The Colorado Legislature’s Breach of State Contracts in 2010 “Shocks the Conscience.”

PROFESSOR MONAHAN RELEASES NEW PAPER, "Understanding the Legal Limits on Public Pension Reform," May, 2013.

Professor Amy Monahan is the preeminent legal scholar in the United States on public pension contracts.  "Amy Monahan is a professor and the Solly Robbins Distinguished Research Fellow at the University of Minnesota Law School."

In 2010, a majority of the members of the Colorado General Assembly voted to unilaterally change the terms of the statutory Colorado PERA pension contract, taking hundreds of thousands of dollars of total lifetime pension benefits due Colorado PERA retirees under their "fully-vested" PERA pension contracts.  That year, a majority of the members of the Colorado Legislature were persuaded by lobbyists representing PERA employers (who actually owe the accumulated PERA pension debt) to eliminate 42 percent of COLA benefits PERA retirees are to receive under their Colorado PERA pension contracts.  In 2010, lobbyists persuaded a majority of the members of the Colorado Legislature to push 90 percent of the costs of their PERA "reform" bill onto a small group of the state's elderly.

Colorado is a quite wealthy state.  Colorado can afford to pay its debts.  It is simply the case that many politicians and taxpayers in Colorado do not want to pay the state's debts.  Political careers are not built on reminding voters that they must meet the state's accumulated debt obligations.  Many Colorado politicians prefer breaking state contracts, and manufacturing legal contrivances as a means to escape legitimate Colorado public sector debts.  They prefer taking money from Colorado PERA retirees who gave their lives in public service in order to avoid raising a fair and reasonable level of revenues to pay for public services already consumed (deferred PERA pension compensation).  The Colorado legislative process is controlled by lobbyists to the extent that a majority of state legislators can be persuaded to support unconstitutional and immoral legislation.  The bill that broke Colorado PERA retiree pension contracts in 2010 (SB10-001) is proof that lobbyists at the Colorado Legislature have the ability to persuade the members to violate their oaths of office.  Only the Judicial Branch of Colorado government has the power to preserve justice in our state.

The outright, brazen, unabashed breach of Colorado government contractual obligations in 2010 represents one of the most immoral and egregious acts in the history of the Colorado General Assembly, truly "shocking the conscience."  Colorado PERA retirees ask only that their legal rights under the Colorado Constitution be upheld.

Decent Coloradans who support the rule of law are appalled by the Colorado General Assembly's breach of public pension contracts in 2010.  Decent Coloradans look at Colorado PERA's public relations, political, and legal campaigns to abrogate state contracts and rightly feel disgust.  Thus, it is not surprising to find the target of SB10-001, Colorado PERA retirees, suing the State of Colorado and demanding restoration of their rights under the Colorado and U.S. constitutions.

Over the last few years, Colorado PERA retirees have gathered evidence revealing the rotten foundation upon which SB10-001 rests.  Colorado PERA retirees have refuted the reams of PERA propaganda that were used to take contracted retiree pension benefits in 2010.  Colorado PERA retirees have studied germane Colorado public pension case law and legal theory.  PERA retirees have spent many hours with the following legal analyses of Professor Monahan:

“Statutes as Contracts? The ‘California Rule’ and Its Impact on Public Pension Reform,” (Iowa Law Review article.)

http://www.law.umn.edu/facultyprofiles/monahana.html

(In this paper, Professor Monahan notes that the Colorado Supreme Court [and 12 other states] have adopted the “California Rule” as controlling in the establishment of contractual rights to public pension benefits.)

"Public Pension Reform: The Legal Framework."

Professor Monahan: “This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

http://www.law.umn.edu/facultyprofiles/monahana.html)

Recently, (in May of 2013) Professor Monahan published yet another public pension legal analysis:

"Understanding the Legal Limits on Public Pension Reform."

https://www.dropbox.com/s/cvzed3lmwt8t8v2/Understanding%20Pension%20Reform.pdf

(I doubt that any members of the Colorado Legislature read Monahan's work prior to voting to break Colorado PERA retiree pension contracts in 2010.)

Colorado PERA-affiliated employers and Colorado PERA retirees are parties to a pension contract that provides a total defined benefit composed of a "base benefit" and an annual pension "escalator."  Under the terms of the Colorado PERA pension contract, at retirement, annuitants receive a significant percentage of their final salaries and an annual adjustment that happens to match Colorado PERA's current, long-term inflation assumption.  Hypothetically, if the Colorado PERA pension contract included terms paying a relatively low initial pension "base benefit" at retirement accompanied by a high fixed, "automatic" COLA escalator, then 90 percent of the total PERA pension benefit would derive from the COLA provision.  Under such circumstances, would Colorado PERA's attorneys argue that Colorado governments should be free to ignore their contractual obligations and take 90 percent of the value of a Colorado PERA retiree's contracted retirement benefit by unilaterally slashing the COLA?

No lawyer could make this argument with a straight face . . . that the State of Colorado should have the right to retroactively take 90 percent of a retired worker's pension after they have completed 30 years of work for the state and made 30 years of uninterrupted PERA pension contributions, performing their obligations fully under their PERA pension contracts.  If the State of Colorado were allowed to take such an action, the PERA pension contract would be meaningless, and the Colorado Constitution would be meaningless.

So, why are Colorado PERA's lawyers arguing that the State of Colorado should have the right to claw back 30 percent, or 40 percent of a retired worker's total contracted pension benefit after it has been earned?  Why are Colorado PERA's lawyers arguing that the State of Colorado should be empowered to unilaterally slash 42 percent of a PERA retiree's contracted inflation protection?

Provision of an "automatic" public pension COLA in a statutory pension contract benefits members of the pension financially at retirement, just as they benefit financially from statutory terms providing the pension "base benefit."  A public pension automatic COLA is simply a means of delivering the total, contracted public pension benefit to a worker at retirement.

Few attorneys for private insurance companies would bother arguing in court that their employer, the insurance company, should be able to ignore its contractual obligation to pay a contracted COLA in an annuity that the insurance company had sold.  Do we see attorneys for private insurance companies arguing in court that, since the insurance company has sold many annuities in the past, and entered into many annuity contracts with COLA provisions, that the insurance company has the right to unilaterally reduce the contracted COLA rate in all contracts to which it is a party?  Apparently, only attorneys representing public sector entities are so brazen as to suggest that courts sanction such self-serving, ridiculous contrivances.  (I imagine that many of them can scarcely believe that they spent years in law school only to be compelled, as a condition of employment, to make preposterous and misleading arguments before a court of law.)

Below, I provide a few excerpts from Professor Monahan's new paper, "Understanding the Legal Limits on Public Pension Reform," and my comments:

Professor Monahan:

"In place of the 'gratuity' approach, courts have, for the most part, adopted one of two legal theories to protect public pension benefits: the property interest approach or the contract approach."

(My comment, Marcucci [of the National Association of Public Pension Attorneys]: “Does your jurisdiction have an anti-gratuity clause in its constitution?  If so, then almost by default there needs to be a contract component to pension benefits.”  The Colorado Constitution's "anti-gratuity" clause: Article 5, Section 34 of the Colorado Constitution prohibits the Colorado General Assembly from using public funds “for benevolent purposes to any person.”  If the PERA COLA is a gratuity, it is unconstitutional.)

Professor Monahan:

"This policy brief will provide an overview of the various approaches that states take to protect public employee pensions, discussing first the protections that apply to employees who have not yet retired and then those that apply to already-retired employees.  It concludes with a look at recent litigation in several states challenging public pension plan changes."

Professor Monahan:

"The ability of state legislatures to make changes to the pension benefits of current employees varies dramatically by state.  In some states, changes are relatively unrestricted, while in other states no detrimental changes can be made to either past or future accruals unless such changes are the least drastic means of achieving an important policy goal."

(My comment: On May 16, 2012, the Colorado General Assembly enacted a bill that represents one of dozens of available "less drastic" public pension reforms.  The General Assembly enacted SB12-149, reforming certain Colorado county [administrative arms of the state] public pension systems and honoring the accrued public pension benefits of public sector workers who are members of those pension systems.  The General Assembly adopted this PROSPECTIVE legislation two years after having retroactively taken accrued public pension benefits from Colorado PERA retirees.)

Professor Monahan:

"As a general rule, changes that are purely prospective (changes that affect not what an employee has already earned but solely what he will earn through future service) invite less judicial scrutiny than changes that affect an employee’s already-earned and vested benefits because prospective changes are considered less substantial impairments than changes to accrued benefits."

Professor Monahan:

"Property Approach.  To the extent that an employee’s rights in a public pension plan are considered property, those rights are protected under the 5th and 14th Amendments to the US Constitution from deprivation without due process of law."

(My comment: Both the U.S. and Colorado constitutions make public pension benefits a constitutionally protected property right.  Due process requires the right to present evidence.  Since, to date, Colorado courts have not permitted the case, Justus v. State, to go before a jury, Colorado PERA retirees have not been afforded this constitutional right to due process.)

Professor Monahan:

"Contract Approach.  In many states, an employee’s right to public pension benefits is considered contractual, and therefore is protected against substantial impairment under both state and federal constitutions.  This protection is provided by the Contract Clause of the United States Constitution, which states, 'No State shall . . . pass any . . . Law impairing the Obligation of Contracts.'  Most state constitutions contain substantially similar language.  As a result, once a court finds an employee’s right to her public retirement benefits to be contractual, it is generally unconstitutional for a state to take any action that substantially impairs the employee’s benefits."

(My comment: The Ritter Administration on substantial impairment of PERA retiree pension contracts [in a letter to the federal pension regulator GASB]):

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

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

Professor Monahan:

"In the pension context, courts typically find any decrease in the amount of retirement benefits to be a substantial impairment."

Professor Monahan:

"In some states, the contract is considered to be formed on the employee’s first day of employment, thereby protecting the employee against any detrimental changes in her pension plan benefits from the moment she begins work.  At the other end of the spectrum are states that find a contract to exist only once the employee has retired and begun receiving benefits under the plan."

Professor Monahan:

"Somewhere in the middle are states that find a contract to exist once an employee has satisfied the minimum service requirements to receive a pension."

Professor Monahan:

"In these states, courts are left to infer whether the legislature intended to create a contract when it passed laws granting public employees’ retirement benefits.  They do so by examining the facts and circumstances of the case and often conclude that by providing retirement benefits that an employee can earn through performing services, the state has made a unilateral offer that the employee accepts through service, thereby creating a contract under traditional contract theory principles.  Even this approach is relatively uncontroversial when it is used to protect benefits that an employee has already earned."

(My comment: Ritter Administration Letter to GASB [federal pension regulator] on contractual public pension obligations:

“COSC agrees that an obligation exists since the government entity has entered into a duty, contract, or promise to provide compensation in the form of benefit payments during retirement; and furthermore, we agree that this obligation is a present obligation to the extent that the benefits owed have already been earned through past services, and are legally enforceable once vesting provisions have been met.”

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits (such as COLAs), or an increase in required employee contributions both serve to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

“The criteria suggested as the basis for differentiating these COLAs (automatic) versus ad-hoc COLAs is the statutes that exist as of the date of the employer’s financial statements.”

“The essential difference between an automatic COLA and an ad hoc COLA is the legal requirement; with this core difference there is no way for the two not to be substantively different. The legal difference in this instance is critical to the determination of whether the government is unable to avoid the surrender of resources to meet the obligation.”

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

Professor Monahan:

"An impairment occurs if the action alters the contractual relationship between the parties and is substantial 'where the right abridged was one that induced the parties to contract in the first place' or where the impaired right was one on which there had been reasonable reliance."

(My comment: March 1, 2012, House Finance Committee, Representative 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 . . . ")

Professor Monahan:

"Where a state is seeking to impair a contract to which it is a party, a reviewing court does not completely defer to the state legislature’s determination of what is reasonable or necessary under the circumstances."

(My comment: United States Supreme Court in U.S. Trust, “A governmental entity can always find a use for extra money, especially when taxes do not have to be raised.  If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all . . . Thus, a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors.")

Professor Monahan:

"For an action to be considered necessary, (1) no other less drastic modification could have been implemented at the time of the challenged change, and (2) the state could not have achieved its goals without the modification."

(My comment: February 2011, Colorado PERA General Counsel Greg Smith writes in Government Finance Review: "Adjusting public pension benefits in Colorado: a fiduciary process": "Necessity is judged on two levels: 1) whether a less drastic modification could have been implemented; and 2) whether, even with modification, the state could have achieved its stated goals. To determine whether the changes were reasonable, the changes MUST BE THE MINIMUM CHANGES NECESSARY to solve the economic problems of the plan. (See United States Trust Co. v. New Jersey, 431 U.S. 1, 1977.)"

(The next year, [June 26, 2012] Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, reports in the 2011 Colorado PERA CAFR: “It should be noted that the changes made to the PERA structure as a result of SB10-001 have as a goal 100% funding of the  accrued liability within 30 years for all divisions.  The results of the December 31, 2011, valuations combined with financial projections of all divisions, indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division.”

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

The Colorado General Assembly's incorporation of a 100 percent funding threshold into the Colorado PERA statutory pension contract was much stronger than necessary, not the "minimum change necessary," thus SB10-001 does not meet the "necessity" standard.  Dozens of other "less drastic" pension reform options were available to the General Assembly in 2010.)

Professor Monahan:

"Post-retirement changes to public pension benefits.  While distinct differences exist among the states with respect to the legal protections they grant to public employee pensions preretirement, changes to a participant’s benefits once she has retired will be extremely difficult to make in any state.  The difference between the legal approach to pre- versus postretirement changes is that once a participant is retired, she has by definition fulfilled her side of any bargain that has been made.  In contract theory terms, the participant has accepted the offer of pension benefits through performance.  The protection given to pensions in this context is analogous to the legal protections given with respect to promised salary."

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

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

Professor Monahan:

"In cases where COLAs are being reduced before retirement, they would typically be analyzed under either the property or contract approach outlined here, generally on the same terms as any other type of preretirement change.  However, COLA reductions that affect already-retired participants are typically analyzed under a contract analysis because the participant has already satisfied all of the conditions necessary to receive a benefit."

Professor Monahan on Colorado's Public Pension Lawsuit, Justus v. State:

"In Colorado, retirees challenged actions by the state legislature that reduced the COLA retirees were eligible to receive.  The plaintiffs included individuals who had retired under Colorado’s public employee retirement system at a time when there was a guaranteed 3.5 percent COLA in place."

Professor Monahan: The Denver District Court's Initial Decision in Justus v. State was Surprising in Light of Colorado Public Pension Case Precedent.

Professor Monahan:

"The (Denver District) court’s ruling 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."

(My comment: In 2011, the Denver District Court held that “plaintiffs unarguably have a contractual right to their pension itself.”  Further, the Denver District Court found that the Colorado PERA pension COLA provisions contain no "durational language" suggesting that a contract has been created, and that a pension provision requires a clear indication that the Legislature has intended to bind itself in a contractual manner.

This 2011 Denver District Court finding begs the question, if the test of enforceability of a statutory pension provision is accompanying durational language or a clear statement of the intent of the Legislature to create a contractual obligation, then how did the Denver District Court go about determining that “plaintiffs unarguably have a contractual right to their pension itself" (i.e., the PERA 'base benefit')?  The Colorado PERA statutes state that qualifying PERA members "shall" receive the PERA "base benefit" at retirement, language that is identical to the language providing the PERA COLA benefit.  PERA statutes setting forth the benefit formula for service retirement state that the service retirement benefit "shall be calculated."  How is this identical language contractual for the PERA "base benefit," yet NOT contractual for the PERA COLA benefit?

How did the Denver District Court reach the conclusion that Colorado PERA "base benefits" are contractual without mentioning the most significant, on-point Colorado public pension case precedent, Bills and McPhail?  What supported this legal conclusion?  Was it simply pulled out of thin air?)

Professor Monahan: Under Colorado's Public Pension Contract Precedent, the Taking of a Colorado PERA Retiree's Contracted COLA Benefit "Would Properly Be Considered Retroactive."

Professor Monahan:

"For example, a participant who worked for the state from 2001 (when the 3.5 percent COLA was enacted) until 2010 (when the COLA was reduced) would have worked for nine years in exchange for the promise of a benefit that increased by 3.5 percent each year during retirement. If that COLA benefit is part of what an employee earns through services rendered, the change at issue in Colorado would properly be considered retroactive."

(My comment: Vickie Johnson, an attorney representing the Adams County Retirement Plan, testifying on the Colorado legislation, SB12-149: “Boards of pension plans have very limited options to improve the funded status of the plan.”  “They could cut benefits, but for incoming employees . . . employees that haven’t been hired yet.”  “Now, we’ve made clear that any modifications to benefits and age and service requirements shall not affect vested benefits already accrued.  So, it won’t affect benefits that are already earned or benefits of retired members.”  “When an employee begins working for a government entity that offers a pension, and the employee contributes to that benefit, the benefit offered to the employee is considered to be a contract right governed by the United States Constitution.”  “As I said, in Subsection 3, we make clear in the proposed legislation that vested benefits already accrued, including the vested benefits of retirees, are not going to be touched.”)

Professor Monahan:

"In October 2012, the Colorado Court of Appeals reversed the trial court, finding that plaintiffs did have a contractual right to their COLAs but remanding the case for further consideration of whether the impairment of plaintiffs’ contract rights was nevertheless permissible because it was reasonable and necessary to serve an important public purpose."

"The case is currently pending before the Colorado Supreme Court."

Professor Monahan on Florida's recent COLA-taking litigation:

"In addition, the (Florida) plan was amended to eliminate the COLA for years of service earned after the date of amendment."

(My comment: Note that the proposed change to the public pension COLA benefit in Florida was to be implemented on a PROSPECTIVE basis.)

Professor Monahan:

"After finding that a contract existed that included the right to have a noncontributory plan and unchanged COLAs, the (Florida) trial court found it easy to conclude that the 2011 legislation was a substantial contract impairment that was not justified by an important public purpose."

Professor Monahan:

"In addition, the court noted that the plan was operating 'well above the 80% funding ratio recommended by experts' and was regarded as one of the healthiest public pension funds in the United States."

(My comment: As we have seen, in spite of the fact that public pension plans are considered to be "well-funded" at an 80 percent actuarial funded ratio, and the fact that the Colorado PERA Board of Trustees has sought to cap funding of the PERA trust funds at a 90 percent funded ratio in the past, the Colorado General Assembly, in SB10-001, proposes to continue taking contracted COLA benefits from Colorado PERA retirees until an absurd 100 percent funding ratio is achieved.  The lobbyists hired by Colorado PERA-affiliated employers became quite greedy in 2010.)

Professor Monahan:

"Although the state of Florida claimed to be facing a budget shortfall, the court noted that the legislature’s appropriations for 2011–12 left more than $1 billion in general revenue unspent for the year.  The court further explained that a significant budget shortfall is insufficient to justify the changes, given that 'other reasonable alternatives existed' to preserve the contract.  As the court explained, 'All indications are that the Florida Legislature chose to effectuate the challenged provisions of Senate Bill 2100 in order to make funds available for other purposes.'”

(My comment: Colorado is the 15th wealthiest state in the nation.  The Colorado General Assembly has allocated $700 million for local government legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado.  The General Assembly has done this while ignoring its own Colorado PERA pension debts.  The Colorado General Assembly has made numerous $100 million dollar grants of discretionary property tax relief.  The State of Colorado can afford to pay its PERA pension debts.)

Professor Monahan:

"The state appealed the decision to the Florida Supreme Court, which overruled the trial court and reiterated its prior holding that the statutory language protected only accrued benefits.  Because the changes at issue were prospective in nature and did not impair what an employee had already earned, the court found the changes permissible."

(My comment: The Florida Supreme Court agreed that PROSPECTIVE changes to a COLA benefit are legal, RETROACTIVE takings of accrued public pension COLA benefits are unconstitutional.)

Professor Monahan on Rhode Island's Attempt to Take Contracted COLA Benefits:

"Before deciding the contractual issue, the court importantly pointed out that pursuant to a prior decision of the Rhode Island Supreme Court, no separate analysis applies to a base pension benefit versus a COLA.  Rather, the court explained, a 'COLA and a pension are one and the same.'”

(My comment: A COLA is simply a means of providing a contracted public pension benefit.  A public pension plan sponsor could just as easily offer a larger monthly annuity payment with no COLA escalator provision.)

Professor Monahan:

"In analyzing the contractual issue, the court found that while the statute is not explicit about the existence of a contract, the facts and circumstances supported the finding of a contract.  The court explained that the state offered to provide the benefits in return for service and that acceptance was supported by employees’ adequate consideration, creating an implied contract under standard contract theory.  The court did note that while these employees have only partially performed (because they have not yet retired), it found their performance to be 'substantial,' thereby preventing the state from revoking its offer."

Professor Monahan:

"The trial court judge who issued this ruling is the same judge who has been assigned to hear the legal challenges to Rhode Island’s major pension reform passed in 2011.  There have been no rulings yet in that case, which the judge most recently ordered to mediation."

From Professor Monahan's paper, "Public Pension Reform: The Legal Framework":

“This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

Link to Monahan law article:

http://www.law.umn.edu/facultyprofiles/monahana.html)

On page 28 of this paper Professor Monahan notes that public pension retirees in Colorado have a “contract, at some time prior to eligibility for retirement,” but that the point in time at which this contractual right arises is “unclear” based on the case law.  Further, Monahan writes “Colorado courts have held that prior to eligibility to retire, plan changes can be made if the changes ‘strengthen or better’ the retirement plan, or if they are actuarially necessary.”

Professor Monahan in the article “Statutes as Contracts? The ‘California Rule’ and Its Impact on Public Pension Reform,” (Iowa Law Review article):

“In the Colorado case, the district court was considering whether the state was permitted, as part of a broad pension reform effort, to reduce the cost-of-living adjustments (“COLAs”) previously granted to retirees.  The plaintiffs included individuals who had retired under Colorado’s public employee retirement system at a time when there was a guaranteed 3.5% COLA in place.  This COLA had been in place since 2001.  Under the California Rule, it is clear that COLA reductions could not be made once a participant entered the system.  However, the Colorado District Court held that the statute granting COLAs contained no clear and unambiguous evidence that retirees were entitled to an unchanged COLA for the duration of their benefits.  In further support of its conclusion, the court highlighted the fact that COLAs had previously been changed (though not to a retiree’s detriment), and therefore those in the system could have no reasonable expectation of an unchanged COLA.”

(My comment: Note that Professor Monahan points out that prior “changes” made to the PERA COLA did not harm PERA retirees . . . therefore those retirees could not be expected to contest such “improvements” to their contracted “automatic” PERA COLA benefit.)

Professor Monahan expresses her surprise at the Denver District Court ruling:

“The court’s ruling is surprising both because the court broke from the previously endorsed California Rule, under which it is clear that detrimental changes to the benefits of current employees are only permissible where they are offset with comparable new advantages, and because the change at issue is one that 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.”

(My opinion: Here Professor Monahan states her “surprise” that the Denver District Court would render a decision that entirely disregards on-point, established Colorado public pension case law . . . a decision that represents an extreme departure from public pension case law in Colorado.  Further, Monahan notes that the COLA taking was a “retroactive” diminution of fully-vested PERA retiree COLA benefits, and that such a taking “invites the most scrutiny under contract clause analysis.”)

Professor Monahan at the February 22, 2013, the Ohio State University Moritz College of Law hosted a "Roundtable on Public Pension Reform."

http://moritzlaw.osu.edu/programs/capital-markets/roundtable-on-public-pension-reform-video-archive/

Professor Monahan: Taking accrued retiree public pension benefits is the pension "reform" with the greatest legal risk.  The U.S. Supreme Court tells us that public pension reforms must be the "least drastic" alternative in order to meet constitutional muster.  Most public pension administrators consider automatic pension COLAs to be an accrued benefit.

Professor Monahan:

"I'm not aware of any case, where a court has said that once a participant has retired, and completed all of the necessary ingredients to receive a pension that that pension is not contractual."

"Even in some liberal states, once you've retired, you have a vested, contractual right to the benefit."

Professor Monahan on the relative legal risk of legislative enactment of various reforms to public pension systems:

"I think it's fair to generalize that there is a sort of risk hierarchy here."

"So, I'm going to start with the most risky and go down to the least."

Pension Changes Impacting:

Public Pension Retiree Accrued Benefits

" . . . benefits being paid to retirees are the riskiest thing to touch." "The idea is that they have completed their side of the bargain, and so any changes to those individuals usually get the highest level of scrutiny."

Active Pension Member Accrued Benefits

"Next, is touching accrued benefits for people who haven't retired.  So, they're still working, but you're reducing what they've already earned to date.  That's also pretty risky.  Basically, the analogy here is to salary.  You can't retroactively reduce someone's salary.  The court's going to easily imply a contract here, for the same reasons reducing accrued benefits are risky."

Future Benefit Accruals

"Future benefit accruals in most states, should be less risky."

(My comment: Note that the Colorado General Assembly adopted prospective changes to future benefit accruals of certain Colorado county government pension systems in 2012 [SB12-149]. The Colorado Legislature adopted these prospective pension reforms, honoring the accrued pension benefits of thousands of Colorado county government retirees two years after having retroactively seized accrued contracted public pension benefits of Colorado PERA retirees.  In 2010, most members of the Colorado Legislature were unaware of Monahan’s “hierarchy of legal risk” of various public pension reform options.  This lack of knowledge is attributable to the fact that, in 2009 and 2010, the Colorado Legislature permitted self-interested outside parties to develop public pension policy for the State of Colorado [through lobbyists].)

New Hires

"New hires are easy."

Professor Monahan on public pension COLAs:

"I think that most people in the pension world, when they think of COLAs, think of it as part of the participant's accrued benefit."

(My comment: "Automatic" public pension COLA benefits are fixed, contractual obligations of public pension plan sponsors.  "Ad Hoc" public pension COLA benefits may be adjusted by pension plan sponsors as needed.  Many critics of public pension systems in the U.S. are attempting to confuse the two types of COLAs to support of their efforts to break pension COLA contracts.)

Professor Monahan on the "Reasonable and Necessary" standard to break public pension contracts:

"That sounds like an easy test."  "It's not."  "The U.S. Supreme Court tells us that it has to be the least drastic way of achieving the policy goal."

Professor Monahan:

"Colorado is a closely watched case that's been going on for awhile now.  Colorado reduced COLAs.  Most recent ruling there is the Appellate Court which just ruled that there is a contractual right to COLAs."

Colorado PERA active and retired members, support public pension contractual rights in Colorado.  Read your Monahan and contribute at saveperacola.com!  "Friend" Save Pera Cola on Facebook!

Moody’s Condemns the Failure of States to Pay Their Public Pension Bills, i.e., “The Colorado Plan.”

From an article in yesterday's (6/27/13) Reuters:

"The states that have the largest relative pension liabilities have at least one thing in common: a history of contributing less to their pension plans than the actuarially required contributions (ARC)," Moody's said in the report, which looked at data for fiscal 2011.

http://www.reuters.com/article/2013/06/27/usa-states-pensions-moodys-idUSL2N0F21RD20130627

(My comment: The "actuarially required contribution" [ARC] is the amount of the annual pension payment that is necessary, according to actuaries, to keep up with newly accruing pension liabilities, and amortize existing pension liabilities.)

As we have seen, Colorado has not paid its complete public pension (Colorado PERA) bills for many years.  Since the Leadership of the Colorado Legislature has abdicated its public pension policy-making responsibility to self-interested lobbyists, most members of the Colorado Legislature are not even aware of the historical PERA pension underfunding.

From the Moody's report:

"The largest accumulated liabilities most often reflect management decisions not to fund contributions at levels reflecting actuarial guidelines.  Of the ten states with the largest pension burdens, six have been downgraded in recent years for the magnitude and management of their pension obligations, in part a reflection of persistent underfunding."

"In an effort to reduce current expenditures, states that underfund simply increase the portion of their liability that must be amortized, resulting in ever-greater ARCs that become even more difficult to meet. For this reason, funding history is an important credit factor."

"The states with the lowest ratio of ANPL to revenues also have little in common outside of a commitment to making full ARC payments to their pension plans."

"By contrast, for states with statutory contributions less than the ARC (My comment: Like Colorado) or for those who have underpaid for other reasons, the dismal performance of the asset markets in the last decade revealed how quickly such approaches could reduce the funding status of a pension plan."

Colorado has "already eaten its lunch," now it wants to "skip out on the bill."

The State of Colorado and Colorado local governments are attempting to escape their contractual obligations.  Having failed to pay their public pension bills for many years, they now are attempting to use their own negligence as a rationale to break Colorado PERA public pension contracts.  The Colorado Legislature, having intentionally reduced the funding ratio of the Colorado PERA pension system through underfunding, now wants PERA retirees to bear the burden of fixing their problem.  In 2010, the Colorado Legislature enacted a bill, SB10-001, that attempts to shift the accrued public pension debts of Colorado governments onto the backs elderly pensioners (Colorado PERA retirees.)

Note Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee (relating to the Legislature's historical underfunding of its PERA pension obligations):

"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."

Recall the words of Colorado PERA's General Counsel (now Executive Director) Greg Smith.  On August 11, 2009, at the 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: “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.”

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

The recently released 2012 PERA CAFR (financial report), page 34, includes a chart illustrating the failure of the Colorado General Assembly to set PERA contribution rates at a level sufficient to meet PERA's "actuarially required contributions" (ARC).  The chart identifies Colorado PERA pension underfunding from 2008 to 2012, although the pension underfunding has been uninterrupted since 2001, [also occurring in the 1990s.]

Page 93 of the 2012 PERA CAFR identifies the historical underfunding of the Colorado PERA pension (failure of the General Assembly to pay the full ARC) by PERA division.

Note that while the Colorado General Assembly has failed to pay its contractual PERA public pension bills, it has simultaneously paid off $700 million in Colorado local government legacy pension debt (Old Hire Fire and Police Pensions) that ARE NOT the contractual obligation of the State of Colorado.  Having failed to pay its PERA pension bills, and directed state funds to pensions that ARE NOT the contractual obligation of the State of Colorado, the General Assembly now seeks to break its own PERA contracts.

At the 2013 Colorado legislative session, the Colorado General Assembly made a final installment of $142 million to pay off Colorado local government Old Hire Fire and Police legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado, while (according to the 2012 PERA CAFR) again underfunding its Colorado PERA contractual public pension obligations.

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."

https://www.copera.org/pdf/5/5-20-12.pdf

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.)

Colorado PERA active and retired members, when a government creates a problem through its own negligence, and then attempts to fix the problem by breaking its contracts, that is clearly immoral and illegal.  Colorado is better than this.  Support contractual public pension rights in the United States.  Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!

Colorado PERA Investment Staff Misses 2012 Performance Benchmarks Costing Taxpayers and PERA Members $175 Million; 2012 PERA CAFR Released.

COLORADO GENERAL ASSEMBLY CONTINUES HISTORICAL UNDERFUNDING OF THE PERA PENSION (IN SPITE OF THE 2010, SB10-001, PERA CONTRACT BREACH);

PERA ACTUARY, PROVISIONS OF SB10-001 WERE STRONGER THAN NECESSARY TO MEET FEDERAL REGULATORY REQUIREMENTS;

PERA'S LONG-TERM INFLATION ASSUMPTION LOWERED TO 3.5 PERCENT, MATCHING THE CONTRACTED PERA COLA TAKEN BY THE COLORADO GENERAL ASSEMBLY.

Colorado PERA released its 2012 PERA CAFR (financial report) today.  Here are a few upbeat excerpts from Colorado PERA's announcement of the CAFR on the PERA website:

"Colorado PERA 2012 Investment Returns Exceed 12 Percent."

"Strong Investment Returns During 2012 Add $4.6 Billion to PERA Trusts."

"Colorado PERA investment returns for 2012 were 12.9 percent, according to the Comprehensive Annual Financial Report released by the PERA Board of Trustees today."

https://www.copera.org/pera/about/latestnews.htm#cafr

As expected, surging equity markets provided an excellent return for the Colorado PERA trust funds in 2012; but what's the "rest of the story"?

The 2012 Colorado PERA CAFR continues the documentation of the Colorado General Assembly's failure to pay its PERA pension bills.  The 2012 PERA CAFR documents the failure of Colorado PERA's investment professionals to meet investment performance benchmarks.  This failure cost the PERA trust funds approximately $175 million last year (by my estimation.)  It's easy to ignore PERA's investment underperformance while the PERA trust funds are earning double-digit returns; but we should remember that such PERA investment underperformance has been a contributor to the Colorado General Assembly's rationale for breaking Colorado PERA pension contracts.  Since the Colorado General Assembly has abdicated its policy-making authority regarding the PERA public pension system to PERA lobbyists, members of the Colorado Legislature (Finance Committees) pay scant attention to PERA's investment performance.  This is odd, since taxpayers will pick up any underperformance.

The 2012 PERA CAFR repeats the observation of Colorado PERA's actuary Cavanaugh MacDonald (made in earlier CAFRs) that the 100 percent funding ratio goal incorporated into the Colorado PERA statutory public pension contract by SB10-001 was much stronger than is necessary to meet federal regulatory (GASB) standards.  (Recall that Colorado PERA's Executive Director Greg Smith has written that changes to public pension plans must be the minimum changes necessary to solve the economic problems of the pension plan in order to pass constitutional muster.  This absurd 100 percent funding requirement placed in the PERA statutory contract by SB10-001 is clearly "not the minimum change necessary.")

Finally, the 2012 PERA CAFR reveals that the reduction of Colorado PERA's long-term portfolio return assumption from 8.5 percent to 8 percent by the Colorado PERA Board of Trustees continues to suppress the actuarial funded ratio of the PERA trust funds.  (I have no position on the PERA Board's portfolio return assumption, other than the fact that a policy decision by the PERA Board should not be used as a rationale for the breach of Colorado PERA pension contracts.  The accumulated PERA pension debt is unaffected by PERA Board policy or market conditions.)

Excerpts from the 2012 PERA CAFR, "Letter of Transmittal":

"On December 31, 2012, PERA's funded ratio was 61.9 percent with an unfunded liability of $24.2 billion based on the actuarial value of assets and an investment return and discount rate assumption of 8.0 percent."

From the 2012 PERA CAFR, page 125: "Colorado PERA pension divisions have a funded ratio of 63% based on the Actuarial Value of Assets and 64% based on the Market Value of Assets."

(My comment: The PERA portfolio is now about $40 billion.  PERA's actuarial funding ratio was 68.9 percent at the time of the contract breach in 2010.

February 14, 2011

Subcommittee on Courts, Commercial and Administrative Law, Committee on Judiciary

House of Representatives, Testimony of Keith Brainard, Research Director, National Association of State Retirement Administrators

“Only 30-40 years ago, most public plans were financed primarily on a pay-as-you-go basis.”

“Even after the most recent and unprecedented financial downturn, most state and local government pension trusts have plenty of assets to continue to pay promised benefits for years, and values already have rebounded sharply since the market low.”

A 2006 Federal Reserve paper, by Ronald A Wirtz, notes that public pension funded ratios in the 50 to 60 percent range were typical in the 1970s:

“From a long-term perspective, however, one can't really pin too much of the pension problem on the recent stock market pullback—in fact, it's [the stock market in recent decades] been a savior for most pensions.  Rewind 50 years, and almost all pension assets were invested in U.S. bonds and other fixed-income sorts of securities.  Though comparatively safe in terms of protecting assets, such a portfolio could not generate the returns necessary for pension funds to keep up with the benefits promised by generous government employers.  During the 1970s, funding ratios generally hovered between 50 and 60 percent.”

Silver and Gold Record, October 26, 2006:

“One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent.  Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.  Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”

https://www.cu.edu/sg/messages/5245.html

2012 PERA CAFR CONTINUES DOCUMENTATION OF THE GENERAL ASSEMBLY'S HISTORICAL UNDERFUNDING OF THE PERA PENSION SYSTEM.

The 2012 PERA CAFR, page 34, includes a chart illustrating the failure of the Colorado General Assembly to set PERA contribution rates at a level sufficient to meet PERA's "annual required contributions" (ARC).  The chart identifies Colorado PERA pension underfunding from 2008 to 2012, although the pension underfunding has been uninterrupted since 2001, [also occurring in the 1990s.]

Page 93 of the 2012 PERA CAFR identifies the historical underfunding of the Colorado PERA pension (failure of the General Assembly to pay the full ARC) by PERA division.

As we have seen, the failure of the Colorado General Assembly to pay its public pension bills has also been documented by the Center for Retirement Research at Boston College.  Note that while the Colorado General Assembly has failed to pay its contractual PERA public pension bills, it has simultaneously paid off $700 million in Colorado local government legacy pension debt (Old Hire Fire and Police Pensions) that ARE NOT the contractual obligation of the State of Colorado.  Having failed to pay its PERA pension bills, and directed state funds to pensions that ARE NOT the contractual obligation of the State of Colorado, the General Assembly now seeks to break PERA contracts.

At the 2013 Colorado legislative session, the Colorado General assembly made a final installment of $142 million to pay off Colorado local government Old Hire Fire and Police legacy pension obligations that ARE NOT the contractual obligation of the State of Colorado, while (according to the 2012 PERA CAFR) again underfunding its Colorado PERA contractual public pension obligations.

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."

https://www.copera.org/pdf/5/5-20-12.pdf

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee relating to the Legislature's historical underfunding of its PERA pension obligations:

"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."

Recall the words of Colorado PERA's General Counsel (now Executive Director) Greg Smith.  On August 11, 2009, at the 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: “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.”

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

2012 PERA CAFR: PERA'S LONG-TERM INFLATION ASSUMPTION HAS BEEN LOWERED TO 3.5 PERCENT, MATCHING THE CONTRACTED PERA COLA TAKEN BY THE GENERAL ASSEMBLY IN 2010.

On page 95 of the 2012 PERA CAFR, Colorado PERA notes that it has recently reduced its long-term inflation assumption from 3.75 percent to 3.50 percent.

In 2010, the Colorado General Assembly enacted SB10-001 slashing the contracted inflation protection of Colorado PERA retirees by 42 percent, from 3.5 percent to 2.0 percent (for non-DPS retirees).  This taking by the Colorado General Assembly will cost many PERA retirees hundreds of thousands of dollars over their remaining lives.  The bill (SB10-001) took this money from Colorado PERA retirees in order to maintain Colorado's status as a "tax haven," the state with the lowest per capita state tax burden in the nation, and to "inflate away" the pension debt of PERA employers.

Back in 1993, when the "automatic" Colorado PERA COLA benefit was adopted, Colorado PERA's Director of Governmental Relations (Rob Gray) informed the Colorado Legislature (in testimony) that the "automatic" PERA COLA benefit they were placing into Colorado law would "come close to what the long-term inflation rate is."

On March 24, 1993 (1:32 PM – 2:28 PM) the House Finance Committee of the Colorado General Assembly heard House Bill 93-1324.

Rob Gray elaborated: “The (CPI up to) 3.5 percent increase is a reasonable level.”  “It will probably come close to what the long-term inflation rate is.”

(Note that the PERA COLA was in later years improved to a flat 3.5 percent rate, permissible as this improvement did not impair PERA retiree pension contracts.)

Rob Gray also noted that: “The PERA Board does support this bill.”  “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.”  (Ironically, at the time, PERA employers thought they were getting a great deal by fixing an "automatic" PERA COLA benefit, only to break the contract two decades later.)

COLORADO PERA ACTUARIES: THE OBJECTIVE OF SB10-001 TO SEEK A 100 PERCENT FUNDING RATIO IS MUCH STRONGER THAN REQUIRED BY FEDERAL REGULATORS.

The 2012 PERA CAFR, page 126, includes the following statement from Colorado PERA's actuary:

Colorado PERA actuary Cavanaugh MacDonald Consulting, LLC:

"It should be noted that the changes made to the PERA structure as a result of SB10-001 had as a goal 100% funding of the accrued liability within 30 years for all divisions.  The results of the December 31, 2012, valuations combined with financial projections of all divisions indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division."  (My comment: In my opinion, PERA's actuaries want this on the record when SB10-001 is declared unconstitutional.)

February 2011

Colorado PERA General Counsel (now Executive Director) Greg Smith writes in Government Finance Review: "Adjusting public pension benefits in Colorado: a fiduciary process": "Necessity is judged on two levels: 1) whether a less drastic modification could have been implemented; and 2) whether, even with modification, the state could have achieved its stated goals. To determine whether the changes were reasonable, the changes MUST BE THE MINIMUM CHANGES NECESSARY to solve the economic problems of the plan. (See United States Trust Co. v. New Jersey, 431 U.S. 1, 1977.)"

(The next year, [June 26, 2012 and again in the newly released CAFR] Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, reports in the 2011 Colorado PERA CAFR: “It should be noted that the changes made to the PERA structure as a result of SB10-001 have as a goal 100% funding of the accrued liability within 30 years for all divisions.  The results of the December 31, 2011, valuations combined with financial projections of all divisions, indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division.”)

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

http://www.thefreelibrary.com/Adjusting+public+pension+benefits+in+Colorado%3a+a+fiduciary+process.-a0290520595

Also from the 2012 PERA CAFR, page 43, "These benefits earned will be payable over the lifespan of members after their retirement and therefore, it is not necessary that the actuarially determined benefits equal the actuarial value of assets at any given moment in time."

So, why did the Colorado Legislature make this the goal of SB10-001??

UNDERPERFORMANCE BY COLORADO PERA'S INVESTMENT STAFF IN 2012 COSTS THE PERA TRUST FUNDS (AND COLORADO TAXPAYERS) $175 MILLION.

Page 29 of the 2012 PERA CAFR reveals that Colorado PERA's investment staff have failed to meet their investment performance benchmarks.  During 2012, Colorado PERA's investment staff achieved a rate of return of 12.9 percent while the PERA investment performance benchmark was 13.4 percent.  (By my estimation this underperformance by PERA's investment staff [53 basis points] cost the PERA trust funds approximately $175 million.)

Although the Colorado General Assembly and Colorado PERA are trying to push market risk onto PERA retirees, Colorado PERA retirees should not have to bear the cost of any historical PERA investment underperformance on the part of PERA's investment staff.  Again, PERA retirees "bear no market risk" in the PERA defined benefit pension plan.

"The Total Fund underperformed the policy benchmark return by approximately 53 basis points (0.53 percentage points) for the year ended December 31, 2012."

"Alternative Investments was the primary contributor to the underperformance . . ."

What has been the performance of PERA's investment staff historically?  In what years have they missed their benchmarks?  What has been the cost to the PERA trust funds?

Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board’s historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

“Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization.  We were very aggressive in what I’ll call private equity or alternatives.  At the board’s direction we’ve pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each.  I think that the portfolio as we headed into the dotcom bust was far riskier than it is today.  We paid the price for that.”

(My comment: Meredith Williams tells us here that PERA “paid the price” for its past investing mistakes.  Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds.  I ask: Why should Colorado PERA retirees, who bear no “market risk” in their “defined benefit” pension plan, whose contractual public pension rights are “fully-vested,” why should these Colorado PERA retirees pay the cost of the PERA Board’s past investing mistakes by relinquishing their contracted pension benefits?)

THE 2012 PERA CAFR ON THE JUSTUS v. STATE LAWSUIT:

The 2012 PERA CAFR, page 82, addresses the Justus v. State PERA retiree lawsuit: "The maximum potential damages arising from this Civil Action consist of the payment of additional statutory benefits beyond those provided for by SB10-001.  In the event the pertinent portion of SB10-001 was held to be unconstitutional by an unappealable final court order, PERA would be required to pay the annual increase in effect prior to the passage of SB10-001.  The nature of the relief sought is a mandatory injunction requiring the payment of annual increases going forward based on the PERA statutes as they existed prior to passage and enactment of SB10-001."

A few final excerpts from the 2012 Colorado PERA CAFR:

From the 2012 PERA CAFR, page 136, "Benefits to retirees are funded at 77 percent, that is, assets reserved for benefits currently being paid are less than the liabilities for those benefits."

From the 2012 PERA CAFR, page 174, the average age of a current PERA retiree is now 70 years.

From the 2012 PERA CAFR, page 175, "For most benefit recipients, this is the only source of income in retirement as most PERA benefit recipients and their beneficiaries do not qualify for Social Security payments."

(My comment: It is unconscionable that the Colorado General Assembly has broken the PERA pension contracts of Colorado PERA retirees, who average 70 years of age, and are completely dependent on their contracted PERA retirement benefits.  All in order to keep taxes low in the 15th wealthiest state in the nation.)

Colorado PERA active and retired members, support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com and "Friend" Save Pera Cola on Facebook!

Colorado PERA Staff Attorney Appointed PERA General Counsel: PERA’s Collective Cognitive Dissonance Persists.

The "post-Meredith shuffle" continues at Colorado PERA.  Today, (June 21, 2013) Colorado PERA announced that staff attorney Adam Franklin will replace Greg Smith as Colorado PERA's General Counsel.  Last year, the Colorado PERA Board of Trustees appointed Greg Smith to be PERA's Executive Director (after the departure of Executive Director Meredith Williams.)

From the announcement of Adam Franklin as PERA's General Counsel on the Colorado PERA website:

"Franklin has served as a Senior Staff Attorney at PERA since January 2007."

