Should Colorado Supreme Court Justice William Hood Recuse Himself in the Colorado PERA Pension COLA Lawsuit?

The State of Colorado and many Colorado local governments are currently attempting to escape their contractual Colorado PERA public pension obligations.  These Colorado PERA "plan sponsors" have failed to pay their public pension bills for a decade and now seek to push the accumulated debt off onto certain elderly Colorado residents.  The Colorado residents whose contracts are targeted (Colorado PERA pensioners) have filed a lawsuit to prevent the taking of their PERA pension COLA benefits.  Oral arguments in this case, Justus v. State, will be heard by the Colorado Supreme Court in a few weeks.

This article addresses important questions relating to the independence, integrity, and impartiality of Colorado's courts.  The failure to ask these questions would certainly be irresponsible.  The questions: Should Colorado Supreme Court Justice William Hood opt to recuse himself from this case, Justus v. State?  Can the impartiality of Colorado Supreme Court Justice William Hood be REASONABLY questioned in the Colorado PERA public pension lawsuit, Justus v. State?

Here is one example of a relationship that raises concerns in my mind: While Colorado Supreme Court Justice William Hood was a shareholder at the firm Isaacson Rosenbaum in 2006, Justice Hood's colleague at the firm (Mark Grueskin) provided legal representation to the defendant in the current PERA litigation, Justus v. State (Colorado PERA) relating to a proposed initiative that sought to grant the Colorado General Assembly authority to retroactively take accrued Colorado PERA pension benefits in the event of "actuarial necessity."

Thus, while Justice Hood received the compensation of a shareholder at Isaacson Rosenbaum, the firm was paid by the Colorado PERA pension system to provide legal services to Colorado PERA relating to the legal concept of "actuarial necessity."

As we have seen, this concept of "actuarial necessity" is a factor in the current Colorado PERA public pension lawsuit, Justus v. State, and was cited as a legal rationale for the bill taking the Colorado PERA COLA benefit, SB10-001, by the bill's co-prime sponsor Senator Josh Penry.

The Colorado Code of Judicial Conduct requires a judge to recuse himself in a case if the judge "was associated with a lawyer who participated substantially as a lawyer in the matter during such association."

Isaacson Rosenbaum's Mark Grueskin (Justice Hood's colleague at the law firm in 2006) provided legal services to Colorado PERA relating to this 2006 ballot measure addressing the authority of Colorado PERA plan sponsors to take accrued PERA pension benefits through "actuarial necessity."  Colorado PERA's ability to employ "actuarial necessity" to take accrued pension benefits is a central question in the case, Justus v. State.

In 2009 and 2010, the Defendant, Colorado PERA, embraced this concept of "actuarial necessity" as a means to claw back accrued Colorado PERA pension benefits.  SB10-001 Co-Prime Sponsor Senator Penry on "actuarial necessity":

On January 10, 2010, Senator Penry (who was Senate Minority Leader at the time) was a guest on the 9 News “Your Show” program with Adam Schrager.  About 9 minutes into this show a caller (Julian Graham) asks: “How can this occur when there is an AG opinion currently in effect that states PERA rules and regulations are considered to be a contract?” 

Adam Schrager then asks Senator Penry: “Can you do this legally?”

Senator Penry responded: “We can.  What the courts have said, what the case law and the opinions have said is you can’t.  It is a contract, unless there is actuarial necessity.”  “What the courts have said from a legal standpoint, as long as there is actuarial necessity, as long as there’s a bona fide emergency it’s OK.”

A Colorado PERA document provided to the JBC 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)

Colorado PERA’s General Counsel Greg Smith provided his perspectives on “actuarial necessity” during the August 11, 2009 Colorado PERA Denver “Listening Tour” meeting.  Greg Smith’s words:

“Also important is that there are constitutional limitations . . . on what the General Assembly can do with regard to benefits.” 

