Will Colorado Union Leaders Relinquish Remaining Colorado PERA Pension Contractual Rights?

The Colorado Legislature has underfunded the Colorado PERA pension system for more than a decade, but from Colorado public sector union leaders we hear not a peep (one might expect them to defend their members' financial interests.)

Today (November 13, 2014), a letter was published which illuminates Colorado government's historical mismanagement of the state's public pension system, Colorado PERA. Below, I provide some excerpts from the letter (by Dinah McKay):

"Colorado needs public employee pension protection laws."

"In Colorado, conservative think tanks (backed by Wall Street firms that stand to financially gain) are spreading anti-public-worker propaganda claiming that PERA (Public Employees’ Retirement Association) employees and retirees are greedy parasites and their exorbitant benefits are going to bankrupt the state. They cite billions of dollars of unfunded pension liabilities as debt that taxpayers will have to pay off. Their tactics are to manufacture the perception of a public pension crisis and their only solution to 'save PERA' is to drastically cut benefits and privatize the pension plan. They would like to strip PERA employees and retirees of their rights to their earned pension benefits and allow Wall Street hedge fund managers to raid PERA assets."

(My comment: For the record, it should be noted that Colorado union leaders supported legislation in 2010 [SB10-001] that ultimately resulted in the elimination of their union member's contractual rights to the Colorado PERA statutorily specified "annual benefit increase" [ABI.] Will Colorado unions defend unionists' remaining contractual public pension rights?  Or, will the unions also choose to relinquish the remaining Colorado PERA contractual rights to the benefit of corporate interests, i.e., lower future corporate tax burdens? Too soon to tell.)

"They don’t mention that the Colorado State Legislature has been underfunding its employers’ obligations to PERA for 12 years and that state employers’ unfunded liabilities have accrued into billions of dollars. (Note: These are state employers’ unfunded liabilities. New GASB accounting rules now require state employers to report their unfunded actuarially accrued liabilities owed to PERA in their annual financial statements)."

"Prior to 2003, the Colorado State Legislature had always met its employers’ actuarially required contributions (ARC) to PERA at 100 percent and since PERA began in 1931, it has weathered every recession. Beginning in 2003 (under Governor Owens) to the present, the state legislature has decided not to fund what actuaries have determined is the state employers’ percentage of payroll (ARC) required to keep the PERA trust fund sound. (PERA employees have always met their required employee contributions to PERA from their monthly paychecks without fail)."

"According to statistics from the Center for Retirement Research at Boston College Public Plans database, the ARC percentages the Colorado State Legislature paid to its employers’ State division were: 2003 = 69 percent, 2004 = 51 percent, 2005 = 48 percent, 2006 = 58 percent, 2007 = 56 percent, 2008 = 63 percent, 2009 = 61 percent. From 2003 to 2009, the Colorado State Legislature created a 42 percent funding shortfall in its State division."

"PERA’s underfunding can be directly traced to the Colorado State Legislature’s failure to make its employers’ actuarially required contributions."

"If you ask your state legislator why the state is not meeting its employers’ annual required contributions to PERA, they may not even be aware that the state legislature is underfunding PERA, or even know what an ARC is. They will likely say, 'Oh, PERA was fixed in 2010 with SB 1,' but they won’t answer your question. If you keep asking, some legislators may not want to talk with you because they do know. They know the money is being diverted and they know retirees got fleeced with SB 1."

"In 2010, the Colorado State Legislature passed Senate Bill 10-001 with pension reforms that broke its contractual obligations with 50,000 PERA retirees. SB 1 primarily targeted this elderly group with the burden of making up billions of dollars, or 90 percent of the state’s unfunded employers’ contribution shortfall to the PERA fund since 2003. SB 1 was not a 'shared sacrifice' as PERA administrators purported in order to sell the deal to employees."