Link:

https://www.copera.org/pera/about/latestnews.htm#gc

Former Colorado PERA Executive Director Meredith Williams was at PERA's helm during the Colorado General Assembly's 2010 PERA pension contract breach.  Current Colorado PERA Executive Director, Greg Smith served as Colorado PERA's General Counsel during the PERA contract breach, providing the Colorado PERA Board of Trustees with legal advice, prior to and during the 2010 contract breach.  The legislation breaking Colorado PERA pension contracts (SB10-001) was recommended by the Colorado PERA Board of Trustees (most of the provisions of the ultimate bill were PERA Board recommendations.)  As Meredith Williams has informed us, nearly all of the Colorado PERA Board's pension reform recommendations in 2009 "came out of the hides" of PERA retirees, rather than coming from those who ACTUALLY OWE THE PERA PENSION DEBT, Colorado PERA-affiliated employers.  As Colorado PERA officials have informed us, 90 percent of the savings in their 2009 reform recommendation came from taking accrued PERA pension COLA benefits from retirees with "fully-vested" PERA pension contracts.

In 2010, the Colorado PERA Board of Trustees, (a board composed of fiduciaries) became one of a handful of public pension governing bodies in U.S. history that has advocated breaking the pension contracts of persons who have retired in their pension systems.  Yes, incredibly, PERA trustees with fiduciary obligations formally recommended as board policy the breach of the contracts of members of the pension trust.  It's clear where the "reform" is really needed.

The Colorado Court of Appeals has confirmed the contractual status of the PERA COLA benefit:

October 11, 2012

Colorado Court of Appeals 2012 decision in Justus v. State:

“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

Soon after presiding over the 2010 Colorado PERA pension contract breach, Meredith Williams began job hunting (here's a reference to Meredith's job hunt in November 2010):

"Texas Teachers picks 5 finalists for executive director."

http://www.pionline.com/article/20101123/DAILYREG/101129968

Why was Meredith job hunting just months after the PERA pension contract breach?  Was Meredith not on the same page with the PERA Board of Trustees on the COLA taking?  Or, did he just need a change of scenery?  In any event, Meredith succeeded in escaping the aftermath of Colorado PERA's self-inflicted SB10-001 legal fiasco.

COLORADO PERA OFFICIALS AFTER THE CONTRACT BREACH: THE COLA IS NOT CONTRACTUAL.

It has been reported that Colorado PERA's new General Counsel (in my opinion . . . conveniently) believes that fully-vested, accrued PERA COLA benefits taken in the bill SB10-001 are not contractual obligations of the Colorado PERA pension system.  Adam Franklin, Senior Staff Attorney, Colorado PERA, April 5, 2011 (as documented by the organization Friends of PERA):

“PERA believes that the COLA formula is not contractual.”

Link:

http://www.friendsofpera.com/0405meeting.pdf

Given that Colorado PERA is currently a defendant in a lawsuit generated by the Colorado General Assembly's 2010 taking of contracted PERA COLA benefits, I believe that it would have been prudent for the Colorado PERA Board of Trustees to ensure that PERA's new General Counsel (Adam Franklin) holds the same opinion as Colorado PERA's administrative leadership on this important question of the contractual nature of PERA COLA benefits.  It appears that newly appointed Colorado PERA General Counsel Adam Franklin's opinion on this question differs from that of former Colorado PERA General Counsel (and current PERA Executive Director) Greg Smith's opinion.

COLORADO PERA OFFICIALS BEFORE THE PENSION CONTRACT BREACH: THE COLA IS CONTRACTUAL

November 30, 2008

Colorado PERA General Counsel Greg Smith: “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.”

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

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.”

Link:

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

Former Colorado PERA Executive Director Meredith Williams has also noted his respect for "fully-vested" Colorado PERA pension contracts:

December 2008

Colorado PERA Executive Director Meredith Williams commenting on Colorado Attorney General Ken Salazar’s 2004 Formal Opinion on PERA benefits (PERA Retiree Update, page 1):

“The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”.

https://www.copera.org/pdf/5/5-40-08.pdf

December 8, 2008

"Ask Meredith" column on Colorado PERA website: “That leaves the benefits being earned by members (active and inactive) as the only area to examine for savings. The Attorney General’s opinion contains the following language: 'Once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member’s fully vested pension right cannot be reduced by the General Assembly.'”

https://www.copera.org/pera/about/askm.htm

January 2009

Colorado PERA Executive Director Meredith Williams: “The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”

https://www.copera.org/pdf/Topics/2009/Topics1-09.pdf

February 23, 2012

Meredith Williams, Feb 23, 2012, House Finance Committee:

"What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor's edge.  You can't fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in  Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers.  No one has ever done anything quite like that.  I am quite anxious for the litigation to get behind us."

In 2008, when Colorado PERA officials were asked (by legislative staff) if PERA pension contracts can be broken in the event of "actuarial necessity," PERA officials responded (in writing) that a 2004 Colorado Attorney General Opinion states that a Colorado PERA retiree's "fully-vested" pension benefits cannot be reduced by the Colorado General Assembly.

COLORADO GENERAL ASSEMBLY – JOINT BUDGET COMMITTEE

FY 2009-10 STAFF BUDGET BRIEFING

December 22, 2008 – Joint Budget Committee staff question to Colorado PERA:

"Has PERA discussed what constitutes an actuarial emergency?  At what funding level would this occur?  Is declaring an actuarial emergency the only way the Association can support increasing the employee contribution to help address the unfunded liability?  Is declaring an actuarial emergency more feasible now given the financial crisis and the drop in PERA's market valuation?"

Below is the written response from Colorado PERA officials to the JBC staff in 2008.  (It would also be interesting to listen to the tape of this legislative hearing, for PERA staff's verbal response to the question, as well as the January 5, 2009 PERA meeting with the JBC.)

December 22, 2008 – PERA Response to Joint Budget Committee:

"The AG further concluded that, once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member's fully vested pension right cannot be reduced by the General Assembly."

Link:

http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2008-09/perbrf.pdf

Recall that the Colorado General Assembly did not declare an "actuarial emergency" prior to enacting SB10-001.  Why would they?  They had plenty of revenue to continue paying off $700 million in legacy pension obligations of Colorado local governments that ARE NOT the contractual obligation of the State of Colorado (Old Hire Fire and Police pension obligations.)

As I understand it, attorneys are required to zealously defend the interests of their clients.  This requirement may account for what we (as laypeople) perceive as a sort of collective cognitive dissonance of Colorado PERA officials on the question of the contractual nature of accrued PERA COLA benefits.

Colorado PERA active and retired members, support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com and "Friend" Save Pera Cola on Facebook!

The Top Ten: Damning Evidence in the Colorado PERA Retiree Lawsuit, Justus v. State.

Here's a synopsis of the "Top Ten" for the casual reader:

(1) Colorado governments face no fiscal "crisis" that would warrant the breach of their pension contracts.  They spend a mere two percent of revenues on public pensions.

(2) The Colorado General Assembly has not paid its full pension bill for a decade.  It comes with dirty hands.

(3) The Colorado General Assembly has adopted PROSPECTIVE, legal pension reform for Colorado county governments (SB12-149).  It can also adopt such PROSPECTIVE, legal pension reform for the Colorado PERA pension system.  SB12-149 is proof that the Colorado Legislature can adopt "less drastic" pension reform than the breach of "fully-vested" PERA public pension contracts.  The 2010 PERA COLA taking was unnecessary.

(4) The Colorado PERA COLA benefit is an "AUTOMATIC" COLA benefit, a contractual obligation of Colorado PERA employers, rather than an "ad hoc" pension COLA that can be diminished by pension plan sponsors.  Colorado PERA officials have confirmed this fact in writing.

(5) Opinions of Colorado Attorneys General and Colorado case law support the sanctity of Colorado PERA COLA pension contracts.

(6) Colorado PERA officials have testified before the Colorado Legislature that the PERA COLA is their contractual obligation.  Their words are on the record at the Colorado Legislature.

(7) The taking of the PERA COLA benefit was planned by lobbyists and the Leadership of the Colorado Legislature.  Thus, Leadership failed to send an interrogatory to the Colorado Supreme Court, or appoint an interim study committee to explore legal pension reform options.  Colorado PERA was shopping for a legal rationale to break COLA contracts a full year prior to the adoption of SB10-001.

(8) The Colorado Legislature overreached in attempting to shift 90 percent of the PERA pension reform bill's costs away from those who actually owe the debt, Colorado PERA-affiliated employers, and onto those who DO NOT owe the debt, Colorado PERA pensioners. Not exactly "reasonable."

(9) Colorado PERA's actuarial funded ratio (AFR) has been much lower in the past, than its level at the time of the contract breach, yet no "crisis" was perceived by PERA or Colorado legislators or Governors in the past.  Clear evidence that SB10-001 was arbitrary . . . political.

(10) In 2009, Colorado PERA selected a politically, and judicially, connected lawyer to create a legal rationale to break PERA COLA contracts.  This connected lawyer worked with our gifted Colorado Supreme Court Justice Marquez (a former PERA legal advisor) on the lawsuit, Justus v. State.

Income inequality in the United States is bad enough without the Colorado Legislature exacerbating the problem by breaking the contracts of elderly, middle-class pensioners.  The Colorado Legislature intends to take the property of Colorado PERA retirees in order to help preserve Colorado's status as a "tax haven," the state with the lowest per capita state tax burden in the nation.  The Colorado Legislature has planned a deliberate breach of Colorado PERA retiree pension contracts that will result in Colorado corporations, corporate owners and executives controlling even more of the wealth in the state.

In 2010, a majority of Colorado legislators decided to use the force of government to take property from Colorado PERA pensioners, to renege on the contractual obligations of Colorado state and local governments, as well as taxpayers.  Our state legislators took this action as a political favor for their voters, and for the constituencies that finance their state legislative campaigns.

In 2010, a troop of 27 statehouse lobbyists, hired by Colorado PERA-affiliated employers, rammed a bill through the legislative process (SB10-001) in an attempt to force their employer's debts onto the backs of Colorado PERA pensioners.  Three years have passed, and I still cannot believe that a majority of the members of our own Colorado Legislature were capable of such immorality.

October 22, 2009

"PERA is obviously gearing up for some heavy-duty lobbying, one observer noted.  The agency has hired two lobbyists from the firm Colorado Communiqué, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO.  The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler."

http://www.ednewscolorado.org/news/capitol-news/pera-woes-loom-large-for-education/comment-page-1

Over the last three years, a great deal of information relating to the circumstances of the Colorado Legislature's 2010 PERA pension contract breach has come to light.  Colorado PERA officials have already admitted (provided written and verbal testimony to the Legislature) that the Colorado PERA COLA benefit is a contractual obligation of PERA-affiliated employers.

Their legislative testimony is in agreement with the recent finding of the Colorado Court of Appeals that the PERA COLA provision IS such a contractual obligation.  Why does Colorado PERA bother appealing a ruling on this question, when they agree with the Court of Appeals decision?  It makes no sense.  Further, it is obvious that the taking of one-third to one-half of a contracted annuity stream is a "substantial" impairment of the contract, just as the taking of one-half of a homeowner's equity would be a "substantial" taking.

In legal briefs, the State of Colorado and PERA Defendants present arguments in favor of the legislative taking of contracted Colorado pensioner benefits.  In this article, I rank what I perceive to be the most damning evidence to the State of Colorado and PERA Defendant's legal arguments.  I prioritize the evidence (discovered to date) that I believe most soundly refutes the State of Colorado and PERA Defendant's legal arguments that the taking of money from PERA pensioners to meet Colorado public sector debts was "reasonable and necessary."  Even the evidence gathered to date, without formal discovery, demonstrates that the Colorado Legislature's 2010 PERA pension contract breach was completely arbitrary, and purely a political preference, rather than "reasonable," or "necessary."

The Top Ten:

(1) Colorado is not in the midst of a fiscal "crisis."  Colorado is a wealthy state with a budget surplus.  Colorado has paid off $700 million in local government pension debt that is not its responsibility, while ignoring its own contractual Colorado PERA debt.  Colorado has recently made $100 million grants of discretionary property tax relief.  Colorado governments can afford to pay their debts.

(2)  The Colorado General Assembly has, historically, ignored its PERA pension bills (ARC), the Colorado PERA Board of Trustees has, historically, made it board policy to underfund the PERA pension system (a "90 percent cap.")

(3) The Colorado Legislature has recently adopted PROSPECTIVE, legal public pension reform honoring the accrued pension benefits of thousands of Colorado county government pensioners (SB12-149).  Thus, the General Assembly has demonstrated that it is capable of public pension reform that conforms to the strictures of the Colorado Constitution.  Similar legislation may be adopted to bolster the actuarial funded ratio (AFR) of the Colorado PERA pension system.

(4)  The Colorado PERA COLA benefit is an "AUTOMATIC" COLA benefit, a contractual obligation of Colorado PERA employers.  It has a legal status identical to any other provision of the written, statutory Colorado PERA pension contract.  In spite of the wishes of those who would break PERA contracts, it IS NOT an "ad hoc" COLA benefit (provided by some states) that may be diminished by a pension plan sponsor for vested annuitants.

(5) A number of Opinions of Colorado Attorneys General support the sanctity of Colorado PERA COLA contracts.

(6) Colorado PERA officials have provided written testimony to the Colorado Legislature's Joint Budget Committee stating that the Colorado PERA COLA benefit is a contractual obligation of PERA-affiliated employers.  Officials of the Ritter Administration (Governor Ritter signed SB10-001) have confirmed this opinion in a letter to the federal regulatory agency, GASB.

(7)  The Legislative Leadership of the Colorado General Assembly failed to perform due diligence.  Although encouraged to do so, Leadership failed to send an interrogatory to the Colorado Supreme Court to clarify the contractual nature of the PERA COLA benefit.  Leadership failed to appoint an interim study committee to examine PROSPECTIVE, legal pension reform options.  The taking of the PERA COLA benefit was preconceived, rather than the result of a deliberative process.

(8)  The Colorado Legislature (and lobbyists hired by PERA employers) overreached in attempting to shift 90 percent of the costs of PERA reform away from those who legally owe the debt, PERA employers, and by incorporating an unnecessary "100 percent" funded ratio threshold into the PERA statutory contract.

(9)  The actuarial funded ratio of the Colorado PERA pension system has been much lower in the past, than its level at the time of the SB10-001 pension contract breach.  Yet, during those times, Colorado PERA officials supported PERA pensioner contractual rights.

(10)  In early 2009, the supporters of the planned Colorado PERA COLA contract breach shopped for a law firm to create a legal rationale to justify the taking of the COLA benefit.  They selected the law firm of an education advocate with impressive connections in the Colorado political and judicial communities.  The selected attorney, Jean Dubofsky, worked on the Justus v. State lawsuit with current Colorado Supreme Court Justice Monica Marquez.  While at the Colorado Attorney General's Office, our accomplished Justice Marquez provided legal advice to Colorado PERA.

 

#1: COLORADO STATE AND LOCAL GOVERNMENTS FACE NO FINANCIAL "CRISIS."

Prior to the adoption of SB10-001, Colorado PERA officials assured us that the Colorado PERA pension system faced no "crisis":

August 11, 2009

Colorado PERA Board Trustee Casebolt assures PERA retirees present at Colorado PERA Denver meeting of the PERA “Listening Tour”: “PERA faces no immediate danger of being unable to pay benefits, in fact, PERA can pay benefits for many years to come, based on our current funding and our benefit structure coupled with over $30 billion in assets, at present market value.”

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

April 12, 2011

Colorado PERA in “Setting the Record Straight”: “But what’s not mentioned is that this liability is not due and cannot be made payable today, just like a mortgage.” “PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years.”

https://www.copera.org/pera/about/issues.htm

March 1, 2012

Representative Kagan, March 1, 2012, House Finance Committee: "(In adopting SB10-001) we had put PERA . . . on an actuarial sound footing without waiting for a crisis to hit, without waiting for exposés and pressure . . ."

(My comment: Here, Rep. Kagan notes that the Colorado General Assembly adopted SB10-001 in 2010, breaking PERA pension contracts, while Colorado PERA faced no financial "crisis.")

April 12, 2013

From Governing Magazine:

"Tax revenues increased in all but five states in fiscal year 2012, with some recording noticeable gains.  In all, states collected $794.6 billion, a record-high that represents a 13 percent increase from 2010 totals, not adjusting for inflation."

"Governing compiled current and historical revenue data reported to the Census Bureau into the chart below."

Colorado Total Revenue Collected, 2008: $9,624,636,000

Colorado Total Revenue Collected, 2012: $10,250, 628,000

http://www.governing.com/gov-data/state-tax-revenue-data.html

March 18, 2013

State financial crisis?  From the Denver Business Journal: “. . . next year’s money — $924.3 million above the amount the state will spend this year, according to Legislative Council — is up for grabs.”

http://www.bizjournals.com/denver/news/2013/03/18/colorado-state-revenue-picture.html?page=all

States that are able to voluntarily pay off debts that ARE NOT their contractual obligations, while ignoring debts that ARE INDEED their contractual obligations do not, by definition, face a financial "crisis":

April 2, 2013

The Colorado Legislature has paid off local government pension debt that IS NOT the contractual obligation of the State of Colorado.  (This 2013 $142 million appropriation brings the total to $700 million for this purpose.) “House Republican leaders are floating a proposal to repay a longstanding debt (My comment, this is not a state 'debt,' sloppy reporting) to the state’s Fire and Police Pension Association in full as a way to get some GOP lawmakers to vote in favor of the $20 billion state budget for next year, which will be up for debate in the House on Thursday.”  “‘It’s (House Minority Leader) Waller’s effort to buy some Republican votes,’ one GOP lawmaker told FOX31 Denver Tuesday." "Waller, who is almost certain to run for Attorney General (next) year, would like to be able to demonstrate that he leads a group of lawmakers who are pragmatic and responsible; and helping forge a bipartisan budget compromise would help him make that case.”

http://kdvr.com/2013/04/02/republicans-considering-pension-deal-hoping-for-bipartisan-budget-vote/

September 19, 2012

FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans" to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

"So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link: http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

The fact that the State of Colorado has directed $700 million ($142 million at the 2013 legislative session) to the payment of public pensions (Old Hire Fire and Police pensions) that ARE NOT its contractual obligation, the fact that the State of Colorado is making a $105 million discretionary grant of property tax relief in the budget for the coming fiscal year, proves that the State of Colorado has available financial resources and is quite able to perform under the terms of its Colorado PERA public pension contracts.

Next year’s property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, “Homestead” property tax relief grant: $105,200,000

http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

 

#2: THE COLORADO GENERAL ASSEMBLY HAS NOT PAID ITS (FULL) PUBLIC PENSION BILL FOR A DECADE.

Colorado state and local governments (employers) have not paid their full pension bills for a decade.  Colorado PERA members (workers) have ALWAYS paid their required Colorado PERA pension contributions, every month from their paychecks, without fail.  These workers are required under Colorado law to make their PERA pension payments.  In the history of the Colorado PERA pension system public workers have NEVER missed a payment.  Why does Colorado law not similarly force Colorado PERA-affiliated employers to pay their own PERA pension bills?

Now that the Colorado Legislature has run up the PERA pension debt by failing to require PERA-affiliated employers to pay their pension bills, the Legislature seeks to push this EMPLOYER pension debt onto former employees.)  That is plainly immoral and illegal.

October 10, 2003

“In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”

“Adding to the problem is the fact that the legislature voted to reduce the amount of the state's contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)

http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf

March 11, 2009

Colorado PERA officials place blame on the Colorado General Assembly for creating the latest PERA financial downturn: “Other notable factors (for the downturn in PERA’s fiscal position) include employers not contributing the actuarially determined contribution rates, the sale of purchased service credit at rates below actuarial costs, and the raising of benefits in the late 1990’s coupled with decreasing employer contributions.”

http://www.kentlambert.com/Files/PERA_Response_Pt_1.pdf

August 11, 2009

Colorado PERA’s General Counsel Greg Smith blames the Colorado General Assembly for PERA’s fiscal downturn: “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.”

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

February 23, 2012

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee relating to the Legislature's historical underfunding of its PERA pension obligations:

"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."

March 1, 2012

House Finance Hearing: Don Schaeffer, Colorado PERA retiree, "I actually worked at PERA for 20 years."  "In my job at PERA, I was the Communications Director, and that started somewhere back in the early 80s."  "In the year 2000 . . . we (PERA) were fully funded and they (the General Assembly) said 'Oh, we have too much money," and so then we had (pension contribution) cuts, and we had benefits added and so forth."

(My comment: I ask: Why should Colorado PERA retirees, who have fully-vested public pension contracts relinquish their constitutional rights to compensate for such policy decisions of the Colorado General Assembly?)

March 1, 2012

House Finance Hearing: Rep. Hullinghorst, "We got ourselves into this mess in the 1980s to begin with, in the 1980s and 1990s, when the Legislature just on a whim decided they were going to do this and that with PERA, and made some changes that were very detrimental to the system."

Even the Colorado PERA Board of Trustees has sought to limit the funding available to the Colorado PERA pension system in the past.  Now, having supported underfunding the system, the Board seeks to compensate by breaking Colorado PERA pension contracts.

1999

George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?”  (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved?  As PERA officials have noted, the pension debt comes due over up to 70 years, it is not "due tomorrow.")

Was the PERA Board's "90 percent cap" on the actuarial funded ratio of the PERA trust funds a formal or informal board policy?  By what means did the PERA Board seek to "cap" the trust funds?  In what years has this policy been in place?  Did the PERA Board make recommendations to the Legislature to maintain this 90 percent funded level?

 

#3: THE COLORADO LEGISLATURE HAS ADOPTED PROSPECTIVE, LEGAL PENSION REFORM HONORING ACCRUED PENSION BENEFITS OF THOUSANDS OF COLORADO COUNTY GOVERNMENT RETIREES.  THE LEGISLATURE CAN ALSO HONOR COLORADO PERA CONTRACTS.

May 16, 2012

The Colorado General Assembly enacts the bill SB12-149, reforming certain Colorado public pension systems and honoring the accrued public pension benefits of public workers who are members of those pension systems, after having retroactively taken accrued benefits from Colorado PERA retirees in 2010.

Language from SB12-149:

“(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

Link to SB12-149, the Act:

http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/0E9F894D31C081EF87257981007DAF5A?open&file=149_enr.pdf

Reforms adopted by the Colorado Legislature for county government pension systems (administrative arms of the state) conform with the legal theories of Professor Amy Monahan regarding protection of accrued public pension benefits.

March 17, 2010

Professor Amy Monahan, University of Minnesota School of Law, "Public Pension Plan Reform, the Legal Framework": "This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

http://www.ncsl.org/documents/fiscal/AMonahan_Handout.pdf

March 13, 2012

Denver attorney Cindy Birley (a champion of prospective public pension reform in Colorado) testifying before the Colorado Legislature’s Senate Finance Committee hearing on the bill SB12-149, on March 13, 2012: “Generally, you would not change people who have already retired . . .”.  “There may be an issue with what we would call ‘definitely determinable benefits,’ and this is a tax code concept.”  “The . . . Internal Revenue Code requires for a defined benefit plan that your benefit be . . .  ‘definitely determinable’.”  “So a benefit that fluctuated based on your funding, it may be difficult to change that unless it’s somehow a cost-of-living adjustment that’s done more on an ad hoc basis.” “Because, it may not qualify as a defined benefit plan." “We could adjust benefits for future retirees as long as it still meets Internal Revenue Code requirements.”  “It still has to pass muster as a DB plan.”

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

What instructions did the PERA Board or staff provide to PERA's actuaries modeling costs of proposals for pension reform? Did PERA's actuaries not find it odd that nearly all pension reform alternatives under consideration in the summer of 2009 financially impacted PERA employees and retirees, rather than PERA employers?  What actuary performed these services for PERA?  How many years has this actuary worked for PERA?  What has been the value of Colorado PERA's contracts for actuarial services in recent years?  Over the totality of the contractual relationship?

 

#4: THE COLORADO PERA COLA BENEFIT IS AN "AUTOMATIC" PENSION COLA BENEFIT, RATHER THAN AN "AD HOC" COLA THAT MAY BE LEGALLY DIMINISHED BY A PENSION PLAN SPONSOR.

Note that the Colorado PERA Defendants are clearly aware of the difference between an "ad hoc" public pension COLA benefit and an "automatic" public pension COLA benefit.  On page 5 of the May 10, 2010 PERA Defendant's Motion to Dismiss, PERA's lawyers write: "From 1975 to 1978, the General Assembly also enacted ad hoc increases."  See also, page 6 and page 7 of the PERA brief: "The ad hoc increases were also eliminated."  Although Colorado PERA administrators know the difference between "automatic" and "ad hoc" pension COLAs, they would prefer that Colorado courts not recognize the difference.  Accordingly, since deciding to attempt a breach of Colorado PERA COLA contracts, Colorado PERA officials no longer describe the COLA as an "automatic" pension benefit (as has been their historical practice.)

For decades, in every paycheck, Colorado PERA retirees paid for their contracted, "automatic," PERA COLA benefit.  The Colorado General Assembly voluntarily offered this "automatic," pension COLA benefit in the PERA contract.  Colorado PERA retirees acted on this contractual offer, they chose to continue in state service, forgoing other job opportunities, and they retired under these contractual terms.  The Colorado General Assembly has no right to claw back this earned, accrued, deferred compensation after the fact.

At some point in recent years the decision was made that part of Colorado PERA’s legal strategy would be to attempt to deny the “automatic” nature of the PERA retiree COLA benefit itself.  In hindsight, so much evidence of the “automatic” nature of the PERA COLA benefit exists that this decision now looks foolish.  Prior to 2009, Colorado PERA officials had correctly assumed that fully-vested PERA retiree benefits, including contracted “automatic” COLA benefits were inviolate.

When it became clear that Colorado PERA would attempt to deny the “automatic” nature of the PERA COLA as part of its legal defense strategy, PERA began placing “disclaimers” on documents published on its website that identified the PERA COLA as “automatic.”  PERA officials stopped referring to the PERA retiree COLA benefit as “automatic.”

June 2011

National Institute on Retirement Security on “automatic” and “ad hoc” public pension COLAs: “One key design feature of a COLA is whether it is automatic or ad hoc in nature. An automatic COLA means the retiree’s benefit increases automatically every year by a certain percentage. An ad hoc COLA is granted at the discretion of the plan sponsor, usually when the fund is in a well-funded position and investment gains have exceeded expectation."

http://www.nirsonline.org/storage/nirs/documents/Lessons%20Learned/final_june_29_report_lessonsfromwellfundedpublicpensions1.pdf

August 8, 2012

Douglas Greenfield: “The theory behind that is that a pension that has a COLA is the equivalent of a fixed pension . . . that you could just have a higher fixed pension and no COLA . . . and is just a method by which you are providing the benefit.”  Greenfield participated in a panel discussion hosted by the National Conference of State Legislatures. The panel discussion was titled: “How Much Can States Change Existing Retirement Policy?”

http://www.ncsl.org/issues-research/labor/how-much-can-states-change-existing-retirement.aspx

March 24, 1993 (1:32 PM – 2:28 PM)

Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature's House Finance Committee in regard to the "automatic" PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.”  “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.”  Rob Gray states that the proposed COLA "adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”.  Rob Gray characterizes the "automatic" PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.”  (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

From the Colorado PERA 2001 CAFR (financial report), page 64:

"Summary of Actuarial Methods and Assumptions"

"Benefits are assumed to increase at a rate of 3.5 percent after payments begin."

https://www.copera.org/pdf/5/5-20-01.pdf

From "Ask Meredith," December 16, 2009:

In December 2009, PERA’s Executive Director Meredith Williams was unaware of PERA’s ultimate legal defense strategy in the case, Justus v. State, when he wrote the following: “. . . most other pension plans, public and private, do not have automatic COLAs and remember that Social Security is not a retirement plan.)”

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

Colorado PERA has since added a “disclaimer” to this publication.  (The PERA website is now peppered with disclaimers.)

Another PERA publication refers to the “automatic” nature of the PERA retiree COLA benefit:

“PERA Benefits at a Glance,” 2004:

“Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”

Yet another PERA publication refers to the “automatic” nature of the PERA retiree COLA benefit:

PERA Legislative Update, February 2006:

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

“Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

Further evidence of the absurdity of Colorado PERA’s denial of the “automatic” nature of the PERA COLA exists.  PERA has historically communicated the “automatic” nature of the COLA benefit to the “fiscal note” staff of the Colorado General Assembly.  These communications should be on file at the offices of these legislative staffers.

Colorado PERA tells us in a 2004 document:

“Whenever legislation is contemplated regarding PERA benefits or contribution rates, PERA asks the actuary for an estimate of the long-term impact.  The results are communicated to Legislative Council for preparation of fiscal notes on such legislation.”

From this document:

http://www.copera.org/pdf/Legislation/2004/LegUp2-04.pdf

With such information from Colorado PERA, the Legislative “fiscal note” staff wrote the fiscal note for House Bill 00-1458 (the bill that improved the COLA benefit to a fixed 3.5 percent.)  The fiscal note for this bill, HB 00-1458, includes the term “automatic” in the following description of the retiree COLA:

“Established 3.5% compounded annual automatic COLA effective March 2001.”

As we know, Colorado PERA contracts with outside, independent actuaries for supplemental actuarial reviews every five years.  In 2001, Buck Consultants provided such an actuarial report to the Legislative Audit Committee of the Colorado General Assembly.

This Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” and the “fixed” COLA, that is “compounded annually for each year of retirement.”

The Buck Consultants report identifies the 3.5% PERA COLA as “automatic,” contrasting the PERA COLA with an “ad hoc” COLA “as approved by Legislature.”

Specifically, the report makes reference to:

“PERA’s automatic 3.5% per year COLA feature”;

“the guaranteed lifetime income provided by PERA”;

“COLA – Automatic 3.5%” as opposed to an “ad hoc” COLA;

“PERA guaranteed benefits at retirement”;

“Colorado PERA vesting requirement – five years.”

Further, the Buck Consultants report notes that:

“Effective March of 2001, the cost of living adjustment was set at an annual fixed rate of 3.5%”;

“PERA provides inflation protection to retirees with a 3.5% annual COLA,” and

“Post-Retirement Benefit Increases:  Each year on March 1, benefits which have been paid for at least three months are increased. The increase is 3.5% compounded annually for each year of retirement.”

If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented to the Legislative Audit Committee in 2001?

Over the years, Colorado PERA has published, and periodically updated a memorandum with a title along the lines of “History of Colorado PERA Legislation.”

The 2009 version of this memorandum is stored on the website of the Colorado General Assembly at this link:

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

Right clicking on this PDF, and then clicking on “Document Properties” reveals that the memorandum was prepared by Mr. Karl Paulson of Colorado PERA on 11/30-2009.

When it became apparent that part of PERA’s legal strategy would be to deny the “automatic” nature of the retiree COLA benefit, PERA suppressed this “History of Colorado PERA Legislation” memorandum which identifies the PERA COLA as an “automatic” COLA benefit.  However, they were unable to remove the copy stored on the website of the Colorado General Assembly.  Colorado PERA officials replaced the memorandum with a “scrubbed” version of the memo, striking all reference to the “automatic” COLA, as well as pre-1993 references to the “ad hoc” PERA COLA, (which the COLA was at the time.)  The “scrubbed” memo is available here:

http://www.copera.org/pera/active/benefithistory.htm

The “History of Colorado PERA Legislation” memorandum from 2009 (that is, the “non-scrubbed version of the memo) describes the COLAs in HB 00-1458 as follows:

“HB 00-1458

Established 3.5% compounded annual automatic COLA effective March 2001.”  “Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.”  (The PERA COLA was improved from “automatic” lesser of 3.5 percent or inflation, to a flat “automatic” 3.5 percent in HB 00-1458.)

Additional PERA documents describing the PERA retiree COLA as “automatic” are available on PERA’s website at the following links:

http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf

http://www.copera.org/pdf/5/5-114.pdf

http://www.copera.org/pdf/Legislation/2006/legislation2006.pdf

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

http://www.copera.org/pdf/Legislation/2006/LegUp3-06.pdf

 

#5: OPINIONS OF COLORADO ATTORNEYS GENERAL SUPPORT COLORADO PERA PENSION COLA CONTRACTS.

November 18, 2004

Colorado Attorney General Ken Salazar Opinion (post-DeWitt): "Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly."

http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf

November 17, 1975

Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”

http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

August 14, 1984

Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee"

http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

November 30, 2008

Colorado PERA General Counsel Greg Smith: “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.”

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

December 2008

Colorado PERA Executive Director Meredith Williams commenting on Colorado Attorney General Ken Salazar’s 2004 Formal Opinion on PERA benefits (PERA Retiree Update, page 1):

“The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”.

https://www.copera.org/pdf/5/5-40-08.pdf

December 8, 2008

"Ask Meredith" column on Colorado PERA website: “That leaves the benefits being earned by members (active and inactive) as the only area to examine for savings. The Attorney General’s opinion contains the following language: 'Once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member’s fully vested pension right cannot be reduced by the General Assembly.'”

https://www.copera.org/pera/about/askm.htm

January 2009

Colorado PERA Executive Director Meredith Williams: “The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”

https://www.copera.org/pdf/Topics/2009/Topics1-09.pdf

February 23, 2012

Meredith Williams, Feb 23, 2012, House Finance Committee:

"What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor's edge.  You can't fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in  Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers.  No one has ever done anything quite like that.  I am quite anxious for the litigation to get behind us."

 

#6: COLORADO PERA OFFICIALS HAVE TESTIFIED TO THE LEGISLATURE'S JOINT BUDGET COMMITTEE: "THE COLA IS A CONTRACT."

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 General Counsel: An "actuarial emergency" occurs when a pension plan runs out of cash to pay benefits:

February 21, 2004

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

Colorado PERA Board Trustee Casebolt: Colorado PERA has plenty of cash to pay benefits:

August 11, 2009

Colorado PERA Board Trustee Casebolt assures PERA retirees present at Colorado PERA Denver meeting of the PERA “Listening Tour”: “PERA faces no immediate danger of being unable to pay benefits, in fact, PERA can pay benefits for many years to come, based on our current funding and our benefit structure coupled with over $30 billion in assets, at present market value.”

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

August 17, 2005

Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): "'Everyone agrees you certainly can make changes for people you haven’t even hired yet,' said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. 'On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.'"

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

“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.”

"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/

January 29, 2010

Colorado PERA General Counsel Greg Smith to Senate Finance Committee: “There are few case laws that address the issue, Smith said, but one, regarding a fire and police pension plan, was litigated when the plan ran out of money and benefits were being paid for with current revenues.”

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

December 17, 2009

Greg Smith, before the Joint Budget Committee: “The statutes are in fact binding, and they are constitutionally protected from reduction.”

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

July 7, 2004

PERA response to July 5, 2004, Rocky Mountain News Editorial:

“PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”

http://www.copera.org/pera/about/newsarchives2004.htm

January 10, 2010

Senator Josh Penry, co-prime sponsor, SB10-001 appearing on Your Show, Channel 20 with Channel 9 News (KUSA-TV) host Adam Schrager on at 10:30 a.m.:

“What the courts have said with the case law and opinions have said is that you can’t, it is a contract unless there is actuarial necessity.”

February 23, 2012

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee: "Those people all have a contract with their employer with the plan.  You made changes to impact people like that in SB1."

January 29, 2010

2010 Senate floor debate on SB 10-001:

Rep. Lambert: “I have heard from my constituents, as many of you have, that this proposal will breach retiree’s contracts.”

Rep. Swalm: “We’re breaking new territory in this state by trying to reduce the COLA. We’re probably going to get a lawsuit out of that. If we cut the 3.5 percent COLA there will be a lawsuit.”

Rep. Gerou: in committee, said that it is a disservice to the state to rush a bill through when her committee knew that it will go to litigation, and said what we are doing to the retirees is wrong.

Rep. DelGrosso: said that it is “tough” for him to tell people that he is going to break their contract.

Senator Harvey: “We have made a commitment. We have a contract with current retirees. That is already in place. Reforms should be made for new hires. We do not have that commitment to new hires.”

Senator Spence: “The bill places an unfair burden on retirees.”

Senator Scheffel: “We are breaching our promises to existing retirees.”

Senator Lundberg: “This bill is a deal that was cut before this body met.”

February 10, 2010

Joel Judd, Chairman, House Finance Committee, during the hearing on Senate Bill 10-001 Chairman Judd stated (near the end of the hearing) that SB 10-001 (the “COLA theft bill”) must be supported "because that's where the money is."

2012 House Finance Hearings:

Representative Chris Holbert – February 23, 2012, House Finance Committee, hearing on HB12-1250: "We have a contract, an obligation to the vested members of PERA, and we have to meet that . ."

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

Representative Kevin Priola – February 23, 2012, House Finance Committee, hearing on HB12-1150:  " . . . taxpayers know that in the end they're on the hook, State of Colorado taxpayers are on the hook for any (PERA) unfunded liability down the road . . "

House Finance Committee Chairman 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."

Representative Jim Kerr, February 23, 2012: "The taxpayers . . . are obligated to fulfill the (PERA) benefits as soon as someone starts drawing those benefits down."

Representative Jim Kerr, February 23, 2012: "They've earned those benefits . ."  ". . . The taxpayers . . . they're the ones who ultimately have to make the (PERA) fund whole . . ."

Representative Jim Kerr, February 23, 2012: "If you're in a defined benefit program, you have a guarantee."  "PERA does have a guarantee." "A defined benefit plan is a guarantee."

Representative Dickey Lee Hullinghorst, February 23, 2012: "Our state employees earn retirement benefits when they work."

Representative Spencer Swalm, February 23, 2012: "There is a contractual obligation here.  This is a defined benefit plan, those benefits are guaranteed, and ultimately the taxpayers of the state are on the hook."

Representative Dickey Lee Hullinghorst, February 23, 2012: "I would like to know exactly what that (PERA) contractual relationship is."  "We are employers and we pay into PERA as a part of a benefit that's earned by our employees."

Colorado PERA Executive Director Meredith Williams in response to Representative Hullinghorst's question, February 23, 2012, (after preliminary remarks):

"We never have to answer that question.  It's not a black and white answer."

(My comment: Why is Colorado PERA's Executive Director, Meredith Williams now hesitant to succinctly state the contractual rights of PERA's members?  Are the employees of PERA-affiliated employers expected to work for decades without knowing clearly what their rights are under their PERA contracts?  Are they expected to work each day for pension benefits that are undefined?)

Representative Hullinghorst, March 1, 2012, House Finance Committee: "My understanding is that when you go to work, and you sign up for PERA benefits, and you are required by the state to do that . . . that's a contract, and I think that this is potentially actionable."

Representative DelGrosso, March 1, 2012, House Finance Committee: "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 . . . "

Representative Kefalas, March 1, 2012, House Finance Committee: "It still does affect those members that have signed contracts that are non-vested.  Is that correct?  And therefore I still have concerns about L.001."

(My comment: Here Rep. Kefalas expressed concern about impacting PERA benefits of "non-vested" PERA members, yet he supported Senate Bill 10-001, a bill abrogating "fully-vested" Colorado PERA pension contracts . . . a bill that took one-third of the accrued public pension benefits of Colorado PERA retirees.  This is stunning admission.)

Representative Kagan, March 1, 2012, House Finance Committee: "This is a benefit cut to public employees who work hard all of their lives and one of their measures of compensation is their benefits package, that's how we manage to attract such fine public employees as we have on such low salaries is because they know 'yeah, the salaries aren't as high as I'd like, but I'm still very loyal to the state, I work very hard for the state for a very low salary because I do have a respectable benefits package, and I'm sure that that benefits package will be there for me when I retire.'  Now you come and you say we're going to cut those benefits, we're going to reduce the value of that package . . ."

Representative DelGrosso, March 1, 2012, House Finance Committee: "These new hires know what their retirement will be, so when they're getting into the system they can choose to accept the job or not knowing what their retirement benefits will be."

"We are still involved in lawsuits over Senate Bill 1 on whether or not those were constitutional because we made changes to people that are currently in the system that were vested, current retirees.  So, Senate Bill 1 did affect people's current retirements and those that were retired."

Representative DelGrosso, March 1, 2012, House Finance Committee: "We have to look 25 to 30 years into the future to avoid the lawsuits that we are currently involved in because of Senate Bill 1."  "We're forced to, to avoid lawsuits, to look that far into the future."

Representative Hullinghorst, March 1, 2012, House Finance Committee: "The current suits are relative to COLA."  "There was some awareness that that possibly could draw some suits."  "It was much less a problem with cutting benefits than any other thing you could look at in that regard."  "This is a more difficult . . . approach than the COLA situation."

(My comment: Incredibly, here we have Rep. Hullinhorst stating that enactment of PROSPECTIVE public pension reform for NEW HIRES is a "more difficult approach" for the Colorado General Assembly than is the outright, intentional breach of fully-vested Colorado PERA pension contracts of PERA members who had worked for PERA-affiliated employers FOR DECADES.  The lobbyists earned their pay.)

Representative Kefalas, March 1, 2012, House Finance Committee: "I am concerned that this will undermine the contractual obligations that we have made with folks who are state employees and that could invite litigation and I think that's something the state does not need."

(My comment: Again, Rep. Kefalas defends the interests of non-vested Colorado PERA members, members who have NO contractual right to any PERA annuity.)

THE RITTER ADMINISTRATION'S "GASB LETTER."

Why did officials in the Colorado State Controller's Office describe Colorado PERA pension benefits as a "present obligation" arising from the "employment exchange transaction," in a letter to federal regulators, just six months after SB10-001 was signed?  Why did they write that taking the COLA benefit changes the "net economic benefit to the employee" that was "entered into" in the "exchange transaction agreement" six months after the bill was signed?

Did officials in the State Controller's office disagree with Governor Ritter's action on SB10-001?  Were they astonished that the General Assembly would attempt to break Colorado public pension contracts?  Were they prevented from speaking openly, believing that such candor would end their careers?  Did they hope that their letter would be discovered in order that their view of state contractual pension obligations be known?  How many state employees find themselves in this predicament?  How many employees of the Colorado Attorney General's Office, or the state Judicial Branch are in this predicament?  employees of PERA-affiliated local governments?

Ritter Administration GASB Letter:

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits [such as COLAs] . . . serve[s] to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

Here the Ritter Administration states clearly that a reduction in a COLA benefit [that is earned in an “exchange transaction”] changes the “net economic benefit” to the employee under the employee’s pension “agreement.” Under SB 10-001, the “net economic benefit,” for an average PERA member was “reduced,” according the Ritter Administration, by “$165,000.”

Read the entirety of the Ritter Administration letter on the GASB site here:

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

August 2, 2010

Excerpts, Ritter Administration Letter to GASB on contractual public pension obligations:

“COSC agrees that an obligation exists since the government entity has entered into a duty, contract, or promise to provide compensation in the form of benefit payments during retirement; and furthermore, we agree that this obligation is a present obligation to the extent that the benefits owed have already been earned through past services, and are legally enforceable once vesting provisions have been met.”

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

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits (such as COLAs), or an increase in required employee contributions both serve to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

“The criteria suggested as the basis for differentiating these COLAs (automatic) versus ad-hoc COLAs is the statutes that exist as of the date of the employer’s financial statements.”

“The essential difference between an automatic COLA and an ad hoc COLA is the legal requirement; with this core difference there is no way for the two not to be substantively different. The legal difference in this instance is critical to the determination of whether the government is unable to avoid the surrender of resources to meet the obligation.”

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

 

#7: THE TAKING OF ACCRUED PERA COLA BENEFITS WAS NOT THE RESULT OF A DELIBERATIVE PROCESS . . . IT WAS PRECONCEIVED.  THE LEGISLATURE DID NOT PURSUE AN INTERROGATORY OR APPOINT AN INTERIM STUDY COMMITTEE, AS THIS WOULD HAVE INTERFERED WITH THE PLANNED COLA TAKING.

April 14, 2009

Colorado PERA Executive Director Meredith Williams testifies to the Senate Finance Committee hearing on SB09-282 (03:28 PM) stating that "the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA.”  Mr. Williams made this  statement one week BEFORE the requirement for the PERA Board to provide recommendations to the Legislature regarding PERA reform was placed into SB09-282  (on April 21, 2009.)  In court documents, Colorado PERA emphasizes that, in 2009, the PERA Board was simply responding to the General Assembly’s “legislative mandate” to make PERA pension reform recommendations.  Response Brief submitted to the Denver District Court:

http://www.ednewscolorado.org/wp-content/uploads/2010/05/PERASuitResponse5-10-10.pdf

2009

Senator Josh Penry, in a videotaped discussion with Representative Mike May, (videocenter. denverpost.com) said ‘we can’t, can’t miss this window.’ And, . . . we have an opportunity to pass something that Republicans have long advocated, a significant increase in retirement age, which the PERA Board embraced, reigning in the cost of living increases . . .

“Penry went on to say, ‘I think it is important to pass something because if you lose actuarial necessity, as you know, it becomes extremely difficult to increase retirement age. You cannot change course and this year, when PERA’s investment numbers come out, their investment returns . . . numbers are going to be significant, like double, 15-16% investment return. So that could change the specter of actuarial necessity. We gotta’ do it this year or else these other structural changes won’t be possible.”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

Why did the Colorado General Assembly believe that market volatility in 2008/09 was a "window of opportunity" to break PERA pension contracts, but market volatility in 2001 was NOT a "window of opportunity" to break PERA pension contracts?  In October 1987, U.S. stock markets fell 23 percent over ten days (beginning with "Black Monday.")  Why was this 1987 market volatility not seized by Colorado legislators as an opportunity to break PERA pension contracts?  What was the reaction of the Colorado PERA Board to the market drop in 1987?

February 1, 2010

Senate “Third Reading” debate on SB10-001 (watch on the Colorado Channel):

Senator Renfroe: “Or, if you want it to go out of here with the PERA-approved document and nothing else then let’s just approve this one and vote mine down.”

http://www.coloradochannel.net/colorado-senate-2010-legislative-day-20

COLORADO PERA BOARD OF TRUSTEES CONTROLLING THE LEGISLATIVE PROCESS.