“There’s always a big question in everybody’s mind . . . Well, what is actuarial necessity?  I wish I could answer that question for you, it’s not that I haven’t tried, not that we haven’t researched it.”  “In fact, Colorado has one of the only cases in the union that actually found a cut in benefits was acceptable due to actuarial necessity.” 

“And, in that case, what the court found was, well, since the system was completely out of money, had no money, it was paying its benefits out of current contributions with no reserves, out of current operating capital.”

Recall that, at a December 17, 2009 meeting of the Joint Budget Committee, Representative Jack Pommer asked: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”

In my mind, Justice Hood is certainly fit for judicial office.  However, I am uncertain, given his  professional relationship with a member of the legal defense team in the case Justus v. State, the legal representation his former law firm has provided to a defendant in the case, Colorado PERA, relating to a central aspect of the case, "actuarial necessity," past compensation provided by the Colorado PERA Defendant in the case, and Justice Hood's prior political activities, that a decision to hear the case, Justice v. State, will contribute to the preservation of public confidence in Colorado courts.

What information did Justice Hood provide to State of Colorado Governor Hickenlooper's office, as a Supreme Court judicial candidate, regarding his past employment at a law firm that provided legal representation to a defendant in what is arguably the most significant lawsuit facing the State of Colorado in decades?  Where is this information recorded?  Was the matter raised during the judicial selection process?  Which members of the Governor's staff were involved in this selection process?

Was Governor Hickenlooper aware of Justice Hood's association with a lawyer for a defendant in one of the most significant lawsuits facing the State of Colorado in its history when the Governor chose to appoint Justice Hood to the Colorado Supreme Court?  When Governor Hickenlooper made this appointment, the case Justus v. State was an impending matter before the Colorado Supreme Court.  Years ago, Colorado PERA officials told us that they expected this case to reach the Colorado Supreme Court.

An unusual number of current or former members of the Colorado Supreme Court have represented, or are associated with lawyers who have represented the defendants in the Colorado PERA public pension case, Justus v. State, currently pending before the Colorado Supreme Court.

Recall that one Colorado Supreme Court Justice (Marquez) has represented a defendant in the case, Justus v. State.  Recall that we have a former Colorado Supreme Court Justice (Dubofsky) who has represented a defendant in the case, Justus v. State and drafted a legal memorandum for the defendant relating to the COLA taking.  Now we have a third Colorado Supreme Court Justice (Hood) who has been a colleague of an attorney representing a defendant in the case (Grueskin.)  It appears that this Supreme Court Justice (Hood) has recused himself (or was removed) in 2011 in the Colorado redistricting case, Moreno, due to his association with this politically-connected attorney (Grueskin.)  The extent of the relationship of Justice William Hood with the Colorado PERA lawyer (until recently) Grueskin should be explored.

It may very well be, that certain attorneys have been hired by a defendant in the case, in part, due to political, or judicial influence that an attorney offers.  In all likelihood Justice Hood has knowledge of the political activities of attorneys who have represented the Colorado PERA defendant, and he may be able to provide testimony germane to the case.  Due to his employment as a shareholder at the firm Isaacson Rosenbaum, while the firm provided legal representation to Colorado PERA, Justice Hood may likely provide a jury with some insight into the relationship of attorney Grueskin and the defendant in the case, Colorado PERA.

Colorado PERA retirees should make a point of discovering the rationale for Justice Hood's recusal (or removal) from the case, Moreno, in 2011.  Was Justice Hood indeed recused in the Moreno case due to his association with the defendant's (Colorado PERA) lawyer (Grueskin) in the current case, Justus v. State.  What documents exist relating to Justice Hood's removal or recusal in the Moreno case?

While his former law firm represented a defendant in the case, did Justice Hood obtain any information that bears on the current case, Justus v. State?  Did Justice Hood, during his own period of  political activity (and while employed at the firm Isaacson Rosenbaum with the politically active attorney who has represented a defendant in the case, Justus v. State) obtain any information relating to the political activities of the defendant?  During his employment at Isaacson Rosenbaum did Justice Hood make any statements relevant to the case before the court, Justice v. State?

