colorado is attempting to break public pension contracts outside of bankruptcy, and of course, state governments cannot declare bankruptcy under federal law.

Is breach of contract a "common sense" solution?  It sounds like a temporary solution to me, kicking the can.  Is taking a third or more of Colorado PERA retiree contracted benefits a "common sense" solution?  We know that the PERA contract breach was not "reasonable," nor was it "necessary."

Greg, in my opinion, "your future" will include an opportunity to watch the enactment of PROSPECTIVE Colorado PERA pension reforms that you should have insisted upon before the Colorado PERA Board of Trustees in 2009.)

Here's a bit more from Colorado PERA's Executive Director Greg Smith:

Senate Finance January 29, 2010, Greg Smith:

“There are few case laws that address the issue, Smith said, but one, regarding a fire and police pension plan, was litigated when the plan ran out of money and benefits were being paid for with current revenues.”

http://www.coloradostatesman.com/content/991568-pera-reform-bill-passes-first-test-capitol

RMN, August 17, 2005:

“The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member.  That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan.”

“Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem.”

http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/

RMN, February 21, 2004:

“PERA general counsel Greg Smith said his research shows that actuarial emergencies occur only when a pension plan does not have the cash to pay current benefits, and that's not the case with PERA, since the plan has $29 billion in assets and a constant stream of investment income that helps cover benefit costs.”

PERA Trustee Casebolt at the Colorado PERA "Listening Tour," August 11, 2009, there's plenty of cash to pay current PERA benefits:

“PERA faces no immediate danger of being unable to pay benefits, in fact, PERA can pay benefits for many years to come, based on our current funding and our benefit structure coupled with over $30 billion in assets, at present market value.”

Link:

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

RMN, August 17, 2005, Greg Smith:

“His briefing paper said 'there has never been a finding in Colorado that the state has reserved its power to make changes' in PERA's benefit structure.”  (My comment: Let's have a look at this Smith briefing paper, surely the "transparent" organization Colorado PERA will make a copy available.)

Greg Smith at 2010 PERA Shareholder meeting – YouTube video 10-11 minutes into the video.

“We need to know the answer of whether this action was constitutional.”

(My comment: Then why did the Colorado PERA Board not insist that an interrogatory be sent to the Colorado Supreme Court?  Would have rocked the boat?)

Colorado PERA active and retired members, support public pension contractual rights in our state.  Colorado is better than breach of contract.  Contribute at saveperacola.com.  Friend Save Pera Cola on Facebook!