New video exposes “Amendment 66: The PERA Fiction”

(Promoted by Colorado Pols)

The Yes on 66 campaign released a video on Monday dubbed “The PERA Fiction” in response to the latest instance of an opponent repeating a widely discredited claim about how money raised for schools under Amendment 66 might be used.

The claim was recently made by political consultant Laura Carno during an appearance with Amendment 66 supporter Laura Chapin on The Denver Post’s video program “The Spot.”

“Colorado voters are smart enough to see through the scare tactics opponents are using,” said Yes on 66 Campaign Director Andrew Freedman. “New money raised for schools under Amendment 66 is constitutionally and statutorily prohibited from being used on anything but education reforms and program enhancements, and we’re happy to make that clear to voters.”

“We’re not agreeing to disagree. We’re saying that our opponents are wrong, period.”

“Amendment 66: The PERA Fiction” supporting materials:

Money raised by Amendment 66 CANNOT BE USED for “shoring up” PERA, as political strategist Laura Carno and others claim.

In fact, all new money raised by Amendment 66 must be placed in the newly created State Educational Achievement Fund, where it can ONLY be used for “Implementing educational reforms and programmatic enhancements.” 1

To be certain there is no question as to what qualifies as “educational reforms and programmatic enhancements,” lawmakers defined them in 19 categories in Senate Bill 213. 2

As a further protection, Amendment 66 requires an annual state audit “to ensure compliance” that new money is only spent on education reforms and program enhancements. 3

That’s why we say the money is “constitutionally and statutorily prohibited from ever being used directly to fund PERA.”

But don’t just take our word for it. In a Sept. 9, 2013, editorial headlined “The PERA Fiction on Amendment 66,” the Grand Junction Daily Sentinel editorial board called it “downright embarrassing” to base opposition ”…on the inaccurate claim that money raised by Amendment 66…could end up going to the Colorado Public Employees Retirement Fund — or PERA — instead being sent to schools.”

“Downright embarrassing.”

Steve Reynolds, the board chairman of the Western Slope business group Club 20 wrote in The Sentinel that the information being circulated that new money “would be redirected to bail out PERA is blatantly false.”

That’s right. “Blatantly false.”

There is only one way to read Amendment 66 when it comes to where the new money goes:

Shoring up PERA  = FICTION

New money for classroom and programs = FACT

Amendment 66 is good for kids, it’s good for schools, and it’s good for Colorado. Don’t let the false information fool you.

End of discussion.


1Amendment 66, Sections 6a, 6c

2 SB 213: Colo. Rev. Stat. § 22-54.5-101(3)

3 Amendment 66, Section 6d

4 Grand Junction Daily Sentinel editorial, Sept. 9, 2103

5 Grand Junction Daily Sentinel guest commentary, Sept. 15, 2103

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36 Community Comments, Facebook Comments

  1. ElliotFladen says:

    Say the school budget currently is X.  X = A + B + C.  A is the money for operations, B is the money for reforms (the sort of stuff that 66 would be obligated to go to, and C is the money that goes to PERA. 

    New money comes in under 66.  Let's call that money Y.  Now Y, per this, must go to C.  Fine.  But that says nothing about whether then X, the already existing money, cannot be redirected so that the portion of it that went to C would get solely redirected to B.  So whereas C before = X – A – B, C after 66 could just end up equaling X – A.  Kind of a big difference there. 

    Of course this video carefully dances around that with its claim that NEW money would only go to PERA ("C" again).  In doing so, it builds a strawman that can safely be disregarded. 

    • Algernon Moncrief says:

      Elliott, the level of the accumulated public pension debt of Colorado PERA-affiliated employers (the state and many Colorado local governments) is unaffected by the revenue stream used to meet these contractual obligations.  It makes no difference whether you make your car payment from your salary or interest earnings on your portfolio, your total automobile debt and your contractual obligation remains unchanged.

    • Algernon Moncrief says:

      Elliot's research into the contractual nature of accrued Colorado PERA pension benefits.

      Hey Elliot, when you have some time read the work of Professor Amy Monahan of the University of Minnesota School of Law; "Public Pension Reform: the Legal Framework."

      http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1573864

      I consider Monahan to be the preeminent scholar in the nation in the area of public pension legal doctrine.