"Political alliances between corporate lobbyists, legislators and PERA administrators forged this bait and switch deal that was precut outside normal legislative processes. Primarily retirees (not taxpayers) will make up for the billions of dollars of state employers’ contributions diverted from the PERA trust fund that the state legislature has used instead to fund multimillion-dollar corporate handouts and business tax breaks, subsidies and other popular discretionary programs without raising taxes. It’s immoral and corrupt to take elderly middle-class retirees’ earned pension benefits (deferred wages) by stealthy means and shift their wealth to subsidize very very wealthy corporate and business interests. (Google: David Sirota’s report, “The Plot Against Pensions — The Pew-Arnold campaign to undermine America’s retirement security — and leave taxpayers with the bill.” and Matt Taibbi’s article, “Looting the Pension Funds.”) There is also a double standard in Colorado law (SB12-149) that protects county government retirees’ pensions while PERA retirees’ benefits can be abrogated."

"Since enacting SB 10-001, the Colorado State Legislature has continued to underfund its employers’ contributions to the PERA trust fund, even with a $512 million-dollar budget surplus. The 2013 Colorado PERA Comprehensive Annual Financial Report, page 34, states: 'In 2013, the actual contributions, as set in statute, were $278.0 million less than the ARC as calculated by the actuaries.'”

"For 12 years, why have PERA trustees not taken action on behalf of public employees to compel the state legislature to fully fund their employers’ contributions to PERA instead of conspiring with corporate lobbyists in 2010 to break the contracts of 50,000 retirees to make up the debt. Every year, the state legislature can always find plenty of money to hand out more and more corporate tax breaks and subsidies, yet the State of Colorado continues to be a deadbeat employer."

"A subsidy tracker report published by Good Jobs First, 'Subsidizing the Corporate One Percent,' found that three-quarters of all the economic development dollars awarded by state and local governments in the name of job creation have gone to just 965 large corporations by tracing parent company to subsidiary ties. The New York Times’ report, 'United States of Subsidies,' found Colorado spends at least $995 million per year on incentive programs. CU News Corps’ four part series, 'House of Subsidies,' analyzed this year’s Colorado legislative session and the key corporate tax-credit incentive bills lawmakers passed and found that they don’t always work as lawmakers intend and their effectiveness is being challenged by a variety of experts whose candid remarks are worth the read. CU News Corps reporter, Lars Gesing states, 'According to the latest Enterprise Zone Annual Report, 7,212 jobs have been created through Enterprise Zone program incentives in fiscal year 2013. At the same time, businesses claimed tax credits for $3.89 billion worth of investments, or more than $530,000 per job.' The Denver Post in 2011 ran an investigative series on the Enterprise Zone program and found that Colorado companies claimed more than $75 million worth of tax credits in 2010, but those companies only created a net 564 jobs."

"Colorado PERA employees and retirees deserve a pension plan that is adequately funded on an annual basis. Colorado should pass laws similar those recently passed in Tennessee. On May 28, 2014, Republican Governor Bill Haslam of Tennessee signed into law a bill called Public Employee Defined Benefit Financial Security Act of 2014 that requires all local government entities that operate pension plans in Tennessee to pay the payments recommended by their actuaries each year in order to protect the financial stability of local governments and to protect workers’ pensions. (http://www.tn.gov/sos/ acts/108/pub/pc.0990.pdf ) Dinah McKay/Boulder.)

The complete letter by Dinah McKay can be read here:

http://www.boulderweekly.com/article-13611-letters-week-of-november-13.html

In their propaganda supporting the 2010 breach of pension contracts in our state, Colorado PERA administrators have tried to justify (in part) the abrogation of state and local pension contracts by noting the support of public sector unions for the "COLA-taking" bill, SB10-001. 

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.”