Colorado PERA’s propaganda has emphasized that the Colorado Legislature requested that the PERA Board of Directors make recommendations to shore up the PERA trust funds.  I ask if this Colorado PERA assertion is an attempt to mislead.  Colorado PERA went so far as to emphasize the General Assembly’s “legislative mandate” in a Response Brief submitted to the Denver District Court:

“By LEGISLATIVE MANDATE the PERA Board extensively studied the underfunding and consulted with its members . . . before proposing a solution to the General Assembly.”

Link:

http://www.ednewscolorado.org/wp-content/uploads/2010/05/PERASuitResponse5-10-10.pdf

I ask: Did Colorado PERA plant this request language into SB 09-282 at the end of the 2009 legislative session in order to lend a patina of legitimacy to what was in fact a premeditated attempt to breach pension COLA contractual obligations?

Recall Senator Lundberg’s statement on the Senate floor during the SB 10-001 debate: “This bill is a deal that was cut before this body met.”

Was Colorado PERA’s ostensible, impartial examination of pension reform options in 2009 in reality a ruse constructed by PERA lobbyists to add legitimacy to a process with a predetermined conclusion?  To falsely portray a preordained conclusion to breach pension COLA contracts as the result of an extensive, deliberative process?

I wonder, did the request for a PERA study actually come from the Colorado General Assembly?  Was this request the product of SB 10-001 co-prime sponsor Senator Josh Penry’s mind?  Did he conceive this idea to request PERA recommendations?  Or, was this idea planted in the Penry brain by PERA’s lobbyists?

In 2009, the Colorado General Assembly enacted legislation (SB 09-282) to merge Denver Public Schools with Colorado PERA (specifically, to merge the assets and liabilities of Denver Public Schools into Colorado PERA.)  A provision of SB 09-282 required that the PERA Board of Trustees submit recommendations to the Colorado General Assembly regarding methods of responding to the decrease in the value of the association's assets on or before November 1, 2009.  Note that this bill asks for “possible methods” to respond to the decrease in the value of PERA’s assets.  The General Assembly did not ask that the PERA Board dictate a plan that would breach PERA’s contractual pension obligations.  Implicit in the request from the General Assembly was the fact that the requested “possible methods” would be constitutional.

On April 21, 2009, Senator Penry, the co-prime sponsor of SB 10-001 amended SB 09-282 on the floor of the Senate.  His prepared amendment to the bill required the PERA Board to make recommendations to the Legislature regarding “possible methods” to respond to the decrease in the value of PERA’s assets.  His amendment required that this report be provided to the Legislature by September 1, 2009.  Two days later, Senator Sandoval amended the bill (SB 09-282) to move the deadline for submission of the report from September 1, 2009 to November 1, 2009.  (The PERA Board wanted more time?  It looks like the PERA Board may claim some ownership in the statutory language requiring the “study.”  In fact, PERA lawyers may very well have drafted the entire amendment.)

Questions for Senator Penry: Did you originate the idea to require the PERA Board to make recommendations to the General Assembly regarding possible methods to respond to the decrease in PERA assets of your own accord?  Or, did you offer this amendment on behalf of a PERA lobbyist?  Another lobbyist?  Another legislative member?

The drafter of SB 09-282 was a lawyer from the General Assembly’s Office of Legislative Legal Services, Nicole Myers.  Questions for Ms. Myers:  Who asked you to draft the amendment requesting that the General Assembly make recommendations regarding methods to respond to the decrease in PERA assets?  A lobbyist?  A PERA lobbyist?  Did a PERA lobbyist make this request on behalf of Senator Penry?  Did a PERA lobbyist provide a draft of their desired language in this regard?  Please check your records.

LEGISLATIVE LEADERSHIP OF THE COLORADO GENERAL ASSEMBLY WANTED TO KEEP STATE LEGISLATORS IN THE DARK ON PERA PENSION RIGHTS.

In 2009, the General Assembly's Leadership did not want to know the truth, and they did not want others to know the truth.  Thus, Leadership did not pursue an interrogatory to the Colorado Supreme Court addressing the constitutionality of their proposal to take contracted, accrued PERA COLA benefits.  The Denver Post Editorial Board encouraged the General Assembly to pursue an interrogatory.  This advice was ignored by Legislative Leadership.  (Better to put thousands of old people through hell.)

Leadership did not want the rank and file members to know the truth.  In 2009/2010 how many members of the Colorado Legislature could tell you the difference between an "automatic" public pension COLA benefit and an "ad hoc" COLA benefit?  Two? Three out of 100?

How many state legislators could tell you what an ARC is in 2009?  How many knew that the General Assembly had skipped full payment of that ARC for a decade?  How many can answer even the most basic questions regarding public pension contractual rights even today?  

How many had read the on-point Colorado case law regarding the contractual nature of pension COLA benefits in our state?  How many had even read the four page Colorado Attorney General's opinion on the contractual nature of public pension benefits in Colorado?

Can these state legislators be blamed for their lack of knowledge in this very complex subject area, if that ignorance was by design of the Leadership of the General Assembly?  That ignorance worked to the benefit of self-interested parties (public sector unions) and their 27-member troop of lobbyists pursuing the PERA pension COLA contract breach.

Why would any state legislator assume that public pension benefits in Colorado are not part of contracted compensation for public sector workers in the state?  Do they expect that these employees will work for compensation that is not determined in advance, that is not "defined," as in "defined benefit" pension plan?  Did they hold the opinion that public sector workers in Colorado will give a day of labor for whatever compensation is deemed appropriate by the benevolent sovereign, the Colorado General Assembly?

November 15, 2009

Denver Post Editorial Board: "First, let court rule on PERA.  Before legislators take on reforms, they should first ask the state Supreme Court to determine how much leeway they have."

"As Colorado lawmakers prepare to consider the financial rescue of the state employees' retirement fund, they ought to first figure out just how much legal leeway they have to overhaul it."  "Legislators need to understand how much power a designation of 'actuarially necessary' gives them to modify benefits paid to members." "We think lawmakers should ask the state Supreme Court for a ruling so they know exactly what they can do." "Administrators of the Colorado Public Employees' Retirement Association, or PERA, recently asserted that the fund's foundering finances give the state the legal footing to cut future cost-of-living increases for people who already are retired. But what if that were challenged in court and found to be illegal?"  "On the other hand, if annual hikes for retirees can be adjusted, why can't a case be made to increase the retirement age for many of those who are still working and contributing to PERA — a reform that is missing from the PERA board's plan?"  "It's in Colorado's best interest to get out in front of the PERA problem, file an interrogatory with the state Supreme Court, and get a clear fix on what legislators can and cannot do. We're confident that PERA solutions will be far more clear after that."

http://www.denverpost.com/opinion/ci_13776995

January 15, 2010

“PERA also is hoping the Legislature will ask the Colorado Supreme Court to review the matter through interrogatories before the end of the session.”

http://www.coloradostatesman.com/content/991527-state-retirees-ready-pounce-pera-fix

July 19, 2009

"That may include asking Colorado's Supreme Court, via what's called an interrogatory from the legislature, about what changes can be done legally."

"It will complicate the situation, but given how disruptive such a change could be — imagine the accounting nightmare of changing benefits only to see the court strike it down some years later — it would be helpful if the court could answer such a question in advance of legislation."

http://www.denverpost.com/opinion/ci_12856631

November 22, 2010

Colorado PERA General Counsel Greg Smith at 2010 PERA Shareholder meeting (10 minutes into this YouTube video): “We need to know the answer of whether this action was constitutional.” (My comment: Would it not have been simpler to send an interrogatory to the Colorado Supreme Court in 2009?)

http://www.youtube.com/watch?v=w94THpAjGs0&list=PL4601A03B224436D2&index=3&feature=plpp_video

 

#8: THE COLORADO LEGISLATURE OVERREACHED IN PUSHING 90 PERCENT OF THE COSTS OF SB10-001 ONTO PERA RETIREES AND IN PLACING AN UNNECESSARY 100 PERCENT FUNDED GOAL INTO THE PERA CONTRACT.

January 22, 2010

SB10-001 co-prime sponsor Senator Josh Penry and bill sponsor Senator Greg Brophy: “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.”

http://www.denverpost.com/search/ci_14242354

January 26, 2010

"With SB1, Shaffer and Penry have said the state can realize solvency in the PERA fund within 30 years.  Previously, the Legislature had targeted a 60-year fix."

"The difference between the past approach and SB1, Penry said, is that the new plan boldly tackles benefit reductions, which he said will constitute 90 percent of the PERA fund's recovery and generate plenty of opposition along the way."

http://www.chieftain.com/news/local/legislators-pera-changes-will-be-painful/article_b82cee28-328f-59ba-91c0-a480e5f719c8.html

October 26, 2011

Colorado PERA Executive Director Greg Smith, at the “Fall 2011 PERA Shareholder’s Meeting,” (thirty-six minutes into the video):"‘Only ten percent of the fix” of the [SB10-001] reforms in 2010 came from additional employer contributions."

April 17, 2011

Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post: “I sponsored last year's legislation, known as Senate Bill 1, to protect PERA. The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”

http://www.denverpost.com/opinion/ci_17858107

May 29, 2011

Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

“In fact, about 90 percent of the changes enacted by Senate Bill 1 are falling on the shoulders of current and future PERA members and retirees — not other taxpayers.”

http://www.chieftain.com/opinion/ideas/legislative-changes-have-put-pera-fund-on-a-solid-footing/article_3080a01c-88cd-11e0-ad01-001cc4c03286.html

COLORADO PERA GENERAL COUNSEL: TO MEET CONSTITUTIONAL MUSTER, A CHANGE TO A PENSION CONTRACT MUST BE THE "MINIMUM NECESSARY."

February 2011

Colorado PERA General Counsel Greg Smith writes in Government Finance Review: "Adjusting public pension benefits in Colorado: a fiduciary process": "Necessity is judged on two levels: 1) whether a less drastic modification could have been implemented; and 2) whether, even with modification, the state could have achieved its stated goals. To determine whether the changes were reasonable, the changes MUST BE THE MINIMUM CHANGES NECESSARY to solve the economic problems of the plan. (See United States Trust Co. v. New Jersey, 431 U.S. 1, 1977.)"

(The next year, [June 26, 2012] Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, reports in the 2011 Colorado PERA CAFR: “It should be noted that the changes made to the PERA structure as a result of SB10-001 have as a goal 100% funding of the accrued liability within 30 years for all divisions.  The results of the December 31, 2011, valuations combined with financial projections of all divisions, indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division.”

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

http://www.thefreelibrary.com/Adjusting+public+pension+benefits+in+Colorado%3a+a+fiduciary+process.-a0290520595

 

#9: COLORADO PERA'S FUNDED RATIO HAS BEEN MUCH LOWER IN THE PAST, WHILE PERA PENSION CONTRACTS WERE HONORED.

December 31, 2009

At the time of the breach of Colorado PERA pension contracts, the Colorado PERA actuarial funded ratio (AFR) stood at 68.9 percent.  This funding level is 9.1 percent below the 40-year average of the PERA actuarial funded ratio.  It was 11.1 percent  below an 80 percent AFR level considered “well-funded” by Fitch Ratings, 1.1 percent below a 70 percent AFR level considered “adequately-funded” by Fitch Ratings, and 3.1 percent below the Wilshire Associates average U.S. public pension actuarial funded ratio that year.  At the time of the contract breach the PERA AFR stood at a level 1.1 percent below the level at which Standard and Poor's considers public pension systems to have "above average" funding.  In 2010, the General Assembly determined that the Colorado PERA pension plan faced such financial stress that PERA pension contracts must be broken at a 68.9 percent AFR.  Should all U.S. public pension contracts be abrogated at that funding level?

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

Standard and Poor's Public Pension System Ratings:

"Standard & Poor’s, 'U.S. State Ratings Method­ology,' Global Credit Portal, Jan. 3, 2011."

"Table 25 – Pension Funded Ratio

Strong – 90% or above

Above Average – 80% to 90%

Below Average – 60% to 80%

Weak –            60% or below."

 http://www.standardandpoors.com/spf/upload/Ratings_US/US_State_Ratings_Methodology_Related_2.pdf

March 28, 2012

Fitch Ratings (one of the three large rating agencies in the United States): “Fitch generally considers pensions with funded ratios 80% and above to be well-funded.”

http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp

From the SB10-001 hearing:

“Mr. Williams was quoted in the same report as saying ‘Most pension funds are considered sound at 80 percent funding levels.’”

“Meredith Williams ‘said at the Senate Finance Committee hearing in January that PERA needed to be funded at 100 percent.  When the PERA representatives were asked by a member of the committee why in view of the fact that PERA had  only been funded at 100 percent for about seven of the past thirty years (My comment, actually two of the last eighty-one years), it was necessary now.  The answer was ‘it just makes things easier.’”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

February 14, 2011

Keith Brainard, Research Director, National Association of State Retirement Administrators testifies before the a subcommittee of the U.S. House of Representatives:

“Only 30-40 years ago, most public plans were financed primarily on a pay-as-you-go basis.” “Even after the most recent and unprecedented financial downturn, most state and local government pension trusts have plenty of assets to continue to pay promised benefits for years, and values already have rebounded sharply since the market low.” “The percentage of all state and local government spending on pensions has hovered around three percent during the last decade.”

http://judiciary.house.gov/hearings/pdf/Brainard02142011.pdf

February 17, 2011

Fitch Ratings notes that  a 70% actuarial funded ratio for public defined benefit pensions is considered an “adequate” actuarial funded ratio. "Fitch generally considers a funded ratio of 70% or above to be adequate and less than 60% to be weak."

http://www.ncpers.org/Files/2011_enhancing_the_analysis_of_state_local_government_pension_obligations.pdf

June 3, 2003

Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”

July 7, 2004

PERA response to July 5, 2004, Rocky Mountain News Editorial:

“PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”

http://www.copera.org/pera/about/newsarchives2004.htm

October 28, 2004

PERA official: Legislators say PERA is "too well-funded" at an 87 percent actuarial funded ratio.  Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 82-year] history, in 1999 and 2000.” Silver and Gold Record:

November 4, 2005

PERA Shareholders Meeting Presentation, Fall, 2005:

"Note that PERA’s funded status was lower 30 years ago than it is now.  You may recall that there was no perceived 'crisis' in PERA’s funded status in 1975.”  “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent.  Why?   Because not all benefits are due and payable today or tomorrow . . .  PERA can weather the ups and downs in the markets.”  “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”

http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf

A Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:

“From a long-term perspective, however, one can't really pin too much of the pension problem on the recent stock market pullback . . .".  "During the 1970s, funding ratios generally hovered between 50 and 60 percent.”  (Yet, public pension contracts in the United States were honored.)

February 24, 2006

“In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”

http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/

March 9, 2006

Silver and Gold Record: “Williams noted that most people don't have enough money to pay off their mortgages, and that PERA's assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’"  (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)

https://www.cu.edu/sg/messages/4871.html

June 5, 2006

PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)

http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf

October 26, 2006

Silver and Gold Record: “One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.  Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”  “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools.  Williams said this ‘employer contribution’ will not affect retirees . . .”

https://www.cu.edu/sg/messages/5245.html

December 17, 2009

The Colorado General Assembly's Joint Budget Committee (JBC) meets with representatives of Colorado PERA.  Rep. Jack Pommer, Joint Budget Committee Chairman to JBC: “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?”

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

March 1, 2012

Colorado PERA General Counsel Greg Smith on PERA's return assumption:

" . . if we fall short of the 8 percent, what it does is it takes us longer to pay off that unfunded liability, instead of doing it in 30 years it may take us 35 years, it may take us 38 years, it may take us 50 years."

(My comment: Here Colorado PERA's General Counsel admits that the 30-year time frame for amortization of PERA liabilities set in Colorado statutes is arbitrary.  The 30-year period is merely an arbitrarily set goal, however this "goal" in Colorado law was used to justify the breach of Colorado PERA pension contracts in 2010.  Thus, an important actuarial assumption used to justify the taking of fully-vested Colorado PERA benefits in SB10-001 was arbitrary.  This assumption, put in statute by the same General Assembly that enacted SB10-001, was used to calculate projections of PERA's future unfunded liabilities, placing unnecessary financial pressure on the PERA trust funds.  Note that just 15 years ago, Colorado PERA's "maximum amortization period" was set in statute at 60 years.

Administrators of public pension funds in the United States expect market volatility.  To paraphrase the author of a recent law review: “The unanticipated severity of an anticipated event does not justify unilateral modification of a contract.”  In any event, Colorado PERA pensioners, who have fully-vested pension contracts, by design bear no market risk in their DEFINED benefit pension plans.)

“Courts, though, “sit to determine questions on stormy as well as calm days,” and the Constitution was upheld during the Great Depression.”

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1774163

 

#10: THE DUBOFSKY/MARQUEZ  CONNECTION.

Colorado Supreme Court Justice Monica Marquez has worked for the defense in the Colorado PERA retiree lawsuit, Justus v. State:

August 30, 2010

Attorney Jean Dubofsky, author of the Colorado PERA "COLA-taking" legal opinion: "I worked on" the case, Justus v. State, with Colorado Supreme Court Justice Monica Marquez.  The author of the Colorado PERA "COLA-taking" legal opinion wrote a letter of recommendation for Monica Marquez to serve on Colorado Supreme Court: “In particular, I’ve worked on several cases where she provided superb briefing, argument and/or advice for the Attorney General’s office, including congressional redistricting, the challenges to voter-approved Amendments 41 and 54 to the Colorado Constitution, and the current challenge to the amendments to PERA (Justus v. State), the government’s pension system.”

“ . . . and Ms. Marquez would bring to the court sophistication about the numerous cases that involve, for example, TABOR, ballot titles, election issues, voter-initiated constitutional amendments, property tax, public pensions, labor law, and regulations issued by a wide variety of state agencies.”

“Sincerely, Jean E. Dubofsky.”

(Personally, I believe that Justice Marquez has such strength of character, and commitment to the rule of law, that she could hear the case, Justus v. State, objectively, in spite of her prior work on the case; however, I expect that she will recuse herself as she did in Lobato.)

http://www.scrib.com/doc/36638245/Letter-for-Monica-Marquez-by-Jean-Dubofsky

May 10, 2010

Attorney Monica Marquez's name appears on the PERA Defendant's Motion to Dismiss submitted to the Denver District Court on May 10, 2010:

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

In 2009, Colorado PERA officials told the members of the Joint Budget Committee that they had obtained outside legal counsel's advice regarding Colorado PERA contractual rights:

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

Sometime in 2009

Attorney Jean Dubofsky, at the request of Colorado PERA, creates a legal opinion arguing that the Colorado Legislature may 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

March 19, 2010

Attorney Monica Marquez (soon to be a Colorado Supreme Court Justice) advises Colorado PERA on March 19, 2010:

https://www.copera.org/pdf/Board/Minutes/2010/Minutes3-19-10.pdf

October 18, 2010

Jean Dubofsky deposition submitted to Colorado PUC stating that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit:

“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.)

March 7, 2013

Colorado Supreme Court Justice Marquez recuses herself in Lobato case deliberations, since she had previously worked on the Lobato case at the Colorado Attorney General's office: “The seventh, Justice Monica Marquez, recused herself because she had worked on the Lobato case while an attorney with the attorney general’s office.”

http://www.coloradostatesman.com/content/994052-lobato-lawsuit-could-have-major-ramifications-k-12-school-finance

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Montana Public Sector Unions to Sue Over Pension COLA Theft. (Colorado’s Unions Supported the Taking of the Contracted Colorado PERA COLA Benefit from Pensioners.)

In 2010, Colorado public sector unions supported the Colorado Legislature's breach of the contracts of Colorado PERA retirees (in SB10-001.)  This bill took earned, accrued, fully-vested, contracted PERA COLA benefits from retirees, i.e., the PERA retiree's "inflation protection" provided for in their PERA contracts.  A lawsuit over this taking, Justus v. State, is now pending before the Colorado Supreme Court.

Colorado PERA Executive Director Meredith Williams recorded the names of Colorado public sector unions supporting the taking of the PERA COLA benefit here:

“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA . . . 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 2010, the Colorado General Assembly colluded with those who ACTUALLY OWE the Colorado PERA pension debt, Colorado PERA-affiliated employers (the State of Colorado and Colorado local governments) and those seeking to lower future PERA pension contributions for their "dues-paying," (non-retired) members (Colorado public sector unions.)  This collusion culminated in the bill, SB10-001, breaking the pension contracts of Colorado PERA retirees.

By taking the contracted PERA COLA benefit, the Colorado Legislature is attempting to slash the PERA pension debt of Colorado state and local governments in order to further lower taxes in the state with the lowest per capita state tax burden in the nation.  The Colorado Legislature is attempting to use a legal contrivance to justify the taking of one-third to one-half of the accrued PERA pension benefit from Colorado PERA retirees.  The Colorado Legislature is attempting to "inflate away" its PERA pension debt, breaking the statutory requirement to pay the PERA COLA, while the Colorado PERA Board of Trustees' own long-term actuarial inflation assumption is 3.75 percent.

In 2010, financially self-interested parties told Colorado PERA retirees that they were greedy to expect the State of Colorado and Colorado local governments to honor their Colorado PERA pension contracts.

In 2010, the Colorado General Assembly spat in the faces of those who have given their lives in public service . . . Colorado PERA retirees.

Rather than supporting the breach of pension contracts like Colorado's public sector unions, today, Montana's public sector unions announced that they will sue the State of Montana over the Montana Legislature's recent taking of retiree pension COLA benefits.  (In Montana, the COLA is known as the "GABA," "guaranteed annual benefit increase."):

MEA-MFT:

"We keep getting calls and emails asking if MEA-MFT is in fact going to litigate legislated amendments seriously truncating and delaying Guaranteed Annual Benefit Adjustments or GABAs in PERS and TRS.

The answer is YES!

MEA-MFT is right now working with other advocate organizations representing current and future retirees on a common, comprehensive legal challenge to the legislature's GABA attacks. We have retained counsel. We are developing compelling legal arguments. We are vetting possible plaintiffs. We will file when it is the right time to file. And we expect to win.

MEA-MFT President Eric Feaver"

From helenair.com:

"Bullock signs pension fixes, school funding bill."

"The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees."

"The state's largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes."

http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

Eric Feaver, President, MEA-MFT:

"There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)"

MONTANA GOVERNOR: THE COLA TAKING IS UNCONSTITUTIONAL.

From helenair.com:

"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality."

"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

Montana pensioners:

"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

"Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees."

http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

(My comment: Like Montana, Colorado has an "automatic" public pension COLA benefit, that is a contractual obligation of the Colorado PERA pension system.  For every day of labor that Colorado PERA retirees provided, with every monthly PERA contribution that Colorado PERA retirees made, they paid for their contracted PERA COLA.  Having benefited from this labor, Colorado PERA-affiliated employers now want to retroactively take this earned "deferred compensation" from PERA retirees.

In Colorado, the Legislature did not bother to ask its legal staff for a legal opinion addressing the taking of  the Colorado PERA COLA benefit.  Although encouraged to do so, prior to the taking, the Colorado Legislature did not bother to ask the Colorado Supreme Court for an opinion on the constitutionality of their PERA pension proposal (through an interrogatory.)  The Colorado Legislature did not appoint an interim study committee to examine legal, PROSPECTIVE, PERA pension reform options, instead abdicating its policy-making authority in this area to lobbyists representing self-interested Colorado PERA employers trying to escape their debts.)

Colorado PERA active and retired members.  Support public pension contractual rights in the USA.  Contribute at saveperacola.com, and "Friend"  Save Pera Cola on Facebook!

New Hampshire Judge: Public Employee Pensions are Protected on Day One. Colorado Legislature: Public Employee Pensions are Not Protected, Even on Day 10,950.

A New Hampshire judge recently determined that public employee contractual rights to their accrued pension benefits vest immediately upon employment.  This conclusion seems logical.  A worker wants to know what she is earning in salary and deferred pension compensation for each day of labor.  If she does not know this, how can she make an informed, economic decision regarding alternative employment opportunities?  It is truly immoral for an employer to change the rate of compensation (salary or deferred pension compensation) after the employer has already benefited from the worker's labor (See the Colorado bill, SB10-001.)

This New Hampshire judge determined that public pension benefits are legally protected on Day One.  Ironically, the Colorado General Assembly does not consider accrued, earned, contracted Colorado PERA pension benefits to be protected even on Day 10,950 (30 years.)  Thus, the State of Colorado is a defendant in the lawsuit, Justus v. State.

In 2010, a majority of the members of the Colorado Legislature voted to support the breach of the fully-vested public pension COLA contracts of Colorado PERA retirees.  Last year, the Colorado Court of Appeals agreed with the PERA retirees that the Colorado Legislature unconstitutionally seized their COLA benefits.  This lawsuit, Justus v. State, is now pending before the Colorado Supreme Court.

The New Hampshire Decision.

From seacoastonline.com:

"Judge rules in union pension case: Says state workers are protected from Day One of employment."

"CONCORD — A superior court justice has ruled in the lawsuit that state unions filed to block pension reform that state workers are contractually protected beginning at the time of employment."

"Hillsborough County Superior Court Judge Gillian Abramson ruled May 23 in the case of Professional Fire Fighters of New Hampshire et al. vs. the State of New Hampshire and the state Retirement System that 'vesting occurs upon commencement of permanent employee status.'  It is a position long held by the N.H. Retirement Security Coalition, but was challenged when the Republican-led Legislature crafted House Bill 2 in 2011, which made changes to the benefits of current employees."

(My comment: In my opinion, the Colorado Coalition for Retirement Security, an organization that supported SB10-001 [the bill taking contracted COLA benefits from Colorado PERA retirees] believes that Colorado PERA retirees are more "secure" in their retirement when the State of Colorado seizes one-third to one-half of their contracted annuity stream to maintain Colorado's status as a tax haven.  How does having one's property taken, one's contract ignored, bring a person greater "security"?)

New Hampshire decision:

"'Workers with five years in the system are just as committed to their work as those with 20 years in the system, and therefore shouldn't be treated differently by the retirement system. The decision is right to rule in favor of promoting worker retention and recruitment,' said Steve Arnold, a retired Portsmouth police officer and the current state director for the New England Police Benevolent Association."

(My comment: Now that public sector unions in Colorado have argued that the Colorado PERA pension benefits of their [former, “non-dues paying,” retired] members are not constitutionally protected, even after 30 years, how will these public sector unions argue in the future that the PERA pension benefits of their members who have 3 or 7 or 12 years of service are constitutionally protected?  Those who should defend contracted public pension benefits in Colorado argue that Colorado governments should be free to break these contracts at will.)

New Hampshire decision:

"Member unions of the coalition filed suit in court asking a judge to rule that the changes to the state budget that would affect retirement benefits are unconstitutional. They argued that certain sections of the budget bill violate the Contract and Takings Clauses of both the state and U.S. constitutions when it comes to N.H. Retirement System members who reached permanent employment status or retired as of Jan. 1, 2012."

"'According to a statement from the retirement coalition, the court has requested, and the coalition will provide, additional information supporting their argument of the damages the legislative changes make to workers who are 'prepared to give a lifetime of service to the state.'"

Link to complete article:

http://www.seacoastonline.com/articles/20130530-NEWS-305300397

From the New Hampshire Retirement System website:

"Below is a brief summary of pending lawsuits regarding legislative changes to RSA 100-A, the statute governing the New Hampshire Retirement System (NHRS, the retirement system):

HB 2 Benefits suit – Filed February 2012:

Professional Fire Fighters of NH v. State of NH"

"This suit, filed in Hillsborough County Superior Court by a coalition representing active and retired public employees, teachers, police, and firefighters, challenges a number of the pension provisions in House Bill 2, passed in 2011. The State of New Hampshire and NHRS were named as defendants in this lawsuit."

"The Plaintiffs claim HB 2 violates the New Hampshire and U.S. constitutions by substantially impairing vested contract rights, Judge Abramson issued a ruling May 24, 2013, on the pending motions for partial summary judgment filed last August.  In her ruling she stated that that 'vesting' of the plaintiffs’ contract rights occur at the time of employment.  The next step is for her to make a determination whether or not there was a substantial impairment of the contract rights of the plaintiffs.  Previously, in the related HB 2 Contribution suit in Merrimack County, Judge McNamara determined that vesting occurred at 10 years of service."

Thoughts on “substantial” impairments of public pension contracts from the Beerman paper addressing contractual public pension rights at this link:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2131481

“Amy Monahan concludes from her examination of the case law that in general, changes to the level of benefits and changes that affect the rights and responsibilities of employers are held to be substantial impairments. In her view, except perhaps in extraordinary circumstances, changing the method for calculating benefits so that lower benefits are paid is likely to be found to be a substantial impairment of the contract.”

“At the time the contract was made, had the employees’ known that their pension promises were subject to significant revision, they may not have accepted government employment or they may have demanded significantly higher current compensation.”

Link to NHRS:

http://www.nhrs.org/documents/NHRS_Legal_Update_WEB.pdf

Support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Incredible Short Video on Racial Profiling in the U.S.

Hey fellow Polsters, this post is a bit off-message for me, but I had to share this amazing short video on racial profiling (produced by ABC).   Watch this, gain some cultural insight, and be saddened that we remain somewhat primitive.  The video was recently shared on Facebook by Progressive Outreach – Colorado.

http://now.msn.com/hidden-camera-captures-racial-profiling-in-viral-video-involving-bike-theft

 

 

 

U.S. Census Bureau: Colorado Reneged on its PERA Pension Contracts While Spending a Mere 2.08 Percent of Revenues on Public Pensions . . .

WHILE RANKING 35TH IN THE NATION IN FINANCIAL SUPPORT FOR PUBLIC PENSIONS . . .

WHILE DEAD LAST AMONG THE "NON-SOCIAL SECURITY" STATES IN PUBLIC PENSION SUPPORT.

Colorado PERA retirees have fully performed under their Colorado PERA pension contracts.  Nevertheless, in 2010, the Colorado General Assembly acted in bad faith, willfully breaching its contracts with these Colorado PERA pensioners.  The Colorado General Assembly is attempting to abrogate the PERA pension COLA, "escalator" provision of the written, statutory Colorado PERA pension contract.  The Colorado General Assembly is attempting to renege on one-third to one-half of its contractual obligations to pay Colorado PERA pension benefits.

In 2010, the Colorado Legislature allowed a pack of 27 lobbyists to ram a bill through the legislative process breaking the contracts of Colorado PERA pensioners.  During the debate on this bill, SB10-001, lobbyists, members of the Colorado Legislature, and Colorado PERA administrators argued that if the State of Colorado and local governments were forced to honor their PERA pension contracts, this would burden Colorado taxpayers.

Yet, according to the U.S. Census Bureau, at the time of the Colorado PERA pension contract breach in 2010, Colorado ranked 35th in the nation in taxpayer support for public pension obligations.  At the time of the taking of fully-vested, accrued Colorado PERA retiree pension COLA benefits by the Colorado Legislature, Colorado's financial support for public pensions was slightly more than two percent of all Colorado public sector expenditures.  (It would be interesting to examine complete historical data comparing Colorado's financial support for public pensions to the level of support of other states for public pensions.)

Colorado PERA's Chief Investment Officer, Jennifer Paquette, provided comparative data for the year 2008.  In a May 22, 2011, Denver Post Guest Commentary entitled, "Careful Planning, Not Hope, Drives PERA" Jennifer Paquette writes:

“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.”

http://www.denverpost.com/commented/ci_18100068?source=commented-

If we allow state governments in the United States to break their contracts based on flimsy, self-serving, political arguments, our Constitution will be meaningless, and the rule of law in the United States will be a myth.  It is not possible for the defendants in the lawsuit, Justus v. State, to legitimately argue that contracted Colorado PERA pension benefits are a burden on taxpayers while Colorado ranks 35th in the nation in support for public pensions, and support for public pensions consumes two percent of Colorado state and local government expenditures.  Two percent of expenditures is hardly a crushing burden on Colorado taxpayers.  In any event, under the Colorado Constitution, Colorado state and local governments cannot escape their contractual obligations even if meeting these contractual obligations is a burden on Colorado taxpayers.  Debts are by their nature "burdensome."  When Colorado state and local governments became parties to Colorado PERA pension contracts they freely assumed the contractual, financial burden of providing future deferred compensation to members of the Colorado PERA pension system.  In the United States, neither individuals, nor governments, may set aside the Contract Clause of the U.S. Constitution when it is simply convenient.  Governments cannot set aside their contractual obligations in order to make discretionary expenditures.

Here is a link to a recent NASRA Issue Brief reporting U.S. Census Bureau public pension expenditure data:

http://www.nasra.org/resources/NASRACostsBrief.pdf

And, some background on NASRA:

"NASRA (the National Association of State Retirement Administrators) is a non-profit association whose members are the directors of the nation’s state, territorial, and largest statewide public retirement systems. NASRA members oversee retirement systems that hold more than $2.0 trillion in assets and that provide pension and other benefits to more than two-thirds of all state and local government employees."

http://www.nasra.org/AboutNasra/whoweare.htm

According to the U.S. Census Bureau, 34 states spend more on public pensions than does Colorado; however, only a handful of states are in breach of their public pension contracts.

"NASRA ISSUE BRIEF: Spending on Public Employee Retirement Systems, May 9, 2013."

"Table 1: State and Local Government Contributions to Pensions as a Percentage of All State and Local Government Spending, by State, 2010.

Alabama 2.85
ALASKA  2.25
Arizona 2.42
Arkansas 3.02
CALIFORNIA 3.58
COLORADO 2.08
Connecticut 4.54
Delaware 1.99
District of Columbia 1.33
Florida 2.58
Georgia 2.14
Hawaii 3.57
Idaho 2.38
ILLINOIS 4.75
Indiana 2.82
Iowa 1.73
Kansas 2.03
Kentucky 2.58
LOUISIANA 3.31
MAINE 2.77
Maryland 3.14
MASSACHUSETTS 3.36
Michigan 2.32
Minnesota 1.62
Mississippi 2.81
Missouri 3.08
Montana 2.40
Nebraska 1.60
NEVADA 2.84
New Hampshire 2.47
New Jersey 2.03
New Mexico 2.77
New York 3.68
North Carolina 0.99
North Dakota 1.20
OHIO 2.85
Oklahoma 3.34
Oregon 1.46
Pennsylvania 1.29
Rhode Island 3.99
South Carolina 2.24
South Dakota 1.54
Tennessee 1.97
TEXAS  2.16
Utah 2.76
Vermont 1.09
Virginia 3.15
Washington 1.40
West Virginia 3.87
Wisconsin 2.07
Wyoming 1.24
U. S. weighted avg. 2.77"

(My comment: Note that Colorado's support for public pensions [2.08 percent] was 25 percent below the national average support for public pensions [2.77 percent] in 2010.   Also, I show the 10 states "where more than one-half of public employee payrolls are estimated to be outside of Social Security in ALL CAPS in Table 1.)
 
Source: U.S. Census Bureau

The ten states where the preponderance of public employees are outside of Social Security:

ALASKA – 2.25 percent
CALIFORNIA – 3.58 percent
COLORADO – 2.08 percent
ILLINOIS – 4.75 percent
LOUISIANA – 3.31 percent
MAINE – 2.77 percent
MASSACHUSETTS – 3.36 percent
NEVADA – 2.84 percent
OHIO – 2.85 percent
TEXAS – 2.16 percent

(My comment: Note that the average public pension support among the ten "non-Social Security" states, in 2010, was 2.79 percent, while Colorado's level of support that year was 2.08 percent.  One might expect that in states where the preponderance of public employees are not eligible to receive Social Security benefits [such as Colorado] these states would offset that detriment to public employees with more robust financial support for public pension benefits.  One might have this expectation, since taxpayers in these states are spared the "burden" of making the 6.2 percent Social Security payment under FICA for these public employees.  Even in this select group we find Colorado at the bottom of the barrel in terms of financial support for public pensions at 2.08 percent.)

NASRA Issue Brief:

"Social Security Coverage: Twenty-five to thirty percent of state and local governments and their employees make contributions to their retirement plan instead of to Social Security. This is the case for most to substantially all of the state and local government workforce in seven states, 40 percent of the nation’s public school teachers, and a majority of firefighters and police officers.  Pension benefits—and costs—for those who do not participate in Social Security are usually higher than for those who do participate in order to compensate for the absence of Social Security benefits. This higher cost should be considered in the context of the 12.4 percent of payroll, or an estimated $31.2 billion annually, these employers and employees would otherwise be paying into Social Security."

NASRA Issue Brief:

"On a nationwide basis, pension contributions made by state and local governments account for roughly three percent of total spending (see Figure 1)."

(My comment: Note that Colorado governments contribute one-quarter less than the national average to support public pensions and yet they find this level of support so burdensome that they seek to escape their contractual obligations.)

NASRA Issue Brief:

"Three Percent Nationwide: Based on the most recent information provided by the U.S. Census Bureau, approximately three percent of all state and local government spending is used to fund pension benefits for employees of state and local government.  As shown in Figure 2, pension costs since 1980 have been reliably stable, declining from around four percent to three percent in 2010."

"Although pensions are not the state-local budget-drain that some claim they are, as shown in Table 1, spending levels for states and cities do vary from the national average, from less than one percent to more than four percent."

"In addition, some states and cities do not contribute the amount determined actuarially to adequately fund the plan."

(My comment: The Center for Retirement Research at Boston College compiles the “Public Plans Database,” which includes the State and Local Defined Benefit Plans dataset.

http://crr.bc.edu/data/public-plans-database/

Provided below are statistics relating to the failure of the Colorado General Assembly to pay its public pension “actuarially required contributions” [ARC], 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 Colorado PERA CAFR [annual financial report], 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.)

NASRA Issue Brief:

"The chronic failure by some pension plan sponsors to pay required contributions results in greater future contributions to make-up the difference."

(My comment: Instead, of "making-up the difference" resulting from ignoring its public pension bills, the Colorado Legislature is trying to escape its contractual PERA pension obligations, trying to take accrued public pension COLA benefits from pensioners.)

NASRA Issue Brief:

"A variety of state and local laws and policies guide governmental pension funding practices. Most require employers to contribute what is known as the Annual Required Contribution (ARC), which is the amount needed to finance benefits being accrued each year, plus the cost to amortize unfunded liabilities from past years, minus required employee contributions.

"The average ARC received in recent years has been around 90 percent.  Beneath this average ARC experience lies diversity: approximately 60 percent of plans in the Public Fund Survey   consistently receive 90 percent or more of their ARC.  This means that although a majority of plans have been receiving their required funding, many plans have not been adequately funded, which will result in higher future costs."

(My comment: In 2010, when the Colorado General Assembly broke Colorado PERA pension contracts, most Colorado state legislators did not know what a pension "ARC" is.  This ignorance resulted from the failure of Legislative Leadership to appoint an interim study committee on public pensions to educate the members, and the desire of Legislative Leadership break PERA retiree pension contracts.  The ignorance of state legislators regarding public pension administration and contractual public pension rights served the preconceived political goals of Colorado Legislative Leadership.)

NASRA Issue Brief:

"Generally, states and cities with a history of paying their required pension contributions are in better condition and have needed more minor adjustments to benefits or financing arrangements compared to those with a history of not adequately making their contributions."

Link to complete NASRA Issue Brief:

http://www.nasra.org/resources/NASRACostsBrief.pdf

Colorado PERA active and retired members, the argument that contracted PERA pension benefits are a burden on Colorado taxpayers is clearly specious.  Support contractual public pension rights and the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

How Does Colorado Treasurer Walker Stapleton’s DUI Arrest Inform His Latest Colorado PERA Pension Rant?

After Colorado's State Treasurer Walker Stapleton was arrested for driving under the influence, his honesty and integrity were called into question.  In this article, I examine the circumstances of Treasurer Stapleton's DUI arrest and ask if a pattern of personal failings relating to "honesty and integrity" have spilled over into his participation in the Colorado PERA pension reform debate.

Reform of the Colorado PERA pension system is one of our Treasurer's favorite political topics. Perhaps, similar to Rhode Island's State Treasurer, Stapleton believes that public pension contract breach is the route to higher political office (not working out as planned for Treasurer Gina Raimondo in Rhode Island.)  Or, given the decline of defined benefit pension plans in the private sector, perhaps our State Treasurer hopes to exploit "PERA pension envy" for personal political gain.  Whatever his motives, or political goals, I encourage our Treasurer to engage in a fair, open and fully-informed discussion of pension reform options for the Colorado PERA system . . . to participate in the PERA reform debate with "honesty and integrity."  I also encourage him to advocate prospective PERA pension reforms in conformance with the Contract Clause of the Colorado Constitution, similar to prospective reforms made available to Colorado county governments in SB12-149.

In this article, I examine published materials germane to the "honesty and integrity" of our State Treasurer, and consider whether a recent article written by Treasurer Stapleton regarding Colorado education finance and public pension obligations does not again call into question our Treasurer's forthrightness.

The Colorado PERA pension system has significant unfunded pension liabilities.  These liabilities have accumulated due to the failure of the Colorado Legislature to pay its full pension bill for the last decade.  Colorado PERA pension liabilities are a contractual obligation of Colorado PERA-affiliated employers, a legal debt obligation of Colorado state and local governments.  Our State Treasurer should not ignore the fact that the decline in the funded ratio of the Colorado PERA pension system is the result of the failure of the Colorado Legislature to pay its pension bills for a decade.

Colorado's Treasurer Stapleton has expressed concern regarding Colorado PERA's unfunded liabilities, but why is our State Treasurer so concerned about this one particular form of Colorado state and local government debt, public pension debt?  Why do we not see our State Treasurer concerned about all other Colorado governmental debt, all outstanding bonds issued by Colorado state and local governments?  What is so special about our public pension debt obligations?

Why do we see our State Treasurer focus on Colorado's public pension debt obligations that will come due over the next 70 years?  Why does he leave the impression that PERA unfunded liabilities due over the next 70 years are somehow due immediately?  A current financial "crisis," a "shortfall"?  Why have we never heard our Treasurer note that Colorado's financial support for public pension obligations consumes less than three percent of all Colorado state and local governmental expenditures?  A level far below the national average for the states?  Does this key information not comport with his political agenda?  Would it not be more "honest" for our State Treasurer to acknowledge this fact?

Why does our State Treasurer see the PERA pension debt service that will be paid by Colorado taxpayers in coming decades as onerous, yet he lacks any corresponding concern for the "burden" of all other Colorado state and local government debt (bonds) on taxpayers that will come due over the next 70 years?

Colorado has not "banked" the three percent of future state and local governmental expenditures that will be required to support future Colorado PERA pension obligations and that is a "crisis" in the mind of our State Treasurer.  Yet, Colorado has not banked the 97 percent of state and local governmental expenditures that will be required to support all other public sector programs for the next 70 years and that IS NOT a "crisis" in the mind of our Treasurer.  We see our State Treasurer ranting about Colorado PERA public pension debt in particular because this serves a political agenda.

WHAT DO THE CIRCUMSTANCES OF COLORADO TREASURER WALKER STAPLETON'S DUI ARREST TELL US ABOUT HIS "HONESTY AND INTEGRITY"?

Ellen Dumm writes in a Huffington Post article:

"Colorado's treasurer accounts for $20 billion and manages a $6 billion investment pool of public funds annually.  Integrity, responsibility and good decision making are critical to this job.  So are honesty and transparency."  It is important that the person serving as Colorado's Treasurer act with integrity, and honesty.

Here are a few excerpts from her Huffington Post article:

"In June 1999, GOP candidate state Treasurer Walker Stapleton was charged with DUI and leaving the scene of the accident in San Francisco where two women were injured."

"He blamed the victims. (The reality is that he accepted a plea bargain down to a DUI, with three-year probation, twice weekly AA meetings and court-ordered community work.)"

"That charge was amended several days later, to charges of running a flashing light and hitting a cab in the intersection, causing injuries and leaving the scene."

"One of the victims, Ginger Vasquez of Santa Monica, CA, was alone in the backseat of the cab that was hit by Stapleton.  She describes the vehicle spinning after the impact and seeing Stapleton's car driving away."

"After Stapleton's car stopped down a steep hill, she says, two cabs boxed in his vehicle to prevent him driving any farther. She has never talked to Stapleton and did not know his name until recently. She does not know the other woman injured in the accident. Stapleton never approached the cab to find out if everyone was all right. Most importantly, she has no motive to lie about events that night."

"Stapleton, who has an obvious motive not to tell the whole truth, continues to shift the blame and will not produce police reports (unavailable to the public) of the accident."

(My comment: Have complete police reports relating to the incident been released by our State Treasurer?)

"Ironically, Stapleton was born into one of the country's wealthiest, best-connected families, sharing a family tree with the Bushes. He attended prep school in Connecticut and expensive colleges and universities. The truth is that Stapleton has never had to find a real job outside his wealthy family's umbrella."

Link to Huffington Post article:

http://www.huffingtonpost.com/ellen-dumm/why-walker-stapletons-11y_b_776122.html

From 5280.com:

"Stapleton smelled of alcohol as he allegedly walked away from the scene of an accident in San Francisco, making 'loud and belligerent' noises and ignoring officers, writes The Denver Post . . ."