      Monahan:

      "The (Denver District) court’s (2011) ruling (in Justus v. State, which was reversed by the Court of Appeals in 2012) is surprising both because the court appeared to break from earlier Colorado decisions that found pension benefits to be contractually protected prior to retirement and because the change could be characterized as a retroactive change to benefits, which is the type of change that invites the most scrutiny under a contract clause analysis."

       

      Also see:

      http://coloradopols.com/diary/47186/making-life-easy-for-elliot-fladen-algernon-volunteers-to-pull-excerpts-from-the-aei-public-pension-contractual-rights-paper-on-elliots-reading-list

       

      A Republican, House Finance Committee Chairman (and now House Minority Leader) 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."

       

      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 . . . "

       

      A Democrat, (the Pueblo Chieftain quoting from Sal Pace’s website in February 2010):

      "'I voted against the proposal because I don’t believe that the problems with PERA need an immediate fix and the solutions proposed unduly placed a burden on our seniors,’ Pace said in a statement on his Web site Tuesday."

      http://trsbaudit.wordpress.com/

       

      Colorado PERA's lawyers, December 16, 2009:

      Colorado PERA officials in written testimony to the Joint Budget Committee: “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.”

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

       

      Colorado PERA's former General Counsel and current Executive Director:

      August 17, 2005, Rocky Mountain News:

      “His (Colorado PERA General Counsel Greg Smith) 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.”

      "Smith said in his opinion that 'other (non-Colorado) courts have set a high burden to meet the necessity threshold.'"

      "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/

      Again, Greg Smith:

      "Shrink the COLAs: '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,' Smith said."

      http://www.denverpost.com/news/ci_11105271

       

      Colorado Court of Appeals 2012 decision in Justus v. State (October 11, 2012):

      “We consider McPhail and Bills dispositive (indisputably bringing to a conclusion a legal controversy) of whether plaintiffs here have a contractual right to a particular COLA.”

      http://saveperacola.files.wordpress.com/2010/01/2012-10-11-judgment-reversed-and-case.pdf

  2. ElliotFladen says:

    Oops – I mis-assigned the variables above.  It should read like this instead:

     

    Say the school budget currently is X.  X = A + B + C.  A is the money for operations, B is the money for reforms (the sort of stuff that 66 would be obligated to go to, and C is the money that goes to PERA. 

    New money comes in under 66.  Let's call that money Y.  Now Y, per this, must go to B.  Fine.  But that says nothing about whether then X, the already existing money, cannot be redirected so that the portion of it that went to B would get solely redirected to C.  So whereas C before = X – A – B, C after 66 could just end up equaling X – A.  Kind of a big difference there. 

    Of course this video carefully dances around that with its claim that NEW money would only go to PERA ("C" again).  In doing so, it builds a strawman that can safely be disregarded. 

     

    • ClubTwitty says:

      Does that make you feel good?  Just wondering.

      • ElliotFladen says:

        Exposing dishonest hit pieces does make me feel good.

        • ClubTwitty says:

          I meant all the silly faux algebra, counselor.  But carry on.  Your estimation of yourself and your work here, at least, is grand. 

          • ElliotFladen says:

            What is faux about my "faux algebra"?  It was used to illustrate a simple point; that although Y is purportedly restricted from going to PERA, the passage of 66 may cause a greater share of X from going to it than previously.

            That you dislike this point hardly makes it "faux"

            • ajb says:

              How about we dispnse with all the faux algebra and say this:

              Money is fungible.

              or this:

              Dog bites man.

              Both are equally newsworthy and neither requires patronizing faux algebra.

              • mamajama55 says:

                I agree. Pera is a contractual obligation, paid to retired public employees, partly out of their own frigging savings, taken out of each and every paycheck since their hiring dates.

                I hope to get a pension someday. The reason I didn't support Bennet in 2010 (don't get all riled up, Ms. Kronk) is that, as DPS Superintendant,  he did help make the deal that merged DPS pension funds with PERA. "We're going to pay this pension obligation with loan money, and it will be just dandy. I'm a deal maker and I know how to make deals, so trust me." Right.

                I don't often read Algernon's stuff because it's  long and repetitious much of the time. However, I definitely have a personal interest in the PERA outcomes. I paid into it for 13 years, and would like to see some fruit of my labors.  Since PERA is in fact a contractual obligation, it must be met.

                I get that there aren't funds to meet all obligations now, but that doesn't make them magically disappear, nor does it mean that the people demanding that they be met are somehow villainous. Nor does it mean that any new funding stream coming into the same system must be discredited because the old agreements haven't been honored.