To what extent did political influence on the PERA Board result in the Board's recommendation to pursue a taking of PERA pensioner contracted COLA benefits?  This factual matter may very well be in dispute if the case, Justus v. State, goes to trial.  Having worked, as a shareholder, at a law firm representing Colorado PERA, what light might Justice Hood shed on Colorado PERA's historical political relationships and activities?

If discovery is allowed to proceed in the case, Justus v. State, the extent to which political influence on the Colorado PERA Board of Trustees contributed to the PERA Board's decision to pursue a taking of contracted PERA pensioner COLA benefits must certainly be brought to light and thoroughly scrutinized.

Is the fact that Justice Hood has received compensation from a defendant in the case (as a shareholder while Colorado PERA was a firm client) relevant in a decision to recuse?  If I'm not mistaken, Justice Eid has recused herself in the case, Justus v. State, due to that fact that she is a recipient of an annuity from a defendant in the case, Colorado PERA.

Below I provide a few excerpts from the Colorado Code of Judicial Conduct relating to the recusal of judges.

Canon 2, Colorado Code of Judicial Conduct, "A Judge Shall Perform the Duties of Judicial Office Impartially, Competently, and Diligently."

Rule 1.1: Compliance with the Law. "A judge shall comply with the law, including the Code of Judicial Conduct."

Rule 1.2: Promoting Confidence in the Judiciary.

 "A judge shall act at all times in a manner that promotes public confidence in the independence, integrity, and impartiality of the judiciary, and shall avoid impropriety and the APPEARANCE (my emphasis) of impropriety."

"A judge should expect to be the subject of public scrutiny that might be viewed as burdensome if applied to other citizens, and must accept the restrictions imposed by the code."

"Conduct that compromises or appears to compromise the independence, integrity and impartiality of a judge undermines public confidence in the judiciary.  Because it is not practicable to list all such conduct, the Rule is necessarily cast in general terms."

"The test for appearance of impropriety is whether the conduct would create in reasonable minds a perception that the judge violated this Code . . .".

From the Annotation:

"Courts must meticulously avoid any appearance of partiality, not merely to secure the confidence of the litigants immediately involved, but to retain public respect and secure willing and ready obedience to their judgments."

Rule 2.4:

"(B) A judge shall not permit . . . political . . . relationships to influence the judge's judicial conduct or judgment."

"Confidence in the judiciary is eroded if judicial decision making is perceived to be subject to inappropriate outside influences."

(My comment: Trustees of the Colorado PERA Board would be well-advised to take this bit of advice, concerning inappropriate outside influences, to heart.)

Rule 2.11: Disqualification.

"(A) A judge shall disqualify himself or herself in any proceeding in which the judge's impartiality MIGHT REASONABLY BE QUESTIONED . . . (my emphasis.)

(A)(2)(d): The judge knows that the judge "is likely to be a material witness in the proceeding."

(A)(5): The judge . . . was associated with a lawyer who participated substantially as a lawyer in the matter during such association."

(My comment: Was attorney Grueskin involved in the selection of Dubofsky to create a legal rationale for the contemplated PERA COLA taking?  Was the taking of the COLA contemplated even while Hood and Grueskin were colleagues at Isaacson Rosenbaum?  Has Justice Hood ever had conversations with Grueskin regarding the PERA COLA benefit or "actuarial necessity"?  Has Justice Hood had any association with the Colorado PERA defense team's Grueskin while Colorado PERA was contemplating a taking of the PERA COLA benefit in 2008, 2009, or 2010?  If so, what was communicated between the two?

As we have seen, Colorado PERA's legal strategy in the case, Justus v. State, has employed the concept of "actuarial necessity."  Justice Hood's law firm, Isaacson Rosenbaum grappled with this legal concept in 2006 while addressing state ballot measure #93.  (It would be interesting to listen to the tapes of initiative hearings on this 2006 ballot measure #93.)