"After his arrest, Stapleton pleaded guilty to drunken-driving after a taxi hit his Jeep Cherokee, damaging it, and forcing him to pull over a block away–which Stapleton disputes. The report claims he continued to drive away even after police attempted to stop him with lights and sirens, and that he only stopped after his Jeep could no longer continue. He was sentenced to community service. The Colorado Independent is critical of the Post's article, saying it fails to answer some questions, such as, 'Was anyone hurt in the accident?' Court documents examined by the Independent list two victims, but the Post, citing California police, writes that 'no pedestrians' were injured in the collision."

http://www.5280.com/blogs/2010/11/24/treasurer-elect-walker-stapletons-dui-records-continue-raise-questions

From the Denver Post:

"Stapleton, now 36, was arrested in the early hours of June 20, 1999, in San Francisco on complaints of driving under the influence and hit-and-run. He later pleaded guilty only to drunken driving, for which he was sentenced to community service."

"When police arrived, they asked if he had been drinking, and he admitted he had, prompting officers to arrest him, Stapleton said."

"According to the report, witnesses said that after the two vehicles collided at the intersection of Bush and Jones streets, Stapleton continued to drive away. Police caught up with his Jeep down the street."

"'We then attempted to stop the vehicle with lights and siren,' the report said. The car 'then failed to pull over and continued southbound on Jones St. (The Jeep) having been damaged by the collision, could no longer continue and came to rest.'"

"A strong odor of alcohol beverage could be detected emanating from Stapleton's breath and clothing.  He spontaneously stated, 'I had the yellow light, he ran the light.'"

"'He was unsteady on his feet, and loud and belligerent.'"

http://www.denverpost.com/legislature/ci_16688120

The records indicate that a plea of no contest was entered.  Walker Stapleton placed his initials after the following on the Superior Court of California, County of San Francisco, "Waiver of Rights/Plea Form":

"Charges: I understand that I am accused of violating Vehicle Code section 2352(a), driving under the influence (DUI) of an alcoholic beverage and/or drugs."

"No Contest Plea: I understand that if I plead no contest, the Court will make a finding that I am guilty and the effect in this case is the same as a guilty plea."

"Probation Revocation: I understand that if I violate any of the terms or conditions of probation or conditional release (see 22a-o below), a Judge after a hearing but without a jury trial, may revoke my probation or conditional release and order me to serve out my suspended sentence in jail."

"Costs of Restitution and Public Agency Response: I understand that in addition to the fine imposed, I may also be ordered to make restitution to the victim(s), if any, and to pay the expenses incurred by a public agency that responded to any incident caused by my vehicle at the time of my arrest."

"Jail: I understand that the maximum penalty for a first offense is 6 months in the county jail, a mandatory minimum sentence of 96 hours, a fine of $1,000 plus penalty assessments, and suspension of my driving privilege for 6 months.  I understand that if I plead guilty (or no contest), 1 year in the county jail will be suspended, . . ."

"Probation: I will be placed on FORMAL SUPERVISED PROBATION for 3 years and I will have to pay probation costs of up to $40 per month.  These probation costs are not a condition of my probation, but failure to pay may result in my civil liability.  My probation has the following initialed terms and conditions:"

"I must obey all laws."

"2 AA mtgs./week progress rept. 6 months"

Link to Colorado Treasurer Walker Stapleton's court records:

http://strongcolorado.org/wp-content/uploads/2010/10/Walker-Stapleton-Court-Docs.pdf

From the Denver Post:

“They asked if I’d been drinking, and I said I had been drinking,” Stapleton said, adding he was charged with a DUI and a hit-and-run charge.

"The hit-and-run charge was dropped later after he explained how the accident occurred, Stapleton said.  He was sentenced to community service, which included 'a fantastic period of time that involved me cleaning up garbage in the Tenderloin district of San Francisco' and working at a nursing home."

http://blogs.denverpost.com/thespot/2010/09/30/stapleton-admits-to-dui-during-debate/15478/

From brandeisbulletin.blogspot.com:

"Most of you know that he comes from a rich and powerful Colorado family (hence, the old Stapleton Airport, etc), and that he used millions from his family trust to buy a whole bunch of premium land and had expensive properties developed.  That allowed him to call himself a 'developer/businessman' instead of a trust-fund baby."

"But, I’ll bet none of you knew, until the Denver Post printed it today, that Walker Stapleton has a third job: that of Gentleman Farmer. Yes, in Colorado alone, Farmer Stapleton owns 180 acres of primo real estate near Castle Rock, worth millions right now, which will be worth tons more, after he’s done speculating and decides to actually develop it.  No, no crops are actually grown on the land.  A cow or two were most certainly plopped down on the fenced property to eat the weeds for a day or two and were then removed, never to return."

"But the 'rent-a-cow' thingy was enough to allow Walker Stapleton to have this pre-development acreage classified as 'agricultural', and so he paid exactly $116 in property taxes last year."

"Add the $336 million lost to Gentleman Farmers last year, to the $300 million we needlessly donated to the obscenely rich oil companies, to the $300+ million in welfare checks for the equally rich mega-agricorps, to the $8.8 million un-earned bonus to Wal-Mart, (the world's largest retailer) and then you can plainly see why we have a $1 billion budget shortfall (in 2011.)"

http://brandeisbulletin.blogspot.com/2011/03/walker-stapleton-gentleman-farmer.html

(My comment: The State of Colorado can afford to lose millions in tax revenues to "Gentlemen Farmers," but cannot afford to honor state contracts?)

TREASURER STAPLETON'S MOST RECENT COLORADO PERA PENSION RANT.

So, what is the connection between Colorado Treasurer Walker Stapleton's DUI arrest and his latest rant regarding the Colorado PERA pension system?  In my opinion, Treasurer Stapleton's personal failings relating to "honesty and integrity" are spilling over into the Colorado PERA pension reform debate.

Now that we have increased our knowledge of Colorado Treasurer Walker Stapleton, we'll examine his recent article addressing Colorado education funding and the underfunding of the Colorado PERA pension system.  The May 30, 2013 issue of the Colorado Springs Gazette Telegraph includes an article written by Colorado Treasurer Walker Stapleton addressing the Colorado education finance measure on the Fall 2013 ballot.

Here is a link to the article, a few excerpts and my comments:

http://gazette.com/education-finance-reform-buyer-beware/article/1501394

Treasurer Walker Stapleton:

"This November, Colorado will be given the opportunity to vote for a more than $1 billion tax increase to fund Colorado education."

"But, as voters take a closer look, this tax increase, masked as education funding, is also another mechanism to keep our sinking public pension system afloat."

(My comment: Colorado's PERA public pension debt is independent of public school finance in the state.  This debt of Colorado state and local governments would remain even if Colorado's K-12 education system were completely privatized, or eliminated for that matter.  Also, Colorado PERA-affiliated employers hire workers in hundreds of professions other than teaching.

It is not entirely "honest" of our Treasurer to refer to the PERA pension system as "sinking" in light of recent double digit portfolio returns [to be augmented by a report of yet another double digit return in the coming weeks].  Further, our Treasurer had an opportunity here to note that the Colorado Legislature's historical failure to pay its pension bills has caused the financial pressure on PERA's trust funds.  By fully disclosing this information in his article our Treasurer could act with "integrity.")

Treasurer Walker Stapleton:

"While PERA is currently $20 billion underfunded, its debt grows every year it does not achieve an 8 percent return on its portfolio. This 8 percent return is not an inflated conclusion simply contested along partisan lines."

(My comment: Here our Treasurer fails to note that the average return assumption for private sector defined benefit plans in the U.S now exceeds 8 percent.  Good enough for the private sector, not good enough for the public sector?

Also, Stapleton, in his article, does not mention the fact that many private sector employers make 401K contributions on behalf of their workers, in addition to Social Security.  He makes no mention of the fact that Colorado PERA members are not eligible to participate in the Social Security system, and thus rely entirely on their contracted PERA pension benefits for retirement security.  By omitting this information our State Treasurer is not acting with complete "honesty.")

Treasurer Walker Stapleton:

"We cannot allow more taxpayer money to be taken out of our children's classrooms in order to backfill obligations in a bankrupt retirement system."

(My comment: Here our Colorado Treasurer presents a "false choice," again displaying a lack of integrity.  When the State of Colorado or Colorado local governments pay their debts, when these governments meet their contractual obligations, they are not "taking money out of children's classrooms" anymore than they are taking money out of law enforcement or road construction.  When Colorado state and local governments meet the debt service on their bonds are they "taking money out of classrooms"?  Stapleton presents an emotional appeal with the intent to deceive the reader.

Colorado PERA-affiliated employers are contractually obligated to pay deferred compensation to Colorado PERA retirees for work completed over the course of their careers.  Rather than encouraging the Colorado Legislature to actually meet its Colorado PERA pension obligations by paying the full actuarially required contribution [ARC] our Treasurer assumes, in his article, that these obligations will be met by taking money from public school budgets, a false choice. Here we have the Washington Post condemning such tactics:

“It’s time to retire the false choice.  As a rhetorical device, particularly as a political rhetorical device, the false choice has outlived its usefulness, if it ever had any. The phrase has become a trite substitute for serious thinking. It serves too often to obscure rather than to explain.”

http://articles.washingtonpost.com/2011-03-31/opinions/35208590_1_financial-reform-false-choice-false-choice

Also, Walker Stapleton, as State Treasurer, should know that state governments are not eligible to file for "bankruptcy" under federal law.)

Treasurer Walker Stapleton:

"When I explained the funding shortfall to different stakeholders and legislators crafting this bill they told me that PERA was off the table."

(My comment: Here our Treasurer again laments the underfunding of the Colorado PERA pension system.  Complete honesty demands that he inform the reader that the Colorado General Assembly is the author of this "shortfall."

Our State Treasurer refers to Colorado PERA unfunded liabilities as a "shortfall."  Yet, these Colorado PERA unfunded liabilities will come due over the next seven decades, consuming approximately three percent of total Colorado state and local government financial resources.  How is it that our Treasurer sees the failure of Colorado state and local governments to set aside an amount equivalent to three percent of their future revenues as a "shortfall," a pressing financial matter for Colorado PERA, but the failure of Colorado state and local governments to set aside an amount equal to 97 percent of their future revenues to meet all other future Colorado public expenditures is inconsequential, not a "shortfall"?  Is it simply politically convenient for our State Treasurer to label certain revenues needed in the future, for a public program he does not support a "shortfall," while the remaining revenue needed for all other future state and local government expenditures is not a "shortfall"?  If so, again this is not being "honest" with the reader.

In his Gazette Telegraph article, it appears that our State Treasurer intends to deceive the reader, withhold information critical to the debate from the reader to advance a political agenda (elimination of public defined benefit pension plans in the United States, see ALEC), and he presents a false choice to the reader.  As Ellen Dumm wrote in the Huffington Post, it is important that the person serving as Colorado's Treasurer act with integrity, and honesty.

Colorado PERA active and retired members, many Colorado legislators supported the breach of Colorado PERA pension contracts in 2010 out of ignorance.  Many state legislators did not have sufficient information to make an informed decision regarding SB10-001 in 2010, because Legislative Leadership at the time did not want them to have complete information.  As with our State Treasurer's recent PERA article, Legislative Leadership intended that members be deceived and accordingly served up uninformed legislators to a pack of 27 lobbyists promoting Colorado PERA pension contract breach.

Leadership could have appointed an interim study committee to ensure that the members had complete information regarding Colorado contractual public pension rights.  Legislative Leadership could have sent an interrogatory to the Colorado Supreme Court, but instead opted to squander millions of taxpayer dollars on protracted litigation.  Do your part to support public pension contractual rights in Colorado, contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook.

Treasurer Stapleton: Having Enacted SB10-001, the Colorado Legislature will Continue to Break Colorado PERA Pension Contracts as Needed. Comments from Priola, Labuda, DelGrosso, Holbert, Kerr, Hullinghorst, Swalm, and Kefalas.

TREASURER STAPLETON: THERE WAS NO "ACTUARIAL EMERGENCY" IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

COMMENTS OF COLORADO PERA DIRECTOR WILLIAMS, PERA TRUSTEE CAROLE WRIGHT, PERA GENERAL COUNSEL SMITH, AND TREASURER STAPLETON.

In 2010, the Colorado Legislature enacted legislation breaking Colorado PERA pension contracts.  Members of the Colorado Legislature, generally, have little respect for Colorado PERA pension contracts.  Thus, in 2010, the Colorado Legislature recognized no constraints on its power to take property from Colorado PERA pensioners.

Offering low public sector salaries in order to maintain Colorado's status as a "tax haven" is one thing.  No one is forced to accept a job with a Colorado PERA-affiliated employer, but taking back compensation that has already been earned crosses both moral and legal lines.  For some reason, in 2010, lobbyists were able to push a majority of Colorado legislators across these lines.  Twenty-seven lobbyists successfully persuaded state legislators that breaking pension contracts is acceptable here in Colorado.

A century ago, public pensions in the United States were considered "gratuities granted by a benevolent sovereign."  Although this idea was eradicated from public pension jurisprudence nearly a century ago, it remains predominant at the Colorado Legislature well into the twenty-first century.

In 2009, members of the Colorado Legislature were unlikely, of their own accord, to plumb the depths of public pension contractual obligations.  It was incumbent on the Leadership of the Colorado Legislature that year to perform due diligence . . . to appoint an interim study committee to explore legal, prospective pension reform options for the Colorado PERA pension system, but no interim study committee was appointed.  The Leadership of the Colorado Legislature, recognizing that well-informed Colorado legislators would not support a planned breach of Colorado PERA pension contracts, opted against legislative examination of prospective pension reform options.  Colorado PERA's hired lobbyists would be unable to manipulate state legislators who might easily refute specious arguments relating to public pension contractual rights.  In early 2009, the Colorado PERA Board was already shopping for a law firm willing to create a legal rationale for breaking Colorado PERA's contractual obligation to provide total, accrued pension benefits via a pension "escalator," i.e., a COLA.  Why should Legislative Leadership and the Colorado PERA Board work against their own interests in taking COLA benefits by educating the members?

Therefore, Leadership controlled the flow of information relating to public pension contractual rights in 2009 and 2010; by failing to appoint an interim study committee to examine prospective reforms, by abdicating policy-making authority in this area to outside groups with an agenda to protect their own financial interests, and by failing to send an interrogatory to the Colorado Supreme Court requesting an opinion on the constitutionality of SB10-001's proposed changes to PERA contracts.

There is an apparent disconnect between the prevailing view of Colorado state legislators regarding contractual public pension obligations, and the sanctity of public pension contractual obligations as recognized in case law across the United States.  The nonchalant treatment of public pension contractual rights by Colorado legislators conveniently aligns with their desire to break Colorado PERA pension contracts . . . their desire to force a group of elderly Coloradans to pay for the Colorado General Assembly's past public pension mismanagement.

In 2010, 27 lobbyists told our state legislators that they were free to break the state's contractual obligations; hence, it must be true.

The Colorado PERA pension system is an alternative to Social Security for Colorado state and local government workers.  These workers are not eligible to participate in the Social Security system, they are completely dependent on the Colorado General Assembly to ensure that contractual obligations of Colorado state and local governments are honored.  Instead of acting responsibly, and paying its annual pension bills, the Colorado Legislature has mismanaged its pension system, and enacted legislation, SB10-001, under which Colorado PERA pension benefits are no longer "definitely determinable" under IRS regulations.

According to our State Treasurer, (a Trustee on the Colorado PERA Board of Trustees) the Colorado Legislature, having abrogated Colorado PERA pension contracts in 2010, will continue to break Colorado PERA pension contracts in the future at its convenience.  Here are Colorado Treasurer Walker Stapleton's comments made in testimony to a committee of the Colorado Legislature (recorded March 1, 2012, House Finance Committee):

"That's what happened in Senate Bill 1, and if the plan becomes insolvent or the liabilities grow again, it will happen in 'Senate Bill 2,' and who knows how many more bills."

" . . . make no mistake that will happen."

"And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it."

If the Colorado Legislature's breach of Colorado PERA public pension contracts is upheld by the Colorado Supreme Court, Colorado's Treasurer assures us that the Colorado Legislature will break Colorado PERA pension contracts repeatedly.  Future breach of Colorado PERA public pension contracts by the Colorado Legislature will occur in accordance with the following formula that was employed for the 2010 PERA contract breach: "Underfund the PERA pension to lower its funded ratio, claim that the low funded ratio represents a 'fiscal crisis' justifying seizure of accrued PERA pension benefits, break PERA pension contracts to lower taxpayer obligations, repeat . . ."

Recently, I discovered that Senate Bill 10-001, the legislation enacted by the Colorado General Assembly in 2010, breaking "fully-vested" Colorado PERA pension contracts and taking PERA COLA benefits, was discussed at length during hearings of the Colorado Legislature's House Finance Committee in 2012.  A number of comments relating to SB10-001 were made by members of the Colorado General Assembly (on the record) who voted in favor of SB10-001 during the 2010 Colorado legislative session, as well as other witnesses.  (PERA members and retirees, I apologize for my failure to discover these comments by SB10-001 proponents made at 2012 House Finance Committee hearings earlier.)

Below, I provide quotations of state legislators, and witnesses from testimony relating to Colorado PERA contractual pension rights given during 2012 House Finance Committee hearings.  Note that the bulk of the comments presented in this article, (many demonstrating a somewhat limited grasp of public pension contractual obligations) were made by members of the Colorado House Finance Committee.  The Finance Committees of the Colorado General Assembly are designated as the committees of reference of the Legislature with oversight responsibility for Colorado public pension systems.  The members of these committees ostensibly possess the greatest degree of sophistication on the subject of public pensions at the Colorado General Assembly.

It is important, (not just for litigation of the breach of public pension contractual rights in SB10-001), but for the integrity of the Colorado legislative process, that these comments be readily available for those who will, in the future, consider reforms addressing Colorado legislative ethics, legislative procedure, and administration.

2012 HOUSE FINANCE HEARINGS ON PERA LEGISLATION:

Representative Chris Holbert – Feb 23, 2012, House Finance Committee, hearing on HB12-1250: "We have a contract, an obligation to the vested members of PERA, and we have to meet that . ."

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

Representative Kevin Priola – Feb 23, 2012, House Finance Committee, hearing on HB12-1150:  " . . . taxpayers know that in the end they're on the hook, State of Colorado taxpayers are on the hook for any (PERA) unfunded liability down the road . . "

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee: "Those people all have a contract with their employer with the plan.  You made changes to impact people like that in SB1."

"The only reason you could do that in Senate Bill1 . . . and to unilaterally change the terms of the contract, is because the sustainability of PERA was significantly in question."

(My comment: Sustainability?  Here, Colorado PERA's Executive Director Meredith Williams tells us that the sustainability of PERA was in question in 2010 when the Colorado PERA actuarial funded ratio [AFR] stood at 69 percent.  Yet, Meredith Williams has informed us earlier, that the sustainability of PERA was not in question when the Colorado PERA AFR was at 54 percent.

From the Silver and Gold Record:

“One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent.  Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.  Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”

https://www.cu.edu/sg/messages/5245.html

When one compares the past comments of Meredith Williams arguing that a PERA funded ratio [AFR, not "market-based"] in the mid-50s is not a crisis, with recent comments of Meredith Williams that a 69 percent PERA AFR IS a crisis of sufficient proportion to warrant the breach of contracts, only herculean restraint allows one to limit one's characterization of Meredith Williams comments to simply "disingenuous."

Why did Meredith Williams support the breach of Colorado PERA pension contracts in 2010?  Was he embarrassed that, on his watch, the Colorado Legislature underfunded the PERA pension?   Embarrassed that he failed to do his job, to impress upon the Legislature the importance of paying its public pension bills?  Did the PERA Board and education establishment lobbyists persuade him that historical PERA underfunding should be solved by taking money from PERA retirees?

At the end of 2009, just prior to the breach of Colorado PERA pension contracts, the actuarial funded ratio of the Colorado PERA trust funds was nine percent below its 40-year average, and three percent below the national average actuarial funded ratio of public pension funds.  If public pension funds are in crisis at this funding level [a 69 percent AFR] should half of the pension contracts in the United States be abandoned at this funding level?)

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee relating to the Legislature's historical underfunding of its PERA pension obligations:

"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."

(My comment: Recall the words of Colorado PERA's General Counsel Greg Smith.  On August 11, 2009, at the 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: “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.”

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

So, here we have Colorado PERA officials acknowledging that the Colorado General Assembly has not paid its public pension bills.  Instead of proposing that the Colorado General Assembly make the PERA trust funds whole, and commit to meeting its future pension obligations, these PERA officials propose that money be taken by force of government from a relatively small group of Colorado's pensioners.  These are our leaders in Colorado state government.)

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee on SB10-001:

"What you did in 2010, with Senate Bill1, no one in the country has done anything comparable . . . and this was pretty dicey stuff, and this is why we had to walk on that razor's edge.  You can't fix it (the PERA pension system) too much, because over 90 percent of the fix incorporated in  Senate Bill 1 in 2010 came out of the hide of people in the system . . . less than ten percent of that fix came from our employers/taxpayers.  No one has ever done anything quite like that.  I am quite anxious for the litigation to get behind us."

(My comment: Meredith Williams states that the SB10-001 "90 percent" cost-shift from PERA employers onto PERA retirees was "dicey."  Webster's dictionary defines "dicey" as "risky."  I consider this unnecessary, planned breach of public pension contracts beyond "dicey," I consider this action to be immoral, ill-advised and foolhardy.

From “Colorado PERA on the Issues”:

“In all, about 90 percent of the changes enacted by Senate Bill 1 will fall on the shoulders of current and future PERA members and retirees – not other taxpayers.”

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

Senator Brandon Shaffer, in the Denver Post, April 17, 2011:

“I sponsored last year's legislation, known as Senate Bill 1, to protect PERA.  The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”

http://www.denverpost.com/opinion/ci_17858107

Meredith Williams, PERA Executive Director, in the Pueblo Chieftain, May 29, 2011:

“In fact, about 90 percent of the changes enacted by Senate Bill 1 are falling on the shoulders of current and future PERA members and retirees — not other taxpayers.”

http://www.chieftain.com/opinion/ideas/legislative-changes-have-put-pera-fund-on-a-solid-footing/article_3080a01c-88cd-11e0-ad01-001cc4c03286.html

SB 10-001 co-prime sponsor Senator Josh Penry and sponsor Senator Greg Brophy in the Denver Post, January 22, 2010:

“Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees . . .”

http://www.denverpost.com/search/ci_14242354

Colorado PERA Executive Director Greg Smith, at the “Fall 2011 PERA Shareholder’s Meeting,” [thirty-six minutes into the video]:

“‘Only ten percent of the fix” of the [SB10-001] reforms in 2010 came from additional employer contributions.

http://www.copera.org/pera/about/shareholder.htm.)

Back to the House Finance Committee hearings:

Colorado PERA Executive Director Meredith Williams' comments on February 23, 2012 to the House Finance Committee:

"I had something cross my desk earlier this week that appears that it could be the beginnings of another Senate Bill 1 lawsuit, on a completely different and very bizarre issue."

(My comment: What is that about?  PERA retirees?)

House Finance Committee Chairman 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."

House Finance Hearing on HB 12-1179:

Representative Jim Kerr, February 23, 2012: "The taxpayers . . . are obligated to fulfill the (PERA) benefits as soon as someone starts drawing those benefits down."

Rep. Jim Kerr, February 23, 2012: "They've earned those benefits . ."  ". . . The taxpayers . . . they're the ones who ultimately have to make the (PERA) fund whole . . ."

(My comment: According to Representative Jim Kerr, Colorado taxpayers are obligated to meet the state's contractual obligations to Colorado PERA retirees.  So, why is the Colorado General Assembly attempting to shift 90 percent of the costs of their 2010 pension reform bill from Colorado taxpayers onto PERA retirees?)

Rep. Jim Kerr, February 23, 2012: "If you're in a defined benefit program, you have a guarantee."  "PERA does have a guarantee." "A defined benefit plan is a guarantee."

Rep. Dickey Lee Hullinghorst, February 23, 2012: "Our state employees earn retirement benefits when they work."

(My comment: Representative Hullinghorst agrees with officials of the Ritter Administration who write:

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits [such as COLAs] . . . serve[s] to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

Here the Ritter Administration states clearly that a reduction in a COLA benefit [that is earned in an “exchange transaction”] changes the “net economic benefit” to the employee under the employee’s pension “agreement.”  Under SB 10-001, the “net economic benefit,” for an average PERA member was “reduced,” according the Ritter Administration, by “$165,000.”

Read the entirety of the Ritter Administration letter on the GASB site here:

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

Colorado PERA Board Trustee Carole Wright, February 23, 2012: "Only 18 percent of the money that comes into the (PERA) trust comes from taxpayers or from employers."

(My comment: PERA Trustee Carole Wright knows that the taxpayers provide a mere 18 percent of the resources that support the Colorado PERA pension system.  In light of this relatively small burden on Colorado taxpayers, [amounting to just 2-3 percent of all Colorado state and local government expenditures] why did PERA Trustee Wright support a further diminution of the taxpayer's PERA contribution in 2009 by shifting 90 percent of the costs of the PERA Board's pension reform proposal onto PERA retirees?)

Representative Spencer Swalm, February 23, 2012: "There is a contractual obligation here.  This is a defined benefit plan, those benefits are guaranteed, and ultimately the taxpayers of the state are on the hook."

Colorado PERA Executive Director Meredith Williams, February 23, 2012, on the Colorado PERA Board's historical investing mistakes, and the impact of these mistakes on the Colorado PERA Trust Funds:

"Ten years ago we were pretty aggressive in real estate, very aggressive might be a better characterization.  We were very aggressive in what I'll call private equity or alternatives.  At the board's direction we've pulled in our horns substantially, about seven and a half of the portfolio in each of those two, used to be fifteen in each.  I think that the portfolio as we headed into the dotcom bust was far riskier than it is today.  We paid the price for that."

(My comment: Meredith Williams tells us here that PERA "paid the price" for its past investing mistakes.  Here he admits that the Colorado PERA Board of Trustees has historically made mistakes in setting the asset allocation of the Colorado PERA trust funds.  I ask: Why should Colorado PERA retirees, who bear no "market risk" in their "defined benefit" pension plan, whose contractual public pension rights are "fully-vested," why should these Colorado PERA retirees pay the cost of the PERA Board's past investing mistakes by relinquishing their contracted pension benefits?)

Rep. Dickey Lee Hullinghorst, February 23, 2012: "I would like to know exactly what that (PERA) contractual relationship is."  "We are employers and we pay into PERA as a part of a benefit that's earned by our employees."

Colorado PERA Executive Director Meredith Williams in response to Representative Hullinghorst's question, February 23, 2012, (after preliminary remarks):

"We never have to answer that question.  It's not a black and white answer."

(My comment: Why did Colorado PERA's Executive Director, Meredith Williams refuse to answer Rep. Hullinghorst's question?  One might expect a more sophisticated response from the head of an organization that recently recommended a breach of PERA pension contracts to the Colorado Legislature.  During his many years in public pension administration one might have expected Meredith Williams to explore such a foundational question in depth.

Why is Colorado PERA's Executive Director, Meredith Williams unable to succinctly state the contractual rights of PERA's members?  Are the employees of PERA-affiliated employers expected to work for decades without knowing clearly what their rights are under their PERA contracts?  Are they expected to work each day for pension benefits that are undefined?

Why did Representative Hullinghorst vote for SB10-001 in 2010 without knowing the contractual rights of persons impacted by the bill?  Without this knowledge, how could she be certain that she was not violating her oath of office to act only within the strictures of the Colorado Constitution?)

THE HOUSE FINANCE COMMITTEE DEBATES PROSPECTIVE, LEGAL PENSION  REFORM THAT WOULD IMPACT ONLY "NON-VESTED" PERA MEMBERS.

March 1, 2012, House Finance Committee, comments of members of the House Finance Committee made during the amendment phase of the committee's hearing on HB 12-1150:

Rep. Priola: "I would draw your attention to L.001."  "This amendment simply moves the universe of folks that the three to seven years would apply to, to new hires and to folks that are not yet vested, meaning five years of service credit or less."  "I think it strikes a fair balance to not change the rules of the game on people later in their working years."

(My comment: This amendment proposed a change to the method of calculation of the "highest average salary" used to determine Colorado PERA base pension benefits.  The change would affect ONLY new hires and those without vested PERA pension contracts.)

Rep. Hullinghorst: "My understanding is that when you go to work, and you sign up for PERA benefits, and you are required by the state to do that . . . that's a contract, and I think that this is potentially actionable."

(My comment: If this is Representative Hullinghorst's "understanding," why did she support the breach of Colorado PERA public pension contracts when she voted for SB10-001?)

Rep. Labuda: "In 40-50 years they're going to be seniors, and they're going to be living on less because of this amendment, and I can't support that."

(My comment: Here, Rep. Labuda tells us that she cannot support a prospective change FOR NEW HIRES and non-vested PERA members because they will be "seniors" forced to "live on less" in 40-50 years!  Yet, she voted for SB10-001 in 2010, forcing current "seniors" [who have fully-vested PERA contractual rights] to "live on less" when SB10-001 was signed into law.  I see two possible explanations for the inconsistency of Representative Labuda's position.  First, she was persuaded to abandon her belief system by the 27 SB10-001 lobbyists.  Second, her vote in favor of SB10-001 was entirely arbitrary.)

Rep. Priola: "Representative Labuda, that brings to mind something that I need to correct the record on as well.  When I was in testimony a week or so ago, I had stated that I voted for SB 1, I then checked the voting record, and realized that I voted against it, and I tried to think back to what was in my mind at the time.  Then I refreshed my memory that although I thought it was a much needed step in the right direction, I wasn't willing to make the vote that bought it lock stock and barrel."

(My comment: Two years after a legislator considers legislation that abrogates Colorado State contracts, the legislator cannot recall whether he supported or opposed the legislation?)

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 . . . "

Rep. Kefalas: "It still does affect those members that have signed contracts that are non-vested.  Is that correct?  And therefore I still have concerns about L.001."

(My comment: Here Rep. Kefalas expresses concern about impacting PERA benefits of "non-vested" PERA members, yet he supported Senate Bill 10-001, a bill abrogating "fully-vested" Colorado PERA pension contracts . . . a bill that took one-third of the accrued public pension benefits of Colorado PERA retirees.  This is stunning admission.

Again, in 2010 the Leadership of the Colorado General Assembly decided against appointing an interim study committee to examine prospective pension reform options in order to keep its members in the dark.  This is apparent from comments made by members of the House Finance Committee who supported SB10-001.)

Rep. Hullinghorst: "We got ourselves into this mess in the 1980s to begin with, in the 1980s and 1990s, when the Legislature just on a whim decided they were going to do this and that with PERA, and made some changes that were very detrimental to the system."

(My comment: Here, Rep. Hullinghorst adds her voice to the many voices that have condemned the Colorado General Assembly's historical mismanagement of the PERA pension system.)

Rep. Kagan: "This is a benefit cut to public employees who work hard all of their lives and one of their measures of compensation is their benefits package, that's how we manage to attract such fine public employees as we have on such low salaries is because they know 'yeah, the salaries aren't as high as I'd like, but I'm still very loyal to the state, I work very hard for the state for a very low salary because I do have a respectable benefits package, and I'm sure that that benefits package will be there for me when I retire.'  Now you come and you say we're going to cut those benefits, we're going to reduce the value of that package . . ."

Rep. Kagan: "(In adopting SB10-001) we had put PERA . . . on an actuarial sound footing without waiting for a crisis to hit, without waiting for exposés and pressure . . ."

(My comment: Here, Rep. Kagan notes that the Colorado General Assembly adopted SB10-001 in 2010, breaking PERA pension contracts, while Colorado PERA faced no financial "crisis."  Like Representative Labuda and Kefalas above, Rep. Kagan expresses concern regarding changes to "non-vested" Colorado PERA pension contracts, while he supported the breach of "fully-vested" PERA contracts in SB10-001.  Such inconsistency of logic is not found among persons with knowledge of public pension contractual rights.  It is truly surprising that this argument is propounded by a man of such discernment.)

Rep. DelGrosso: "These new hires know what their retirement will be, so when they're getting into the system they can choose to accept the job or not knowing what their retirement benefits will be."

"We are still involved in lawsuits over Senate Bill 1 on whether or not those were constitutional because we made changes to people that are currently in the system that were vested, current retirees.  So, Senate Bill 1 did affect people's current retirements and those that were retired."

Rep. DelGrosso: "We have to look 25 to 30 years into the future to avoid the lawsuits that we are currently involved in because of Senate Bill 1."

"We're forced to, to avoid lawsuits, to look that far into the future."

(My comment: Here Rep. DelGrosso notes that prospective, legal public pension reform options are available to the Colorado General Assembly.  In fact, just six weeks after Rep. DelGrosso made these remarks, the House Finance Committee [on April 19, 2012] adopted such legal, prospective pension reform options for thousands of members of Colorado county public pension systems [when the committee referred out SB12-149.]

Language from SB12-149:

“(3) ANY MODIFICATION PURSUANT TO SUBSECTION (2) OF THIS SECTION SHALL NOT ADVERSELY AFFECT VESTED BENEFITS ALREADY ACCRUED BY MEMBERS OF SUCH DEFINED BENEFIT PLAN OR SYSTEM, INCLUDING, BUT NOT LIMITED TO, THE PENSION BENEFITS OF RETIRED MEMBERS OR MEMBERS ELIGIBLE TO RETIRE AS OF THE EFFECTIVE DATE OF THE MODIFICATION, UNLESS OTHERWISE PERMITTED UNDER OR REQUIRED BY COLORADO OR FEDERAL LAW.”)

Link to SB12-149, the Act:

http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/0E9F894D31C081EF87257981007DAF5A?open&file=149_enr.pdf

Note that House Finance Committee members, Representatives Priola, Jim Kerr and Labuda co-sponsored this legislation making prospective pension reform options available to Colorado county governments.  Note that Representative Labuda co-sponsored SB12-149, providing prospective pension reform options to Colorado county governments, AND voted in favor of SB10-001, breaking "fully-vested" Colorado PERA retiree pension contracts.  Completely arbitrary.)

Link to meeting summary of House Finance Hearing on SB12-149 (excerpts from hearings on this bill are available at saveperacola.com):

http://www.leg.state.co.us/clics/clics2012a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/b695bc1290e34d25872579e4006ba1bd?OpenDocument)

Rep. Hullinghorst: "The current suits are relative to COLA."  "There was some awareness that that possibly could draw some suits."  "It was much less a problem with cutting benefits than any other thing you could look at in that regard."

Representative Hullinghorst: "This is a more difficult . . . approach than the COLA situation."

(My comment: Incredibly, here we have Rep. Hullinhorst stating that enactment of PROSPECTIVE public pension reform for NEW HIRES is a "more difficult approach" for the Colorado General Assembly than is the outright, intentional breach of fully-vested Colorado PERA pension contracts of PERA members who had worked for PERA-affiliated employers FOR DECADES.  Here we see, manifest in Rep. Hullinghorst's remarks, the work of 27 lobbyists hired to enact SB10-001.  It is sickening that lobbyists have gained such control over the minds of Colorado legislators.  In 2010, Legislative Leadership served up pliable members for the 27 SB10-001 lobbyists . . . members who were ignorant of public pension contractual rights.)

Rep. Kefalas: "I believe that a fundamental premise, principle, value of this great State of Colorado, of this great country, is this idea of some semblance of retirement security."

"I am concerned that this will undermine the contractual obligations that we have made with folks who are state employees and that could invite litigation and I think that's something the state does not need."

(My comment: Again, Rep. Kefalas defends the interests of non-vested Colorado PERA members, members who have NO contractual right to any PERA annuity.  Two years earlier, he voted to take one-third of the accrued public pension benefits of PERA retirees with fully-vested pension contracts.)

Rep. Labuda: "I don't want to penalize anybody who is thinking of coming to work for PERA, or someone who is newly started for PERA."

(My comment: Again, note the members of the House Finance Committee who aggressively defend the interests of persons who have no vested PERA contractual pension rights, while having voted to take fully-vested PERA public pension benefits in SB10-001.)

Rep. DelGrosso: "This has nothing to do with those that are in the system, that are moving through the system, that are retired or not retired."  "This puts more money into PERA's coffers, this will actually put more money in there to shore up the sustainability of PERA."

(My comment: Here Rep. DelGrosso attempts to educate the members of the House Finance Committee.  He attempts to do the job that should have been done by the Leadership of the Colorado General Assembly during the 2009 interim.)

The amendment to HB12-1150, (L.001), passed, the bill was then postponed indefinitely.

House Finance Committee, March 1, 2012, Hearing on HB12-1142:

COLORADO TREASURER STAPLETON: THE LEGISLATURE'S SB10-001 PERA CONTRACT BREACH WILL BE REPEATED.

Colorado Treasurer Walker Stapleton:

"It's incumbent on a plan to make promises that are conservative to our public workers, so that at the end of the day . . . the plan is in a position that it's making promises that it can afford to make and it's not putting the plan at risk of having benefits cut and amended and retirement lengthened by the Legislature, because make no mistake that will happen.  That's what happened in Senate Bill1, and if the plan becomes insolvent or the liabilities grow again, it will happen in "Senate Bill 2," and who knows how many more bills."

(My comment: Here, the Colorado Treasurer assumes that state worker contracts are inferior to the state's contracts with corporations, that state worker contracts may be freely abrogated while other state contracts remain untouched.  The Treasurer assumes that the Colorado Legislature possesses power permitting it to ignore the provisions of the Colorado Constitution, that the Colorado Legislature is the one branch of government that is unrestrained by the Colorado and U.S. Constitutions.  The Treasurer assumes, erroneously, that the members of the Colorado PERA pension system are somehow subject to "market risk" in their "defined" benefit plan.  The Treasurer notes that no actuarial emergency existed in 2010 when the Colorado Legislature broke Colorado PERA public pension contracts.  In 2010, the Colorado General Assembly refused to act responsibly, refused to explore legal, prospective pension reform options.  The Colorado Legislature has ignored its PERA pension bills.  Having ignored its contractual public pension obligations, the Colorado Legislature finds a cavalier attitude toward the contracts of Colorado PERA retirees to be quite convenient. The Colorado Treasurer anticipates that members of the Colorado General Assembly will again break Colorado PERA contracts in the future at their pleasure.

Thus, if the Colorado General Assembly's legislation breaking Colorado PERA pension contracts, SB10-001, is upheld by Colorado courts, the Colorado PERA pension system becomes, for all practical purposes, a "gratuity."  In that event, Colorado public sector workers who are members of the PERA pension system will work each day for compensation that will be determined after the fact by their Colorado PERA-affiliated employers.)

COLORADO TREASURER AND PERA BOARD TRUSTEE WALKER STAPLETON: THERE WAS NO ACTUARIAL EMERGENCY IN 2010 WHEN SB10-001 WAS ENACTED BY THE COLORADO LEGISLATURE.

Colorado Treasurer Stapleton:

"And all you have to do is go back to 2008 and look at our portfolio which lost billions of dollars in one year alone and ALMOST had an actuarial emergency as a result of it."

(My comment: This statement by our State Treasurer is in conformance with the failure of the Colorado General Assembly to declare an "actuarial emergency" prior to adoption of SB10-001 in 2010.  Our State Treasurer observed no PERA "actuarial emergency," and the Colorado Legislature declared no "actuarial emergency."  And, why would the Colorado General Assembly declare an actuarial emergency in 2010?  That year, the actuarial funded ratio of the Colorado PERA trust funds was only nine percent less than the average PERA AFR over the prior 40 year period.)

Colorado PERA General Counsel Greg Smith on PERA's return assumption:

" . . if we fall short of the 8 percent, what it does is it takes us longer to pay off that unfunded liability, instead of doing it in 30 years it may take us 35 years, it may take us 38 years, it may take us 50 years."

(My comment: Here Colorado PERA's General Counsel admits that the 30-year time frame for amortization of PERA liabilities set in Colorado statutes is arbitrary.  The 30-year period is merely an arbitrarily set goal, however this "goal" in Colorado law was used to justify the breach of Colorado PERA pension contracts in 2010.  Thus, an important actuarial assumption used to justify the taking of fully-vested Colorado PERA benefits in SB10-001 was arbitrary.  This assumption, put in statute by the same General Assembly that enacted SB10-001, was used to calculate projections of PERA's future unfunded liabilities, placing unnecessary financial pressure on the PERA trust funds.  Note that just 15 years ago, Colorado PERA's "maximum amortization period" was set in statute at 60 years.)

Don Schaeffer, Colorado PERA retiree, "I actually worked at PERA for 20 years."  "In my job at PERA, I was the Communications Director, and that started somewhere back in the early 80s."
 
"In the year 2000 . . . we (PERA) were fully funded and they (the General Assembly) said 'Oh, we have too much money," and so then we had (pension contribution) cuts, and we had benefits added and so forth."

"If you look at the . . . State Division trust fund it is more underfunded than the School Division, because the School Division doesn't have choice (of a defined contribution alternative)."  "It's expensive to give choice."

(My comment: Here, Don Schaeffer, former Colorado PERA Communications Director, points out that legislation enacted by the Colorado General Assembly, allowing a defined contribution choice for certain members of that PERA Division, places an additional burden on members of the Division, and results in the underfunding of that PERA Division's trust fund.  I ask: Why should Colorado PERA retirees, who have fully-vested public pension contracts relinquish their constitutional rights to compensate for such policy decisions of the Colorado General Assembly?)

Dan Chapman, Legislative Advocate, AARP Colorado: "I am here today solely as a represent of AARP Colorado and its members."

"AARP also supports pension reform, but believes that modification to pension plans or plan formulas should have as a key objective to hold harmless current beneficiaries and employees . . ."
 
(My comment: Here we have a representative of AARP Colorado informing the House Finance Committee of AARP's position that public pension reforms should hold harmless current public pension beneficiaries.  In light of this AARP position, why did AARP Colorado fail to defend the contractual rights of Colorado PERA retirees in 2010?  Are Colorado PERA retirees an exception to AARP Colorado's policy that current public pension beneficiaries should be held harmless in pension reform legislation?

Does AARP Colorado support public pension contractual rights? or do they not support public pension contractual rights?  Or, did it happen in 2010, that certain self-interested parties successfully lobbied AARP Colorado officials, persuading AARP Colorado to remain on the sidelines while SB10-001 was pushed through the legislative process, that is, while one-third of the accrued public pension benefits of Colorado PERA retirees were seized by the Colorado Legislature?

In 2009/2010, the Colorado AARP decided to do nothing to defend Colorado PERA retiree constitutional rights.  Here is a statement from an AARP Colorado representative on SB10-001: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.”  I ask: How does the "monitoring" of a breach of contract protect the interests of retirees?)

Colorado PERA active and retired members, in 2010, we observed a willful, deliberate, breach of public pension contracts by the Colorado General Assembly.  If Colorado legislators did not take Colorado PERA statutory contracts seriously in 2010, as our State Treasurer warns, they will never take Colorado PERA statutory contracts seriously in the future.  Support public pension contractual rights and the rule of law in Colorado.  Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!

National Association of State Budget Officers – the Common Funding Ratio Benchmark for Public Pensions is 80%. So, Why is the Colorado Legislature Trying to Break PERA Pension Contracts Until a 100% Ratio is Attained?

CLEARLY LEGISLATIVE OVERREACH.

Last year, the National Association of State Budget Officers published an Issue Brief that places public pension funding in a state budgetary perspective.  The Issue Brief brings perspective to the Colorado General Assembly's breach of Colorado PERA public pension COLA contractual obligations in 2010.  A lawsuit contesting this state taking of PERA public pension benefits, Justus v. State, is currently pending before the Colorado Supreme Court.

"For over 60 years, the National Association of State Budget Officers (NASBO) has been the professional membership organization for state budget and finance officers."

http://www.nasbo.org/about-nasbo

The Issue Brief, "A State Budgeting Perspective on Public Pensions," is available at the following link:

http://www.nasbo.org/sites/default/files/pdf/A%20State%20Budgeting%20Perspective%20on%20Public%20Pensions.pdf

Below, I provide a few important excerpts from the NASBO public pension Issue Brief (and my observations):

"This brief examines a number of pension issues from a budgetary perspective. A budgetary perspective considers long term pension funding adequacy, and the financial cost of promised benefits in relation to the rest of current state spending."

"Most public pensions have retained a defined benefit status in which retiree payments are guaranteed under state statute, constitution, or contract law."

(My comment: When the Colorado General Assembly enacted the bill breaking Colorado PERA retiree pension contracts in 2010 [SB10-001], scant attention was given to the fact that the issue of governmental taking of contracted public pension COLA benefits had been previously litigated in Colorado.  Decades ago the Colorado Supreme Court invalidated the taking of contracted COLA benefits by Colorado governmental employers as a means of escaping their contracted public pension debt.  Colorado state and local government employers cannot "define" their way out of their contractual public pension COLA obligations in statute or ordinance.  How did the Colorado PERA Board of Trustees and Colorado's public sector unions arrive at the conclusion that state and local government employers, after benefiting from the labor of their employees, did not have to pay contracted deferred compensation for that labor?  This notion defies Colorado case law, and common sense.

Although, many state legislators were generally aware of the recent Colorado Attorney General's Opinion stating that impairment of contracted PERA benefits would be unconstitutional (during debate of SB10-001), few had read the on-point case law, Bills or McPhail.  In 2009/2010 the Leadership of the Colorado General Assembly, encouraged by self-interested public sector unions, preferred to keep rank and file members of the General Assembly in ignorance.  Thus, Leadership abdicated legislative policy-making authority in this area to the state's pension administrator, Colorado PERA.  The Colorado PERA Board of Trustees conducted a statewide campaign to persuade Colorado PERA retirees to relinquish their contractual pension rights.  As planned, the PERA Board of Trustees presented a preordained conclusion to take "fully-vested" PERA retiree pension COLA benefits to the Legislature prior to the 2010 legislative session.