                Amendment 66 has enough safeguards built into it to spend on critically needed classrooms and teachers and teacher aides and school infrastructure that it can't be spent on PERA.

                So bottom line, retirees are back where we started. PERA owes retirees money.  There apparently isn't enough money. Yet, contractual obligations are contractual obligations, and we're going to have to keep trying to solve the problem. It has nothing to do with Amendment 66.

                Elliott, bless his pea-picking heart, loves to deal in hypotheticals. If outcome Y can happen, and that would be a horrible thing, then let's plan to prevent Y from happening, even if it means that public benefits A-X and Z will be derailed to prevent Y from happening. (I can do faux algebra, too). This is a logical causal fallacy known as the "slippery slope" argument .

                Fear that people would parlay very modest restrictions on gun ownership into blithering gun-grabbing fueled the recall elections. 

                But rest assured, my moderate and libertarian friends – if we judge the future by the past, then school districts will never be in any hurry to fund their member's retirements. It will definitely be the last thing on their to-do lists. Teachers, firefighters, and bureaucrats will, because we are public-spirited people, step aside once again and wait politely for that magical moment when dollars and ethics come together, and promises are kept.

                • Algernon Moncrief says:

                  Hey mama, I don't buy the "not enough money" argument.  PERA obligations will be paid over the next 70 years (for new hires.)  The PERA debt is not due tomorrow.  Also, there is no need for the PERA pension system to be 100 funded as required in SB10-001.  Public pension systems are fiscally sound at a 70 percent actuarial funded ratio (see my recent Morningstar article.)  PERA's funded ratio at the time of the breach was 68.9 percent.

                  Colorado has the 16th lowest per capita pension debt among the states, and is the tenth wealthiest state in the nation.  Public sector expenditures to support public pension obligations in Colorado are less than three percent of all such expenditures, hardly a "burden" or a "crisis."

                  If there is "not enough money," then how has the Legislature managed to pay $700 million to meet local government public pension debts that are NOT the contractual obligation of the State of Colorado (of course, pleasing local government lobbyists?)  How has the Legislature managed to make $100 million grants of discretionary property tax relief?  Provide generous, ongoing corporate welfare?  Why did Senator Morse propose yet another massive tax cut (admittedly for a good purpose) at the beginning of the 2013 session if we are in a financial "crisis"?  Why has S&P raised the state's credit rating in the last decade if we are in a financial "crisis"?  Can you see just how absurd it is that the State of Colorado is trying to escape its contractual obligations?

                  Sorry about the repetition in some of my articles.  I habitually apply the same set of facts to recent news articles relating to public pension litigation, obligations, and administration in the U.S.  I'm sure that reading the same set of facts can grow annoying.  On the other hand, I want as many Coloradans as possible to know that the State of Colorado is trying to break its contracts.  This is uncommon.

                  • mamajama55 says:

                    Points taken. So, in an unusual, almost unheard of move on here, I'm goiing to outline our (yours, mine, Elliot's, Duke's, whoever else is writing about this) points of agreement.

                    • The State of Colorado has a contractual obligation to fund the PERA system.
                    • School districts and government entities have contractual obligations to fund the PERA system.
                    • Amendment 66 specifically excludes funding to the PERA system.

                    For the rest,   i.e. Amendment 66 funding, we will never agree on anything Laura Carno does, because she is a true corporate conservative. Her mission is to never allow tax increases of any kind. Full stop.

                    • ElliotFladen says:

                      Mamajama, I cannot agree about the existence/extent of an obligation to fund PERA.  Not because I am saying you are wrong, I just haven't looked into it sufficiently to agree with you. 

                      As for Point #3, we can agree to that, but we should also be able to agree to Points #4 & 5:

                      4) Amendment 66 does not prevent the shifting of previously existing funding to meet purported PERA obligations; and

                      5) By focusing in on new funding and ignoring existing funding, the above video in the original post dishonestly creates a strawman argument. 

                • ElliotFladen says:

                  Mamajama, sorry for not including you in my response to Duke Cox (where I exempted Algernon from my overall critique of commenters on this thread/site….I would have exempted PCG as well for when she comments as obviously we are good friends [who granted disagree on signficant issues] who I have a ton of respect for). 

