A few days ago, (8/19/2013) Colorado WINS (a coalition of public sector unions, "Colorado Workers for Innovative and New Solutions") posted an article on its website condemning the historical underfunding of the Colorado PERA public pension system by the Colorado General Assembly.
In 2010, Colorado WINS supported SB10-001, a bill that broke the pension contracts of pensioners in the Colorado PERA pension system. The 2010 legislation sought to force a "sacrifice" from Colorado PERA pensioners, that is, forcibly take the property of these PERA pensioners, allowing Colorado state and local governments to escape their accrued pension debts. I believe, that Colorado WINS supported the breach of the public pension contracts of their retired union "brothers and sisters" in order to minimize the future pension contributions needed from their current active "dues-paying" union members. (Retired union members no longer pay union dues, why should their interests and contracts be protected by Colorado WINS? . . . follow the money!)
Colorado WINS is looking out for their current, active members, but I think they made a mistake in 2010. What kind of a union casually tosses its retired members under the bus? There is scant precedent for this type of behavior in the history of the U.S. labor movement. This act was clearly immoral and treacherous. It undermines the moral standing of the U.S. labor movement. Public sector unions have done much to improve the working conditions of middle-class Americans over the last century, but advocating the breach of the contracts of their retired union members crosses a moral line.
As we read on the Colorado PERA website:
“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”
(My comment: Yes, Colorado PERA was able to frighten a few PERA retirees into supporting the breach of their own PERA pension contracts in 2009. The public relations campaign to take money from Colorado PERA retirees was, ironically, funded with these retirees' own money [from PERA pension trust funds.] It has been observed that many of the PERA retirees who supported the breach of PERA contracts in 2010 were among the wealthier PERA pensioners.)
Rather than conspiring with others to "claw back" the earnings of Colorado's pensioners, I think that Colorado WINS should be demanding that the Colorado Legislature actually pay its public pension bills. What are Colorado WINS' lobbyists doing? For the last decade, they should have demanded that the Colorado Legislature meet its contractual obligations, that full payment of PERA's pension bills be made. Colorado WINS lobbyists should have made these demands before the committees of the Legislature at every opportunity. In every year that the Colorado Legislature failed to make its PERA pension payments and instead appropriated funds to cover local government pension debt that IS NOT the contractual obligation of the State of Colorado, Colorado WINS' lobbyists should have been there to demand an end to the practice.
As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill for a decade.
2012 PERA CAFR, page 35 – "ARC Deficiency."
"In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries."
"During the past 10 years, this shortfall in funding . . . has been $3.4 billion."
Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” (ARCs), from the Center for Retirement Research at Boston College Public Plans Database:
2001 Colorado School – 100% ARC Paid
2002 Colorado School – 100% ARC Paid
2003 Colorado School – 69% ARC Paid
2004 Colorado School – 51% ARC Paid
2005 Colorado School – 48% ARC Paid
2006 Colorado School – 62% ARC Paid
2007 Colorado School – 60% ARC Paid
2008 Colorado School – 68% ARC Paid
2009 Colorado School – 65% ARC Paid
2010 Colorado School – 70% ARC Paid
2011 Colorado School – 89% ARC Paid
2001 Colorado State – 100% ARC Paid
2002 Colorado State – 100% ARC Paid
2003 Colorado State – 69% ARC Paid
2004 Colorado State – 51% ARC Paid
2005 Colorado State – 48% ARC Paid
2006 Colorado State – 58% ARC Paid
2007 Colorado State – 56% ARC Paid
2008 Colorado State – 63% ARC Paid
2009 Colorado State – 61% ARC Paid
2010 Colorado State – 62% ARC Paid
2011 Colorado State – 85% ARC Paid
2001 Colorado Municipal – 100% ARC Paid
2002 Colorado Municipal – 100% ARC Paid
2003 Colorado Municipal – 69% ARC Paid
2004 Colorado Municipal – 62% ARC Paid
2005 Colorado Municipal – 64% ARC Paid
2006 Colorado Municipal – 85% ARC Paid
2007 Colorado Municipal – 84% ARC Paid
2008 Colorado Municipal – 98% ARC Paid
2009 Colorado Municipal – 96% ARC Paid
2010 Colorado Municipal – 101% ARC Paid
2011 Colorado Municipal – 139% ARC Paid
(According to the 2011 PERA CAFR, the dramatic increase in the percentage contributed for the Colorado PERA Local Government Division in 2011, is a “result of the changes contained in SB10-001,” [2011 PERA CAFR Financial Section, page 82.] Apparently, when the State of Colorado breaks its public pension contracts it really facilitates the payment of the full ARC in some PERA divisions.)