Although encouraged to do so, the Leadership of the General Assembly did not pursue an interrogatory to the Colorado Supreme Court requesting an opinion on the constitutionality of their proposed taking of PERA retiree public pension benefits.  The Leadership of the General Assembly did not propose that an interim study committee be appointed to examine potential PERA pension reforms that would comply with the Colorado Constitution.  Such actions on the part of the General Assembly's Leadership would have resulted in a level of knowledge of public pension contractual rights on the part of the members sufficient to prevent even 27 statehouse lobbyists from pushing SB10-001 through the legislative process.)

NASBO:

"The yearly . . . employer contribution to the fund comes directly from the state’s operating budget and is called the annual required contribution or (ARC).  The ARC represents the level of payment needed for the state to keep pace with the accumulation of benefits."

"When states contribute significantly less than the ARC, assets in the pension fund may not be able to meet the liabilities that accrue, which can necessitate future taxpayer dollars to cover the cost of benefits for services delivered in the past.  States must consider the issue of equity because, as the Government Accountability Office points out, 'When the ARC is not paid in full each year, future generations must make up for the costs of benefits that accrued to employees in the past.'"

(My comment: On August 11, 2009, at the 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: “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.”

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

This legislative habit of failing to pay annual public pension bills [the ARC deficiency] has been referred to as "taking a pension holiday," or "putting state expenditures on a credit card."  Skipping out on required PERA pension bills allowed the Colorado General Assembly to redirect this money to discretionary state programs.  Colorado state legislators have racked up their PERA credit card balance on an extended "pension holiday."  Rather than acting responsibly and facing the consequences of their negligence, state legislators now seek to raid Grandma's bank account to pay off their credit card debt.  These are our state leaders . . . setting a example for today's youth.)

NASBO:

"The amount owed on unfunded liabilities can be paid over time because the obligations are amortized much like a mortgage payment."

(My comment: Colorado PERA Executive Director Meredith Williams in "Setting the Record Straight":

“PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years.”

https://www.copera.org/pera/about/issues.htm

Silver and Gold Record, March 9, 2006:

“Williams noted that most people don't have enough money to pay off their mortgages, and that PERA's assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said."

https://www.cu.edu/sg/messages/4871.html)

NASBO:

"When a pension plan’s accrued actuarial liability exceeds the actuarial valuation of assets the plan is said to have an unfunded actuarial accrued liability (UAAL) or unfunded liabilities."

"The ratio of liabilities to assets is depicted as a pension plans’ funding ratio, which indicates the level of funds available for paying accrued benefits. The benchmark for many state and local plans is to maintain an 80 percent funding ratio or enough assets to cover 80 percent of accrued liabilities."

(My comment: “Mr. [Meredith] Williams was quoted in the same report as saying ‘Most pension funds are considered sound at 80 percent funding levels.’”

“Meredith Williams ‘said at the Senate Finance Committee hearing [on SB10-001] in January that PERA needed to be funded at 100 percent.  When the PERA representatives  were asked by a member of the committee why in view of the fact that PERA had only been funded at 100 percent for about seven of the past thirty years [actually two of the last eighty-one years], it was necessary now.  The answer was ‘it just makes things easier.’”

Link:

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

In February 2011, Colorado PERA's General Counsel wrote in the periodical "Government Finance Review," that, in order for a PERA pension reform to be found "reasonable" under the law, changes to the Colorado PERA pension must be "the minimum changes necessary."  The next year, June 26, 2012, Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, wrote in the 2011 Colorado PERA CAFR: that the 100 percent funding threshold put into Colorado law by SB10-001 is much stronger than is necessary [i.e., not “the minimum change necessary”] to meet public pension regulatory [GASB] standards.  Alteration of the statutory Colorado PERA pension contract in 2010 [SB10-001] by incorporation of this 100 percent PERA pension funding threshold placed unnecessary financial pressure on the PERA pension trust funds, creating the Legislature's desired rationale for breaking pension contracts, and does not represent the "least drastic" reform option available to the Colorado General Assembly.

You can see that, in 2010, when Leadership decided to attempt a Colorado PERA pension contract breach, they were determined to "go big."  If they were going to use recent [2008/2009] market volatility as a “window” to attempt to slash state and local government pension debt, why not roll the dice and slash the PERA pension debt dramatically?  Why not push 90 percent of the cost-shift in their bill, SB10-001, onto PERA retirees?  PERA retirees were weak and unrepresented . . . an easy target for PERA’s hired lobbyists.  Instead of placing a PERA pension funded ratio of 80 percent in the title of SB10-001, why not bet the farm and stick in a 100 percent funded ratio threshold?  [Note that another state that has been condemned for its attempt to take public pension COLA benefits, Rhode Island, proposes to continue its own pension theft until just an 80 percent funding threshold is achieved.  The Rhode Island theft is thus, comparatively, the lesser crime.]  This is what happens when lobbyists run the legislative show. Greed takes over.

Note this 2012 Fitch Ratings position on public pension funding levels: “Fitch generally considers pensions with funded ratios 80% and above to be well-funded.”  Also, in a 2011 Fitch Ratings report, Fitch notes that a 70 percent actuarial funded ratio for public defined benefit pensions is considered an “adequate” actuarial funded ratio.

Link:

http://www.ncpers.org/Files/2011_enhancing_the_analysis_of_state_local_government_pension_obligations.pdf)

Back to NASBO:

"In the past, pension dollars accounted for a much greater share of state budgets than they do today (See the graph on page 4 of the NASBO Issue Brief.)"

"Overall, pension contributions represent a small percentage of states’ operating budgets at roughly 3.8 percent."

(My comment: Jennifer Paquette, Colorado PERA Chief Investment Officer, 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.”

Note that according to the NASBO graph, in the 1980s, U.S. state and local government expenditures to meet public pension obligations reached six percent of total state and local government expenditures, nearly three times Colorado's public pension burden in 2008 as identified by Colorado PERA's Chief Investment Officer above.)

NASBO:

"Center for Retirement Research at Boston College, October 2010 – Public Pension Contributions as a Percent of State and Local Government Budgets."

NASBO:

"Pension liabilities can also be viewed as a debt structure component, comprising one aspect of a state’s long-term outstanding debt. Therefore, state pension systems are a factor that rating agencies consider before issuing an opinion on a state’s ability to repay debt obligations. The degree to which states consistently pay their ARC indicates that other debt obligations will likely be met through the normal budget process."

"Pension obligations are referred to as 'riskless' because the payments are guaranteed to beneficiaries."

Link to complete NASBO public pension Issue Brief:

http://www.nasbo.org/sites/default/files/pdf/A%20State%20Budgeting%20Perspective%20on%20Public%20Pensions.pdf

Colorado PERA active and retired members, the proponents of SB10-001 would have you, and Colorado courts, believe that your accrued pension benefits are a burden on Colorado state and local governments.  In reality, pension contributions made by Colorado governments are a fraction of public pension contributions in other states.  The Colorado General Assembly and self-interested lobbyists want to conceal many truths from you and the courts.  Help bring the truth to light in our state.  Do your part to preserve the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Do Colorado PERA Retirees Have a “Duty to Die”?

The average age of a Colorado PERA retiree has now passed 70 years.  In 2010, a majority of the members of the Colorado General Assembly determined that these Colorado residents were no longer full "citizens" of Colorado.  They no longer deserved protections afforded by the Colorado Constitution.

Agreeing with lobbyists in 2010, a majority of Colorado legislators decided that this group of elderly Coloradans should have no voice.  They were a burden on Colorado.  Lifetimes that had been spent serving Coloradans deserved no recognition.  Thousands of these PERA retirees were in hospitals or nursing homes.  Under no circumstances would these PERA retirees ever show up at the Colorado Capitol's lobbies to defend their constitutional rights.  The State of Colorado's contracts with these "residents" were inferior to the state's contracts with corporations.  Colorado PERA retiree contracts could be casually discarded.

"You've got a duty to die and get out of the way," said former Colorado Governor Dick Lamm decades ago.  The former Colorado Governor was speaking in support of physician-assisted suicide; nevertheless, his words came to mind in 2010 when the Colorado General Assembly voted to break Colorado's contracts with elderly Colorado PERA pensioners.

http://en.wikipedia.org/wiki/Richard_Lamm

The State of Colorado, the 15th wealthiest state in the nation, a state with an unexpected billion dollar tax bonus in next year's budget, a state that pumps $700 million into pensions that are not its responsibility while ignoring its own pension contracts, a state that recently granted $105 million in discretionary property tax relief . . . that state is burdened by its elderly and therefore must illegally seize their property.

As Colorado PERA officials have informed us, Colorado legislators have skipped out on their pension obligations for a decade . . . they haven't paid their pension bills (ARC).  In 2010, a majority of Colorado legislators decided to try and use recent market volatility as an excuse to take money from this group of PERA retirees (who, by the way, bear no "market risk" in their "defined" benefit pension plan.)  Colorado legislators decided to inflict a compulsory "shared sacrifice" on PERA retirees. This "shared sacrifice" was put into Colorado law, to help keep taxes low in the state with the lowest per capita state tax receipts in the country.  Each new year finds thousands of criminals convicted in the United States for misappropriating the assets of the elderly . . . tapping an old man's bank account for a "compulsory shared sacrifice."

IS THE STATE OF COLORADO OBLIGATED UNDER COLORADO LAW TO REPORT ITSELF FOR "ELDER FINANCIAL ABUSE"?

I find tremendous irony in the fact that the Colorado General Assembly has recently enacted legislation that requires reports of financial abuse of Colorado residents over 70 years of age.

"SB 13-111: Requiring Certain Mandatory Reporters to Report Suspected Abuse of Persons 70 Years of Age or Older."

(My comment: The taking of one-third of an at-risk elder's contracted, accrued, earned, "fully-vested" pension benefits to maintain Colorado's position as a "tax haven" is undeniably abusive.)

"Under the bill, on and after July 1, 2014, certain professionals (mandatory reporters) who observe the abuse or exploitation of a person who is 70 years of age or older (at-risk elder) or who have reasonable cause to believe that an at-risk elder has been abused or has been exploited and is at imminent risk of abuse or exploitation are required to report such fact to a law enforcement agency within 24 hours after making the observation or discovery. A mandatory reporter who fails to report commits a class 3 misdemeanor."

(My comment: Under this legislation, a person who steals a paltry $1,000 from an at-risk elder must be reported.  Why should an organization that illegally takes one-third of an at-risk PERA retiree's pension not also be reported?)

"A person who exercises undue influence to convert or take possession of an at-risk elder’s money, assets, or other property commits statutory theft."

"Within 24 hours after receiving a report of abuse or exploitation of an at-risk elder, a law enforcement agency shall notify the at-risk elder’s county department and district attorney’s office of the report. The law enforcement agency shall complete a criminal investigation when appropriate. Upon completion of an investigation, the law enforcement agency shall provide a report of the investigation to the at-risk elder’s county department and a district attorney’s office.

"On or before January 1, 2014, the peace officers standards and training board (P.O.S.T. board) shall create and implement a training curriculum to prepare peace officers to recognize and address incidents of abuse and exploitation of at-risk elders."

http://cbaclelegalconnection.com/tag/elder-law/

From the SB13-111:

"(e) The general assembly should study and implement specific recommendations for combating financial exploitation of elder adults . . ."

(10) "EXPLOITATION" MEANS AN ACT OR OMISSION COMMITTED BY A PERSON WHO: (a) USES DECEPTION, HARASSMENT, INTIMIDATION, OR UNDUE INFLUENCE TO PERMANENTLY OR TEMPORARILY DEPRIVE AN AT-RISK ELDER OF THE USE, BENEFIT, OR POSSESSION OF HIS OR HER MONEY, ASSETS, OR PROPERTY;

(My comment: "Deception . . . undue influence to permanently . . . deprive an at-risk elder . . . of her money."  This phrase perfectly encapsulates the Colorado PERA legal, lobbying, and political campaigns to break Colorado PERA retiree pension contracts in 2009/2010.)

(12) "Position of trust" means assuming a responsibility, duty, or FIDUCIARY relationship toward an at-risk adult . . .

(My comment, Colorado PERA statutes: “As FIDUCIARIES, such [PERA Board] trustees shall carry out their functions solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law.”)

"THEFT FROM THE PERSON OF AN AT-RISK ELDER BY MEANS OTHER THAN THE USE OF FORCE, THREAT, OR INTIMIDATION IS A CLASS 4 FELONY WITHOUT REGARD TO THE VALUE OF THE THING TAKEN.

(7.5) ANY PERSON WHO EXERCISES UNDUE INFLUENCE TO CONVERT OR TAKE POSSESSION OF AN AT-RISK ELDER'S MONEY, ASSETS, OR OTHER PROPERTY COMMITS THEFT . . ."

(My comment: Colorado Court of Appeals on PERA pensioner property rights: “See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim.”

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

For the complete bill, SB13-111, visit this link:

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/3006FD57CDD34B8287257AEE00570CDC?open&file=111_rer.pdf

In an eleven-page letter, dated August 2, 2010, from the Ritter Administration (Office of the Colorado State Controller) to the Governmental Accounting Standards Board, GASB, (the national regulator for public pension plans) officials of the Ritter Administration note that SB10-001 will cost every Colorado PERA retiree $165,000 over the next 20 years.  Ritter Administration officials in 2010:

“In Colorado, a class action lawsuit has been filed challenging recently passed statutory reductions in annual COLA increases which for an average member would result in $165,000 of reduced benefit over a 20 year period.” You can read the entirety of the letter on the GASB site here:

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

Colorado Coalition for Elder Rights and Abuse Prevention:

"Our mission: to promote state-wide understanding of elder/at-risk adult abuse and the rights and protections available to elder and at-risk adults."

"What is financial exploitation?  The improper use of an elder’s funds, property or assets constitutes financial exploitation or abuse."

"By far, the greatest number of elder abuse cases involves some type of financial exploitation."

http://ccerap.org/

Not even the retiree organization, Colorado AARP, will defend the constitutional rights of Colorado PERA retirees.  In 2009/2010, the Colorado AARP decided to do nothing to defend PERA retiree constitutional rights.  Here is a statement from an AARP representative: “The (Colorado) AARP state office, with input from our volunteer leadership, reached the decision to monitor SB10-001.”  How does the "monitoring" of a breach of contract protect the interests of retirees?

"AARP ElderWatch is designed to operate as a clearinghouse for complaints, educational information, and training materials dealing with the financial exploitation of elderly Coloradoans."

http://hotline.aarpelderwatch.org/public/home.html

Colorado PERA active members, is this the future you desire?  A future in which contractual rights to your accrued benefits can be casually ignored by your employer?

Colorado PERA retirees, when state legislators ignore the Colorado Constitution they have sworn to uphold, courts must necessarily intervene to defend that constitution.  Support the rule of law in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Hick Signs Next Year’s State Budget; Provides More Evidence that the State Faces No Financial “Crisis” Warranting Breach of its Pension Contracts.

STATE LAWYERS ARGUE THAT COLORADO CANNOT MEET ITS OWN CONTRACTUAL PENSION OBLIGATIONS.  IF THIS IS TRUE, HOW HAS THE STATE MANAGED TO PAY $700 MILLION FOR PENSIONS THAT ARE NOT ITS CONTRACTUAL OBLIGATION?

Three years ago, a mob of statehouse lobbyists (paid by self-interested parties) set their sights on breaking Colorado state and local government pension contracts.  These 27 lobbyists successfully persuaded a majority of Colorado state legislators to attempt to break the contracts of Colorado PERA pensioners.  In effect, the lobbyists intend to use the force of government to take money from older Coloradans to subsidize state and local government budgets.

The pensioners whose property was seized immediately filed a lawsuit, Justus v. State.  A defendant in the case, the Colorado PERA pension system, notes (in its May, 2010 Motion to Dismiss, page 12) that even the prime sponsor of the legislation they are attempting to defend considers Colorado PERA's pension debt to be a "financial liability" of the State of Colorado.

From the PERA Defendant's Motion to Dismiss:

"Senate Minority Leader Penry, another co-sponsor of the bill, called PERA’s unfunded pension liability the 'single largest financial liability facing the State of Colorado.' Id. at 9-10 (statement of Sen. Joshua Penry, Senate Minority Leader)."

The PERA Defendants also note, on page 27 of their Motion to Dismiss, that " . . . PERA is . . . an instrumentality of the state . . ."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

The PERA Defendants highlight the fact that Colorado PERA pension debt is a financial liability of the State of Colorado in legal briefs, so why have they bothered appealing a recent Colorado Court of Appeals decision making this same finding?

The PERA Defendants would have us believe that meeting contractual public pension obligations is a financial burden on the State of Colorado.  The defendants would have us believe that the State of Colorado has insufficient financial resources to perform under the Colorado PERA pension contract.

If meeting contractual Colorado PERA pension obligations is such a burden on the State of Colorado, why has the Colorado General Assembly recently and voluntarily agreed to finish paying off $700 million of public pension liabilities that ARE NOT its contractual obligation?

The State of Colorado, the 15th wealthiest state in the nation, is fortunate to find itself with an extra $1 billion in next fiscal year's budget.  Yet, the defendants in the case, Justus v. State, would have us believe that the State of Colorado faces such a severe financial "crisis" that it cannot afford to meet its contractual pension obligations.

Further, if the State of Colorado is indeed confronted by a "financial crisis," how has the Colorado General Assembly managed to give away $105 million in discretionary property tax relief in next year's state budget?  The PERA Defendant's arguments continue to defy logic.

When a person hires a lawyer to file a civil case, isn't it generally safe to assume that the person will try to help their lawyer win the case?  That the person will avoid, to the extent possible, actions that are contrary to his legal interests?  If an organization is sued and hires a law firm to defend its interests, is it not generally expected that the organization will act in its own defense, and assist the law firm in building a defense?

The State of Colorado is an organization that is currently being sued by its retired workers.  The State of Colorado and its pension-administering arm, Colorado PERA, have in-house attorneys, state attorneys general, and an outside, hired law firm defending their breach of Colorado PERA pension contracts.  You might expect that the Colorado General Assembly, as a branch of Colorado state government, would assist this host of lawyers in building a case.

You would be wrong.

When the Colorado General Assembly broke the state's pension contracts in 2010, politics was in the driver's seat.  Is it really a surprise that short-term political considerations predominate in the minds of politicians?  Nevertheless, one might expect that Colorado state legislators would at least temporarily attempt to set political considerations aside in order to help Colorado PERA's in-house and outside hired attorneys build a defense in the case, Justus v. State, i.e., establish "actuarial necessity."

One would be disappointed.

In 2010, when a majority of state legislators violated Colorado PERA pension contracts, politics controlled.  Political calculations and ambitions continue to control in 2013.  At the recently concluded legislative session, Colorado legislators could not (even temporarily) resist the impulse to provide political favors to constituents and lobbyists in order to avoid harming the state's case in the PERA COLA lawsuit.  Thus, while their lawyers are trying to establish an atmosphere of "financial crisis," state legislators are using this year's billion dollar tax bonus to provide a gift to local governments, paying off local government legacy pension liabilities.  With an extra billion dollars in their pockets, we did not see a single Colorado legislator propose that the General Assembly meet ITS OWN contractual pension obligations.  At the recently concluded 2013 legislative session, not a single state legislator suggested that a good faith effort be made to catch up with a decade of underfunded PERA pension contributions.  Instead, we see a $105 million purchase of votes in the form of a discretionary grant of property tax relief.  We see local government lobbyists persuade state legislators to use state government resources to meet local government legacy pension debt.

I have no objection to discretionary expenditures that are deemed appropriate by the Colorado General Assembly.  However, I do object to arguments by attorneys representing the State of Colorado that the state cannot meet its own contractual pension obligations while it is giving away revenues to pay off local government pension obligations.  Having made such appropriations, representatives of the Colorado General Assembly cannot legitimately argue in court that financial need has forced the Legislature to break Colorado PERA pension contracts.

Business Week:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

http://www.businessweek.com/ap/2013-04-29/hickenlooper-signs-next-years-budget-for-colo-dot

Note again, that this $140 million is not "state debt," in spite of the effort of politicians to portray these local government pension liabilities as "state debt."  This deception serves their political purposes.

September 19, 2012, FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans" to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

"So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link:

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage)

The fact that FPPA Old Hire Pension Plan unfunded liabilities are not a contractual obligation of the State of Colorado is also made clear in Colorado statutes and in the language of Referendum C.

The discretionary nature of state grants to fund Colorado local government pensions is stated clearly in the “Legislative Declaration” (preceding Section 31-31-101, C.R.S. ) in Colorado law.  Section 31-31-101, C.R.S. Legislative Declaration:

“The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits, except for state funding of death and disability benefits as specified in this article, but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=SB234_r1.pdf

A few years ago, a Colorado Department of Treasury JBC Budget Briefing document provided an accounting of the Colorado General Assembly’s historical discretionary grants to meet local government public pension obligations:

http://www.state.co.us/gov_dir/leg_dir/jbc/2011-12/trebrf.pdf

Here are a few excerpts:

“State Contributions for Local Fire and Police Pension Plans: Since 1980, the State has contributed almost $540 million to the FPPA to eliminate the unfunded liability of the ‘old-hire’ pension plans.”

From page 29 of the JBC document:

“To put this figure in perspective, the total state General Fund operating budget in the FY 1978-79 Long Bill was just over $1.0 billion. Thus the $500 million shortfall in local plans represented nearly half of the annual state General Fund budget. If the magnitude of this shortfall were adjusted for inflation, it would exceed $1.8 billion.”

From page 31 of the JBC document:

“During the ensuing years, the State's contribution to the old hire plans equaled about 41 percent of the total combined contributions of the state, local governments and employees.”

From Senate Bill13-234  – $132.4 million to pay off local government pension obligations (this appropriation, coupled with funding in next year's Long Bill brings total state appropriations to pay off local government pension obligations to approximately $700 million):

SB13-234, CONCERNING THE STATE'S AUTHORITY TO PREPAY ITS OBLIGATION FOR THE UNFUNDED ACCRUED LIABILITY OF OLD HIRE PENSION PLANS THAT ARE AFFILIATED WITH THE FIRE AND POLICE PENSION ASSOCIATION.

(My comment: Note the deception present even in the title of the bill.  As with SB10-001, the rank and file membership did not bother to root out deception.)

Page 2:

"(b) ON MAY 31, 2013, THE STATE TREASURER SHALL TRANSFER ONE HUNDRED THIRTY-TWO MILLION FOUR HUNDRED NINE THOUSAND THREE HUNDRED THIRTY-NINE DOLLARS FROM THE GENERAL FUND TO THE OLD HIRE PLAN MEMBERS' BENEFIT TRUST FUND CREATED IN SECTION 31-31-701 (6)."

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=234_enr.pdf

Next year's property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, "Homestead" property tax relief grant: $105,200,000

http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

Denver Post:

"But Joint Budget Committee vice-chairwoman Rep. Claire Levy, D-Boulder, lauded her colleagues on the committee and noted that with Colorado's economic recovery, the state is no longer in a position that requires it to cut programs."

http://www.denverpost.com/breakingnews/ci_23131374/hickenlooper-sign-next-years-20-5-billion-colorado

HICK'S LETTER TO THE GENERAL ASSEMBLY ON THE 2013/14 STATE BUDGET.

April 29, 2013:

"With thanks to the members of the sixty-ninth General Assembly, this budget is the result of a bipartisan dedication to Colorado’s values.  We are enacting this budget at a unique time in our
history.  After enduring a significant economic downturn, Colorado’s economy is outperforming the nation’s.  The resulting recovery is allowing us the opportunity to allocate resources for the common good."

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22A+letter+to+the+general+assembly+from+Hickenlooper.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251854377268&ssbinary=true

Denver Business Journal:

" . . . Hickenlooper on Monday signed into law the $20.5 billion state budget for the 2013-14 fiscal year . . . "

"The new eco-devo money — a priority for Hickenlooper since he introduced his proposed budget in November — includes:

• $2.9 million more for incentives for relocating and expanding companies.
• $1 million for increased film incentives.
• $2 million for increased tourism marketing and development of a state branding campaign to attract tourists and entrepreneurs.

http://www.bizjournals.com/denver/news/2013/04/29/hickenlooper-signs-state-budget-with.html

Boulder Daily Camera:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

"We're in the happy position of no longer having to cut programs," said Rep. Claire Levy, D-Boulder, one of six budget writers.

http://www.dailycamera.com/nation-world-news/ci_23135284/hickenlooper-signs-next-years-state-budget

KDVR:

"Republicans support those pieces of the budget, as well as a measure House Republicans fought for to pay off a long-standing debt to the Fire and Police Protection Association."

http://kdvr.com/2013/04/29/hickenlooper-signs-next-years-20-5-billion-budget-into-law/

(My comment: Can you believe the voracity with which Colorado media will gobble up the propaganda?)

 

COLORADO COURTS: MEMBERS OF BOTH MAJOR PARTIES HAVE BEEN LOBBIED HARD AND PERSUADED TO TAKE MONEY FROM PENSIONERS, SO PLEASE GIVE IT YOUR BLESSING.

Much has been made in the press (and in legal briefs) of the fact that both Democrats and some Republicans voted for SB10-001 in 2010.

From the Colorado PERA Defendant's Motion to Dismiss:

"In a BIPARTISAN effort to address this critical funding shortfall, the General Assembly enacted Senate Bill 10-001 to make changes to the state pension system."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

Of course, the term "shortfall" implies that PERA-affiliated employers need the ability to "pay off the mortgage" today, which is untrue.  If a Colorado PERA "critical shortfall" existed in 2010, as we have seen, the General Assembly is itself the author of that "critical shortfall."

This PERA Defendant argument distills to: "Colorado courts we both want to take money from old people, so please give it your blessing."  The fact that both a Republican and a Democrat support a bill does not necessarily place the stamp of morality or constitutionality on the legislation.

If a lobbyist persuades one Democrat and one Republican to mug an old lady, is the mugging thereby rendered "moral" because it was a "bipartisan" mugging?  If a lobbyist persuades both a Republican and a Democrat to raid an old lady's bank account, will the theft conform with statutory or constitutional law in the United States?  After all, it was a "bipartisan" theft.

Occasionally, members of both political parties find collusion in their interest.  Many Colorado conservatives would like to see the Colorado PERA defined benefit plan eliminated entirely.  A fraction of these conservatives will look the other way if constitutional rights are trampled in the process (as we know, not all conservatives will look the other way.)  Many Colorado Democrats naturally want to serve the interests of organized labor.  In 2009, Colorado's public sector unions decided that the breach of Colorado PERA retiree pension contracts would help to minimize future pension contributions from their dues-paying membership.  So, the unions supported SB10-001, and convinced some of their legislative friends to ignore their oaths of office.  As always, follow the money.

In 2010, it happened that "bi-partisan" Colorado political interests intersected on immoral and unconstitutional ground.  Collusion benefited some Democrats and some Republicans.  In this environment, a collective push from 27 lobbyists was sufficient to enact SB10-001.

Colorado PERA active and retired members, politics can be a filthy business.  Don't let dirty politics rob you of your constitutional rights.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Argentine and Colorado Pension Piracy . . . Morally Equivalent?

In 2008, the Argentine Legislature passed a bill taking $25 billion in pension assets in which millions of Argentines held a property interest.  This taking bolstered Argentina's financial condition.

In 2010, the Colorado Legislature passed a bill abrogating the contractual obligation of Colorado PERA employers to pay approximately one-third of a PERA member's accrued PERA pension benefits.  Thousands of Colorado pensioners hold a property interest in this PERA contracted annuity.  This taking bolstered Colorado's financial condition.

Which government has the greater respect for property rights?  How is Colorado's taking of pension property rights not the moral equivalent of Argentina's taking of pension property rights?

From the organization "Friends of PERA":

“There is a misconception that the ‘taxpayers’ are owners of the (PERA pension) fund; the trust fund is owned by the beneficiaries of the fund . . .”

http://www.friendsofpera.com/facts/index.html

These two instances, in which pension contracts were breached by a legislative body (the Argentine National Congress and the Colorado General Assembly), are not factually identical, but they are quite similar.  In both cases pension contracts were violated to make additional funds available to a government for that government's discretionary expenditures, and to curry political favor.

If contracts are meaningless in the United States, if U.S. state and local governments are permitted to take accrued pension benefits with impunity, the moral standing of our nation is diminished.  We will find ourselves on the same moral plane with governments that brush aside the rule of law.  How exceptional will we find a United States that takes, by force, property earned by its citizens over decades?  Does the theft of contracted pension benefits not somewhat diminish the luster of that "shining city upon a hill"?

The Wall Street Journal on the Argentine pension taking:

"'With the [latest, Argentine] announcement, the custom of violating the rules of the game has been repeated, which deepens the lack of confidence,' political analyst Rosendo Fraga wrote in the Buenos Aires daily La Nacion."

http://online.wsj.com/article/SB122460155879054331.html

Professor Secunda of Marquette University on U.S. state government takings of accrued pension benefits:

"What the states are trying to do is change the rules in the middle of the game."

http://truth-out.org/news/item/13498-pensions-a-promise-is-a-promise-unless-its-inconvenient

Colorado Supreme Court in Bills:

“Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.”

Wall Street Journal:

"Buenos Aires economist Aldo Abram, among many other economists, wasn't buying that argument. 'They were in a tight situation and this was an accessible source of funds,' he said."

"Opposition leader Elisa Carrió vowed to contest it, saying, 'The government measures aren't designed to better the retirement system but rather to plunder the funds of the retirees.'"

Washington Post:

"The proposal by (Argentine) President Cristina Fernández de Kirchner last month to nationalize about $25 billion in private pension funds provoked an outburst of criticism that the government was seizing retirement savings for cash to shore up its finances."

"'The announced nationalization-expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country's recent history,' wrote Claudio Loser, senior fellow at the Inter-American Dialogue, in the Latin American Advisor newsletter."

"Sen. Ernesto Sanz of Mendoza, who opposed the nationalization, said: 'We don't have any doubt that this is violating the right to private property.  Not just for us, but for all society and the world. This is clearly confiscation.'"

http://articles.washingtonpost.com/2008-11-21/world/36794754_1_pension-system-pension-funds-private-pension

Colorado Court of Appeals on PERA pensioner property rights:

"See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim."

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

New York Times:

"The (Argentine) measure . . . was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009 . . ."

"The announcement . . . led analysts to question whether the nationalization, which is subject to approval by the Argentine Legislature, puts property rights at risk and threatens the rule of law in the country."

"It may be the first time a Latin American government has expropriated cash."

Argentina's President, Mrs. Kirchner: " . . . we are protecting our retirees and our workers."

"She dismissed criticism that the move was simply a grab for cash . . ."

"The opposition leader Elisa Carrio . . . told radio Mitre on Tuesday that the government was trying to 'loot the funds of retirees.'"

"By taking over the pension funds the government can continue to spend on programs that help it retain political support."

"If the move is approved, her government may have secured an important electoral asset, which could help guarantee Mrs. Kirchner's political survival."

http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html

Lebanon, Pennsylvania Daily News Editorial:

"The reasons for the pirating of deposits or the nationalization of pensions don't matter nearly as much as the demonstrated willingness of government to treat money – privately held money, money earned by individuals – as a state resource, as needed."

"And we have to wonder, again, who might be paying attention in this country (the USA); how good are our protections against such a thing.  Forget lip service and what anyone may claim 'could never happen.'"

(My comment: As we have seen, it not only can happen, it is happening . . . in Colorado.)

"How good are our protections? How strong are the underpinnings of our individual rights against such demonstrable government-first thinking?"

http://www.ldnews.com/editorial/ci_22872828/argentina-private-pension-holders-well-just-take-that

The Colorado Legislator’s Oath of Office: “I do solemnly swear by the everliving God, that I will support the Constitution of the United States and of the State of Colorado . . ."

The Colorado Constitution: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation . . . shall be passed by the general assembly.”

Support contractual public pension rights and the rule of law in the United States.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook.

Rhode Island Gov. Chafee: “I’ll Have to Think About” Why a State Government Can Take a Contracted Pension COLA Benefit, but Can’t Default on its Moral Obligation Bonds.

GOVERNOR CHAFEE: "WE WERE TOO AGGRESSIVE," IN OUR 2011 PENSION REFORM.  I WAS AFRAID THEY WOULD OVERRIDE MY VETO.

BLOOMBERG COLUMNIST BARRO: IF RHODE ISLAND CAN'T HONOR ITS PENSION COLA DEBT TO PUBLIC PENSIONERS, WHY IS IT HONORING ITS PRIVATE SECTOR MORAL OBLIGATION BONDS ISSUED FOR A BANKRUPT PRIVATE COMPANY?

RHODE ISLAND'S TAKING OF CONTRACTED PENSION COLA BENEFITS COST THE STATE'S PENSIONERS ONE-THIRD OF THEIR ACCRUED PENSION BENEFITS.

 

Josh Barro of Bloomberg writes on May 1, 2013:

"Under Chafee, Rhode Island has drawn national attention for two major fiscal events.  First, the state legislature passed (and Chafee signed) the country’s most sweeping public employee pension reform.  The measure included a provision discharging about $1 billion in existing pension liabilities by freezing retirees’ cost of living adjustments (COLAs) for 15 years. This wasn’t a small cut; by the time the freeze is over, many retirees’ payments will be one-third smaller than initially promised."

http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

http://www.bloomberg.com/view/bios/josh-barro/

"Second was the implosion of 38 Studios, former Red Sox pitcher Curt Schilling’s video game enterprise.  Rhode Island offered the company a loan guarantee to relocate from Massachusetts. Now, the venture is bankrupt, and the state is on the hook to bondholders for $112 million."

Columnist Josh Barro:

"That raises a question that many state residents — especially retired employees — would like to see answered: If Rhode Island can’t afford to keep its promises to retirees, how can it afford to keep its promise to the 38 Studios bondholders? Chafee isn’t prepared to answer."

How is it that RI can afford to honor its obligations to a bankrupt video game company, but cannot afford to honor its contractual obligations to its retired public workers?  How can the State of Colorado afford to pay $700 million for local government pension obligations that ARE NOT the state's contractual obligation (Old Hire Fire and Police pensions,) and (this session) provide $104 million in discretionary property tax relief, but the State of Colorado cannot afford to honor its contractual obligations to its retired public workers?

How is it that Colorado, the 15th wealthiest state in the nation, a state with an extra billion dollars for the next fiscal year, can't afford to honor its pension contracts?  Why does the State of Colorado propose to break public pension contracts, but honors its other bonded moral obligations?

Governor Chaffee dismisses the idea of defaulting on the 38 studios moral obligation bonds.

Chaffee: “The words moral obligation speak for themselves.”

Columnist Josh Barro:

"But aren’t the pensions a moral obligation, too? After all, people spent their careers working for state and local governments in exchange for specific pension benefits.  I asked Chafee, why it was acceptable to freeze the COLAs and unacceptable to break the moral obligation on the bonds."

"He responded: 'Good question. A lot of discussion about that and, in fact, we’re in court on that issue with the unions.'  But he never got around to explaining why his position is right and the unions’ is wrong."  "Instead, he sought to disclaim ownership of the COLA freeze, which was part of the 2011 pension reform law and the key issue the unions are suing over."

Chaffee: I took the COLA because the Legislature would have overridden my veto:

"Asked why he signed, he responded that he had to weigh costs and benefits, and that a key concern was that a veto would have been overridden by the large legislative majority that had passed the bill."

Yet, in 2011, Governor Chaffee supported the proposed pension COLA taking:

"Chafee urged the legislature to pass pension reform, and helped build the veto-proof majorities that got the bill to his desk. I witnessed this: In October 2011, I spoke on a panel after a joint presentation by Chafee and state Treasurer Gina Raimondo in which they advocated the pension reform plan that eventually became law.  At the time, Chafee also called for additional reforms that would have drawn more litigation by cutting benefits in locally run pension plans that were left untouched by his joint reform with Raimondo."

Columnist Josh Barro:

"Now, Chafee says he was the voice of caution: 'We got a little too aggressive. The treasurer was very aggressive, I was more, ‘we need buy-in, avoid litigation.’”

"This would repeat a pattern that we’ve often seen in state level pension reforms — a law that looks like it will produce big cost savings gets unwound years later for political or legal reasons."

"As the interview ended, Chafee remarked, 'I’ll have to think a little more about Josh’s question' — the one about why you can freeze COLAs but can’t default on 38 Studios."

http://www.bloomberg.com/news/2013-05-01/chafee-s-confusion-about-moral-obligation.html

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All Manner of Contradictory Public Policy Positions Fit Under a Big Sky.

MONTANA PUBLIC SECTOR UNIONS: WE SUPPORT THE LEGISLATURE'S TAKING OF THE CONTRACTED PENSION COLA BENEFIT, AND WE SUPPORT A RETIREE LAWSUIT OVER THE LEGISLATURE'S TAKING OF THE CONTRACTED COLA BENEFIT.

MONTANA GOVERNOR: I'M SIGNING THE BILL TO TAKE THE CONTRACTED COLA; HOWEVER, IT'S ILLEGAL, AND I SUPPORT THE COMING RETIREE LAWSUIT OVER THE COLA TAKING.

MONTANA LEGISLATIVE ATTORNEYS: TAKING THE COLA IS ILLEGAL.

In 2010, Colorado public sector unions, 27 lobbyists, and a majority of "low information" Colorado legislators (on public sector pensions anyway) conspired to erase Colorado state and local government debt by taking accrued pension benefits from Colorado PERA retirees.

Montana public sector unions are now in the pension theft game; however, they should have taken the time to get their story straight up front.

From helenair.com:

"Bullock signs pension fixes, school funding bill."

"The plan is expected to face legal challenge from unhappy retirees who will argue in court that the changes unconstitutionally break the contractual obligations the state made to employees."

"The state's largest employee union, MEA-MFT, said it expects to support the litigation — even though it also still supports the overall fixes."

http://helenair.com/news/state-and-regional/bullock-signs-pension-fixes-school-funding-bill/article_3502dd1e-d19b-5d69-bb25-c77671a6792f.html

Eric Feaver, President, MEA-MFT:

"There are constitutional questions, questions of contract rights that are raised by so doing (changing guaranteed annual benefit adjustments.)"

"Guaranteed annual benefit adjustments (GABA), as necessary as they are for retirees, are not themselves the pension."

(My comment: This is deceit.  Public pension COLAs are simply a method of delivering a defined, determinable, accrued public pension benefit.  Should your mortgage company be able to retroactively hike your mortgage rate, breaking your contract, because the mortgage rate "is not itself the mortgage"?  As in Colorado, Montana public sector unions are embracing a ludicrous [but convenient] contrivance.)

From helenair.com:

"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA (COLA) and questioned its constitutionality."

"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

Montana pensioners:

"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

"Unlike other states that have variable Cost of Living Adjustments in their pension plans, Montana enacted a guaranteed statutory annual percentage adjustment for its public employees."

http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

Colorado PERA active and retired members, I am speechless.  Thankfully, I am still able to type. Support public pension contractual rights in the USA.  Contribute at saveperacola.com, and "Friend"  Save Pera Cola on Facebook!

Montana to Attempt a Colorado-style Breach of Public Pension Contracts. Montana Governor: It’s Illegal, but What the Hell.

MONTANA'S GOVERNOR SAYS TAKING THE PUBLIC PENSION COLA BENEFIT IS ILLEGAL, BUT HE'S SIGNING THE BILL ANYWAY.

COME AGAIN?

MONTANA GOV. BULLOCK: STATE PENSIONERS WILL WIN THEIR LAWSUIT OVER THE COLA TAKING.

If Colorado's former Governor Ritter (an attorney) had such views, he wasn't sharing them in 2010.  Many states just want to roll the public pension dice. If they lose their pension contract breach case, they have the status quo, and the courts become the "bad guys."  I guess we can at least admire Governor Bullock's honesty.

From mtprnews.wordpress.com:

"'We believe that ultimately when current and retired employees bring challenge to them that they will be successful,' (Gov. Bulllock’s Budget Director Dan) Villa said, adding the bill fixes the retirement system with or without the reduction in yearly raises which he said just make the fix more aggressive."

"(Association of Montana Retired Public Employees President Russell) Wrigg said he wants the pension fix bills to pass without the raise reductions (COLA taking) – he would prefer that to them (pension reform bills) dying through a veto.  He says the group will consider legal actions against the bills if the governor signs them, which is expected.  But, he doesn’t approve of the tactic."

"'Legislation through litigation is really not the way to solve our problems in this state,' he said."'

http://mtprnews.wordpress.com/2013/05/03/fix-to-state-retirement-systems-opposed-by-retirees/

My comment: "Legislation through litigation" is the strategy employed by the proponents of our Colorado COLA-theft bill, SB10-001. Recall Colorado Deputy Attorney General for Legal Policy and Government Affairs Geoff Blue's comments [he’s now in private practice.]  Geoff Blue notes that since Colorado’s education establishment has failed to win new revenues at the polls lately, they are now seeking to “legislate through the courts.”  "They’ve been losing so they’re trying to legislate through the courts.”  Breaking PERA pension contracts frees up funds for Colorado's education establishment.

http://www.youtube.com/watch?v=k0ZdUF0L8cU

This Montana situation is a first for me . . . I can't recall another instance, in which a Governor believes that a bill is unconstitutional, but signs it anyway.  When the Montana pensioner's case is filed it will be interesting to see how Montana's Attorney General goes about defending it.  The plaintiffs will certainly bring the Governor's position on the constitutionality of the pension COLA taking to the attention of the court.  The State of Montana as a defendant will have to argue in defense of statutory provisions that the Chief Executive of the State of Montana deems a breach of state contracts.

In the Colorado case, Justus v. State, there is a parallel in that officials from Governor Ritter's administration wrote a letter to federal regulators (GASB) after the 2010 COLA-taking contravening legal arguments made by the defendants.

You can read the entirety of the letter on the GASB site here:

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

Colorado PERA active and retired members, are you as appalled as I am about the irrationality of the public pension debate in the United States?  Support public pension contractual rights at saveperacola.com.  Friend Save Pera Cola on Facebook.

Montana Governor Likely to Sign a Pension Reform Bill He Believes is Unconstitutional.

MONTANA DECIDES TO ATTEMPT A PENSION COLA-THEFT.  GOVERNOR BULLOCK "QUESTIONS THE CONSTITUTIONALITY" OF TAKING THE COLA.

BULLOCK, INCREDIBLY, SUPPORTS A PENSIONER LAWSUIT AGAINST THE STATE, BUT WILL LIKELY SIGN THE BILL ANYWAY.

Theatre of the absurd in Montana.

The Montana Legislature has enacted a bill to retroactively take public pension COLA benefits from the state's public pensioners.  Like the Colorado education establishment in 2010, education lobbyists in Montana have their fingerprints all over the Montana Legislature's attempt to break public pension COLA contracts.  (If employers affiliated with the public pension system can break pensioner contracts, that minimizes future pension contributions for dues-paying union members and local government employers.  If the bill gets struck down in court, the judges become "the bad guys.")

Governor Bullock didn't support the COLA-theft amendment to the bill.  Although Bullock thinks the COLA-theft provision in the bill is illegal, it appears he'll sign the bill into law.  (Odd that his primary concern is the taxpayers, but he doesn't seem to mind squandering millions of taxpayer dollars on litigation.)

Here's Montana Governor Steve Bullock in his State of the State address:

“We must also meet our responsibility to fix a long-term problem created by our predecessors.  I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes.  I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants.  A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”

Link to Governor Bullock’s State of the State speech:

http://watch.montanapbs.org/video/2331212142?starttime=1200000

From helenair.com:

"Feeling betrayed, retiree group asks governor to veto pension bill."

"Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees."

“We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”

"About 2,000 retirees in the Public Employees’ Retirement System belong to the association."

"At issue was an amendment to the Guaranteed Annual Benefit Adjustment (GABA), to reduce the current 3 percent annual cost of living pension raises."

"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality."

"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

"'Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,' Wrigg said."

(My comment: Employers affiliated with a public pension system collude with public sector unions to reduce their future pension contributions by taking money from pensioners.  Been there.)

http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

Montana pensioners:

"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

Meanwhile, in Pennsylvania, Governor Tom Corbett's proposal for legal, prospective changes in the state's pension system is moving along:

From lvb.com:

"The governor also wants to change the formula for future benefits in current employees' plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent."

(Recall that the Colorado Legislature adopted a bill last year, SB12-149, providing such prospective, legal public pension reform for certain Colorado county governments.  This bill honored the accrued public pension benefits of thousands of Colorado government workers and retirees, while two years earlier, the Colorado Legislature passed a bill to seize up to one-third of the accrued pension benefits of Colorado PERA retirees.)

http://www.lvb.com/article/20130501/LVB01/130509987

I believe that this solution of prospective pension reform, reducing the rate of accrual of future pension benefits will ultimately prevail in the United States.  It is emerging as a logical and legal pension reform alternative increasingly embraced by public pension legal scholars.  Many politicians will not act responsibly unless forced to do so by the courts.

Colorado PERA active and retired members.  Contribute at saveperacola.com, and Friend Save Pera Cola on Facebook!

Colorado Legislature . . . Pay Your Debts!

THE COLORADO PERA COLA IS SIMPLY A METHOD OF DELIVERING A DEFINED PERA PENSION BENEFIT.

USE OF THIS METHOD DOES NOT JUSTIFY BREACH OF PENSION CONTRACTS.