                  As I said to Algernon below, I haven't sufficiently looked into the argument of whether PERA is contractually obligated in the manner you guys claim to take a stand on your position.  However, for the purpose of this thread, I don't have to.  This thread is NOT about a video that claims that PERA is required to be funded in the manner the unions claim.  Instead, it is about a video about whether my friend (used loosely – we know the other and I assume we are on good terms) Laura Carno was dishonest in her recorded appearance when she claims Amendment 66 would help fund PERA.  Contrary to what the video claims, she was NOT dishonest because Amendment 66 would free up existing money to be used to fund PERA. 

                  Now maybe existing money should freed up to fund PERA.  Maybe it shouldn't.  That is a discussion INDEPENDENT of the video's claims and one we will likely disagree on.  However, that is a general policy discussion that doesn't go to whether the video, and not Carno, was dishonest.  And if you are going to have that policy discussion, a BS way to start it is to make a hit job video (Colorado Commits to Kids) slandering your opponenent (Laura Carno).  

                  So although I know you generally agree with Colorado Commits to Kids, you can at least acknowledge that this video was dishonestly done and should be retracted immediately. 

        • Algernon Moncrief says:

          Elliott, when the State of Colorado meets a contractual obligation to a corporation would you argue that it matters whether this contractual obligation is met with state general funds versus, for example, state mineral royalties?  The contractual obligation of the State of Colorado to that corporation exists and will be honored under the Contract Clause.

          • ElliotFladen says:

            Algernon, 
            Whether Colorado is obligated to PERA is a distinct question from whether this video honestly handles the issue of whether Amendment 66 will lead to an increase in PERA funding.  The video dishonestly claims it will not be only looking at new, not existing/redirected, money. 

        • Algernon Moncrief says:

          Hickenlooper on the relationship of the education funding ballot proposal to PERA funding:

          "There is no lump sum subsidy of PERA anywhere in this."

          Mike Rosen: "I didn't say there was."

          Link:

          http://www.850koa.com/pages/mikerosen.html

          • ElliotFladen says:

            Again, you are missing it.  The issue isn't whether Amd. 66 goes to PERA, it is whether amendment 66 frees up existing money (that comes in independet of Amd. 66) to go to PERA.  That you think this is a good thing and/or legally required is irrelevant from the above issue.

            • Duke Cox says:

              Elliot,

              Is Alex Castellanos a hero of yours? You have a very similar aversion to honest discussion about any subject… and neither of you can recognize your own transparency.

              It is very difficult to respect anyone to whom the truth is such a stranger and who treats every discussion as though everyone else in the room is stupid. 

              You should definitely run for public office as a Republican…your skill set and temperment are perfect for the job. 

               

               

               

              • ElliotFladen says:

                Duke, 
                I have no idea who Alex Castellanos is.  

                As for a purported aversion for honest discussion, I call bullshit.  You guys love to say that I don't like to answer random questions you have that aren't on point.  Guess what – this is a site not only where everything anybody says is recorded (via google/wayback machine) for all time, but it also is a site where I'm going to be in a heavy minority in my opinion.  On that basis, I'm of course going to be circumspect in what I say. 

                Howeer, I'd note that here, as is usual in a discussion where there isn't a single good response to my point (think back to the Hackstaff Mailer thread), this "you won't discuss things honestly get brought up when…wait for it…there isn't a single honest response any of you guys have for the point that I am making which is in direct response to the OP of the thread.  Instead, you try to derail my point with tangent after tangent*.  Sorry, but I'm not going to play that game.

                 *(I'll exempt Algernon from this as his/her points are quite substantive and largely responsive to the issue I've raised, although I remain in disagreement with him/her)

  3. ClubTwitty says:

    You need a blackboard like Glenn Beck. EFU.

    • ElliotFladen says:

      Are you seriously comparing the idea that money is fungible to "Joe Blow's sister's dogwalker's uncle's roommate's godfather was a commie, making Joe Blow a commie?"  

      • BlueCat says:

        Short answer, Elliot… No. Twitty didn't say any of those things. While you're accusing others of using straw man arguments you might want to look up WTF the term means.

        And, by the way…this is what answering a question looks like. 

        • ElliotFladen says:

          BC, 
          He implied them and my comment stands. 

          • ClubTwitty says:

            As does my reply

            The method, counselor.  On one hand we have some pompous blowhard that likes to lecture down to folks…and on the other there is a former Fox News commentator.

              – See more at: http://coloradopols.com/diary/50236/new-video-exposes-amendment-66-the-pera-fiction#comment-527134

          • BlueCat says:

            More like your comment just lays there but have it your way, Elliot.