Language relating to "actuarial necessity" was placed into SB10-001 itself, over the objections of Colorado PERA's attorneys and lobbyists:

"One amendment was modified before passage.  It says PERA will provide written notice to all members that an actuarial necessity, a legal term that means the future fund is in peril, could occur and the General Assembly could modify the benefits allowed by the plan.  In earlier debate, several witnesses had testified that changing cost-of-living adjustment benefits amounted to a breach of contract."

https://www.cusys.edu/newsletter/2010/02-03/pera-open-forum.html

http://www.leg.state.co.us/clics/clics2010a/csl.nsf/fsbillcont2/DD3F57C1B220E34A872576A80029E75E/$FILE/001_01.pdf

Code of Judicial Conduct:

"Under this Rule, a judge is disqualified, whenever the judge's impartiality might reasonably be questioned  . . ."

(My comment: Did Justice Hood disclose any facts pertinent to his potential disqualification due to an association with Mark Grueskin in the Moreno case?)

"A judge's obligation not to hear or decide matters in which disqualification is required applies regardless of whether a motion to disqualify is filed."

"A judge should disclose on the record information that the judge believes the parties or their lawyers might reasonably consider relevant to a possible motion for disqualification, even if the judge believes there is no basis for disqualification."

From the Annotation:  "Appearance of impropriety, not actual prejudice, is sufficient to warrant recusal."

(My comment: Has Justice Hood made any such disclosures in the case Justus v. State?  Did Justice Hood make any such disclosures in the Moreno redistricting case?  If so, what disclosures were made?)

“Hood also has close ties to Democrat [sic] Party attorney (and frequent Colorado Supreme Court litigator) Mark Grueskin, dating from their time as colleagues in the politically connected (and politically active) Isaacson Rosenbaum P.C. law firm – associations that may have been related to his removal from the 2011 Congressional redistricting lawsuits, before the case was reassigned to Denver District Court Chief Judge Robert Hyatt . . .”

http://www.clearthebenchcolorado.org/2013/10/26/governor-Hickenlooper-picks-democrat-contributor-hood-as-new-colorado-supreme-court-justice/

THE JUSTICE WILLIAM HOOD/MARK GRUESKIN CONNECTION:

Justice William Hood’s work at Isaacson Rosenbaum:

“Before moving to the bench, Judge Hood was a shareholder at Isaacson Rosenbaum P.C., where he did both civil and criminal trial work.”

http://www.law.du.edu/index.php/profile/judge-will-hood

“Hood, 50, has been a Denver District Court judge since 2007. Prior to becoming a judge, Hood practiced at the private firm Isaacson Rosenbaum.”

http://www.denverpost.com/breakingnews/ci_24389795/hickenlooper-appoints-new-colorado-supreme-court-justice

Colorado Statesman on Isaacson Rosenbaum’s work for Colorado PERA:

“Both the state and PERA filed motions in May asking the court to dismiss six of the eight claims contained in the plaintiffs’ case. The state is represented by the Attorney General’s office; PERA’s lead attorneys are Mark Grueskin and Edward Ramey of Isaacson Rosenbaum, PC.”

http://coloradostatesman.com/content/991958-ruling-pera-bill-expected-shortly\

“Among those representing PERA are two well-known Denver governmental affairs lawyers, Mark Grueskin and Edward Ramey of the Isaacson Rosenbaum firm.”

http://www.ednewscolorado.org/2010/05/13/pera-responds-to-retiree-lawsuit/comment-page-1

From Law Week online:

“Redistricting Judge, Dem Lawyer Worked At Same Firm.”

“Asked about a possible conflict between himself and the judge (Hood), Grueskin said, ‘Even before you get to the issue that he and I were formerly colleagues, he may have a docket that’s full.’”
“Grueskin explained that the redistricting case must be decided well before the Feb. 7 caucuses, and ‘typically there will be some reallocation if necessary because not every judge’s docket would accommodate that.’”

http://www.lawweekonline.com/2011/05/redistricting-judge-dem-lawyer-worked-at-same-firm/

Attorney Jean Dubofsky, at the request of Colorado PERA, provided PERA with a legal opinion arguing that the Colorado Legislature could legally take Colorado PERA retiree pension COLA benefits: “at request of PERA (Public Employees Retirement Association) in 2009, provided legal opinion that general assembly could repeal automatic 3% cost-of-living adjustment for retirees without violating their vested rights;”

http://lawweb.colorado.edu/files/vitae/dubofsky%20.pdf

December 17, 2009

Colorado PERA General Counsel Greg Smith – “We have obtained outside counsel’s opinion on this issue.”