Three years ago, a majority of Colorado legislators decided to attempt to break state contracts to cut the debt of Colorado state and local governments.  In 2010, Colorado legislators passed a bill, SB10-001, that attempts to discard the obligation of Colorado governments and the state's pension system, Colorado PERA, to pay cost-of-living (COLA) increases due retirees under their state pension contracts.  Retirees in the Colorado PERA pension system, unwilling to allow the State of Colorado to take one-third of their contracted PERA pension benefits, immediately filed a lawsuit (Justus v. State.)  Last year, the Colorado Court of Appeals agreed with the retirees that Colorado state and local governments have a contractual obligation to pay the annual cost-of-living adjustments due under the retiree's contracts.  The Court of Appeals also decided that (since the matter has not yet been heard by a jury) the retiree's lawsuit should be sent back to the trial court (Denver District Court.)  The trial court was ordered to determine if the Colorado General Assembly's breach of Colorado PERA contracts in 2010 was "reasonable," or "necessary."  Immediately after the Court of Appeal's ruling last year, both the PERA retirees and the State of Colorado appealed the Court of Appeal's decision to the Colorado Supreme Court.  Both the plaintiffs and the defendants in the case are currently waiting to see if the Colorado Supreme Court will take the case, or send it back to the Denver District Court to make a determination as to "reasonableness" and "necessity."

http://saveperacola.com/

In 2010, a majority of Colorado legislators decided to attempt to break Colorado PERA pension contracts to free up money for "discretionary" state and local public programs.  Although the constituents of these state legislators want public services (good roads, education, police and fire protection) they do not want to pay for these services.  Incredibly, many of the constituents of Colorado legislators do not want to pay for public services that they have already consumed.  Therefore, they encouraged Colorado legislators to break Colorado PERA pension contracts.

For some reason, in 2010, a majority of Colorado state legislators arrived at the conclusion that Colorado's public pension contracts are inferior to the state's corporate contracts.  If there is a threat to the financial well-being of the State of Colorado (i.e., the state with an extra billion dollars to spend next year) all Colorado contracts should be on the table, not just one set of contracts.

Like salary, Colorado PERA pension COLA benefits are compensation for work performed; specifically "deferred compensation," presently earned.  When a Colorado PERA member has completed the job, and finished earning her salary, her employer cannot retroactively take that salary from her.  Her right to receive her earned salary is plainly a contractual obligation of her employer.  The pension benefits that this PERA member earns each day are, similarly, a contractual obligation of her employer.

For each day that a Colorado PERA member works she is entitled to know precisely what she is earning that day.  She deserves to know both the salary and the pension benefit that she earned in exchange for her day of labor.  When her day of work is complete, her employer cannot retroactively change the agreement.  Her compensation for the day of work is defined, just as her deferred pension compensation is defined in Colorado law.  As we have seen, deferred compensation due Colorado PERA members must stand "immutable for work already performed."

A public pension COLA is simply a method by which a defined pension benefit is provided.  There is nothing inherent in this "method" (provision of a pension COLA) that negates its essence as a contractual obligation of Colorado PERA-affiliated employers.

The Colorado Legislature has placed into Colorado law an agreement to provide an "automatic," fixed, pension COLA "escalator" to PERA members upon retirement.  When the Colorado Legislature created the Colorado PERA contract in statute, the Legislature could just as well have offered PERA members a higher total pension benefit and no COLA escalator.  Instead, Colorado legislators chose to deliver accrued Colorado PERA pension benefits by means of a pension COLA "escalator."

If I buy an annuity from a private insurance company, and I opt to have my purchased income stream delivered via a cost-of-living escalator, does the insurance company that sold the annuity to me have the right to eliminate that purchased COLA benefit after the fact?  Does the insurance company have the right to retroactively diminish the total value of my purchased, contracted income stream simply because I selected an escalator as a method of receiving the income stream?  Perhaps the insurance company wants to use the money made available by breaking the COLA contractual provision to make desired discretionary expenditures.  Perhaps the insurance company wants to construct a new headquarters building or increase the compensation of its executives.  What court would permit this private sector insurance company to ignore its contractual COLA obligations?  Why do we not see insurance companies in the United States attempting to escape their contractual COLA obligations?  We do not see this happening because attorneys working for these insurance companies recognize such arguments as ridiculous, self-serving contrivances.  Why should the State of Colorado be permitted to retroactively take a COLA benefit that has been paid for (through paycheck deductions and labor) by Colorado PERA members for decades?

Purchased annuity COLA benefits in the private sector:

"One way to address this problem is by purchasing a cost-of-living adjustment (COLA) option with the immediate annuity. The COLA option increases the dollar amount of future payments to keep up with inflation, with the goal of preserving the buying power of the immediate annuity payments."

http://www.myretirementpaycheck.org/savings-investments/immediate-annuities.aspx

The contractual obligation of an accrued pension benefit does not disappear simply because state legislators have agreed to use a particular method of delivering the benefit.  If the Colorado Legislature had, historically, placed into statute a Colorado PERA pension contract setting the initial Colorado PERA pension benefit at a maximum 20 percent of highest average salary (HAS), with a 10 percent annual COLA escalator, could the Colorado Legislature retroactively take 90 percent of the total contracted benefit by simply striking the COLA provision from Colorado law?  The contractual obligation of Colorado PERA-affiliated employers to honor statutory COLA provisions does not disappear due to the fact that Colorado statutes mandate payment of a PERA member's accrued pension benefit by means of a COLA escalator.  This contrivance was embraced by the proponents of SB10-001in 2010 in the hope that Colorado PERA-affiliated employers could somehow escape their pension debt.

For fifty-two years, (since the Bills and McPhail cases) the Colorado Legislature has known that public pension COLA benefits are contractual obligations in our state.  They cannot claim ignorance of this fact, they are obligated to read case law and know the implications of legislation they enact.  For fifty-two consecutive legislative sessions, Colorado legislators have had opportunities to adopt any legal, prospective public pension reform they feel is appropriate.  They have had many decades of opportunity to reform the Colorado PERA pension without breaking PERA contracts.  While U.S. equity markets have endured extreme volatility over these decades (1987 and 2001) Colorado PERA contracts were honored.  As Colorado PERA officials have noted many times, pension administrators expect market volatility.  The State of Colorado cannot legitimately argue in court that the "unanticipated severity of an anticipated event" justifies the breach of Colorado PERA pension contracts.

Note that critics of public pensions focus on a single aspect of future state and local government expenditures (public pension obligations) when they argue that these governments are in "crisis." The critics argue that public pensions are in "crisis," because states and cities have not banked the three or four percent of future state revenues that will be needed to meet these pension obligations.  The critics call this a public pension "shortfall."  State and local governments have not banked sufficient funds to cover the other 95 percent of expected future expenditures and yet, somehow, this lack of accumulated resources is not a "crisis."  As we know, public pension obligations to current workers will come due over the next 70 years, like a mortgage, they are not due tomorrow.

What entity on high has decreed that a government's lack of current resources to immediately cover all of its accumulated pension obligations is a "crisis," while a government's failure to set aside resources sufficient to meet all other future expenditures is just standard operating procedure?  Is the State of Colorado in "crisis" because it has bonds outstanding?  Why are accumulated state financial obligations in the form of bonded debt not a "crisis," but accumulated state financial obligations in the form of public pension debt are a "crisis"?  Who decided that one of these state debt obligations has inferior legal status?

Colorado PERA active and retired members.  Help restore some degree of rationality to discussion of Colorado PERA public pensions.  Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!

2013 Moritz College of Law Public Pension Roundtable: Taking Accrued Retiree Benefits has Greatest Legal Risk.

PROFESSOR AMY MONAHAN: THE U.S. SUPREME COURT TELLS US THAT PUBLIC PENSION PLAN REFORMS MUST BE THE "LEAST DRASTIC" ALTERNATIVE TO MEET CONSTITUTIONAL MUSTER.

TAKING PUBLIC PENSION RETIREE BENEFITS CARRIES THE GREATEST LEGAL RISK OF ALL PUBLIC PENSION REFORMS.

MOST PUBLIC PENSION ADMINISTRATORS THINK OF PUBLIC PENSION COLAS AS AN ACCRUED PUBLIC PENSION BENEFIT.

On February 22, 2013, the Ohio State University Moritz College of Law hosted a "Roundtable on Public Pension Reform."

The first panel of the Roundtable was entitled: "Recent Pension Reform Efforts."  Panelists were; Professor Amy Monahan of the University of Minnesota School of Law, Karen Carraher of the Ohio Public Employees Retirement System (OPERS), and Luke Martel of the National Conference on State Legislatures.

http://moritzlaw.osu.edu/programs/capital-markets/roundtable-on-public-pension-reform-video-archive/

(My comment: For Professor Monahan's paper, "Public Pension Reform: The Legal Framework," visit the link below.  In her paper, Monahan concludes:

“This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

Link to Monahan law article:

http://www.law.umn.edu/facultyprofiles/monahana.html)

Video of the Moritz College of Law Roundtable is available on the Moritz Law website in two parts.  (Note that Professor Monahan's presentation consumes the last five minutes of Part 1, and concludes in Part 2.)

Below, I provide quotations from the panel presentation of interest to Colorado PERA retirees:

Karen Carraher, OPERS (19 minutes into Part 1): "The minute any individual in our system retires, we actually transfer dollars equal to their lifetime payoff at that point into a fund.  So, they are 100 percent funded, every person who has retired.  Who we're working on funding are the folks who are still working."

(Note that combined employee and employer pension contributions in the OPERS pension system currently total 24 percent of salary.)

Professor Amy Monahan:

"I'm not aware of any case, where a court has said that once a participant has retired, and completed all of the necessary ingredients to receive a pension that that pension is not contractual."

"Even in some liberal states, once you've retired, you have a vested, contractual right to the benefit."

Amy Monahan on the relative legal risk of legislative enactment of various reforms to public pension systems:

"I think it's fair to generalize that there is a sort of risk hierarchy here."

"So, I'm going to start with the most risky and go down to the least."

Pension Changes Impacting:

Public Pension Retiree Accrued Benefits

" . . . benefits being paid to retirees are the riskiest thing to touch." "The idea is that they have completed their side of the bargain, and so any changes to those individuals usually get the highest level of scrutiny."

Active Pension Member Accrued Benefits

"Next, is touching accrued benefits for people who haven't retired.  So, they're still working, but you're reducing what they've already earned to date.  That's also pretty risky.  Basically, the analogy here is to salary.  You can't retroactively reduce someone's salary.  The court's going to easily imply a contract here, for the same reasons reducing accrued benefits are risky."

Future Benefit Accruals

"Future benefit accruals in most states, should be less risky."

(My comment: Note that the Colorado General Assembly adopted prospective changes to future benefit accruals of certain Colorado county government pension systems in 2012 [SB12-149]. The Colorado Legislature adopted these prospective pension reforms, honoring the accrued pension benefits of thousands of Colorado county government retirees two years after having retroactively seized accrued contracted public pension benefits of Colorado PERA retirees.  In 2010, most members of the Colorado Legislature were unaware of Monahan's "hierarchy of legal risk" of various public pension reform options.  This lack of knowledge is attributable to the fact that, in 2009 and 2010, the Colorado Legislature permitted self-interested outside parties to develop public pension policy for the State of Colorado [through lobbyists].)

New Hires

"New hires are easy."

Professor Monahan on public pension COLAs:

"I think that most people in the pension world, when they think of COLAs, think of it as part of the participant's accrued benefit."

("Automatic" public pension COLAs, like the Colorado PERA COLA are fixed, contracted pension benefits.  "Ad hoc" public pension COLAs can be adjusted by the pension plan sponsor as needed.)

Professor Monahan on the "Reasonable and Necessary" standard to break public pension contracts:

"That sounds like an easy test."  "It's not."  "The U.S. Supreme Court tells us that it has to be the least drastic way of achieving the policy goal."

(My comment: In February 2011, Colorado PERA's General Counsel wrote in the periodical "Government Finance Review," that, in order for a PERA pension reform to be found "reasonable," changes to the Colorado PERA pension must be "the minimum changes necessary."  [The next year, June 26, 2012, Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, wrote in the 2011 Colorado PERA CAFR: that the 100 percent funding threshold put into Colorado law by SB10-001 is much stronger than is necessary [i.e., not the minimum change necessary] to meet public pension regulatory (GASB) standards.  Alteration of the statutory Colorado PERA pension contract in 2010 [SB10-001] through incorporation of this 100 percent PERA pension funding threshold placed unnecessary financial pressure on the PERA pension's trust funds, helping to create the Legislature's desired rationale for breaking pension contracts, and does not represent the "least drastic" reform option available to the Colorado General Assembly.

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

Professor Amy Monahan:

"Colorado is a closely watched case that's been going on for awhile now.  Colorado reduced COLAs.  Most recent ruling there is the Appellate Court which just ruled that there is a contractual right to COLAs."

Colorado PERA active and retired members.  It is clear that the Colorado General Assembly willfully  ignored on-point Colorado public pension contract case law when adopting SB10-001 in 2010.  Support public pension contractual rights and the rule of law in Colorado.

Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Anatomy of a Colorado PERA Pension Contract Breach. (Part 1 of 2.)

In this article I have compiled an extensive (but, incomplete) chronology of events and statements surrounding the Colorado General Assembly's breach of Colorado PERA pension COLA contracts in 2010.  Colorado PERA retirees have filed a lawsuit, Justus v. State, asking that Colorado courts protect the retiree's accrued, earned, contracted Colorado PERA public pension benefits.  (More complete information germane to this lawsuit may be obtained only through formal discovery.)

Readers of the article should note the abrupt transition of the organization, Colorado PERA, in 2009, from an organization that had historically defended the contractual rights of PERA members, to an organization influenced by self-interested parties . . . parties that successfully induced the Colorado PERA Board of Trustees to attempt a breach of the pension plan's contractual obligations in 2010.

Many Colorado politicians are primarily engaged in seeking votes, and bestowing political favors . . . compliance with constitutional provisions for these politicians is an afterthought. The prevailing legislative sentiment at the Colorado General Assembly in 2010 was that, since the idea of breaking Colorado PERA pension contracts was popular with influential self-interested groups and many constituents . . . those contracts should be scrapped.  Colorado Constitution be damned!  In 2010, political considerations trumped respect for the State of Colorado's contractual obligations.

Colorado PERA retirees (the target of the SB10-001 contract breach) have many unanswered questions regarding the 2010 breach of their pension contracts by the State of Colorado:

Was the Colorado PERA Board of Trustees "opinion shopping" for a legal rationale to break PERA pension contracts in 2009?  How was Jean Dubofsky's firm selected to create this legal opinion?  On her resume, Jean Dubofsky writes that Colorado PERA "requested" that she provide an opinion to PERA arguing that the Colorado General Assembly could "repeal" the PERA COLA benefit "without violating the vested rights" of PERA members. When exactly, in early 2009, did the Colorado PERA board decide to seek a legal opinion that would justify taking contracted PERA COLA benefits?

Colorado PERA retirees should grasp the full implications of this statement Jean Dubofsky makes on her resume.  This statement on Jean Dubofsky's resume proves that the Colorado PERA Board intended to attempt a taking of PERA COLA benefits prior to the 2009 PERA "Listening Tour," prior to the placement into Colorado statute of the "requirement" for the Colorado PERA Board to recommend pension reforms to the General Assembly, and prior to any sort of objective contemplation of pension reform options.

In 2009, we do not see the Colorado PERA Board of Trustees seeking a legal opinion regarding changes in the rate of accrual of PERA pension benefits to be earned in the future.  We don't see the PERA board searching for a legal rationale to increase the retirement age of active PERA members, or increase the number of years over which active PERA member base pension benefits are calculated (increasing years in the HAS calculation).

We DO see the PERA board ignoring "less drastic" impairment of PERA pension contracts, and targeting "fully-vested" PERA pension COLA benefits.  We DO see the PERA board seeking a legal opinion regarding their FIRST CHOICE for PERA pension reform, breach of "fully-vested" pension COLA contracts. (Or, perhaps this option was the first choice of PERA employer lobbyists.)

Given the numerous previous statements of Colorado PERA officials (that have been reported in the press and in Colorado PERA publications) supporting the contractual pension rights of PERA members, why would the Colorado PERA Board of Trustees actively seek a legal opinion contravening this legal advice?

What was the initial reaction of Colorado PERA's in-house attorneys to the PERA board's objective to break PERA pension contracts?  Were these in-house attorneys charged with the task of finding an attorney who might create the board's desired legal opinion?  Or, was Jean Dubofsky recommended to the PERA board by outside lobbyists (perhaps education lobbyists, or other representatives of PERA-affiliated employers?)

If the Colorado PERA board sought a legal opinion regarding PERA COLA contractual rights in early 2009, it follows that the PERA board anticipated litigation in early 2009, and thus the organization, Colorado PERA, should have had a "litigation hold" in place at that point in time on all materials relevant to the COLA taking.  Why bother seeking a legal opinion if you are on solid legal footing?

Why would a board, that has a fiduciary duty to act only in the interests of the beneficiaries of the pension trust, actively seek a legal opinion that would rationalize contemplated harm to the rights of those beneficiaries?

Who made the original proposal to attempt to break PERA COLA contracts?  A member of the PERA Board of Trustees?  Education lobbyists?  Colorado PERA staff?  When was this suggestion first proposed to the PERA Board?

Did Executive Director Meredith Williams leave PERA due to a disagreement with the PERA Board over the COLA-taking?  As we have seen, he was a finalist for a public pension job in Texas in November 2010 . . . nine months after SB10-001 was signed. Were Meredith Williams and General Counsel Greg Smith forced to defend a PERA Board decision to attempt a contract breach against their will? Or, did they personally support the contract breach attempt?

Apparently, Colorado PERA officials wanted the Colorado General Assembly to submit an interrogatory to the Colorado Supreme Court seeking clarification regarding PERA contractual public pension rights.  Was this idea quashed by legislative leadership?  Why was this responsible step ignored in 2009?

How did the Colorado General Assembly reach the conclusion in 2010 that the state's public pension contracts are inferior to the state's contracts with corporations?

By what means did the Colorado General Assembly conclude that it is free to pump $700 million of state revenue into local government pensions that ARE NOT the contractual obligation of the State of Colorado, while ignoring the funding of the state's own contractual PERA public pension obligations?

Did lobbyists for PERA-affiliated employers pressure the PERA board to attempt a taking of fully-vested pension benefits from retirees in order to prevent changes to the partially-vested pension benefits of their union dues-paying members?

As late as December of 2009, Colorado PERA officials provided written testimony to the Colorado General Assembly stating that PERA members have a contractual right to their PERA pension COLA benefits.  In light of this, why is Colorado PERA currently appealing a Colorado Court of Appeals decision with this same finding?

Did the Colorado PERA Board (through PERA lobbyists) actually "ask itself" to make pension reform recommendations to the General Assembly? Did PERA lobbyists initiate the amendment (request drafting of this 2009 bill amendment through a legislator)?  Did PERA lobbyists seek the amendment to the bill, SB09-282, at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board?  Was this amendment adopted in anticipation of the coming litigation over the PERA COLA, to potentially benefit the defendants?  The PERA defendants have emphasized in their pleadings that PERA Board recommendations were made in conformance with this "legislative mandate."

Many aspects of the Colorado General Assembly's breach of Colorado PERA pension contracts in 2010 are revealed in the chronological compilation of events and statements provided in this article.

"The Preordained Colorado PERA COLA Contract Breach."

We see the co-prime sponsor of SB10-001 and Colorado PERA's attorneys stating that the COLA is a Colorado PERA contractual obligation. We see members of the Legislature stating that SB10-001 breaks PERA contracts.

We see officials of Governor Bill Ritter's administration describing the Colorado PERA COLA benefit as a "present obligation" arising from the "employment exchange transaction," which will result in an average loss of $165,000 for PERA retirees over the next twenty years (a substantial loss.)

We see numerous statements by Colorado PERA officials that PERA pension benefits are "guaranteed."

We see a former Colorado Assistant Attorney General, and numerous Colorado PERA retirees, warn the Colorado PERA board and the General Assembly against an attempted PERA COLA contract breach.

We see state legislators using market volatility to justify the breach of Colorado PERA pension contracts, retroactively take accrued pension benefits, slash the pension debt of PERA employers, and seize what they believe is a "window of opportunity" to break pension contracts.

We see Colorado PERA attempting to deceive Colorado courts by conflating constitutionally permissible improvements to the contracted PERA COLA benefit, with retrospective legislative takings of accrued PERA COLA benefits in 2010.

We see Colorado PERA attempting to confuse Colorado courts regarding the distinction between "ad hoc" public pension COLA benefits and "automatic" pension COLA benefits.

We see Colorado PERA attempting to exaggerate the financial condition of the Colorado PERA trust funds by employing "market-based" public pension funding ratios in legal briefs, while Colorado PERA has used "actuarial funded ratios" historically (as is common practice in public pension administration.)

We see documentation of legal research conducted by Colorado PERA attorneys supporting the contractual pension rights of PERA members. (I doubt that PERA's General Counsel originated the idea to attempt the COLA contract breach given his numerous previous statements and his legal briefs [cited in the press] that militate against such an attempt.)

We see Colorado PERA officials emphasize the fact that PERA members are not eligible to receive Social Security benefits, and are accordingly particularly vulnerable to state breach of pension contracts.

We see the Colorado General Assembly enact "prospective" pension reform for thousands of Colorado county government retirees, honoring their accrued pension benefits, after having retroactively seized the accrued pension benefits of Colorado PERA retirees in 2010.

We see the adoption of legislation in the past by the Colorado General Assembly in which PERA  employee pension contributions are "technically being paid by employers, from their salary-raise pools" in order to AVOID the breach of PERA member pension contracts.

"The Colorado PERA SB10-001 Lobbying Juggernaut."

We see a member of the Colorado Legislature stating that SB10-001 was "a deal cut before this body met," (that is, prior to legislative deliberation of PERA pension reform alternatives.)  We see PERA lobbyists orchestrating debate on SB10-001.

We see the co-prime sponsor of SB10-001 stating that the Colorado PERA Board of Trustees "needs to make it toxic" (through lobbyists) for anyone to challenge Colorado PERA in the legislative arena.

We see a Deputy Colorado Attorney General stating that the Colorado education establishment is attempting to raise education funding by "legislating through the courts."

We see PERA officials (in 2009) blaming the Colorado General Assembly for the decline in the actuarial funded ratio of the PERA trust funds.

We see a member of the PERA Board state that the PERA trust funds are in no immediate danger, and that benefits can be paid for decades. 

We see a 27-member team of lobbyists assembled to push the pension contract breach through the legislative process.  We see the Colorado PERA Board of Trustees spending the resources of PERA trust fund beneficiaries in an attempt to take the contracted benefits of those same beneficiaries.

"Chronic Legislative Mismanagement of the Colorado PERA Pension Plan."

We see historical and ongoing mismanagement of the Colorado PERA pension plan by the Colorado General Assembly, a preference to shortchange the pension in order to lower PERA employer pension contributions, regular cuts to employer contribution rates, enactment of "early retirement incentives" to shift labor costs from Colorado governments to the PERA pension, enactment of pension benefit enhancements without paying for the enhancements, and a lack of respect for the state's contractual obligations.

We see the 15th wealthiest state in the nation, a state with $1 billion in new revenue, a state that has pumped $700 million into local government public pensions that ARE NOT its contractual obligation, a state that makes $100 million grants in discretionary property tax relief, a state with (nearly) the lowest per capita state tax revenue in the country, attempting to escape its contractual obligations.

We see PERA officials and the prime sponsors of SB10-001 stating that 90 percent of the "cost" savings in SB10-001 derive from those who do not "owe" the debt, i.e., PERA members, rather than from the Colorado governments that are bound contractually to pay the debt. We see Colorado PERA officials and legislative sponsors of SB10-001 boasting that their PERA reform plan pushes 90 percent of the costs onto parties who do not legally owe the debt.

We see the Speaker of the House state that he has no intention of allowing increased Colorado PERA employer pension contributions to be a significant part of the planned pension reform.

We see the Colorado General Assembly cutting its revenue stream beyond the requirements of the 1992 TABOR amendment, and later claiming that limited state revenues constitute a "crisis" justifying the breach of Colorado PERA pension contracts.

We see officials from Colorado PERA and the National Council on Teacher Retirement (former Colorado PERA Executive Director Meredith Williams' current employer) stating that public pension systems consume under three percent of all state and local government spending.

We see a 2002 veto of  a bill that would have improved Colorado PERA's funded ratio by Governor Bill Owens.

We find that the Colorado PERA Board has considered the use of pension obligation bonds (POB) in the past, that a PERA official considers POBs a "useful tool" for addressing unfunded pension liabilities, and we find this "less drastic" means of bolstering the PERA trust funds (re-amortization of the pension debt) off the table in 2010.

"Jean Dubofsky: Author of the 1999 'Requested' Colorado PERA COLA-taking Legal Opinion."

We see the author of the Colorado PERA COLA-taking legal opinion write a letter of recommendation for attorney Monica Marquez to serve on the Colorado Supreme Court.  The letter states that the author of the COLA-taking legal opinion "worked on the case," Justus v. State, with attorney Monica Marquez.  The letter further states that attorney Monica Marquez will "bring sophistication" to the Colorado Supreme Court on "public pensions."

We see attorney Monica Marquez advising Colorado PERA, prior to her appointment to the Colorado Supreme Court.

(In my view, the State of Colorado is fortunate that a talented jurist, Monica Marquez, has recently joined the Colorado Supreme Court. However [although I have complete confidence in Justice Marquez’s objectivity and dedication to the rule of law] it appears unlikely that our new Supreme Court justice will be able to participate in the coming decision in the case, Justus v. State, since she has worked on the case.)

"Actuarial Funded Ratios" vs. "Market-based" Funded Ratios."

Note that, historically, Colorado PERA has used "actuarial funded ratios" (almost) exclusively in its written communications to gauge the financial soundness of the PERA divisions. In 2010, we see Colorado PERA begin to use "market-based" funded ratios (in an attempt to exaggerate the financial condition of the pension plan) only after the commencement of the legal, political and lobbying campaign to break Colorado PERA pension contracts.

We see PERA officials in the past stating that an 80 percent PERA actuarial funded ratio is "sound."

We see numerous statements by Colorado PERA officials indicating that the Colorado PERA Board of Trustees finds an 80 percent actuarial funded ratio (AFR) for the pension plan acceptable, as well as documentation that the PERA Board seeks to cap the AFR at a 90 percent level.

We see PERA officials condemning employer contribution cuts by the Colorado General Assembly.  We see PERA officials stating that a PERA AFR under 60 percent is not a "crisis."

We see the Colorado General Assembly modify the Colorado PERA pension statutory contract in SB10-001 through the introduction of an absurd "100 percent" pension funding threshold.

We learn that, in the past, Colorado legislators argued that an 87 percent PERA actuarial funded ratio is "too well-funded," and yet current legislators intend in SB10-001 to retroactively take contracted PERA COLA benefits until a 100 percent AFR is achieved.

We see the firm, Fitch Ratings, state that a 80 percent actuarial funded ratio (AFR) for public defined benefit pensions is considered "well-funded," and that an AFR of 70 percent or above is an  "adequate" actuarial funded ratio.

We learn that, for the entire decade of the 1970s, the Colorado PERA actuarial funded ratio remained lower than its level at the time of the breach of PERA COLA contracts in 2010 (a low of 54.5 percent.)  There was no concern about a PERA financial "crisis" that decade.

We see public pensions in the United States with actuarial funded ratios as low as the 30s (in the 1970s) and yet public pension contracts were honored.

We see Colorado PERA's General Counsel stating that in order for a pension reform to be found "reasonable" under the Colorado Constitution, such changes to the Colorado PERA pension must be "the minimum changes necessary." We see Colorado PERA's actuaries stating that the 100 percent funding threshold in SB10-001 is much stronger than is necessary (not "the minimum changes necessary") to meet public pension regulatory (GASB) standards.

"Maximum Amortization Period."

We see Colorado PERA officials stating that the pension's investment time horizon extends to 70 years.

We see the Colorado General Assembly arbitrarily cut Colorado PERA's "maximum amortization period" in half (from 60 years to 30 years) putting pressure on PERA's funded ratio. There is no federal statutory mandate for this change, it is merely a "recommendation."

We find the Chairman of the Joint Budget Committee asking his colleagues: “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?”

"Service Credit Purchase Contracts."

We see Colorado PERA officials encouraging PERA members to send in checks for the purchase of "service credit" in 2002, only to later renege on those pension contracts. Much of this money was taken from the PERA member's separate retirement accounts (401Ks, 457 plans.)  The value of these "service credit purchases" was dramatically reduced by SB10-001, after Colorado PERA had their member's money. The purchase of a defined pension benefit, "service credit," by Colorado PERA members is a separate Colorado PERA pension contract that was broken by SB10-001.

The entries in this article (below) summarize material that is posted at saveperacola.com on the internet, "Save Pera Cola" on Facebook, and also on Coloradopols.com.  Additional information on the subject of each entry is generally available through a search of these sites.  Many Coloradans know the answers to the questions posed in this article, I encourage such persons to post their answers to the questions (even anonymously) on these three sites.

I believe that complete revelation of the truth regarding the political machinations that resulted in the breach of Colorado PERA pension contracts in 2010 would benefit the Colorado state legislative process in the future.

I don't believe that accrued Colorado PERA COLA benefits can be successfully taken by Colorado PERA lobbyists, PERA employer lobbyists, or members of the Colorado General Assembly. I don't believe that such a taking is possible under Colorado case law, McPhail, Bills or even DeWitt . . . (if that case is applicable.)

The chronology:

August 1, 1876

The Colorado Constitution takes effect upon statehood: Colorado: Art. II, § 11: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges, franchises or immunities, shall be passed by the general assembly.”

http://www.colorado.gov/dpa/doit/archives/constitution/1876.pdf

May 26, 1905

Franklin MacVeagh, U.S. Secretary of Treasury: “There is no moral exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private respect for a contract breaker. A contract breaker is an utter misfit as a citizen or a business man.”

http://www.senatedem.ilga.gov/phocadownload/PDF/PensionDocs/madiarrevisedpensionclausearticle.pdf

June 28, 1954

Hickey v. Pittsburgh Pension Board: "But when Thomas Hickey started contributing to the city pension fund in 1915, there appeared on the horizon not the slightest suggestion of a cloud to imperil the pension toward which he was faithfully to plod for 31 years. It is not reasonable or logical to suppose that, given the liberal attitude that the General Assembly has assumed in this field of legislation, that it would impose restrictions so fundamentally contrary not only to its policy but to the elemental rules of fairness ‘Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.’"

http://scholar.google.com/scholar_case?case=13490833546797588256&q=Hickey+v.+Pittsburgh+Pension+Board&hl=en&as_sdt=2,6

May 4, 1959

Colorado Supreme Court, Police Pension and Relief Board of Denver v. McPhail:

“ . . .we believe that in a case, such as that before us, involving a contributory system it is the only reasonable conclusion that can be reached (the contract principle.)”

“It would be unjust and contrary to our basic notions concerning the validity of contracts to hold that this provision could be changed by the lawmakers.”

“We conclude that the (Colorado constitutional Contract Clause) applies to the status of the plaintiffs here and prevents the enforcement of the (Denver Charter Amendment) against them.”

http://scholar.google.com/scholar_case?case=14051800929013625867&q=McPhail+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

December 11, 1961

Colorado Supreme Court, Police Pension and Relief Board of Denver v. Bills: “We now hold that not only prior to their actual retirement, but also prior even to their eligibility to retire, there was a limited vesting in these plaintiffs of their pension rights to the end that although prior to their eligibility to retire the pension plan could be changed, it could not be abolished nor could there be a substantial change of an adverse nature, without a corresponding change of a beneficial nature."  "Hence, prior to eligibility for retirement, changes may properly be made in a pension plan if these changes strengthen or better it, or if they are actuarially necessary."

"The charter amendment with which we are here concerned constituted an adverse change in the overall pension plan which deprived plaintiffs of a very substantial right, was unaccompanied by a corresponding change of a beneficial nature, was not shown to be actuarially necessary, nor that it in anywise strengthened or bettered the pension plan.”

http://scholar.google.com/scholar_case?case=3470001684402878070&q=Bills+v.+Denver+Pension+Relief+Board&hl=en&as_sdt=2,6

1969

SB 69-144, SB 69-311, HB 69-1230, and HB 69-1247 (Colorado PERA notes that the PERA COLA benefit in 1969 was an "ad hoc" COLA in its publication "History of Colorado PERA Legislation," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in this same PERA publication.)

– New annual post-retirement increase (COLA) adopted provided maximum 1.5% per year, in addition to AD HOC COLA increases that were based on the year in which the retirement benefit had begun.

– Legislature declared its intent to establish employer contribution rates to provide adequate funding of PERA’s accrued retirement benefits. (In later years [2010], the Legislature finds it more convenient to break PERA pension contracts to erase its public pension debt.)

– Amortization of PERA’s actuarial liabilities over a 60 year period was deemed adequate to maintain the retirement fund’s actuarial stability. (In later years, this "maximum amortization period" is arbitrarily cut in half.  There is no federal statutory mandate for this change, it is merely a "recommendation.")

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

December 31, 1973

The Colorado PERA actuarial funded ratio reaches its nadir of 54.5 percent.  There are no concerns at the Colorado General Assembly regarding a Colorado PERA financial "crisis."  For the balance of the decade of the 1970s, the Colorado PERA actuarial funded ratio remains lower than its level at the time of the breach of PERA COLA contracts in 2010.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

1975

HB 75-1364 (Colorado PERA notes that the PERA COLA benefit in 1975 was "ad hoc," later we find Colorado PERA describing the PERA COLA benefit as "automatic" in its publication "History of Colorado PERA Legislation.")

– Improved AD HOC post-retirement benefit increases.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

November 17, 1975

Colorado Supreme Court in Taylor v. PERA: “As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.”

http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

August 14, 1984

Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee"

http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

1987

SB 87-239 (Cuts to PERA employer pension contributions.)

– Legislature reduced FY88 PERA employer payroll contribution rates to:

– 10.2% from 12.2% for the State Division;

– 11.2% from 13.2% for State Troopers (also in the State Division);

– 11.5% from 12.5% for the School Division;

– 13.0% from 15.0% for the Judicial Division.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1992

HB 92-1335 (Cuts to PERA State and School Division pension contributions.)

– Reduced the School Division employer contribution rate by 0.6% to 11.6% of payroll.

– Temporarily reduced the State Division employer contribution rate by 1.0% of payroll in FY92.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1993

HB 93-1324 ("Automatic" PERA COLA benefit enacted.  The auto COLA was later improved by the Legislature to a fixed 3.5 percent.  Legislative improvements in the contracted COLA are permissible as there is no impairment of existing contracts.  Colorado PERA members began paying for this automatic COLA benefit out of each paycheck, and earning this PERA benefit for each day worked.)

– Changed annual COLA to 3.5% maximum, compounded annually, based on the CPI, and folded the PERA CLSF into the PERA pension trust funds.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

March 24, 1993 (1:32 PM – 2:28 PM)

Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature's House Finance Committee in regard to the "automatic" PERA COLA benefit under consideration (in House Bill 93-1324): “The PERA Board does support this bill.”  “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.”  Rob Gray states that the proposed COLA "adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”.  Rob Gray characterizes the "automatic" PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.”  (Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level [constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

1997

HB 97-1082 (PERA employer pension contribution cuts, benefit enhancements.)

– Increased retirement formula from 1.5% to 2.5% per year of HAS on 20-40 years service, with 100% HAS maximum benefit. Benefits were recalculated for current benefit recipients on a prospective basis.

– One year HAS adopted for Judicial Division’s future retiring judges.

– Combined the State Division’s and the School Division’s trust funds, and reduced the State and School Division employer contribution rate by 0.1% to 11.5% of payroll.

HB 97-1114 (Statutory timeframe for meeting PERA obligations cut by one-third, in later years, the Legislature continues to arbitrarily cut this timeframe to half of the 1997 standard.)

– Reduced PERA’s maximum amortization period to 40 years from 60 years.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1998

HB 98-1242 (Cuts to PERA employer pension contributions in State and School Divisions.)

– State and School Division employer payroll contribution rate was reduced from 11.5% to 11.4%.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1999

SB 99-90 (Cuts to PERA employer and trooper pension contributions.)

– Permanent 1% employer payroll contribution rate cut for state, school, and judicial employers authorized when PERA is fully funded in the State and School Division, and in the Judicial Division.

– Municipal employer payroll contribution rate cut authorized when Municipal Division is fully funded.

– Reduced State Trooper member contribution rate from 11.5% to 10.0% of salary, effective 7/1/99.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

1999

George K. Baum study performed under the auspices of Colorado PERA (presented on Colorado PERA letterhead) for State Treasurer Mike Coffman asks: “Why does PERA appear to have a policy to keep a 10% unfunded liability?”  (If Colorado PERA had a policy, in the past, to cap the funded ratio of the PERA pension at 90 percent, why does the PERA Board propose to break PERA contracts in SB10-001 until a 100 percent funded ratio is achieved?  As PERA officials have noted, the pension debt comes due over up to 70 years, it is not "due tomorrow.")

2000

December 31, 2000

The Colorado PERA actuarial funded ratio reaches a peak of 105.2 percent.  The General Assembly determines that PERA is overfunded, and the effort to bring down the PERA actuarial funded ratio accelerates. (The General Assembly enacts legislation shifting labor costs to the pension through "early retirement incentives," and employer contribution cuts and benefit enhancements continue.)

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

2000

HB 00-1458 (Cuts to PERA employer pension contributions, PERA COLA set at automatic 3.5%.)

– Moved date of 1% reduction in employer payroll contribution rate forward from 1/1/01 to 7/1/00 since PERA was now fully funded, to 10.4% for the State and School Division, and to 14.0% of payroll for the Judicial Division.

– Established an additional minimum 0.25% employer payroll contribution rate cut.

– 20% of any PERA overfunding amortized over 10 years, would be allocated for further employer payroll contribution rate cuts.

– 30% of PERA overfunding amortized over 10 years, would be allocated to the HCTF for retiree health care premium subsidy increases.

– Established 3.5% compounded annual automatic COLA effective March 2001.

– Prior to this date, the annual COLA equaled the lower of the actual inflation rate or annual 3.5% cumulative increases since retirement.

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

2001

November 20, 2001

Buck Consultants study presented to the Colorado General Assembly's Legislative Audit Committee.  (The report provided the results of a retirement plan study for Colorado PERA, conducted pursuant to SB 01-149.)  Six of the seven members of the Audit Committee sitting at the table had sponsored [the prior year] the bill enacting the 3.5 percent fixed, automatic PERA COLA, HB 00-1458 the prior year.)  The Buck Consultants report clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” the “fixed” COLA, that is “compounded annually for each year of retirement,” and contrasts the PERA COLA with an “ad hoc” COLA “as approved by Legislature.”  If Colorado PERA officials did not agree with the Buck Consultants characterization of the PERA retiree COLA as an “automatic” COLA, then why did these Colorado PERA officials not state their objections to this characterization when the Buck Consultants report was presented in 2001?

http://www.nctr.org/pdf/coloradodcdbstudy.pdf

December 31, 2001

Colorado PERA Executive Director Meredith Williams:

“Be assured that your PERA account is safe, and that the benefit you receive when you retire is not affected by PERA’s short-term return on investments.”

http://www.copera.org/pdf/5/5-21-01.pdf

2002

February 25, 2002

From Colorado PERA News Release: "Colorado PERA’s monthly retirement benefits are guaranteed for life and purchasing time makes good sense for many of our members.”

https://www.copera.org/pdf/NewsReleases/2002/Purchasing.pdf

February 15, 2002

Kim Natale, Chairman, Colorado PERA Board of Trustees: “As a comprehensive retirement plan, PERA benefits are guaranteed for life.”  “However, the loss  . . . does not affect our ability to pay guaranteed lifetime benefits to you.”

http://www.copera.org/pdf/Newsletters/MemberUpdate3-02.pdf

July 18, 2002

"PERA’s Funding Status": "Because Colorado PERA is a defined benefit plan, members and retirees will receive a guaranteed benefit.  Those members who are planning on retiring should not be alarmed by the underfunded status of PERA.  Retirement benefits will be calculated and paid, in the same manner, regardless of PERA’s funded status.”

http://www.copera.org/pera/about/newsarchives2002.htm

2003

Colorado PERA:  “In any event, members and retirees with fully vested rights and entitlements provided by the PERA statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”

https://www.copera.org/pera/about/newsarchives2003.htm

June 3, 2003

Colorado PERA Executive Director Meredith Williams, CAFR Summary to Members, 2002, 5/21 (REV 6/03): “PERA directs its efforts at keeping the funding ratio, (the ratio of assets to accrued liabilities) for the three divisional retirement funds at a minimum of 80 percent. A funding ratio over 80 percent is considered good.”

http://www.copera.org/pdf/5/5-21-02.pdf

October 9, 2003

“Colorado PERA Fund Secure, Board of Trustees Seeks to Improve Funded Status.”

"It is our opinion that PERA continues to have a relatively good funded ratio of 88 percent (based on the actuarial value of assets)."

“PERA believes that state constitutional provisions that prohibit the reduction of benefits to existing retirees and restrict the changes which can be imposed on vested members of PERA further limit alternatives.”

“The funding reductions enacted as a result of the up markets of the 1990s must end.  The State must return to fully funding future obligations to PERA members and retirees.”

“PERA Benefits being paid are guaranteed . . .”

“PERA staff is in the process of fully researching and analyzing the issue of changing benefits and has not recommended anything to the Board regarding such changes.  PERA has not made the decision to propose legislation that would change the current benefit levels of vested members.”

“In any event, members and retirees with fully vested rights and entitlements provided by the PERA Statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”

"With PERA, Las Animas employees have a guaranteed benefit for life.”

http://www.copera.org/pera/about/newsarchives2003.htm

October 10, 2003

“In 2003, (Treasurer) Coffman warned that the state’s pension fund may be in jeopardy after legislators lowered the state’s contribution from the general fund. [Associated Press, 10/10/03]”

http://mediatrackers.org/wp-content/uploads/2012/07/DCCC2012MikeCoffmanCO06-ResearchBook.pdf

“Adding to the problem is the fact that the legislature voted to reduce the amount of the state's contribution into the program from 12.2 percent in 1991 to 10.15 percent in 2004, Coffman said.” (October 10, 2003, Rocky Mountain News)

December 4, 2003

"Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

https://www.cu.edu/sg/messages/2718.html

December 4, 2003

“JBC members questioned why PERA is asking for an increase in the employer contribution but not asking employees to contribute more. Williams responded that by law, the association may only ask employees to contribute more if the increase would provide a greater retirement benefit, which is not being proposed at this time.”

https://www.cu.edu/sg/messages/2718.html

2004

February 21, 2004

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

July 2004

"PERA Benefits at a Glance": “Receive an annual automatic increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”  (PERA Document 5/58 (REV 7-04)

July 7, 2004

PERA response to July 5, 2004, Rocky Mountain News Editorial:

“PERA’s funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”

“The fact is that benefits guaranteed to PERA members are of a contractual nature, and that means that unless benefits are increased, contribution rates for members cannot be increased.”

“The PERA Board agrees with the Treasurer that a 40-year period should be used as a standard for amortizing the unfunded liability.”

“PERA’s legal research concluded that employee contribution rates could not be raised absent a showing of fiscal necessity.”

http://www.copera.org/pera/about/newsarchives2004.htm

October 28, 2004

PERA official: Legislators say PERA is "too well-funded" at 87 percent actuarial funded ratio. Colorado PERA Field Education Services Division Director Dennis Gatlin states: “PERA’s funding ratio was at 87 percent (in 1985) and legislators claimed that the association was ‘too well-funded.’ In 1970, the ratio was 54 percent, he added. According to Gatlin, PERA has been overfunded, when its assets equaled more than its liabilities, only twice in its 73-year [My comment: now 81-year] history, in 1999 and 2000.” Silver and Gold Record:

https://www.cu.edu/sg/messages/3851.html

November 18, 2004

Colorado Attorney General Ken Salazar Opinion (post-DeWitt): "Once a PERA member fulfills all the statutory requirements for a pension benefit and retires, the member’s fully vested pension right cannot be reduced by the General Assembly."

http://saveperacola.files.wordpress.com/2010/01/changes_to_pera.pdf

2005

May 12, 2005

“Befort also noted that several years ago, the Legislature and Gov. Bill Owens decided to encourage higher-paid employees to retire early. Payroll expenses went down for the state, but PERA’s costs increased, he explained.”

https://www.cu.edu/sg/messages/4405.html

July 14, 2005

Colorado PERA would rather break pension contracts than issue pension obligation bonds at historically low interest rates: “Rob Gray, PERA government relations director, told S&GR this week that the PERA board has looked at pension obligation bonds and will meet later this week with its regular actuary and an outside actuarial company that did its own review of PERA’s unfunded liability, and which may make recommendations on additional steps PERA could take to cover the liability.”  “PERA has been approached by investment firms about POBs during the past several years, Gray said this week. He agreed with Doherty’s assessment that POBs could be a useful tool to cover the liability and improve PERA’s funding situation, and Gray noted that the independent actuarial firm also is reviewing POBs as a solution.”

https://www.cu.edu/sg/messages/4467.html

August 13, 2005

Colorado PERA Executive Director Meredith Williams,. "The liabilities of the system, frankly, will be paid out over multiple decades, and we're talking 70 or 80 years. We're kind of designed for the long haul and we know we're going to experience ups and downs in the marketplace."

http://www.chieftain.com/metro/slow-stock-market-retiree-boom-hurts-pension-system/article_da58863b-1799-50b4-8ff3-0548d16be68c.html

August 17, 2005

Colorado Assistant Attorney General Heidi Dineen, Rocky Mountain News (in a four part series): "'Everyone agrees you certainly can make changes for people you haven’t even hired yet,' said Heidi Dineen, a state assistant attorney general retained to explore the issue for the Commission to Strengthen and Secure PERA. 'On the other side of the spectrum is pensioners, getting their pension checks, you cannot take that away.'"