          • Algernon Moncrief says:

            Elliott, the PERA pension system is funded through PERA employer contributions, employee contributions and investment earnings.  The level of employer and employee contributions (percent of employee salary) is set in statute.

            The Colorado General Assembly has never made a direct appropriation to the PERA system (to my knowledge.)  Other states have found new revenue streams to support state public pension contractual obligations.  The Colorado Legislature has not pursued new revenue for the system, nor has the Legislature paid its full PERA pension bill (ARC) for a decade.  As you know, the State of Colorado is currently attempting to escape its PERA contractual obligations.  Finding a new revenue stream to meet state contractual obligations is certainly preferable to breach of contract in Colorado.  This option could have been explored if Leadership would have appointed an interim study committee on PERA in the summer of 2009.  Since the deal had already been struck to attempt a breach of PERA COLA contractual obligations, there was no examination of prospective, constitutionally permissible "reform" options in open legislative hearings.  Briefs to the Colorado Supreme Court in the PERA retiree COLA lawsuit will be filed in the next few weeks.

            If you are making the argument that Amendment 66 should be opposed because it "frees up" funding for the PERA pension system, then to be consistent you must oppose ALL new revenue for the State of Colorado, since, by your logic, this revenue also "frees up" funding for the PERA pension system.

            By your logic, federal assistance to the State of Colorado should be opposed since it "frees up funding" for PERA.  Further, population growth, economic growth in the state, relocation of businesses to Colorado, and expansion of military facilities in Colorado should be opposed since all "free up funding" for the PERA pension system by generating new state revenues.

            Employers in the Colorado PERA system have accumulated, contracted, unfunded pension liabilities.  The level of these liabilities for earned pension benefits (deferred compensation) is fixed by statutory contract.  The source of the funding that will be used by the State of Colorado (and local governments in the PERA system) to meet accumulated public pension debts has no significance in regard to performance under PERA contracts.

            • ElliotFladen says:

              Algernon, fair response, but you are missing one of the key points from the other side – that this – Amendment 66 – is only purportedly needed because of a revenue shortfall caused by PERA that the Dems do not want to seriously consider.  And more to the point, your argument doesn't defend the above video which is dishonest in its focus on "NEW" (as opposed to redirected "OLD" money)

              I'm not going to get into the argument of whether there is a contractual obligation or not to fund PERA in the manner the teacher unions claim as I haven't sufficiently looked into that yet. 

              • Algernon Moncrief says:

                Elliott, Colorado's Revenue Shortfall Caused by PERA?

                Jennifer Paquette, Colorado PERA Chief Investment Officer, in the May 22, 2011, Denver Post:

                “In fact, employer contributions to pensions account for just 2.16 percent of all Colorado state and local government spending, according to 2008 U.S. Census Bureau data.”)

                Also, note that a few weeks ago, the investment research firm, Morningstar, reported that Colorado has the 16th lowest per capita public pension debt in the nation, $1,804 per capita, versus (the highest per capita public pension debt, Alaska, in excess of $10,000 per person.)

                Honoring the state's contracts was not an acceptable "political solution" for the majority of Colorado state legislators who voted for SB10-001 in 2010, therefore they embraced a constitutionally impermissible contrivance "solution" that pushed the problem off into the future.

                Prominent public pension attorney Gino L. DiVito, regarding Illinois' self-inflicted public pension mess: “ . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

                Visit saveperacola.com

      • Diogenesdemar says:

        Short answer — damn straight!!  You really ought to consider peddling your BS and snake oil somewhere else — you're so far out of your league here among thinking people that I'm actually starting to feel sympathy for the ass whipping you're receiving here. Sympathy except that your inflated ego and overblown self-image won't let you  admit defeat — truly the fruits of attending a law school without ever becoming functionally educated  — which is pretty damn hilarious when you consider how much X-money you spent towards Y-outcome . . .

         

        You'd do well over at Peak Politics — they eat your kind of nonsense like pablum.  Hell, they'd even consider you some kind of freakin' intellectual . . . 

  4. ClubTwitty says:

    The method, counselor.  On one hand we have some pompous blowhard that likes to lecture down to folks…and on the other there is a former Fox News commentator. 

    Just kidding. Sort of. 

  5. davebarnes says:

    I got robo-called in favor of YES.
    That gets a big NO from me.

    I despise robo-calls.
    Fuck them.

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