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

In a deposition Jean Dubofsky submitted to Colorado PUC she notes that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit, October 18, 2010:

“My most recent legislative experience (within the past two years) is . . . a legal opinion addressing the constitutionality of reducing the cost-of-living increase for PERA recipients.”

(To access this document, paste “Colorado PUC E-filing system PERA legal opinion Jean Dubofsky” into Google.)

Isaacson Rosenbaum's work for Colorado PERA while Justice Hood was a shareholder at the firm:

Initiative #93: PERA Reform,

“Colorado PERA files motion challenging (2006) ballot initiative.”

“The motion was filed on behalf of attorneys Mark G. Grueskin and Edward T. Ramey of the Denver Law Firm Isaacson Rosenbaum, P.C.”

https://www.copera.org/pdf/NewsReleases/2006/Initiative.pdf

Link to Initiative #93:

http://www.leg.state.co.us/lcs/0506initrefr.nsf/dac421ef79ad243487256def0067c1de/4b04cbf7d9ce8812872571260077d751?OpenDocument

The "Purposes" of 2006 State Initiative #93.

A few of the purposes of the proposed initiative that were addressed at a hearing on the measure:

"In the event of an actuarial necessity, to authorize the general assembly to modify the member and employer contributions and the benefits allowed to members of the defined benefit plan, so long as the benefits of members who are eligible for a service retirement benefit or a reduced service retirement are not modified."

"To specify that PERA shall be subject to administrative direction by the governor's office of budget and management."

"To specify that the general assembly shall appropriate funding for the administrative oversight of PERA."

"To prohibit the attorney general from delegating his or her responsibilities as legal advisor to the PERA board to any legal advisor or in-house counsel hired by the association."

"Memorandum Question 9. "The proposed initiative appears to specify that the benefits allowed to members who are eligible for a service retirement benefit or a reduced service retirement benefit under the defined benefit plan cannot be modified during an actuarial necessity. Can the proponents please explain the purpose of this change from the original proposed initiative #81?"

(My comment: This is interesting, that Justice Hood's law firm, Isaacson Rosenbaum, was grappling with the issue of the taking of vested Colorado PERA benefits through a claim of "actuarial necessity," while Justice Hood was a shareholder at the firm.)
As legal representatives of Colorado PERA in 2006, shareholder Hood's firm and colleague Mark Grueskin assisted Colorado PERA in addressing this state-wide ballot initiative providing that "actuarial necessity" could not be used to take "fully-vested" PERA pension benefits.

This is particularly ironic since the use of the "actuarial necessity" strategy was the original legal strategy in PERA's attempt to take the PERA COLA benefit, was noted regularly by SB10-001 bill co-prime sponsor Josh Penry as the legal underpinnings for the proposed taking of the COLA, and was likely employed in the legal memorandum supporting a PERA COLA taking that PERA officials solicited from former Colorado Supreme Court Justice Dubofsky.
While he was a shareholder at Isaacson Rosenbaum did Justice Hood discuss the concept of actuarial necessity with colleague Mark Grueskin?

Greg Smith, Colorado PERA’s General Counsel told us in a Denver Post article from November 30, 2008:  “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)

Support public pension contractual rights at saveperacola.com.

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5 Community Comments, Facebook Comments

  1. kwtreemamajama55 says:

    Algernon, I have PERA pension benefits I'd like to collect someday. I was in the room when DPS made that fateful decision to merge with PERA – because Bennet brokered the deal, because Bennet is a financial deal broker.