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

In a recent article AFSCME (International) writes:

"The very Wall Street-backed politicians who raided and underfunded the pension systems in the first place are now 'using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities,' he writes."

http://www.afscme.org/blog/lawmakers-loot-public-pension-funds-then-blame-retirees-for-underfunding

Here was my response to the AFSCME article:

"AFSCME, if you really believe this post, why did you allow your affiliate, AFSCME Colorado, to support the breach of Colorado PERA pension contracts in 2010, after the Colorado Legislature had underfunded the pension for a decade?  The Colorado Legislature failed to pay its pension bills for a decade, essentially borrowing from the pension fund, now they seek to shift their debt onto the backs of retired public sector workers.  It's sick, but your own people supported this in 2010.  Visit saveperacola.com."

I received a response from a former AFSCME Colorado official:

"Actually Al, that isn't what happened: The rank and file members of Colorado State Employees AFSCME Local 821 had their local dissolved by a unilateral decision of AFSCME International and the Executive Board of Colorado AFSCME Council 76, prior to the sellout, as they were to be 'incorporated' into the Colorado WINS 'partnership' created with Ritter: without their consent or even being given the right to vote on the matter.  The AFSCME 'representatives' who endorsed the PERA plan (i.e. Vivian Stovall and company) weren't even state employees: they were members of Denver City employees AFSCME Local 158, who aren't even covered by PERA. The Colorado State AFSCME retirees (Phyliss Zamaripa, Kathy Bacino, and Guy Santo) opposed the PERA plan put forth by Ritter, Schaffer, and Penry at the public hearing where proponents were allowed to testify first, and at length while opponents had their testimony relegated to the end of the hearing, and had their testimony time truncated. So please don't give the impression that the rank and file members of Colorado State AFSCME Local 821 had anything to do with this sellout, because we didn't. Give the credit to where it is due: Give it to Colorado WINS, and the SEIU."

My response:

"Thanks for this new information. I have noted that Colorado AFSCME supported the PERA pension contract breach since Colorado PERA has made this claim in its propaganda. Al"

And another reply from the former AFSCME official:

"The entire AFSCME endorsement of screwing public employees out of their pension COLA's in Colorado is unfortunately quite true, however, it should be remembered that AFSCME no longer represents Colorado State Employees, and it hasn't for about 7 years now. It was decided 7 years ago in a backroom deal in Washington that the three state employee unions would become Colorado WINS. The rank and file members of AFSCME Locals in Colorado were not given the right to vote on this, nor were the members of CAPE or the CFPE. The people who espouse 'democratic labor trade unionism' in America, wouldn't allow it to take place in Colorado. Ritter and company granted an exclusive franchise to Colorado WINS (which is a subsidiary of SEIU) and Colorado State employees do not have the right to belong to any other union, as both Change To Win and the AFL-CIO have prevented other unions (such as the CWA, which has had a consistent record of fighting for public employees' pensions) from organizing. Thanks to their betrayal of Colorado State employees, Colorado AFSCME Council 76 is now a bankrupt shell of an organization that represents some county employees in Pueblo, city employees in Aurora, the remnants of Denver City employees Local 535 and 158 and the maintenance staff at DU. They have one 'assistant Executive Director' and two clerical workers for a staff. All they are is a paper tiger, shell organization that is used as a conduit to 'move money' in state elections."

My response:

"That seems rather disingenuous on the part of Colorado PERA to attempt to rationalize the COLA-taking by citing the support of AFSCME Colorado, if AFSCME Colorado does not actually represent any employees in PERA."

"Have you ever heard any sort of an explanation from Colorado WINS for breaking PERA contracts? I have always assumed it was to minimize future contributions that might be needed from active Colorado WINS members. To the extent that money can be taken from PERA retirees, the needed pension support from current workers is diminished, not a very good reason to trash the Colorado Constitution."