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

“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.”

"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/

September 14, 2005

Colorado Treasurer’s "Commission to Strengthen and Secure PERA,” co-chaired by former Colorado Senator Hank Brown (who later supported a retroactive taking of PERA COLA benefits):

“For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The  commission may not make any recommendations that materially affect current retirees.”

https://www.copera.org/pdf/Misc/CommissionReport.pdf

November 4, 2005

PERA Shareholders Meeting Presentation, Fall, 2005:

"Note that PERA’s funded status was lower 30 years ago than it is now.  You may recall that there was no perceived 'crisis' in PERA’s funded status in 1975.”  “What the PERA Board and staff would like is for the funded status curve to be flat or stable at around 80 percent.  Why?   Because not all benefits are due and payable today or tomorrow . . .  PERA can weather the ups and downs in the markets.”  “There are legal provisions that protect retirement benefits for current members and retirees, including the contract clause restrictions established by court cases in Colorado and other jurisdictions.”

http://www.copera.org/pdf/Shareholder/ShareholderPresentation05.pdf

2006

SB 06-235

– Reduced PERA’s statutorily prescribed maximum amortization period (MAP) from 40 years to 30 years. (In 1997, the PERA MAP was set in law at 60 years.)

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251603807998&ssbinary=true

2006

Federal Reserve paper, by Ronald A Wirtz, notes that public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s:

“From a long-term perspective, however, one can't really pin too much of the pension problem on the recent stock market pullback . . .".  "During the 1970s, funding ratios generally hovered between 50 and 60 percent.”  (Yet, public pension contracts in the United States were honored.)

January 2006

Colorado PERA Member Report: “As I said above, no changes are proposed for ‘legally protected’ benefits.” “The package addresses PERA’s funded status without impairing earned pension benefits for existing and retired members.”

http://www.copera.org/pdf/Newsletters/MemberReport/MR1-06.pdf

January 12, 2006

Governor Bill Owens 2006 State of the State:

“We need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer.  This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.

"We also need to take the politically tough step of examining benefit levels for our current employees.  We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the ‘out’ years for those furthest from retirement.  These changes should not affect those closest to retirement, but could be phased in for those who have years to go.”

http://www.pewstates.org/projects/stateline/headlines/colorado-state-of-the-state-address-2006-85899394414

January 13, 2006

Rocky Mountain News: “(Colorado PERA Executive Director Meredith) Williams claims that any compromises in promised benefits to current employees could be deemed unconstitutional.”

http://m.rockymountainnews.com/news/2006/jan/13/brosenb-slay-the-pera-dinosaur/

February 2006

From PERA Legislative Update:

“Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) automatic increase of 3.5% per year after retirement.”

“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

February 10, 2006

Colorado PERA Board meeting summary on DocStoc: “A motion was made by Scott Noller and seconded by Carole Wright that 'as it is in the best interest of the members and beneficiaries of PERA, and in compliance with the fiduciary obligation of the Board of Trustees, that any laws affecting PERA be legally adopted, that staff take appropriate action, including incurring reasonable expenses, to ensure that any laws affecting PERA be legally adopted.'”:

http://www.docstoc.com/docs/61834277/Colorado-Public-Employees-Retirement-Association

February 11, 2006

“It defines ‘actuarial necessity’ in state law, opening the door for benefit reductions for current PERA members who have not retired.”

http://m.rockymountainnews.com/news/2006/feb/11/governor-demands-pera-solution/

February 16, 2006

“Joint Budget Committee member Rep. Bernie Buescher (D-Grand Junction) told S&GR this week that he hopes in the next week to meet with representatives of CAPE, CEA, the Colorado Federation of Public Employees, the Colorado Association of School Executives, PERA and Gov. Bill Owens to work out a PERA solution.”

"Deputy Colorado Attorney General Bernie Buescher, 'who spent 20 years as a pension attorney,' has said that he believes Colorado PERA needs changes, but not drastic ones, pointing out that the ‘beauty’ of pension plans is that small changes compound interest over time.  ‘When you're talking about something as complex as retirement plans, the planning horizon is 30 to 50 years — even 20 years is too short.’”

"'Some folks feel urgency' to solve PERA's problems, Buescher added. 'I feel much more strongly that we need to do it right,' he said. 'We don't have to do it this year, but the sooner we deal with it, the less painful the solution would be. It would be better to not do anything than to do something that is not productive.'"  (Note that Buescher later served as Colorado Secretary of State and now works at the Colorado Attorney General's office in the position formerly occupied by our new Colorado Supreme Court Justice, Monica Marquez.)

https://www.cu.edu/sg/messages/4829.html

February 24, 2006

“In an e-mailed statement, spokeswoman Katie Kaufmanis said PERA’s funded status at the end of 2004 ‘is the same as the funded status 20 years ago, and there was not a perceived crisis at that time. . . . PERA continues to enjoy positive cash flow and will be able to meet current and future retirement benefit payments for many decades in the future.’”

http://m.rockymountainnews.com/news/2006/feb/24/peras-red-ink-stains-colorado/

March 5, 2006

Colorado PERA's "Five Minute Rule."  Denver Post article by Bob Ewegen (who retired from the Denver Post in 2008 after 36 years at the paper.) The title of the article is: “A 3 Percent Solution for PERA: Rescue Plan for Retirement Groups Finances Might be Simple”:

"In excluding any cuts for current retirees and slashing benefits for new hires, PERA and its critics agree on what might be called the ‘five minute rule.’ PERA members who are already retired – even if they left just five minutes ago – are considered ‘fully vested’ and thus legally immune from any changes that would reduce their current or future benefits."

"Current or retired employees are guaranteed a 3.5 percent increase in benefits each year." "PERA itself argues that the law bans any adverse change affecting even future earned benefits for existing employees."

http://www.denverpost.com/opinion/ci_3566250

March 9, 2006

Silver and Gold Record: “Williams noted that most people don't have enough money to pay off their mortgages, and that PERA's assets have exceeded its total liabilities only twice in its 75-year history. ‘We have 74 percent of the mortgage, but some people are making hay out of that,’ he said. ‘They want to close down your pension fund.’"  (Williams later supported the breach of Colorado PERA pension contracts when the Colorado PERA actuarial funded ratio was five points lower than this level.)

https://www.cu.edu/sg/messages/4871.html

April 2006

Colorado Association of School Executives (an organization that supported SB10-001) in an issue brief, "Politics and PERA, Separating Fact from Fiction":

“What is PERA’s financial condition?  Is PERA stable?  Yes.  PERA is quite stable.  As of this writing, PERA's market value is in excess of $35 billion.  If there were flat investment returns in the future, PERA would have enough cash to pay benefits or over 40 years.  By almost every standard, PERA is solvent.”

“How did PERA get into this predicament?  Several factors have contributed to PERA's current funded status.  In 1999 and 2000 when PERA had more assets than liabilities, there was a major political movement to increase benefits, to lower the age of retirement, and to lower employer contribution rates for PERA.”

“Now, some of the same politicians who voted for increased benefits and lower contribution rates are the ones pointing fingers and talking about a ‘crisis.’”

“One result of these changes is that PERA's employer contribution rate has declined by 25 percent since the late 1990s.  Current contribution rates and estimated return on investments aren't enough to pay off the debt over time.”

“In short, employer contributions were lowered during the boom years — now employers need to step up to fill some of the gap.”

“Different groups have proposed numerous ‘fixes’ that range from adjusting how Highest

Average Salary is figured, to reconfiguring the benefit package, to privatizing the system.”

(My comment: Here CASE, an SB10-001 proponent, notes in its 2006 Issue Brief the existence of several “less drastic” alternatives to the breach of fully-vested PERA retiree pension contracts.)

“The negative publicity about PERA over the past year is largely the work of organized ideologically motivated activists and profit-minded special interest groups.”

“In reality, PERA has one of the lowest employer contribution rates in comparison with other public pension plans in Colorado and other states. The 2006 employer contribution to PERA is 10.65 percent. By comparison, public pension plans for neighboring states show an average employer contribution rate of 17.2 percent. Even with the scheduled gradual increase of the employer rate up to 13.15 percent by 2012, Colorado will still compare favorably with other public pension plans.”

“By Phil Fox, deputy executive director, and Jana Caldwell, director of communications, CASE.”

http://www.friendsofpera.com/facts/PERAIssuebrief.pdf

June 5, 2006

PERA CAFR: “PERA directs its efforts to keeping the funded ratio (the ratio of assets to accrued liabilities) for the divisional retirement funds at a minimum of 80 percent.” (Page 7)

http://www.leg.state.co.us/osa/coauditor1.nsf/All/900E3922BE6A3D9A872571A4006F3245/$FILE/PERA%20CAFR%20Dec.%202005%20heard%20July%202006.pdf

Fall 2006

“Shareholders Meeting Fall 2006” document: “Note that PERA was over 100% funded in only two years of our 75 year history.”

http://www.copera.org/pdf/Shareholder/ShareholderPresentation06.pdf

October 26, 2006

Silver and Gold Record: “One attendee asked if there was any similar controversy in the 1970s, when PERA's unfunded liability went as low as 54.7 percent. Williams said former Gov. Richard Lamm, who co-chaired the PERA commission, made that same observation last year when he recalled that there was no outcry when he was governor and the unfunded liability was below its current level.  Williams compared the unfunded liability to having a mortgage, and asked how many people have enough money on hand at any one time to pay off all or even half of their mortgages.”  “He (Meredith Williams) added, however, that since PERA is not permitted to increase member contributions without a commensurate increase in benefits, the money is technically being paid by employers, from their salary-raise pools.  Williams said this ‘employer contribution’ will not affect retirees . . .”

https://www.cu.edu/sg/messages/5245.html

2007

“Representative Bernie Buescher, a pension attorney from Grand Junction, began a month-long effort (in 2006) to educate the PERA Board and include them in discussions with others, including Senator Owen, in order to forge a compromise.”

http://cppa.utah.edu/_documents/westernstatesbudgets/wpsa-06/colorado-06.pdf

2008

Friends of PERA (an organization that supported SB10-001) in "PERA Quick Facts":

“The employer contribution rate for the PERA pension plan is below the average rate contributed by public & private employers into retirement plans for their employees.  Many employers contribute between 6% and 10% of pay in addition to 6.2% of pay for Social Security, for a total of 16.2% of pay.”

“In 1984, the contribution rate to PERA's pension fund for the School and School Divisions was 12.5% and 12.2%, respectively.  Over the years, the rate dropped to less than 10%.  The rate in 2009 is 11.9%, still lower than it was 25 years ago.”

“Compare PERA’s rate with other non-PERA Colorado public plans: Denver = 13.7%, Adams & Pueblo counties = 13.7%, Douglas County = 14.2%, University of Colorado = 16.2%, City of Fort Collins = 13.7%, Jefferson County = 13.2%, Durango = 11.2%, Westminster = 10.3%, Lakewood = 11.7%.”

“Compare PERA’s rate with the average rate of the seven neighboring state pension plans: 11.9% vs. average of 18.3%, NM State = 22.8%, NM School = 17.8%, Utah RS = 21.9%, Wyoming = 17.5%, NE School = 13.5%, OK RS = 20.7%, KS PERS = 14.2%.”

“Compare PERA’s rate with the average of 32 public DB plans: 11.9% vs. 14.3%.”

“Average pension cost for all Private Employers according to the 2006 Chamber of Commerce Employee Benefits Study is 14.25%.  PERA is 16 percent below this.”

“Rate cuts to PERA between 2000 and 2005 equaled some $325 million.”

“The State (taxpayers) is not the major provider of funds to the pension plan; only 17% of PERA’s revenue of $45 billion in the last 20 years came from the taxpayer; members contributed about 18% of the revenue.  Investments brought in 65% of the revenue.”

“PERA’s funded level at the end of 2007 was an overall 75% of assets – about the same as it was in 1984.”

“Equating PERA’s amortization period (number of years when it will have the unfunded portion paid off) to an actuarial emergency or necessity is erroneous.  PERA continues to have a positive cash flow without selling off assets.”

"PERA has been fully funded only two years in its 75-year history – in 1999 and 2000.  When it was fully funded, Governor Owens immediately pursued cutting the employer contribution rate and unwisely pushed the Board of Trustees very strongly to reduce the cost to purchase service credit.  This action resulted in a very large unfunded liability increase to the fund.  When PERA tried to pursue legislative changes to remedy the situation, Governor Owens vetoed the legislation because it did not include a ‘defined contribution option’ for state employees.”

“PERA benefits are actually lower than private industry and other public plans that have Social Security plus a pension.”

"Laws passed in 1999 and 2000 to reduce the cost to purchase years of service and to provide for earlier retirement were initiated by Governor Owens' office and legislators who wanted to encourage long-term state employees to retire.  At the same time that the benefit rules were made better, the employer contribution rates were reduced and the rate employees paid remained the same.  These changes were made by the Executive and Legislative branches, not by the PERA board.”

“There is a misconception that the ‘taxpayers’ are owners of the fund; the trust fund is owned by the beneficiaries of the fund . . .”

“PERA reacted promptly to the market downturn in 2001.  In 2002, it developed a proposal that would have saved PERA millions of dollars in payments and brought in millions of dollars in additional revenue.  This plan was passed unanimously by the General Assembly in 2003 but was vetoed by Governor Bill Owens (R).  He vetoed this bill because of a political desire to include defined contribution plans as an alternative option to PERA, even though no other organization in the state offers a ‘choice’ in retirement plans.”

http://www.friendsofpera.com/facts/index.html

Support public pension contractual rights at saveperacola.com.  "Friend Save Pera Cola on Facebook!

Anatomy of a Colorado PERA Pension Contract Breach. (Part 2 of 2.)

January 2008

U.S. Government Accountability Office, “State and Local Government Retiree Benefits: Current Funded Status of Pension and Health Benefits,” (GAO-08-223.)  The GAO report notes on p. 15, “Many experts and officials to whom we spoke consider a funded ratio of 80 percent to be sufficient for public plans for a couple of reasons. First, it is unlikely that public entities will go bankrupt as can happen with private sector employers, and state and local governments can spread the costs of unfunded liabilities over up to 30 years under current GASB (my comment, "recommended") standards. In addition, several commented that it can be politically unwise for a plan to be overfunded; that is, to have a funded ratio over 100 percent. The contributions made to funds with ‘excess’ assets can become a target for lawmakers with other priorities or for those wishing to increase retiree benefits.”  (My comment, GASB does not have the power to compel states and municipalities to follow its recommendations.  If an 80 percent AFR is a "sufficient" funding level, why does the Colorado PERA Board of Trustees seek to break Colorado PERA pension contracts until a 100 percent funded ratio is achieved?)

http://www.cbpp.org/cms/index.cfm?fa=view&id=3372

February 2008

The Auraria Campus Human Resources Department posted a Colorado PERA document on the AHEC website in 2008 (still in place) clearly stating that retirees will receive the contracted annual increase of 3.5 percent in retirement.  This Colorado PERA publication predates PERA's decision to attempt a pension contract breach.  Since this document is on AHEC's website, it is beyond PERA's reach.

"Colorado PERA Retirement Process”: "The amount of increase you receive is dependent on when you were hired by a PERA employer: If you began PERA membership on or before June 30, 2005, you will receive an annual increase of 3.5 percent."

http://www.ahec.edu/hr/peraretirement.pdf

April 17, 2008

Colorado has an opportunity for significant federal mineral lease revenue: “Co-sponsor Sen. Josh Penry (R-Grand Junction) said the bill will create an opportunity for the state to invest in strategic needs. He explained that at the time the original tax structure was set up, the state was receiving about $30 million to $40 million per year from federal mineral lease revenues. However, according to Penry, the state is now expected to see $300 million to $400 million per year, reaching a total of $2.7 billion over the next decade.”  (Note that the State of Colorado also foregoes the collection of significant sales tax revenue.)

https://www.cu.edu/sg/messages/6125.html

August 1, 2008

Colorado PERA website, "Ask Meredith": "Keep in mind that PERA is a long-term investor with a time horizon that is much longer than individuals have.  PERA does not 'time the market' nor do we actively move assets to less risky investments when the market is falling.  Because PERA is a long-term investor, we know that at times we'll have losses, but those losses will be offset by gains over the long run in PERA's diversified investment portfolio. The bottom line is that the PERA portfolio is well diversified and able to withstand the ups and downs of the market over time.
– Meredith"

https://www.copera.org/pera/about/askm.htm

October 10, 2008

Colorado PERA Executive Director Meredith Williams: “The value of your PERA benefit is based on highest average salary and years of service (a 'defined' formula) and does not fluctuate based on market performance.”

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

November 30, 2008

Colorado PERA General Counsel Greg Smith: “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.” 

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

December 2008

Colorado PERA Executive Director Meredith Williams commenting on Colorado Attorney General Ken Salazar’s 2004 Formal Opinion on PERA benefits (PERA Retiree Update, page 1):

“The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”.

https://www.copera.org/pdf/5/5-40-08.pdf

December 4, 2008

Silver and Gold Record: “‘We've got a much larger segment of people making contributions and employers making contributions,’ and with its current assets PERA will be able to pay benefits for decades to come, he (Colorado PERA Executive Director Williams) said.”  “Williams said that gives PERA time to examine its options.” "We generally can ride out market cycles," he said. "We're built to do that."

https://www.cu.edu/sg/messages/6546.html

December 8, 2008

"Ask Meredith" column on Colorado PERA website: “That leaves the benefits being earned by members (active and inactive) as the only area to examine for savings. The Attorney General’s opinion contains the following language: 'Once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member’s fully vested pension right cannot be reduced by the General Assembly.'”

https://www.copera.org/pera/about/askm.htm

December 19, 2008

Colorado PERA Executive Director Meredith Williams assures PERA retirees that market volatility has no impact on their contracted pension benefits:

"Since PERA is a defined benefit plan, your benefit is not based on the fluctuations in the financial markets, but on your contributions, age, and years of service."

https://www.copera.org/pera/about/askm.htm

2009

Sometime in 2009

Attorney Jean Dubofsky, at the request of Colorado PERA, provides 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

2009

Senator Josh Penry, in a videotaped discussion with Representative Mike May, (videocenter. denverpost.com) said ‘we can’t, can’t miss this window.’ And, . . . we have an opportunity to pass something that Republicans have long advocated, a significant increase in retirement age, which the PERA Board embraced, reigning in the cost of living increases . . .

“Penry went on to say, ‘I think it is important to pass something because if you lose actuarial necessity, as you know, it becomes extremely difficult to increase retirement age. You cannot change course and this year, when PERA’s investment numbers come out, their investment returns . . . numbers are going to be significant, like double, 15-16% investment return. So that could change the specter of actuarial necessity. We gotta’ do it this year or else these other structural changes won’t be possible.”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

January 2009

Colorado PERA Executive Director Meredith Williams: “The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”

https://www.copera.org/pdf/Topics/2009/Topics1-09.pdf

January 5, 2009

Colorado PERA officials discuss "what constitutes an actuarial emergency" with the Colorado Legislature's Joint Budget Committee.

January 8, 2009

Silver and Gold Record: “The committee also met with representatives from the Public Employees' Retirement Association on Monday.  PERA Executive Director Meredith Williams pointed out that despite an estimated $11 billion market loss in 2008, the association has enough funds to pay benefits for decades, although perhaps not as many decades as it could have funded in the past.”

https://www.cu.edu/sg/messages/6594.htm

January 24, 2009

“Define an 'actuarial necessity' that automatically triggers a legislative response. PERA’s board has long argued that the state constitution may require any benefit cuts to be paired with equal reductions in contributions, unless the changes are ‘actuarially necessary.’”

http://m.rockymountainnews.com/news/2009/jan/24/lawmakers-must-act-now-on-pensions/

January 26, 2009

Former Colorado Treasurer and PERA Board member Mark Hillman: “PERA lawyers assert that benefits can be retroactively increased (as they have been), but that once increased, those benefits can never be reduced, even for someone who has worked just one day for a PERA employer.”

 “. . . PERA’s party line is that the responsibility to make up for any shortfall rests with taxpayers, represented by state and local governments who contribute to PERA’s pension funds on behalf of their employees.”

http://www.markhillman.com/2009/01/26/get-taxpayers-off-the-pera-go-round/

February 4, 2009

Colorado PERA publication: “Employer contribution rates were lowered when PERA reached fully funded status, saving public employers in Colorado millions of dollars.”

http://www.copera.org/pera/about/newsarchives2009.htm#LAC

March 11, 2009

Colorado PERA officials place blame on the Colorado General Assembly for creating the latest PERA financial downturn: “Other notable factors (for the downturn in PERA’s fiscal position) include employers not contributing the actuarially determined contribution rates, the sale of purchased service credit at rates below actuarial costs, and the raising of benefits in the late 1990’s coupled with decreasing employer contributions.”

http://www.kentlambert.com/Files/PERA_Response_Pt_1.pdf

April 14, 2009

Colorado PERA Executive Director Meredith Williams testifies to the Senate Finance Committee hearing on SB09-282 (03:28 PM) stating that "the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA.”  Mr. Williams made this  statement one week BEFORE the requirement for the PERA Board to provide recommendations to the Legislature regarding PERA reform was placed into SB09-282  (on April 21, 2009.)  In court documents, Colorado PERA emphasizes that, in 2009, the PERA Board was simply responding to the General Assembly’s “legislative mandate” to make PERA pension reform recommendations.  Response Brief submitted to the Denver District Court:

http://www.ednewscolorado.org/wp-content/uploads/2010/05/PERASuitResponse5-10-10.pdf

I suspect that (through PERA lobbyists) the PERA Board actually "asked itself" to make these recommendations, that this amendment was placed in SB09-282 at the end of the 2009 legislative session in order to make a preordained conclusion to attempt to take PERA COLA pension benefits appear to be the product of extensive deliberation on the part of the PERA Board to PERA's benefit in anticipated litigation.  It would be rather disingenuous of Colorado PERA to argue in court documents that it was responding to a "legislative mandate" to provide pension reform recommendations, when in fact Colorado PERA was responding to a Colorado PERA "mandate" to provide pension reform recommendations.

July 14, 2009

Speaker Frank McNulty: "I don't think at this point we can expect employer contributions to be part of the solution . . ."

http://www.9news.com/rss/story.aspx?storyid=119465

August 11, 2009

Colorado PERA Board Trustee Casebolt assures PERA retirees present at Colorado PERA Denver meeting of the PERA “Listening Tour”: “PERA faces no immediate danger of being unable to pay benefits, in fact, PERA can pay benefits for many years to come, based on our current funding and our benefit structure coupled with over $30 billion in assets, at present market value.”

Sue Ellen Quam: "I was a legislative liaison for many, many years. I sat in the Joint Budget Committee for many, many years, and I remember legislators saying ‘You know, you don’t get very good salary increases and your benefits really stink, but you’re gonna get a really good retirement and so just hang in there.”  “So, I find it to be discouraging that the Legislature may be considering saying, ‘We got you on your salary, we got you on your benefits, and now we’re going to get you on your retirement.”  “I’ve heard rumors that the 3.5 percent increase may be reduced or eliminated and that it’s OK with PERA members. It’s not OK with this PERA member.”

Colorado PERA’s General Counsel Greg Smith blames the Colorado General Assembly for PERA’s fiscal downturn: “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.”

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

October 2009

Gabriel Roeder Smith paper: “Most public plans provide a COLA in order to protect retirees’ purchasing power from inflation. In many cases, the COLA is automatic and set at some fixed rate (e.g., 3% annually) or based on the Consumer Price Index (e.g., 80% of the annual CPI increase). In other cases, the COLAs are ad hoc and granted by a decision of the plan’s board of trustees. Because ad hoc COLAs are not part of the guaranteed benefit, they may be reduced or eliminated as circumstances warrant.”

http://www.vermonttreasurer.gov/sites/treasurer/files/pdf/retirement-all/GRS_Pesnio__Insight2009_10.pdf

October 22, 2009

"PERA is obviously gearing up for some heavy-duty lobbying, one observer noted. The agency has hired two lobbyists from the firm Colorado Communiqué, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO. The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler."

http://www.ednewscolorado.org/news/capitol-news/pera-woes-loom-large-for-education/comment-page-1

November 15, 2009

Denver Post Editorial Board: "First, let court rule on PERA.  Before legislators take on reforms, they should first ask the state Supreme Court to determine how much leeway they have."

"As Colorado lawmakers prepare to consider the financial rescue of the state employees' retirement fund, they ought to first figure out just how much legal leeway they have to overhaul it."  "Legislators need to understand how much power a designation of 'actuarially necessary' gives them to modify benefits paid to members." "We think lawmakers should ask the state Supreme Court for a ruling so they know exactly what they can do." "Administrators of the Colorado Public Employees' Retirement Association, or PERA, recently asserted that the fund's foundering finances give the state the legal footing to cut future cost-of-living increases for people who already are retired. But what if that were challenged in court and found to be illegal?"  "On the other hand, if annual hikes for retirees can be adjusted, why can't a case be made to increase the retirement age for many of those who are still working and contributing to PERA — a reform that is missing from the PERA board's plan?"  "It's in Colorado's best interest to get out in front of the PERA problem, file an interrogatory with the state Supreme Court, and get a clear fix on what legislators can and cannot do. We're confident that PERA solutions will be far more clear after that."

http://www.denverpost.com/opinion/ci_13776995

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

December 17, 2009

Education News Colorado: "The most controversial part of the plan, at least based on the volume of e-mail flowing into legislators’ in-boxes, is a proposal to reduce most retirees’ annual cost-of-living increases from 3.5 percent to 2 percent. It’s estimated that the current COLA would provide a third of the pension benefits over the retirement of a worker who retired in 2008."

http://www.ednewscolorado.org/news/capitol-news/pera-plan-work-longer-pay-more-receive-less

December 17, 2009

The Colorado General Assembly's Joint Budget Committee (JBC) meets with representatives of Colorado PERA.  At the meeting, Colorado PERA’s General Counsel Greg Smith informed the JBC that Colorado PERA had hired an outside law firm to provide a legal opinion relating to Colorado PERA contractual pension obligations:

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

Greg Smith, before the Joint Budget Committee: “The statutes are in fact binding, and they are constitutionally protected from reduction.”

Rep. Jack Pommer, Joint Budget Committee Chairman to JBC: “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?”

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

December 31, 2009

The Colorado PERA actuarial funded ratio (AFR) reaches 68.9 percent.  This funding level is 9.1 percent below the 40-year average of the PERA actuarial funded ratio, 11.1 percent  below an 80 percent AFR level considered “well-funded” by Fitch Ratings, 1.1 percent below a 70 percent AFR level considered “adequately-funded” by Fitch Ratings, 3.1 percent below the Wilshire Associates average U.S. public pension actuarial funded ratio that year.  The General Assembly determines that Colorado PERA pension plan is in a funding "crisis," and that PERA pension contracts must be broken.  Should all U.S. public pension contracts be abrogated at that funding level?

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251666724124&ssbinary=true

2010

January 5, 2010

SB10-001 co-prime sponsor Josh Penry: "Republicans and Democrats created this mess . . .".

http://www.9news.com/rss/story.aspx?storyid=130197

January 10, 2010

Senator Josh Penry, co-prime sponsor, SB10-001 appearing on Your Show, Channel 20 with Channel 9 News (KUSA-TV) host Adam Schrager on at 10:30 a.m.:

“What the courts have said with the case law and opinions have said is that you can’t, it is a contract unless there is actuarial necessity.”

January 15, 2010

“PERA also is hoping the Legislature will ask the Colorado Supreme Court to review the matter through interrogatories before the end of the session.”

http://www.coloradostatesman.com/content/991527-state-retirees-ready-pounce-pera-fix

January 22, 2010

SB10-001 co-prime sponsor Senator Josh Penry and bill sponsor Senator Greg Brophy: “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.”

http://www.denverpost.com/search/ci_14242354

January 26, 2010

"With SB1, Shaffer and Penry have said the state can realize solvency in the PERA fund within 30 years.  Previously, the Legislature had targeted a 60-year fix."

"The difference between the past approach and SB1, Penry said, is that the new plan boldly tackles benefit reductions, which he said will constitute 90 percent of the PERA fund's recovery and generate plenty of opposition along the way."

http://www.chieftain.com/news/local/legislators-pera-changes-will-be-painful/article_b82cee28-328f-59ba-91c0-a480e5f719c8.html

January 27, 2010

Assistant Colorado Attorney General Steve Smith (retired) warns the Colorado Legislature’s Senate Finance Committee during testimony on Colorado PERA’s bill, SB10-001, against breaking state contracts: “Others, including a former assistant attorney general, said the 3.5 percent annual increase in benefits was a contractual right, and that changing it would be illegal.”  “Many witnesses asked the senators to seek legal counsel before final passage of the bill rather than face a court battle afterward.”

https://www.cusys.edu/newsletter/2010/01-27/pera.html

January 29, 2010

Colorado PERA General Counsel Greg Smith to Senate Finance Committee: “There are few case laws that address the issue, Smith said, but one, regarding a fire and police pension plan, was litigated when the plan ran out of money and benefits were being paid for with current revenues.”

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

January 29, 2010

2010 Senate floor debate on SB 10-001:

Rep. Lambert: “I have heard from my constituents, as many of you have, that this proposal will breach retiree’s contracts.”

Rep. Swalm: “We’re breaking new territory in this state by trying to reduce the COLA. We’re probably going to get a lawsuit out of that. If we cut the 3.5 percent COLA there will be a lawsuit.”

Rep. Gerou: in committee, said that it is a disservice to the state to rush a bill through when her committee knew that it will go to litigation, and said what we are doing to the retirees is wrong.

Rep. DelGrosso: said that it is “tough” for him to tell people that he is going to break their contract.

Senator Harvey: “We have made a commitment. We have a contract with current retirees. That is already in place. Reforms should be made for new hires. We do not have that commitment to new hires.”

Senator Spence: “The bill places an unfair burden on retirees.”

Senator Scheffel: “We are breaching our promises to existing retirees.”

Senator Lundberg: “This bill is a deal that was cut before this body met.”

February 1, 2010

Senate “Third Reading” debate on SB10-001 (watch on the Colorado Channel):

Senator Ted Harvey: “If we can’t fix that technical issue and compromise in telling the (PERA) members just what their rights are, then we’ve got a more serious problem in this body than simple technical amendments on Third Reading.”

Senator Renfroe: “Or, if you want it to go out of here with the PERA-approved document and nothing else then let’s just approve this one and vote mine down.”

http://www.coloradochannel.net/colorado-senate-2010-legislative-day-20

February 10, 2010

Joel Judd, Chairman, House Finance Committee, during the hearing on Senate Bill 10-001 Chairman Judd stated (near the end of the hearing) that SB 10-001 (the “COLA theft bill”) must be supported "because that's where the money is."

February 10, 2010

Jim Alexander’s paper provided to the House Finance Committee during testimony on SB10-001 (quoting the October 2002, PERA Retiree Report:

“In 2002, PERA Executive Director, Meredith Williams was asked, because of a downturn in the stock market, if retirement benefits were safe.  He replied, ‘First, the ‘loss’ is due to a decline in the stock market.  PERA still owns the same stocks that it did before the decline and this ‘loss’ is a result of the value of the stock decreasing. It is not ‘lost’ since we haven’t sold the stocks, and because PERA is a long-term investor, we can ride out the bad times the market experiences.  When the market recovers, the value of these stocks will also increase, offsetting this ‘loss.’”

“Mr. Williams was quoted in the same report as saying ‘Most pension funds are considered sound at 80 percent funding levels.’”

“Meredith Williams ‘said at the Senate Finance Committee hearing in January that PERA needed to be funded at 100 percent.  When the PERA representatives  were asked by a member of the committee why in view of the fact that PERA had  only been funded at 100 percent for about seven of the past thirty years (my  comment, actually two of the last eighty-one years), it was necessary now.  The answer was ‘it just makes things easier.’”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

February 10, 2010

Assistant Colorado Attorney General Steve Smith (retired) warns the Colorado Legislature’s House Finance Committee during testimony on Colorado PERA’s bill, SB10-001, against breaking state contracts: “Former Assistant Attorney General Stephen Smith said he believed everything in SB 1 is legal except for the COLA change.  ‘They’re setting themselves and you up for failure,’ he told the committee.”

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

February 12, 2010

“Rep. Cheri Gerou, R-Evergreen, questioned why Williams and Smith still have their jobs, suggesting that if they worked in the private sector they might have been fired.  ‘A lot of people would like to see you lose your jobs over this,’ she told them.”

“Gerou, in explaining her ‘no’ vote, said that the hours of testimony from retirees showed that the bill did not have ‘buy-in.’  ‘People who have already retired deserve better than this.’”

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

February 23, 2010

Governor Bill Ritter signs SB10-001 into law, breaking Colorado PERA pension contracts.

http://statebillnews.com/2010/02/sb10-001-ritter-signs-bill-cutting-benefits-for-state-retirees/

February 26, 2010

Colorado PERA retirees sue Colorado PERA and the State of Colorado for breach of Colorado PERA pension contracts.

Education News Colorado:  "Despite support for the bill by organized employee groups, there’s widespread anger about the cut among individual retirees, and the lawsuit doesn’t come as a surprise."  "The named plaintiffs are Gary Justus, a retired Denver Public Schools math teacher who had more than 29 years of service, and retired Department of Labor employee Kathleen Hancock, who worked for about 15 years."  "'This lawsuit is about the state complying with its own constitution,' Justus said in a statement.  'The General Assembly is trying to correct its past mistakes on the backs of the retirees. We can’t go back and restart our careers.'”

"Some observers believe that past legislative actions, including benefit increases, contribution cuts and programs that allowed workers to buy extra years of eligibility, also weakened the pension system."

"A PERA spokeswoman said Friday the agency hadn’t been served with any papers and doesn’t comment on litigation." (As we have seen, Colorado PERA official have been regularly commenting on litigation over SB10-001 for three years.)

http://www.ednewscolorado.org/news/capitol-news/lawsuit-challenges-pera-retiree-cuts

March 17, 2010

Professor Amy Monahan, University of Minnesota School of Law, "Public Pension Plan Reform, the Legal Framework": "This Article has argued that pension benefits that have already been earned through services rendered to the state should be protected against impairment, but that it is hard to find legal justification for protecting the rate of future benefit accruals.”

http://www.ncsl.org/documents/fiscal/AMonahan_Handout.pdf

March 19, 2010

Attorney Monica Marquez (soon to be a Colorado Supreme Court Justice) advises Colorado PERA on March 19, 2010:

https://www.copera.org/pdf/Board/Minutes/2010/Minutes3-19-10.pdf

May 10, 2010

Attorney Monica Marquez's name appears on the PERA Defendant's Motion to Dismiss submitted to the Denver District Court on May 10, 2010:

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

June 3, 2010

Colorado Supreme Court Chief Justice Mary Mullarkey announces retirement.

http://www.denverpost.com/ci_15221861

June 23, 2010

Nicholas Joseph Marcucci, Emeritus Board Member at the National Association of Public Pension Attorneys, “Constitutional Issues When Altering Public Pension Benefits”:

“In most states there is a fairly clear demarcation between the gratuity theory and the contract theory and a seminal case or two where the courts make the change. Police Pension and Relief Board of the City and County of Denver, et al. v. McPhail, 39 Colo. 330, 338 P.2d 694 (1959); and, Police Pension and Relief Board of City and County of Denver, et al., v. Bills, et al.”

"United States Trust Co. emphasizes that the impairment must be both reasonable and necessary. A State cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money on other public policy goals.”

“In many states, enforceable pension terms attach at the start of employment.” City Of Aurora v. Ackman, 738 P.2d 796 (Colo.App. 1987).

(To access this Word document, paste "Constitutional Issues When Altering Public Pension Benefits Marccuci" into Google.)

July 26, 2010

Colorado Secretary of State Bernie Buescher writes letter recommending Monica Marquez to serve on the Colorado Supreme Court.

http://www.lawweekonline.com/2010/08/letters-of-reference-for-monica-marquez-colo-supreme-court-finalist/

August 2, 2010

Ritter Administration Letter to GASB on contractual public pension obligations:

“COSC agrees that an obligation exists since the government entity has entered into a duty, contract, or promise to provide compensation in the form of benefit payments during retirement; and furthermore, we agree that this obligation is a present obligation to the extent that the benefits owed have already been earned through past services, and are legally enforceable once vesting provisions have been met.”

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

“Because the exchange transaction which gave rise to this present obligation was made between the employer and the employee who is also a member of the pension plan, a reduction in member benefits (such as COLAs), or an increase in required employee contributions both serve to change the net economic benefit to the employee that was entered into at the time of the exchange transaction agreement.”

“The criteria suggested as the basis for differentiating these COLAs (automatic) versus ad-hoc COLAs is the statutes that exist as of the date of the employer’s financial statements.”

“The essential difference between an automatic COLA and an ad hoc COLA is the legal requirement; with this core difference there is no way for the two not to be substantively different. The legal difference in this instance is critical to the determination of whether the government is unable to avoid the surrender of resources to meet the obligation.”

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

August 10, 2010

"The Legislature was cutting off funds and starving the pension system," says Stephen Pincus, a Pittsburgh attorney . . .". "They shouldn't now be able to cry there's no money in the pension system. They had a large hand in creating the crisis."

http://www.pewstates.org/projects/stateline/headlines/states-test-whether-public-pension-benefits-given-can-be-taken-away-85899374772

August 16, 2010

“Asked why states are taking the risky strategy of aiming at current retirees, Robert Klausner, a Florida attorney who specializes in public pension law, says many state officials believe they have less to lose in the courtroom by challenging pension protections than taking no action at all. ‘The belief is that if the employer [the state] prevails, it will have been worth the political risk,’ Klausner says.  ‘And if they lose, they will be no worse off than before.’  Klausner adds that legislatures are taking the politically-difficult step and letting the courts be the ‘bad guy’ if they overturn the law.”

http://www.governing.com/news/state/States-Test-Whether-Public-Pension-Benefits-Given-Can-Be-Taken-Away.html

August 22, 2010

Stephen Pincus: "And the key word is necessary – and we're talking about on the verge of bankruptcy. And that's what the case laws really hold that you have to honor your contracts. You can't go around and say, well, we're not going to be paying the contractor who built the bridge this month because we don't have the funds. No, that's an obligation that you have."

http://www.npr.org/templates/story/story.php?storyId=12935726

August 30, 2010

Attorney Jean Dubofsky, author of the Colorado PERA "COLA-taking" legal opinion: "I worked on" the case, Justus v. State, with Colorado Supreme Court Justice Monica Marquez.  The author of Colorado PERA "COLA-taking" legal opinion wrote a letter of recommendation for Monica Marquez to serve on Colorado Supreme Court: “In particular, I’ve worked on several cases where she provided superb briefing, argument and/or advice for the Attorney General’s office, including congressional redistricting, the challenges to voter-approved Amendments 41 and 54 to the Colorado Constitution, and the current challenge to the amendments to PERA (Justus v. State), the government’s pension system.”

“ . . . and Ms. Marquez would bring to the court sophistication about the numerous cases that involve, for example, TABOR, ballot titles, election issues, voter-initiated constitutional amendments, property tax, public pensions, labor law, and regulations issued by a wide variety of state agencies.”

“Sincerely, Jean E. Dubofsky.”

(Personally, I believe that Justice Marquez has such strength of character, and commitment to the rule of law, that she could hear the case, Justus v. State, objectively, in spite of her prior work on the case; however, I expect that she will recuse herself as she did in Lobato.)

http://www.scrib.com/doc/36638245/Letter-for-Monica-Marquez-by-Jean-Dubofsky

September 8, 2010

Governor Ritter appoints Monica Marquez to Colorado Supreme Court: "Marquez leads the State Services Section of the Attorney General’s Office, which represents nine of the 16 executive branch agencies in Colorado. She specializes in appellate litigation and has represented the state, in both state and federal appellate courts, in cases involving fiscal policy, education, healthcare, elections, redistricting and campaign finance."

http://www.colorado.gov/cs/Satellite%3Fc%3DPage%26cid%3D1251580511104%26p%3D1251580511104%26pagename%3DGovRitter%252FGOVRLayout

September 28, 2010

Professor Jonathan Barry Forman, Alfred P. Murrah Professor of Law at the University of Oklahoma, “Funding of Public Pension Plans”: “Because governments tolerate an 80% funding level and use actuarial valuations instead of market valuations, public pensions are almost guaranteed to be underfunded.” “The second disadvantage to fully funded or overfunded public pension plans is that governors and legislatures call for contribution cuts and holidays. Politicians would rather spend money on projects that will bring them more immediate campaign contributions and votes.” “Of course, the best way to ensure that public pension plans are fully funded would be to require them to pay the actuarial required contributions (‘ARC’) in full each year.”

http://jay.law.ou.edu/faculty/jforman/Articles/2010Funding.pdf

October 18, 2010

Jean Dubofsky deposition submitted to Colorado PUC that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit:

“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.)

November 22, 2010

Colorado PERA General Counsel Greg Smith at 2010 PERA Shareholder meeting (10 minutes into this YouTube video): “We need to know the answer of whether this action was constitutional.” (Would it not have been simpler to send an interrogatory to the Colorado Supreme Court in 2009?)

http://www.youtube.com/watch?v=w94THpAjGs0&list=PL4601A03B224436D2&index=3&feature=plpp_video

2011

January 7, 2011

Stephen Pincus, a Pittsburgh attorney: “They're just saying, ‘Let's go after the public workers,’” Pincus says. “If there is a real general threat to the financial well-being of a state or local government, then everything should be on the table, not just one set of contracts.”

http://www.pewstates.org/projects/stateline/headlines/activists-seek-new-tactics-to-break-old-pension-deals-85899376866

January 18, 2011

Bernie Buescher (a former pension attorney) replaces Monica Marquez at Colorado Attorney General's Office as Deputy Attorney General overseeing the Colorado Department of Law’s State Services Section.

"A native of Grand Junction, Buescher replaces Monica M. Marquez, whom Gov. Bill Ritter recently appointed to the Colorado Supreme Court."

http://www.coloradoattorneygeneral.gov/press/news/2011/01/18/attorney_general_announces_bernie_buescher_new_deputy_attorney_general_state_s

February 2011

Colorado PERA General Counsel Greg Smith writes in Government Finance Review: "Adjusting public pension benefits in Colorado: a fiduciary process": "Necessity is judged on two levels: 1) whether a less drastic modification could have been implemented; and 2) whether, even with modification, the state could have achieved its stated goals. To determine whether the changes were reasonable, the changes MUST BE THE MINIMUM CHANGES NECESSARY to solve the economic problems of the plan. (See United States Trust Co. v. New Jersey, 431 U.S. 1, 1977.)"

(The next year, [June 26, 2012] Colorado PERA’s independent actuary, Cavanaugh MacDonald Consulting, LLC, reports in the 2011 Colorado PERA CAFR: “It should be noted that the changes made to the PERA structure as a result of SB10-001 have as a goal 100% funding of the  accrued liability within 30 years for all divisions.  The results of the December 31, 2011, valuations combined with financial projections of all divisions, indicate that this goal, WHICH IS A MUCH STRONGER POSITION THAN REQUIRED TO MEET CURRENT GASB STANDARDS, is still achievable with the exception of the Judicial Division.”

http://www.leg.state.co.us/OSA/coauditor1.nsf/All/641A0AB5B97D073C87257A3A0072FEA3/$FILE/2067-12%20CAFR_6-26-12.pdf.)

http://www.thefreelibrary.com/Adjusting+public+pension+benefits+in+Colorado%3a+a+fiduciary+process.-a0290520595

February 2011

Government Finance Review article by Leigh Snell, National Council on Teacher Retirement: “In fact, for the last 15 years, plan sponsors’ pension contributions have accounted for less than three percent of all state and local government spending.”  NCTR article “Setting the Record Straight”:

http://www.gfoa.org/downloads/GFOA_GFRfeb11_SettingtheRecordStraight.pdf

February 2011

In the "Origins and Severity of the Public Pension Crisis," Dean Baker states that the shortfalls facing state and local pension plans have been misrepresented. Further, his study notes that, “when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.” For example, unfunded liability as a percent of future state income for the Colorado PERA State Plan is approximately one-tenth of one percent of future state income, 0.09 % (See page 11 of the report.)

http://www.cepr.net/documents/publications/pensions-2011-02.pdf

February 14, 2011

Keith Brainard, Research Director, National Association of State Retirement Administrators testifies before the a subcommittee of the U.S. House of Representatives:

“Only 30-40 years ago, most public plans were financed primarily on a pay-as-you-go basis.” “Even after the most recent and unprecedented financial downturn, most state and local government pension trusts have plenty of assets to continue to pay promised benefits for years, and values already have rebounded sharply since the market low.” “The percentage of all state and local government spending on pensions has hovered around three percent during the last decade.” “While the impact of the financial crisis on state and local pensions will likely require spending to increase, the most recent studies find that the share of state and local budgets dedicated to pension contributions would likely need to rise to about five percent on average, and to about eight to 10 percent for those with the most seriously underfunded plans. (Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, “The Impact of Public Pensions on State and Local Budgets,” Center for Retirement Research, October 2010).” “Assuming a rate of asset growth consistent with historic market norms, most funds will never run out of money.  The Center on Retirement Research at Boston College said last October, “even after the worst market crash in decades, state and local plans do not face an immediate liquidity crisis . . ." (Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, “Public Pension Funding in Practice,” NBER Working Paper 16442, October 2010).” “Although some states have accumulated significant unfunded liabilities, pension benefits are paid out over many years, not all at once. These are long-term funding issues, and most thorough analyses by those familiar with governments and public finance find patient and measured responses are required: In a 2008 report, the GAO said, “[U]nfunded liabilities are generally not paid off in a single year, so it can be misleading to review total unfunded liabilities without knowing the length of the period over which the government plans to pay them off.” (U.S. Government Accountability Office, “State and Local Government Pension Plans; Current Structure and Funding Status,” July 2008 GAO-08-983T).”

http://judiciary.house.gov/hearings/pdf/Brainard02142011.pdf

February 17, 2011

Fitch Ratings notes that  a 70% actuarial funded ratio for public defined benefit pensions is considered an “adequate” actuarial funded ratio. "Fitch generally considers a funded ratio of 70% or above to be adequate and less than 60% to be weak."

http://www.ncpers.org/Files/2011_enhancing_the_analysis_of_state_local_government_pension_obligations.pdf

February 17, 2011

“In 2009, Williams persuaded the legislature to roll back the annual COLA to 2 percent.'

http://www.cnbc.com/id/41642979/page/1

February 18, 2011

Colorado PERA in “States and Bankruptcy”: “We acknowledge that the State of Colorado and PERA’s other public employers are facing difficult budget decisions, but pension obligations are not bankrupting the state and other public employers in Colorado. Indeed, the National Association of State Retirement Administrators issued a recent study that showed that, on average, pension costs represent only about 3 percent of total state and local government expenditures. In Colorado, state and local government expenditures to fund retirement benefits totaled only 2.16 percent.” (Note that states cannot declare bankruptcy under federal law.)http://www.copera.org/pera/about/issues.htm#42611

March 5, 2011

Eric Madiar: "Is Welching on Public Pension Promises an Option for Illinois?"  “In sum, welching is not a legal option available to the State.”  “Courts, though, “sit to determine questions on stormy as well as calm days,” and the Constitution was upheld during the Great Depression.”