The Colorado WINS article published on August 19, 2013 highlights the Colorado Legislature's historical underfunding of the Colorado PERA pension system, and points out that the State of Colorado pays for only 17 percent of state employee retirement benefits. The WINS article emphasizes the fact that Colorado PERA retirees are not eligible to receive Social Security benefits and are accordingly entirely dependent on their PERA pension benefits. In the article, Colorado WINS states that the Colorado General Assembly "chose to underfund its portion of contributions," and that the "underfunding" of the Colorado PERA pension system "is not the fault of state employees." If this is true, why did Colorado WINS support a bill that shifts the burden of this PERA pension underfunding onto state employees (and PERA members employed by local governments?)
Colorado WINS notes that the increased PERA employer costs (AED and SAED) put in place by the Colorado Legislature are the result of the Legislature's failure to make pension payments identified by Colorado PERA's actuaries [necessary to maintain a healthy public pension system, “actuarially required contributions, ARC.”] Colorado WINS notes that the inclusion of the AED and SAED in public employee compensation studies leads to the false conclusion that the State of Colorado contributes more to retirement than do private sector entities in Colorado.
Colorado WINS on Social Security:
"What is important to remember, and which is often lost in the debate over public employee pensions, is that state employees do not earn Social Security while they are employed by the state. When someone in the general public hears about a PERA Pension they often are not aware of this fact and assume that a state employee’s pension is an add-on to their Social Security benefits, similar to the role of a 401k or a pension in the private sector."
(My comment: The fact that Colorado PERA pensioners are completely dependent to their pension contracts renders the Colorado Legislature's self-serving breach of these contracts in 2010 unconscionable. Contractual obligations were broken to free up money for discretionary programs popular with voters.)
"The actuarial costs however include moneys needed to make up for years when the state underfunded their portion of the PERA contribution and all other such accrued liabilities and any other contributions made to PERA."
(My comment: The underfunding of the Colorado PERA pension system by the Colorado Legislature was condemned at the 2009 Colorado PERA "Listening Tour" meeting in Denver, PERA member David Holme:
“My decision to join the state was based on the PERA program.”
“Any sort of a reduction in benefits today would be a violation of that contract, and bait and switch advertising . . . and so fraud.”
“State employees have never failed to provide their contributions . . . and in fact we’ve paid more into the system than the employers have over the total of the years, according to PERA reports.”
“The employers, starting in 2002, the last year of 100 percent funding, began providing less than the annual contribution requirement, setting contribution rates for the state of less than required.”
“Today, the State of Colorado PERA employer is past due to the tune of $6.5 billion into the trust fund contributions, not counting any interest — if you do it at the three percent PERA interest, it would be another $1.1 billion past due over the last 9 years.”
“PERA’s overall funds at the end of last year were about $30 billion, this bad debt constitutes about 25 percent of the PERA assets. If they were paid with interest to the PERA investment fund it would be at 94 percent funded on the actuarial basis or 76 percent on the market basis. Most experts believe that a fund at 80 percent is a healthy fund. We’d be above that.”
“The survey today, that we just talked about, is a good example of this. If you look at that, 28 of the options on there cost the employees money, and only two cost the employers money.”
“As a state employee, I’m ready to sit down and work on whatever fixes are needed once the deadbeat employer has made arrangements to fully fund its share.”
"Based on PERA’s report we see that a state employee pays 83% of the contribution necessary to pay for their future retirement benefits – this is significantly higher than what an employee pays in the private sector."