Former AFSCME official:

"Yes, doesn't it? But then again, let us not forget the first piece of legislation that Colorado WINS supported was the bill written by Democratic Senator Dan Gibbs to do away with state employees having the right to strike or engage in labor stoppages. The 'S' in AFSCME is supposed to stand for 'State' but the International of AFSCME basically gave up on Colorado when Wellington Webb failed to deliver his campaign promise to give Denver City employees collective bargaining. The grand plan was 'First we'll get collective bargaining for Denver, then we'll repeal 8-73-104 (C) of the Colorado Labor Peace Act, and get all public employee's collective bargaining rights.' After they realized that wasn't going to happen, Gerry McEntee, Paul Booth, and Larry Scanlon decided to cut their losses, and 'traded' the Colorado State Employee locals to the SEIU which had acquired CAPE (that had gone into virtual bankruptcy when Bill Owens prohibited employees having their dues deducted from their paychecks.) All in all, it was a rather tawdry affair, and for AFSCME Council 76 to come out in favor of screwing public employees out of their pensions by having members of Local 158 of who were hacks from the Denver Democratic Party and Ritter supporters is just reflective of the fact that AFSCME has always placed the interests of the union and the Democratic Party above that of rank and file employees they profess to represent."

My response:

"As I recall, Miller Hudson, formerly of CAPE also supported SB10-001. This is ironic since Bill Owens eviscerated CAPE financially. Bill Owens is very culpable in the decline of PERA's funded ratio (selling PERA service credit cheap to encourage the departure of the more 'expensive' older employees, i.e., shifting labor costs from Colorado governments to PERA.) Why would Miller Hudson go along with pushing the PERA debt burden onto Colorado PERA retirees when the problem was caused by Bill Owens, and Bill Owens actions harmed CAPE? It doesn't make sense."

Former AFSCME official:

"You'd have to ask Miller about that one. Now as far as Colorado WINS goes, well, you have to understand the way union organizers think: Why should they be concerned about the pensions of state employees who were not members of their union? What WINS wants is current state employees, and most of them who have been hired since 2005 don't have the same pension plan as older state employees, and that is not what they are concerned about: By concentrating on health care costs, and doing away with the inequitable 'pay for performance' plan proposed by Penn Pfifner and signed into law by Romer, Colorado WINS needs to play nice with the legislature and the executive branch so that they can market themselves with a 'victory,' to the majority of state employees who don't belong to their organization, or care about somebody else's pension. So why play the heavy and alienate the incumbent politicians in somebody else's fight?  If you win, well, good. They'll get up there and say they were with you all the way……"

Discover the true nature of government in Colorado at saveperacola.com.

2 Community Comments, Facebook Comments

  1. Conserv. Head Banger says:

    I worked for the state from 1981 through 1998; 17 years. I never joined an employee union as I didn't see a whole lot of benefit from doing so. Either the state legislature granted a COLA or it didn't.

    Within a year after leaving, I rolled my PERA money into some rollover IRAs at a highly regarded mutual fund company. That way, I could manage my money instead of leaving it to the whims of PERA and anti-government pressure groups.

    Regards,  C.H.B.

    • Algernon Moncrief says:

      Head Banger, you worked in a PERA job during years in which the Colorado PERA statutory "Annual Benefit Increase" (aka, the PERA "COLA") was an "ad hoc" COLA rather than an "automatic" public pension COLA. The "ad hoc" statutory language was removed from Colorado law as you were leaving. The judges on the Colorado Court of Appeals knew this, and noted it in their Decision. The Colorado Supreme Court "judges" ignored this evidence and all other evidence of the PERA COLA contract as it detracted from their desired political outcome.

      Does it surprise you that we do not have the "rule of law" in Colorado? I was very surprised to learn this. I believed that the Colorado Supreme Court judges were beyond political influence. I believed that they would examine all evidence and give weight to legal precedents set by former judges on the Colorado Supreme Court. I was wrong. It turns out that "corruption" exists in government to the same extent it exists in the private sector. No trial, no discovery, government forgives its own debts, billions of dollars seized.

      The Colorado Judiciary had an obligation to ensure that all evidence in the case was examined prior to breaking Colorado PERA pension contracts. They ruled in ignorance. This ignorance may have been willful.

      Rather than honoring their debts, Colorado PERA-affilliated governments will now inflate away that debt courtesy Colorado Supreme Court.

      Head Banger, in escaping a corrupt system, you acted intelligently.

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