    So DPSRS didn't go broke, but borrowed money to fund PERA, which now has to be paid back, only there's no money to pay it back because of legal decisions which have been made over the last decade.

    That is my super-simplistic summary of the PERA fracas. Now, I challenge you to tell me in one or two paragraphs if my summation is right or wrong, and mostly what you recommend that PERA hopeful retirees do about it.

    Give us names of legislators to call, a bill to write about. Don't give us 10 scroll-length diaries with no headings, no graphics, with each link linked, pasted, and talked about.

    Have some mercy on your audience. Some us us need to care about PERA, because it's going to make us live in poverty as elders if we don't, and maybe this particular judge really does need to recuse himself, but you haven't proved it in an accessible way, nor have you given us an "action item".

    To recap:

    • Please use bolded headings to break up the text wall.
    • Please use either in-text links, pasted link urls, or summations of what the link is, but NOT ALL THREE.
    • Start with a quick summary, end with a conclusion.
    • In the conclusion, end with an action item.
    • Algernon Moncrief says:

      Hey mama, thanks for your work as "citizen journalist," I admire it.  I don't believe that you have any of my "formatting issues."  Clearly, I am "format-challenged," and I apologize to any "audience" that I might have.  My primary goal is simply to discover facts relevant to the 2010 Colorado PERA pension contract breach, preserve relevant information, and bring that information to the attention of interested PERA members and the public.  I have put absolutely no energy into the "presentation" of my posts here.  Perhaps in the future I will have the time to work on my problem.

      In regard to the substance of your comment, I don't intend to "prove" that Justice Hood should recuse himself in the case, Justus v. State.  Recusal is a decision that a judge must make based on his personal history and his knowledge of the Code of Judicial Conduct.  My intention in this article is to raise awareness of, and inform, discussion of a potential Hood recusal.

      Mama, your focus is on the PERA/DPS merger, I am focused on the attempted 2010 PERA pension contract breach.

      Here are my thoughts on the DPS merger, merger of DPS with the Colorado PERA pension system was a legislative policy decision.  This decision may ultimately harm the PERA pension system.  However, I remember that we have a "true-up" coming.  In any case, Colorado PERA active and retired workers should not have to bear the cost of a legislative policy decision.

      Mama, what are your opinions regarding SB10-001?  What is your opinion on the support of Colorado public sector unions for the 2010 breach of Colorado PERA pension contracts?

      What should PERA members do?  Colorado PERA active members and retirees should do what public pension members in Illinois are doing, present a united front in defense of their contractual rights.  Active and retired members should be present at every legislative meeting with Colorado PERA to insist that the State, and local PERA-affiliated employers, actually pay their public pension bills.  Active and retired PERA members should insist that their unions aggressively defend their members' accrued PERA pension benefits, rather than allowing them to "toss their retired union brothers and sisters under the bus."

      Mama, do you realize that if the Colorado Legislature is able to convert the legal status of your public pension from a contractual obligation to a gratuity you will no longer be able to rely on benefits that you have earned and accrued during your employment?  If the State of Colorado and Colorado PERA are successful in their attempt to break PERA contracts, the Legislature will continue to send (and forgo) billions of Colorado taxpayer dollars each year to corporations while failing to pay their PERA pension bills (ARC.)  This will result in further reductions in the funded ratio of the PERA pension system that will be paid for out of your pocket, with your accrued pension benefits.  We have state and federal constitutional contract clauses to prevent such "crimes."

      Finally, Nearly all of my posts have ended with an "action item."  For example, "contribute at saveperacola.com, support public pension contractual rights at saveperacola.com."  Since the 2010 Colorado PERA pension contract breach is no longer before the Legislative Branch there is little purpose in suggesting that PERA members contact their state legislators.  The Judicial Branch will now decide if the Colorado Legislative Branch is free to violate the Colorado Constitution in order to conceal historical pension mismanagement by the Executive and Legislative branches of Colorado state government.