(My comment: The fact that the State of Colorado and other Colorado PERA employers put forth a minimal financial effort in the provision of public pension benefits renders the Colorado Legislature's 2010 breach of PERA pension contracts that much more egregious.
• 2.16 – percent of Colorado state and local government spending dedicated to public pension support in 2008 [Census Bureau/NASRA.]
• 2.89 – average percent of state and local government spending dedicated to public pension support among the states in 2008.
• 5.55 – highest percent of state and local government spending dedicated to public pension support among the states in 2008 [Nevada.]
• #32 – Colorado 2008 rank among the states in taxpayer support for public pensions.
"The added employer costs in the DPA analysis are a result of underfunding of the State’s pension obligation by the State in previous years."
"First, the underfunding that AED and SAED are designed to address (circumstances that) occurred through no fault of any State employees. Rather the State chose to underfund its portion of contributions. Employees should not have their benefits attacked because of an action that their employer freely took. Second, AED and SAED payments cannot be accurately categorized as part of the total annual compensation package for current employees. These are not new benefits; rather they are payments on already owed benefits."
"In that analysis it is clear that the State is simply not competitive in any real world, practical analysis of their retirement benefits plan."
Link to the complete Colorado WINS article:
A comment from ColoradoPols.com on the support of Colorado WINS for breach of PERA pension contracts in 2010:
"However, (Colorado PERA's) placing 90% of the reform burden on PERA retirees was the master stroke to win key employee groups, especially Colorado WINS."
The failure of the Colorado General Assembly to pay its public pension bills for the last decade has also been condemned by Colorado PERA officials:
Colorado PERA Executive Director Greg Smith, August 11, 2009:
“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.”
(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.)
Former Colorado PERA Executive Director Meredith Williams, February 23, 2012:
"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."
(Testimony to the House Finance Committee relating to the Colorado Legislature's historical underfunding of its PERA pension obligations.)
As we have seen, a columnist for the Wall Street Journal's Marketwatch.com has recently labeled such deliberate underfunding of public pension systems "corruption."
The columnist, Chris Tobe, has served as a trustee of a public pension system. Chris Tobe:
"A corporate pension plan could not pay half the payments for ten years like the states like Kentucky and Illinois have done. Those guys would be in jail. I think that public pension plans should be held to the same standard as corporate defined benefit plans."
"I compare Kentucky to Illinois, much of whose real corruption happened maybe ten years ago and Blagojevich, the governor, was deeply involved with it. They’ve also underfunded their actuarially-required contribution [ARC], much like Kentucky. Those two things went hand-in-hand, in Illinois and Kentucky, probably the two worst state systems. If people are willing to look the other way at corruption in investments, they’re willing to look the other way at deliberate underfunding, which I consider corruption as well."
Colorado WINS membership and organization:
“The Colorado Association of Public Employees/Service Employees International Union (CAPE/SEIU); the American Federation of State, County and Municipal Employees (AFSCME); and the American Federation of Teachers (AFT) are joining forces to organize state employees. The new organization will be known as Colorado WINS (Workers for Innovative and New Solutions).”
"In addition, Colorado WINS will have the ‘sole authority to advocate for legislation affecting state employees, including but not limited to legislation affecting PERA [the Public Employees’ Retirement Association], the state personnel system, employee accountability and state employee protections.’”
“Under the agreement, SEIU will provide 50 percent of the budget for Colorado WINS; AFT and AFSCME will provide the rest.”
“The agreement also says that funding contributed by Colorado WINS members for political purposes will be divided, with 50 percent going to SEIU/CAPE and 50 percent to the AFT and AFSCME political funds.”
“A copy of the agreement is available online at:
Colorado PERA active and retired members, your contracts have equal status to Colorado's contracts with corporations. There is no reason why the contract of a public sector worker should be viewed as inferior to a contract between the State of Colorado and a corporation. Note that no Colorado state legislator has proposed breaking state contracts with corporations. Keep up the fight for your contractual rights! Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!