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1774163

March 31, 2011

Jennifer Staman, Legislative Attorney, Congressional Research Service in “State and Local Pension Plans and Fiscal Distress: A Legal Overview”: “. . . a State is not completely free to consider impairing the obligations of its own contracts on a par with other policy alternatives. Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well.”  “Despite the variation in when a contractual right to a public plan pension benefit begins, as noted above, state courts generally find that the benefits of individuals who have already retired may not be diminished or impaired.”

http://www.nasra.org/resources/CRS%20state%20and%20local%20legal%20framework%201104.pdf

April 12, 2011

Colorado PERA in “Setting the Record Straight”: “But what’s not mentioned is that this liability is not due and cannot be made payable today, just like a mortgage. This is the aggregate amount owed by PERA to current retirees and to all existing workers who have begun work for a public employer in Colorado and may not begin receiving a benefit for three or more decades.”

“PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years.”

https://www.copera.org/pera/about/issues.htm

April 17, 2011

Senator Brandon Shaffer, co-prime sponsor, SB10-001, Denver Post: “I sponsored last year's legislation, known as Senate Bill 1, to protect PERA. The bill required shared sacrifice, but frankly most of it — 90 percent of the burden — falls on the shoulders of PERA's current and future members and retirees.”

http://www.denverpost.com/opinion/ci_17858107

May 22, 2011

Jennifer Paquette, PERA Chief Investment Officer, in the 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.”

http://www.denverpost.com/search/ci_18100068

May 29, 2011

Colorado PERA Executive Director Meredith Williams, Pueblo Chieftain:

“Retired public servants who live on fixed incomes no longer get the same cost-of-living-increases upon which many had come to depend.”

“In fact, about 90 percent of the changes enacted by Senate Bill 1 are falling on the shoulders of current and future PERA members and retirees — not other taxpayers.”

“Most PERA beneficiaries don’t qualify for Social Security so their modest PERA benefit may be the only steady retirement payment they’ll ever receive. After careers in public service, this is a reasonable reward. They have earned it.”

http://www.chieftain.com/opinion/ideas/legislative-changes-have-put-pera-fund-on-a-solid-footing/article_3080a01c-88cd-11e0-ad01-001cc4c03286.html

June 2011

National Institute on Retirement Security on “automatic” and “ad hoc” public pension COLAs: “One key design feature of a COLA is whether it is automatic or ad hoc in nature. An automatic COLA means the retiree’s benefit increases automatically every year by a certain percentage. An ad hoc COLA is granted at the discretion of the plan sponsor, usually when the fund is in a well-funded position and investment gains have exceeded expectation.

http://www.nirsonline.org/storage/nirs/documents/Lessons%20Learned/final_june_29_report_lessonsfromwellfundedpublicpensions1.pdf

June 24, 2011

Geoff Blue, Deputy Attorney General for Legal Policy and Government Affairs (now in private practice) argues in an interview on the program "The Devil’s Advocate" that since Colorado’s education establishment has failed at the polls lately, they are now seeking to “legislate through the courts.”  “It would, and as a matter of fact Senator Rollie Heath has proposed such an initiative this year, to raise taxes specifically to fund education and higher education.”   “Cleary there is a path to do it.  They’ve been losing so they’re trying to legislate through the courts.”

http://www.youtube.com/watch?v=k0ZdUF0L8cU

September 13, 2011

Virginia Attorney General Kenneth T. Cuccinelli in "Judicial Compulsion and the Public Fisc." “It is widely thought that a funded ratio of about 80 percent or better [is] sound for state and local  government pensions.” “One factor militating in favor of challengers is that the state is entitled to less deference in the question of reasonableness and necessity, the third prong, when it exercises its sovereign power in a manner that benefits itself.” “Attempts to change the benefits of the retired, those qualified to retire, and voluntary participants in contributory programs probably would not be worth the effort."

http://www.harvard-jlpp.com/wp-content/uploads/2012/03/CuccinelliFinal.pdf

October 26, 2011

Colorado PERA Executive Director Greg Smith, at the “Fall 2011 PERA Shareholder’s Meeting,” (thirty-six minutes into the video):"‘Only ten percent of the fix” of the [SB10-001] reforms in 2010 came from additional employer contributions."

http://www.youtube.com/watch?v=F8LB7t5HMBo

2012

Colorado PERA Board Member, Treasurer Walker Stapleton: “If the board votes to oppose legislative reform, then PERA, at the direction of the board, uses their almost $400,000 annual lobbying budget to ensure the legislation does not pass.”

http://www.colorado.gov/cs/Satellite/Treasury_v2/CBON/1251590160967

January 2012

SB10-001 co-prime sponsor Senator Brandon Shaffer: "They need to make it toxic for any politician to go up against PERA. As individuals, you need to sit down with PERA and tell them you’ve spoken to President Shaffer, and he says you have bad lobbyists.”

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

February 4, 2012

"In 2010, the General Assembly temporarily suspended cost-of-living adjustments for PERA retirees, increased employee contributions to the plan short-term and limited the benefits guaranteed to new hires, among other tweaks."  “I personally think that we probably should go further,” Hickenlooper said.

http://www.chieftain.com/hickenlooper-talks-energy-water-pensions/article_25f92ef8-4ef1-11e1-a99f-001871e3ce6c.html

February 21, 2012

The Cato Institute publishes a paper addressing public pension plan funding in the United States, "Funding Status, Asset Management, and a Look Ahead: State and Local Pension Plans": “Plans with actuarial asset values less than 60 percent of liabilities are considered poorly funded; plans with assets between 60 and 80 percent of plan liabilities are considered inadequately funded; and plans with assets above 80 percent of plan liabilities are considered adequately funded.”

http://www.cato.org/pubs/wtpapers/Gokhale-WP-State-and-Local-Pension-Plans.pdf

February 27, 2012

Representative DelGrosso: “I voted against SB 1, not because I didn’t think we needed to fix PERA, I agreed with that part of it, but I voted against Senate Bill 1 because it did adjust some of the COLAs, and it did adjust that for folks that were already retired and people that were about ready to retire,” said DelGrosso. “And to me, I felt like that was violating the contract that those people got into.”

http://www.coloradostatesman.com/content/993329-legislator-spikes-his-own-bill

March 6, 2012

Florida Circuit Court: “All indications are that the Florida Legislature chose to effectuate the challenged provisions of SB 2100 in order to make funds available for other purposes.”  “The elimination of the future COLA adjustment alone will result in a 4 to 24% reduction in the plaintiffs total retirement income. These costs are substantial as a matter of law.”  “If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”

http://judicial.clerk.leon.fl.us/image_orders.asp?caseid=49809133&jiscaseid=&defseq=&chargeseq=&dktid=87117441&dktsource=CRTV

March 6, 2012

“The employees have a contractual right to their pensions and this court recognized that even if the governor and the Legislature choose not to. This is important. We are a society of laws. This court has said even the powerful have to follow the laws. This was a gamble that the governor and Legislature made last year. They gambled taxpayers’ money that they could balance the budget on the backs of the hard-working public employees of the state. They lost that bet today.”

http://www.firstcoastnews.com/news/article/245606/4/Momentous-ruling-on-Floridas-pension-contribution-law

March 7, 2012

Article: "(Florida) Legislature Overreaches, Public Pays the Bill." "Yet Gov. Rick Scott and the Florida Legislature are at it again, embracing (public pension) legislation that ignores constitutional limits on their authority, forcing costly taxpayer-financed litigation and resorting to name-calling and threats to the judiciary when the courts rule against them. Tuesday's ruling that cutting public employee salaries to help pay for pensions is unconstitutional is not the result of an activist judge as some Republicans complain. It reflects the failure of the executive and legislative branches to recognize their limits and the role of an independent judicial branch."  "Every time elected leaders make bad law, taxpayers pay the legal bills."

http://www.tampabay.com/opinion/editorials/article1218839.ece

March 13, 2012

Denver attorney Cindy Birley (a champion of prospective public pension reform in Colorado) testifying before the Colorado Legislature’s Senate Finance Committee hearing on the bill SB12-149, on March 13, 2012: “Generally, you would not change people who have already retired . . .”.  “There may be an issue with what we would call ‘definitely determinable benefits,’ and this is a tax code concept.”  “The . . . Internal Revenue Code requires for a defined benefit plan that your benefit be . . .  ‘definitely determinable’.”  “So a benefit that fluctuated based on your funding, it may be difficult to change that unless it’s somehow a cost-of-living adjustment that’s done more on an ad hoc basis.” “Because, it may not qualify as a defined benefit plan." “We could adjust benefits for future retirees as long as it still meets Internal Revenue Code requirements.”  “It still has to pass muster as a DB plan.”

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

March 28, 2012

Fitch Ratings (one of the three large rating agencies in the United States):  “Fitch generally considers pensions with funded ratios 80% and above to be well-funded.”

http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp

March 28, 2012

Article in the periodical "Bond Buyer" addresses attempts by politicians to exaggerate pension funding status: “Some state and local officials, eager to garner public support for cuts in pension benefits, increases in contributions or other reforms, have been exaggerating their pension problems, according to several lawyers.”  “’We are seeing announcements of doom and gloom as a justification for cutting employee benefits,’ he said. ‘And at the same time, the people who say, It’s disastrous, go to bond raters and say, Everything is great. We are paying our debts.’”

http://www.bondbuyer.com/issues/121_61/issuers-accused-exaggerating-pension-fund-woes-1037961-1.html

April 6, 2012

"My Opinion: Colorado PERA's Meredith Cuts and Runs."

http://coloradopols.com/diary/17567/my-opinion-colorado-peras-meredith-cuts-and-runs

May 16, 2012

The Colorado General Assembly enacts the bill SB12-149, reforming certain Colorado public pension systems and honoring the accrued public pension benefits of public workers who are members of those pension systems, after having retroactively taken accrued benefits from Colorado PERA retirees in 2010. 

June 26, 2012

(Governor Scott) Walker, Beloit Daily News: "One thing he did stress was that he would not attempt to touch the pensions of current retirees, which he noted would be illegal.”

http://www.beloitdailynews.com/news/walker-open-to-pension-reform/article_e53d0492-bfad-11e1-9faf-0019bb2963f4.html

August 8, 2012

Douglas Greenfield: “The theory behind that is that a pension that has a COLA is the equivalent of a fixed pension . . . that you could just have a higher fixed pension and no COLA . . . and is just a method by which you are providing the benefit.”  Greenfield participated in a panel discussion on hosted by the National Conference of State Legislatures. The panel discussion was titled: “How Much Can States Change Existing Retirement Policy?” 

http://www.ncsl.org/issues-research/labor/how-much-can-states-change-existing-retirement.aspx

Douglas Greenfield presented a paper outlining his arguments and analysis . . . “In Defense of State Judicial Decisions Protecting Public Employees’Pensions.” 

“There is no sound public policy reason to conclude that these promises – based on the reasonable expectations of the contracting parties – should not be fully protected by the laws prohibiting or limiting the impairment of contracts.”

http://www.ncsl.org/documents/fiscal/DGreenfield_Presentation.pdf

October 11, 2012

Colorado Court of Appeals 2012 decision in Justus v. State:

“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

December 23, 2012

Public pension legal scholars on contractual public pension obligations, in the periodical Truth-out: “The state is just trying to find any argument that allows them to get out of their obligations and that will stick in court.”  "‘The entire public pension system is built on the understanding that pensions are legally protected promises,’ said Richard Kaplan, a professor at the University of Illinois College of Law. ‘That idea has been foundational for at least the last half-century.’”  “Since the middle of the century, however, courts have generally acknowledged that states cannot promise pension benefits to their employees as an inducement to get them to work for the state and then renege on those promises. The large majority of states have protected pensions under the theory that the promise of a pension represents a form of contract . . .”.  “The legal understanding has been, ‘That is your money, and the state can’t take it away.’”  “The vast majority of states — 41 — apply a contract theory to their employees’ pension rights. All of these states have constitution provisions that — mirroring the contract clause of the federal Constitution — prohibit the passage of any law that impairs the obligation of contracts.”  “‘It cuts against decades of precedent,’ Kaplan said, ‘not to mention basic, commonsense notions of what pensions are and what’s fair.’”  “According to Secunda of Marquette University, a shift back towards a gratuity model would be ‘disastrous.’ ‘What the states are trying to do is change the rules in the middle of the game,’ he said.”  “According to Richard Kaplan, a professor of law at the University of Illinois, proving that reneging on their pension obligations is necessary to achieve an important public purpose is a high bar to reach, because that argument implies that the state’s ability to raise taxes to keep its promises have been exhausted.”

http://truth-out.org/news/item/13498-pensions-a-promise-is-a-promise-unless-its-inconvenient

2013

February 15, 2013

“After being about 30 percent funded during the 1970s, CalSTRS funding slowly improved with an increase in state funding in 1990 and then large investment fund earnings during a high-tech boom later that decade."

"As funding peaked at about 110 percent around 2000, the ‘surplus’ was not regarded as a cushion to offset future investment earnings shortfalls. As often happens with public pensions, the surplus was viewed as a windfall that should be spent."

"Legislation began divvying up the windfall in 1998 when the surplus was still a projection. A cut began in the state contribution, 4.3 percent of pay, that would reduce the rate by half, a drop in pension funding of 2 percent of pay similar to the teacher diversion.”

http://calpensions.com/2013/02/15/how-much-calstrs-debt-due-to-mismanagement/

March 7, 2013

Colorado Supreme Court Justice Marquez recuses herself in Lobato case deliberations, since she had worked on the case at the Colorado Attorney General's office: “The seventh, Justice Monica Marquez, recused herself because she had worked on the Lobato case while an attorney with the attorney general’s office.”

http://www.coloradostatesman.com/content/994052-lobato-lawsuit-could-have-major-ramifications-k-12-school-finance

March 8, 2013

Former Colorado Senator Hank Brown, co-chair of the Colorado Treasurer’s "Commission to Strengthen and Secure PERA" writes: "The Legislature took the difficult and unpopular step of reducing cost-of-living adjustments for all employees, including current retirees."  "Through a little 'Colorado Courage,' (my comment, aka, 'breach of contract') policy makers ensured that PERA is on track to be fully funded . . .".  Hank Brown holds this position in support of breaking "fully-vested" PERA retiree pension contracts in spite of the fact that the Commission he co-chaired found that: “For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The  commission may not make any recommendations that materially affect current retirees.”

http://www.bizjournals.com/denver/print-edition/2013/03/08/congress-could-use-some-colorado.html?page=all

March 18, 2013

State financial crisis?  Denver Business Journal: “. . . next year’s money — $924.3 million above the amount the state will spend this year, according to Legislative Council — is up for grabs.”

http://www.bizjournals.com/denver/news/2013/03/18/colorado-state-revenue-picture.html?page=all

April 2, 2013

Colorado Legislature pays off local government pension debt that is not the contractual obligations of the State of Colorado.  (This $142 million appropriation brings the total to $700 million for this purpose.) “House Republican leaders are floating a proposal to repay a longstanding debt (My comment, this is not a state 'debt,' sloppy reporting) to the state’s Fire and Police Pension Association in full as a way to get some GOP lawmakers to vote in favor of the $20 billion state budget for next year, which will be up for debate in the House on Thursday.”  “‘It’s (House Minority Leader) Waller’s effort to buy some Republican votes,’ one GOP lawmaker told FOX31 Denver Tuesday." "Waller, who is almost certain to run for Attorney General (next) year, would like to be able to demonstrate that he leads a group of lawmakers who are pragmatic and responsible; and helping forge a bipartisan budget compromise would help him make that case.”

http://kdvr.com/2013/04/02/republicans-considering-pension-deal-hoping-for-bipartisan-budget-vote/

Support public pension contractual rights and the rule of law in the United States at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

Forbes Columnist: How does “Screwing Workers” Out of a Pension COLA Benefit Enhance their “Retirement Security”?

SENATOR BRANDON SHAFFER, SPONSOR OF THE COLORADO PERA "COLA-THEFT" BILL: PERA HAS "BAD LOBBYISTS."

COME AGAIN SHAFFER?

Rather than enacting legislation to reform public pensions prospectively and legally, (like state legislatures across the country), a handful of state legislatures (including the Colorado General Assembly and the Rhode Island Legislature) are attempting to retroactively take accrued, earned benefits from public pensioners.  Colorado state legislators (setting a moral example for their children) are trying to break state contracts to maintain Colorado's status as a state "tax haven."  (So far, Colorado legislators have opted against an attempt to break the state's corporate contracts.)

Edward Siedle, a contributor at Forbes addresses state legislative "COLA-theft" in his most recent column.

Siedle:

"The Rhode Island Retirement Security Act of 2011, enacted November 18, 2011 (which is being challenged as unconstitutional), suspends the COLA for all state employees, teachers, state police and judges until the plans’ funding level exceeds an 80 percent funding level."

(My comment: The Colorado Legislature's SB10-001 sets a more ambitious COLA-theft goal than does the Rhode Island legislation . . . Colorado's bill takes pension COLA benefits until a "100 percent" pension funded level is achieved.  Perhaps, the Colorado Legislature should finish the job it started, and simply pass a bill stating that ALL of the state's public and corporate contracts will be scrapped until Colorado taxpayers contribute nothing for state services.)

Siedle:

"Why is it that laws screwing workers always have the words 'retirement security' in their titles?"

(My comment: Colorado PERA, proponent of Colorado's 2010 public pension contract breach, tells us: “In Colorado, Senate Bill 1 [the bill that broke Colorado PERA pension COLA contracts] passed with the support of the Colorado Coalition for RETIREMENT SECURITY . . .".

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

In a recent editorial, former Colorado Senator Hank Brown tells Colorado PERA pensioners that Colorado PERA's 2010 breach of their COLA contracts will help provide them with "RETIREMENT SECURITY."  Hank Brown:

“Through a little ‘Colorado Courage,’ [a euphemism for breach of contracts] policy makers ensured that PERA is on track to be fully funded and provide RETIREMENT SECURITY . . .".

It follows that Hank Brown could enhance his own RETIREMENT SECURITY by relinquishing part of his own "$2.6 million" federal pension.  The Duke Chronicle on Senator Hank Brown’s personal “$2.6 million” federal pension benefit:

“Members of Congress rant and rave about government spending, but when it comes to their golden retirement pensions — somehow that doesn't count.”  “On the Senate side, the Midas awards go to next year retirees: Sens. Sam Nunn, D-Ga., Bill Bradley, D-N.J., and Hank Brown, R-Colo., who will each collect estimated lifetime benefits in excess of $2.6 million.”

http://www.dukechronicle.com/articles/1996/01/11/congressional-pensions-out-touch-reality

I do not understand how taking money by force, seizing accrued, earned pension benefits, breaking the state's public pension contracts while the state's corporate contracts are unscathed . . . how this enhances a Colorado PERA pensioner's "retirement security."

As we have seen, Rhode Island's "COLA-theft" legislation was championed by current Rhode Island Treasurer Gina Raimondo, who hopes to ride this "COLA-theft" horse to the Rhode Island Governor's office.  (Breaking public pension contracts is rather popular among voters at present.)

Siedle:

"Retired, largely elderly state workers had to have their benefits shaved by 3% annually to 'save' the pension, they were told.  With an average pension benefit of $33,000, the Treasurer (Gina Raimondo) apparently figured these retirees could learn to live a bit more frugally in their golden years."

"The measly 3% COLAs promised to working stiffs are chump-change compared to the over 4% fees she’s (Rhode Island Treasurer Gina Raimondo) paying hedge fund desperados."

"It seems the Treasurer believes it’s a lot easier for retired state workers to adjust their cost of living than it is for hedge fund high rollers.  Or maybe workers are simply less deserving of the monies that have been set-aside for, and by, them."

Our own Governor John Hickenlooper (R-Colorado) is also doing his part to nudge a few public pension dollars toward the captains of industry:

"Gov. John Hickenlooper said in a statement that Colorado business owners have long said they need easier access to capital to grow.  'The creation of the Colorado Mile High Fund will improve the access to capital and we are pleased that Colorado PERA’s partnership will benefit and help grow companies here in Colorado,' Hickenlooper said."

http://csbj.com/2012/10/18/pera-establishes-capital-fund-for-colorado-businesses/

According to Hick, Colorado business owners need "easier access to capital."  The current, historically-low interest rates on Colorado bank loans just aren't cutting the mustard.  So, Hick recently decreed that Colorado PERA pensioners will assume risk with their Colorado PERA trust funds that smart bankers apparently won't touch.  I think this Hickenlooper corporate welfare decree ($50 million in corporate loans backed by pensioners) proves his "Colorado Courage."

"The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado."

"The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group."

http://coloradomilehighfund.com/

Back to Siedle:

"I can tell you where that COLA savings is going—into the already-stuffed pockets of Wall Street’s most highly-compensated gamblers—almost dollar-for-dollar.  By my estimate, $2.1 billion in fees (out of the $2.3 billion in COLA savings) will be paid by the pension to hedge, private equity and venture capital tycoons. That’s some 'reform.'  No wonder Wall Street is so eager to support this shameless public pension money grab."

"This should come as no surprise because Wall Street solutions to retirement problems, even in the corporate and 401(k) marketplace, have always involved greater fees to Wall Street."

"If $87.4 million in fees were paid every year for the next 20 years, that would amount to $1.75 billion or with compounding to $3.8 billion, which equates to $2.1 billion in 2013 dollars. In summary, the savings related to suspension of the 3% COLA ($2.3 billion) miraculously appear to be just enough to pay Wall Street’s elevated fees of 2% and 20% of profits ($2.1 billion). Imagine that!"

"Rhode Island pensioners have been told that they have to sacrifice to 'save'” the state pension. If that is true and the pension can’t afford to pay retirees 3%, then how can it afford to pay Wall Street 2% and 20%– over 4%?  Rhode Islanders, in my opinion, you don’t have to be a Rhodes scholar to see you’ve been hood-winked."

Full article at Forbes:

http://www.forbes.com/sites/edwardsiedle/2013/04/16/rhode-island-pensioners-3-colas-will-help-pay-wall-street-high-rollers-4-fees/2/

 

BRANDON SHAFFER ON THOSE "BAD COLORADO PERA LOBBYISTS."

In my mind, the 27 members of Colorado PERA's SB10-001 lobbying troop were quite effective during the 2010 legislative session.  They succeeded in ramming SB10-001 through the legislative process. To me, it looks like they got the job done for Colorado PERA.

Colorado PERA spends $400,000 out of PERA member trust funds each year for lobbying, and they get their money's worth!  It's no simple matter to persuade an elected official who has sworn to uphold the U.S. Constitution to ignore the constitution's Contract Clause.  The 27 SB10-001 lobbyists succeeded in dramatically (and temporarily) diminishing the contractual obligations of Colorado PERA-affiliated employers.

So, I find it odd that the prime sponsor of the "COLA-theft" bill, former Senator Brandon Shaffer considers some PERA lobbyists to be "bad lobbyists."

The wisdom of SB10-001 co-prime sponsor Brandon Shaffer:

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

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

(My comment: Some of the lobbyists supporting Colorado PERA's "COLA-theft" bill, SB 10-001, represented the Colorado Education Association.)

“His wife (Senator Brandon Shaffer) is a teacher, active in the CEA . . .”

http://www.davidthielen.info/politics/2010/05/senate-president-brandon-shaffer-interview.html

According to the website of the Colorado Secretary of State, six lobbyists (of the 27 SB10-001 lobbyists) were paid by Colorado PERA to ram the COLA-theft bill (SB10-001) through the legislative process:

1.  Michael Beasley – Colorado PERA – supporting
5280 Strategies (Beasley) – Colorado PERA – supporting
2.  Beth C. Minahan – Colorado PERA – supporting
3.  Collon Kennedy – Colorado PERA – supporting
4.  Steve Adams – Colorado PERA – supporting
Colorado Communique, Inc. (Minahan, Kennedy, Adams) –  Colorado PERA –  supporting
5.  Mary Alice Mandarich – Colorado PERA – supporting
6.  Roberta Robinette – Colorado PERA – supporting

When SB10-001 co-prime sponsor Senator Brandon Shaffer refers to "PERA's bad lobbyists" who, exactly, is he referring to?  Does he consider any of these six lobbyists to be "bad lobbyists"?  Come clean Shaffer!

Rather than strengthening Colorado PERA's influence at the Colorado General Assembly as Senator Shaffer suggests ("making it toxic for any politician to go up against PERA") I argue that the Colorado General Assembly should begin making its own public pension policy.

I suggest that the Colorado General Assembly create an ongoing oversight commission for all Colorado public pensions.  I suggest that the Colorado Legislature study public pension administration, and prospective pension reform options (i.e., follow the example of other states.)  I suggest that Colorado PERA's influence over the legislative process be curtailed rather than magnified.

In 2010, Colorado PERA's leaders marched uninformed Colorado legislators right off the contract breach cliff.  In light of this, why should Colorado PERA's legislative influence be increased?

 

"LESS DRASTIC" PENSION REFORM OPTIONS THAT PACK MORE PENSION LIABILITY REDUCTION "PUNCH" THAN DOES THE BREACH OF "FULLY-VESTED" COLA CONTRACTS.

According to Colorado PERA officials, breaking "fully-vested" pension COLA contracts was the only choice in 2010:

"The only solution that works involves impacting the COLA," he (Colorado PERA General Counsel Greg Smith) said.

http://www.coloradostatesman.com/content/991604-pera-reform-bill-gets-bipartisan-blessing

But, it turns out that certain modifications to "partially-vested" public pension contractual rights pack more pension reform "punch" than does the breach of pension COLA contracts.  Such alternatives to taking "fully-vested" public pension benefits offer a "less drastic" impairment of public pension contracts.

This fact was reported during a 2011 public pension funding presentation at Harvard.  According to the presenters, two public pension reform options impacting "partially-vested" pension contractual rights: (1) the use of average pay over the course of a career to calculate base pension benefits and (2) raising retirement age to 65 offer a greater reduction of public pension liabilities than does the elimination of pension COLA benefits.  Both of these pension reform options impact only "partially-vested" public pension contractual rights.

It follows that incremental changes in these "partially-vested" parameters, for example, calculating a PERA pension base benefit using a 10 or 15 year salary average, or raising the PERA retirement age to 60 for active pension members would generate a greater pension liability reduction than a 1.5 percent taking of "fully-vested" COLA benefits.  The point is that public pension reform options are available, that offer significant cost savings, that do not impact “fully-vested” public pension contractual rights. Why were the “less drastic” pension reform options of raising the PERA retirement age, or averaging pay over the course of a public sector career not considered in 2010?

Further, the rate at which future pension benefits accrue may be set prospectively by a legislative body at a level generating a greater reduction in pension system liabilities than does the breach of "fully-vested" public pension COLA contracts.  Such options were not on the table in 2010 because these pension reform options were not supported by the 27 lobbyists pushing SB10-001 through the legislative process.

October 13, 2011 Thomas J. Healey & Carl Hess presentation at Harvard:

“Underfunded State Pensions: The Size of the Problem, the Obstacles to Reforms, and Potential Paths Forward.”

"Change to practice of averaging pay over the course of a career:
• Lowers the cost by 7.4% of payroll
• Overall cost reduction of 33%

Raise retirement age to 65:
• Lowers the cost by 5.7% of payroll
• Overall cost reduction of 25%

Cost savings from elimination of public pension COLAs:
• Lowers the cost by 5.3% of payroll
• Overall cost reduction of 24%"

http://www.hks.harvard.edu/m-rcbg/Events/Underfunded_State_Pensions_29%20October.pdf


Colorado PERA active and retired members, many legal, prospective "less drastic" pension reform options were ignored by the Colorado Legislature in 2010.  Support the rule of law and public pension contractual rights in Colorado.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!

6,000 Colorado Police and Firefighters to Consider Taxing Themselves to Pay for a Pension COLA Benefit.

(IN DECADES TO COME, WHEN THE COLA IS ALL PAID OFF . . . WILL THE STATE LEGISLATURE JUST TAKE IT?)

In 2014, more than 6,000 police officers and firefighters in Colorado will have a chance to vote on the question of raising their pension contributions (by a gradual increase of an additional four percent) to pay for a new pension benefit . . . an enhanced annual cost-of-living increase after they retire.

These Colorado police officers and firefighters are members of a pension system called the Fire and Police Pension Association of Colorado (FPPA.)  In Colorado, we have a number of public pension systems . . . including Colorado PERA, the FPPA, the Denver Employees' Retirement Plan and many county-run pension systems.  These public pension systems are governed by Colorado statutes, which set forth a variety of standards for the contractual pension rights of the members of these pension systems.  Under the 2012 bill, SB12-149, accrued public pension benefits of certain Colorado county-run pension plans are honored, while the 2010 bill, SB10-001, seizes accrued public pension benefits.  Current Colorado law also provides disparate treatment of Colorado pension systems in regard to "amortization of plan liabilities" (the amount of time pension plans have to pay off their debt.)  Colorado law allows some pension plans to amortize plan liabilities over a 40-year period, while other plans (like Colorado PERA) are permitted only a 30-year "maximum amortization period."

Colorado's police officers and firefighters should take heed.  Pensioners in the Colorado PERA pension system paid for their DEFINED, pension COLA benefit (out of every paycheck) for decades, only to see the Colorado Legislature renege on this contract.  Why would a Colorado police officer or firefighter trust that the Colorado Legislature, or a local government, would not simply pass legislation in the future to take their money as well?  As we have seen, Colorado politicians are primarily concerned about maintaining Colorado's status as a "tax haven."  They are not above breaking contracts to win votes from constituents who want governmental services, but don't want to pay for those governmental services.

I ask, in a state that casually breaks public pension COLA contracts, and that has recently demonstrated a willingness to seize accrued public pension COLA benefits, why would any public employee vote to tax themselves for a public pension COLA benefit?

Police officers and firefighters would be better off placing this money in their own savings accounts and managing their own "retirement inflation protection," instead of putting the money in the hands of a governmental plan sponsor that may use it to reduce future taxpayer obligations.

Colorado PERA pension benefits are governed by Colorado state law, the Colorado Revised Statutes.  Colorado fire and police pension benefits are also governed by the Colorado Revised Statutes.  In 2010, the Colorado General Assembly enacted a bill that amended the Colorado Revised Statutes to break Colorado PERA contracts and seize accrued PERA pension COLA benefits.  What is to prevent the Colorado Legislature, or a local government, from simply enacting legislation in decades to come to shore up local government pension plans through the elimination of the proposed, new FPPA COLA?  Nothing.  The reality is that a majority of the members of the Colorado Legislature do not respect public pension contracts.  They will take accrued, earned, contracted pension benefits to the extent permitted by courts.  Moral constraints on such takings of property are not a factor.  Remember that taking accrued, earned, contracted pension COLA benefits was the first choice of Colorado legislators in 2010.

If accrued pension COLA benefits may be freely seized in Colorado state legislation, or in municipal ordinance, if pension contracts are freely abrogated under the Colorado Constitution, why would a Colorado police officer or firefighter vote to increase their monthly contributions to pay for a new COLA benefit?  If police officer or firefighter pension contributions can simply be redirected under Colorado law to fund other municipal programs, why would they support this contribution increase?

What legal protections for police officers and firefighters does the FPPA propose that would prevent FPPA-affiliated employers (local governments) from passing ordinances to unilaterally take the new COLA benefit in the future?  None.  What is to prevent an FPPA-affiliated local government from following the example of the Colorado General Assembly?  Underfund the pension to lower its funded ratio, claim that the low funded ratio represents a "fiscal crisis" justifying seizure of accrued pension benefits, break pension contracts to lower taxpayer obligations, repeat . . .

The assets of public pension plans are trust funds that belong to the beneficiaries of the pension plan.  In spite of this fact, for decades, Colorado legislators have tried to get their hands on public pension trust funds.  In the minds of many Colorado legislators, access to these pension trust funds allows them to keep state taxation low in the state with the nation's lowest state tax revenue per capita.  Colorado legislators have tried to get at public pension assets through the "front door" and through the "back door."

At the turn of the century, former Governor Bill Owens sought and signed legislation creating "early retirement incentives" for Colorado PERA members.  His goal was to persuade the older, more "expensive" public workers to retire under Colorado PERA, in order to shift Colorado public sector labor costs from Colorado governments to the Colorado PERA pension system.  Governor Bill Owens pension scheme was a "back door" raid on Colorado PERA public pension assets.  Having prompted these retirements, the Colorado Legislature now seeks to renege on the deal.

In 2010, Colorado legislators passed a bill that brazenly seized accrued, earned, contracted Colorado PERA pension benefits (SB10-001) to minimize future taxpayer contributions to the pension system.  This bill, SB10-001, represents the legislators' desired "front-door" raid on the Colorado PERA pension trust funds.  Even Governor Hickenlooper is getting into the public pension raid game with his recent decree that Colorado PERA pension trust funds will be used to provide corporate welfare ($50 million in loans) to businesses that the private sector apparently won't touch.

"AD HOC" PENSION COLAS VS. "AUTOMATIC" PENSION COLAS.

The FPPA currently provides a small "ad hoc" pension COLA benefit, that is, a COLA benefit that is discretionary.  The Colorado PERA pension system provides an "automatic" COLA benefit under Colorado law, that is a COLA benefit that is contracted, guaranteed, mandatory on the part of the pension plan sponsor.

FPPA:

"Benefit adjustments are not guaranteed and are determined annually by the FPPA Board of Directors based on the most recent actuarial study. The amount of the benefit adjustment can be 0% to 3%, or the greater of the Consumer Price Index (CPI) per year."

http://www.fppaco.org/pdfs/pubs_handouts/SWDBP_3.5.13.pdf

The Colorado PERA pension system has "automatic" pension COLA benefits (i.e., pension COLA benefits that are a contractual obligation of PERA-affiliated employers):

“PERA Benefits at a Glance,” 2004:

“Receive an annual AUTOMATIC increase of 3.5 percent in your monthly retirement benefit to help keep up with the cost of living.”

PERA Legislative Update, February 2006:

 “Employees hired before January 1, 2007 remain in PERA Pioneer (and will receive) AUTOMATIC increase of 3.5% per year after retirement.”

“PERA members hired January 1, 2007 or later, called PERA Centennial, no guaranteed annual increase after retirement.”

http://www.copera.org/pdf/Legislation/2006/LegUp2-06.pdf

Buck Consultants (independent actuary) 2001 actuarial report to the Legislative Audit Committee of the Colorado General Assembly: the Colorado PERA 3.5 percent COLA is “AUTOMATIC,” a “fixed” COLA, that is “compounded annually for each year of retirement,” part of PERA's “guaranteed benefits at retirement."

Colorado PERA publication “History of Colorado PERA Legislation”:

“HB 00-1458.  Established 3.5% compounded annual AUTOMATIC COLA effective March 2001.”

 

NEXT YEAR'S FIRE AND POLICE PENSION COLA ELECTION.

Here are a few excerpts from FPPA materials for next year's police and fire COLA election . . . the "FPPA Fire and Police Pension COLA Election White Paper":

"A benefit adjustment for retirees, often commonly known as a 'COLA' or cost of living adjustment, is not guaranteed in the SWDB (FPPA Statewide Defined Benefit) Plan. The board of directors of FPPA determines on an annual basis what, if any, benefit adjustment to provide to current retirees."

"In addition, an election requires a mandate from the active members of the plan, since 65% of the members must vote in favor of a proposition and a non-vote is treated as a negative vote."

"Effect of inflation upon purchasing power."

"The base benefit provided in the SWDB Plan does not have any form of automatic adjustment for inflation. Without some type of inflation protection, an annuity will not provide equivalent purchasing power over time."

"It cannot be over-emphasized, however, that the SWDB Plan does not provide guaranteed benefit adjustments."

"In the event that the Plan were ever to become actuarially unsound, the board of directors has the authority to: Reduce or eliminate plan amendments voted in by the membership."

"Retirement income needs to keep pace with inflation as much as possible, so that over time the retiree can continue to maintain his or her standard of living."

"Benefit adjustments provide protection against inflation and are the most cost-effective way to achieve that protection."

"Working together, members of the SWDB Plan can proactively act to preserve and improve retirement security for themselves."

http://www.fppaco.org/pdfs/election-2012-pdfs/white-paper.v03.pdf

(My comment: Colorado PERA retirees "worked together," and made mandatory contributions to the Colorado PERA pension system for a "DEFINED" pension COLA benefit upon retirement.  Colorado PERA retirees "acted proactively" to ensure their "retirement security."  For decades Colorado PERA retirees made these mandatory contributions.  In 2010, Governor Ritter, with the stroke of a pen, seized these PERA contributions, and breached the retirees' PERA contracts.)

From the FPPA "Election Handout":

"Why vote 'yes' on increasing the member contribution rate?  The short answer is that added funding: Increases the likelihood that you will get a greater benefit adjustment (commonly called a COLA) when you retire . . .".

http://www.fppaco.org/pdfs/election-2012-pdfs/handout.V4.3.19.13.pdf

(My comment: "Likelihood," an excellent word choice here.)

 

COLORADO'S ARBITRARY PARAMETERS FOR MEETING PUBLIC PENSION LIABILITIES.

As noted earlier, a public pension plan's "maximum amortization period" is the number of years allowed by the legislative body overseeing the plan during which any pension liabilities must be paid off.  Although public pension benefits will come due over the next 70 years, Colorado law requires that these liabilities be paid off in about half that time frame.

Under Colorado law, the Colorado PERA pension system is currently permitted a period of 30 years to pay off its unfunded pension liabilities.  Seven years ago, Colorado law allowed the Colorado PERA pension system 40 years to pay off unfunded pension liabilities (the time period was reduced in SB06-235.)  Sixteen years ago, Colorado law allowed the Colorado PERA pension system 60 years to pay off its unfunded pension liabilities (the time period was reduced in HB97-1114.)  Colorado law currently allows the FPPA pension system to pay off unfunded pension liabilities over a 40-year period, except for FPPA "Old Hire" pension plans that get 37 years.  You can see that this factor, incorporated into written, statutory public pension contracts in Colorado, is set in law in an arbitrary fashion.

Colorado PERA, in its publication "Setting the Record Straight":

"The bottom line is that SB 1 prefunds these liabilities over the next 30 years while the payment of benefits will occur over the next 70 years."

"PERA is a long-term investor with an investment horizon that spans not just 10 years, but 50 or 70 years."

https://www.copera.org/pera/about/issues.htm

In 2006, the Colorado Legislature lowered Colorado PERA's maximum amortization period to 30 years, in 2010 the Colorado Legislature claimed that this 30-year maximum amortization period was such a burden that the State of Colorado was forced to break its PERA pension contracts.

Recall the words of Representative Jack Pommer, JBC Chairman in 2009.  At the December 17, 2009 meeting of the Joint Budget Committee, Representative Pommer asked: “Are we not just saying we’re going to pick 30 years because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”  Representative Pommer asked if the Legislature could legally alter the statutory parameters of the PERA pension to manufacture a “crisis” in order to justify its breach of pension contracts.

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

Colorado law governing the FPPA:

"31-31-102. Definitions. (1) "Actuarially sound" means a police officers' or firefighters' pension fund . . . receiving or scheduled to receive employer and member contributions . . . actuarially determined to be necessary . . . to pay the annual contribution necessary to amortize any unfunded accrued liability over a period not to exceed FORTY years."

"31-31-408. Modification of state plan by the board. (1) . . . the board may modify the pension benefits and the age and service requirements for pension benefits . . . with respect to the members of the statewide defined benefit plan if:  (f) The modification does not adversely affect the pension benefits of retired members."

http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

Colorado Legislature: We'll break Colorado PERA pension contracts in order to pay off the unfunded liability in 30 years, but we'll give local government Old Hire fire and police pension plans 37 years.  (The arbitrary 30-year time frame is included in the title of the bill that broke Colorado PERA pension contracts, SB10-001.)

"31-30.5-304. (4) (a) For municipalities, fire protection districts, and county improvement districts (with Old Hire fire and police pension plans) . . . contributions for each calendar year . . . shall be at a rate . . . required to amortize the unfunded accrued liabilities of such state-assisted fund over a period of not more than thirty-seven years . . .".

"31-30.5-305. No change in employer obligation. It is the intention of the general assembly that the minimum funding standards established by this part 3 shall not enlarge nor diminish the obligation of municipalities and fire protection districts to their employees for pension benefits provided pursuant to this article."

Colorado Legislature: However, the funding standards that we put in SB10-001, WE DO INTEND to use to break pension contracts and diminish our own state PERA pension obligations.

From the FPPA Rules:

"909. Vesting. Upon attaining the eligibility requirements for a benefit, a Member shall be fully vested in the benefits such Member has accrued."  "This rule is not to be construed as a reduction or limitation of rights heretofore existing, nor as an indication that vested benefits would be forfeitable before the stated age is attained."

http://www.fppaco.org/pdfs/rnr/120927%20%20Codified%20Final%20FPPA%20Rules%20Regulations.pdf

Colorado law governing Colorado PERA:

"24-51-211, C.R.S. Amortization of liabilities.  (1) . . . A maximum amortization period of thirty years shall be deemed actuarially sound . . . the employer or member contribution rates for the plan may be adjusted by the general assembly when indicated by actuarial experience."

(My comment: No mention here in Colorado statutes about the Colorado General Assembly breaking its pension contract when "indicated by actuarial experience.")

Instead of simply re-amortizing Colorado PERA's unfunded pension liabilities in 2010, a majority of Colorado legislators preferred to break PERA contracts.

 

THE COLORADO LEGISLATURE INTENDS TO PAY AN ADDITIONAL $142  MILLION IN NEXT YEAR'S BUDGET FOR LOCAL GOVERNMENT PENSIONS THAT ARE NOT ITS RESPONSIBILITY . . . WHILE IGNORING ITS OWN CONTRACTUAL PERA PENSION OBLIGATIONS.

The Colorado General Assembly claims that financial hardship necessitates its breach of Colorado PERA pension contracts, while simultaneously the Colorado General Assembly tops off a collective $700 million appropriation for local government public pensions that are not its responsibility.  At least the local government lobbyists are happy.

On September 19, 2012,  FPPA CEO Dan Slack provided testimony to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans."  Dan Slack: "So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link:

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage

“31-31-101. Legislative declaration.”  “The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits . . . but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

This “Legislative Declaration” states that the Colorado General Assembly has provided state resources “in recognition that local governments are currently burdened with financial obligations relating to pensions . . .”. Accordingly, the policy preference of the Colorado General Assembly is that discretionary grants of state resources should be made to Colorado local governments when they are “burdened by financial pension obligations,” but when the State of Colorado is also “burdened by financial pension obligations” the State of Colorado will break its public pension contracts.

More Colorado law:

"31-30.5-304, C.R.S. (3) The general assembly finds and determines that it has contributed substantial sums to the (FPPA Old Hire fire and police pension) program established by this part 3 and that the state has a responsibility to evaluate the advisability of its contribution in light of its own fiscal situation."

http://www.fppaco.org/pdfs/Title%20%2031-30%20thru%2031%20w-%20amendments%20(2012).pdf

In spite of this statutory language, and the fact that the State of Colorado is currently in breach of its own pension contracts, the Colorado Legislature intends to pump this additional $142 million into local government pension obligations in the next fiscal year.

How much more evidence is needed to demonstrate that no fiscal emergency exists in Colorado that would justify any breach of state contracts?

Colorado PERA active and retired members, it is clear that the Colorado Legislature has placed into statute public pension contract provisions that are arbitrary, providing unequal protection under the law.  Fight for your contractual public pension rights!  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!