  2. hawkeye says:

    I believe Justice Hood should recluse himself due to the appearance of impropriety. IMHO his participation in the case would likely result in a 3-2 decision in favor of the defendants … clearly giving the appearance of impropriety.

    Of course I'm hoping for an unanimous or majority opinion in favor of the plantiffs, but a 2-2 split decision will keep the case active.

     

  3. kwtreemamajama55 says:

    Algernon, although it affects me personally, I don't feel informed enough about SB10-001 to have an opinion about it. I'll try to remedy that,  But I would appreciate a step-by-step summary of legislation leading up to SB10-001, and what you consider to be the points of disagreement with, say, this guy:

    Joshua Sharf is the main speaker. He is a blogger who "heads the  PERA Project", and writes about and education funding for the

    Independence Institute . He will speak on the topic:

    Colorado Public Pensions and our Schools

    Tuesday, June 10th

    5:30 Social 6:00 Meeting

    1317 N Main

    In case I go to this event, partly to cover the PERA news, and partly just to annoy Pueblo GOP members who thought that they got rid of me when they outed me after the Marilyn Marks event, perhaps you can summarize for me the salient points, as I outlined above.

    • Algernon Moncrief says:

      Independence Institute Questions and a Brief SB10-001 History.

      Mama, as requested, a few questions for Joshua Sharf of the Independence Institute, and activities leading up to SB10-001 in 2010.  (For the full story, visit saveperacola.com, and read up a storm.)

      Questions for Joshua Sharf:

      The Independence Institute is a libertarian think tank.  Recognizing that Libertarians strongly support private property rights, why has the Independence Institute failed to speak out, or take a position in opposition to the taking of property (through breach of contract) from Colorado PERA annuitants by the Colorado Legislature and Colorado PERA in 2010?

      Is the Independence Institute interested in protecting only the private property rights of corporations and businesses, or the rights of all U.S. citizens, including currently disfavored public sector workers?

      The Independence Institute seeks smaller government.  Is the Independence Institute willing to ignore the Contract Clause of the U.S. Constitution to achieve smaller government?

      Recognizing that the U.S. economy rests on the sanctity of contracts, how can the Independence Institute fail to condemn such a blatant and momentous breach of Colorado state contracts as occurred in SB10-001?  Does the Independence Institute support Colorado's constitutional Contract Clause?

      What are the funding sources for the Independence Institute?  What portion of Independence Institute funding originates with corporations?  Why can this information not be made public?

      Why does the Independence Institute fail to aggressively fight corporate welfare granted each year by the Colorado Legislature?  (Corporate welfare "tax expenditures" of billions of dollars each year, more added at most recent legislative session.)

      Is the Independence Institute willing to sacrifice the contractual rights of a disfavored group (PERA pensioners) in order to permit Colorado legislators to continue funneling billions of dollars to businesses and corporations?

      Is the Independence Institute willing to break public sector contracts if this results in lower overall tax burdens?

      Why has the Independence Institute failed to condemn the Colorado Legislature's decade-long underpayment of Colorado PERA bills, that is, failure to pay each year the PERA pension system's actuarially required contribution (as calculated by Colorado PERA's actuaries)?

      Given that Colorado unfunded pension liabilities constitute debt (recognized in the language of TABOR) of the State of Colorado and Colorado local governments, why has the Independence Institute failed to condemn this underpayment of public pension required contributions?

      Synopsis of what has occurred with Colorado PERA:

      In 2002, the Colorado Legislature began its practice of failing to pay annual Colorado PERA pension system bills (the "actuarially required contribution, ARC.)"  Rather than legally reducing benefits in the Colorado PERA pension system through PROSPECTIVE benefit reductions (for example, a prospective reduction of the pension multiplier, that is, lowering the rate at which PERA benefits accrue going forward) the Colorado Legislature continued to rack up the Colorado PERA pension debt.

      Notably, later, in 2012, the Colorado Legislature adopted PROSPECTIVE (legal) pension reform legislation for pension systems operated by certain Colorado county governments (arms of the state.)  Thus, we have both prospective pension reform on the books in Colorado for certain public employees, AND retroactive pension "reform" for certain other public employees.

      While failing to pay its public pension bills during that decade, the Colorado Legislature chose to give away billions of dollars in revenue through corporate and business subsidies, exemptions and grants sought by lobbyists.
      Colorado PERA officials and trustees failed to request that the Colorado Legislature pay its public pension bills (ARC) for this decade, although they are fiduciaries for the pension system. Current and retired workers in the PERA pension system have never failed to make their contributions or supply the labor due under their contractual relationship with PERA employers.

      Further, Governor Bill Owens persuaded (pressured?) the Colorado PERA Board to sell service credit in the pension system at less than its full actuarial cost.  He did this in order to prompt older, more "expensive" state and local government employees to retire and thus reduce public sector labor costs.  This essentially shifted labor costs from Colorado state and local governments to the PERA pension system.  It also increased the eventual unfunded liabilities of the PERA pension system by billions of dollars.  (So much for Bill Owen's fiscal conservatism.)  The PERA Board supported the "Bill Owens Fire Sale" unanimously.

      Over the last 20 years, the Colorado Legislature has paid $700 million in legacy pension debt that is the responsibility of Colorado local governments (Old Hire Fire and Police pension debt.)  This $700 million was allocated for public pension debt that is not the contractual obligation of the State of Colorado.  In many of these years, the Colorado Legislature was failing to make its own full ARC payment (i.e., pay its PERA bills) for pensions that ARE INDEED the contractual obligation of the State of Colorado.

      Since the costs of this history of Colorado PERA and state legislative mismanagement were beginning to accumulate, in 2009, PERA administrators, trustees, unions, interested lawyers and 27 lobbyists colluded to reduce the unfunded liabilities of the PERA pension system by breaking contracts with Colorado PERA retirees (the taking of the COLA is 90 percent of the "savings" in SB10-001.)

      Strangely, they chose to try and break PERA contracts in a year during which PERA's funded ratio was 69 percent, just a few points below its historical average funding ratio.  They claimed that this actuarial funding ratio was a "crisis" necessitating the breach of contract.  PERA's actuarial funded ratio has been as low as 53 percent in the 1970s, but no "crisis' was observed back then, since there was no political campaign to break pension contracts in those years.  PERA's lawyers have attempted to deceive Colorado courts by replacing the "actuarial funding ratio" that it has used historically (and that is used in SB10-001) with a "market-based" funding ratio that makes PERA's financial condition appear to be worse than it is.  This is our state government we're talking about here! 
      Instead of defending all contractual public pension rights in our state, Colorado's weak public sector unions went along with the taking of the COLA benefits from PERA pensioners, breaking their pension contracts.  Unions in other states support the contractual pension rights of their members.  This in itself is very unusual, to have a public sector union agree to break the contracts of the union's retired members.  But, by doing so, Colorado's public sector unions hoped to keep the needed contributions rates of their current, active union members low.  (Retired union members no longer pay union dues.)

      The PERA pensioner lawsuit filed after SB10-001 was signed by Ritter, Justus v. State, has worked its way from the Denver District Court, where a judge decided that PERA pensioners have no contractual right to their PERA COLA benefit (oddly, without mentioning Colorado's on-point public pension case law) to the Colorado Court of Appeals (that read the case law, and reversed the Denver District Court.)  The Court of Appeals found that Colorado's on-point public pension case law was "dispositive," unquestionably establishing the contractual right of PERA pensioners to their COLA benefits.

      Now, the case has made it to the Colorado Supreme Court, where oral arguments will be heard in two weeks.  One member of the Colorado Supreme Court has been involved with the case (Marquez) and is recused.  Another member (Eid) is recused, I believe, due to her receipt of a PERA annuity.  Now, there is a question regarding whether Justice Hood, due to his past associations, should also be recused in the case.

      Mama, do you not find it insane that governments in the United States will go to such great lengths, and engage in such deception, in order to escape their debts?

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