Search Results for: give

As we know, Colorado PERA has testified to the Colorado General Assembly’s Joint Budget Committee that public pension benefits in Colorado cannot be reduced by the General Assembly:

“Terms of the plan are legally binding and protected from reduction by the Constitution.”

Link:

http://www.kentlambert.com/Fil…

The Colorado Court of Appeals finds itself agreeing with Colorado PERA in regard to the contractual nature of public pension rights:

“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.”  In the cases McPhail and Bills, the Colorado Supreme Court “found a contractual right based on members’ provision of services and contributions to the retirement fund.”

The Colorado Court of Appeals also reversed the Denver District Court’s summary judgment on the plaintiff’s “Takings Clause claim.” On page 36 of its decision, the Colorado Court of Appeals restores the plaintiff’s Takings Clause claim and cites the case Lynch: “contract rights can constitute property interests protected by the Takings Clause.”

One would imagine that such consensus would bring an end to the dispute over the Colorado General Assembly’s 2010 taking of contracted, vested PERA retiree COLA benefits in SB 10-001.

However, in spite of the consensus, the Colorado PERA Board of Trustees continues to press for the breach of PERA pensioner contracts and has appealed the recent Colorado Court of Appeals decision to the Colorado Supreme Court.  

If the ultimate resolution of the case Justus v. State remains far off in the future, in the interim period, I believe that the parties to the case would benefit from the examination of certain materials related to Colorado PERA contractual pension rights.  The discovery of these materials should be a relatively simple matter given that Colorado PERA is a “transparent” organization.  

Here are some materials I’m interested in:

In 2005, a commission appointed by the Colorado Treasurer, the “Commission to Strengthen and Secure PERA” completed a report to the Treasurer.

Here’s a link to the final report of the “Commission to Strengthen and Secure PERA”:

http://www.copera.org/pdf/Misc…

I’m not particularly interested in the commission’s report itself.  Rather, I’m interested in the transcripts of the hearings from deliberations of the commission.  During these deliberations, the commission received testimony from Colorado PERA officials and from the Colorado Attorney General’s Office relating to the contractual nature of Colorado public pension benefits.  

Transcripts of these commission hearings were once available on the website of the Colorado State Treasurer.  I suspect that Colorado PERA, or the Colorado Treasurer’s Office has retained copies of these transcripts.  Assistant Attorney General Heidi Dineen of the Colorado Attorney General’s Office testified before the commission in regard to contractual public pension rights.  (Heidi Dineen’s name, by the way, is at the bottom of the 2004 Colorado AG opinion addressing Colorado pension contractual rights.)

Transcripts of the commission’s hearings have been mentioned in the press.  Here are a few examples:

Silver and Gold Record, June 16, 2005:

“Romero advised PERA members to look at the state treasurer’s Web site, which has a link to the commission and meeting transcripts . . .”

Link:

https://www.cu.edu/sg/messages…

Silver and Gold Record, July 14, 2005:

“According to a transcript of the June 17 meeting, Brian Anderson of the treasurer’s office responded to concerns about the commission’s private operations, by noting that an informal opinion from the attorney general’s office stated that the commission is not a public body because it acts in an advisory capacity rather than as a policy-making body.”

Link:

https://www.cu.edu/sg/messages…

Here are a few quotations of Assistant Attorney General Heidi Dineen in the press relating to Colorado public pension contractual rights:

“At its most recent meeting on April 15, the commission heard from Assistant Attorney General Heidi Dineen on state case law regarding pensions and the legal tests required for reducing benefits.”  “‘You can reduce the pension for a person you haven’t even hired, [but] you can’t reduce the pension for a retiree,’ Dineen said, adding that the middle of that continuum is where changes can be made.”

“A commission formed by State Treasurer Mike Coffman to examine the status of the Public Employees’ Retirement Association is looking at its legal options for reducing employee pension benefits.”

“Dineen explained that in the 1980s, the Colorado Supreme Court ruled on a case involving fire and police pensions, and that ruling established what is known as the Peterson test.  The plaintiff in that case argued that no changes could be made to public employees’ pension plans after being hired.  The court rejected that argument, Dineen said, and decided to allow adverse changes that meet one of three conditions.”

“Under the Peterson test, any adverse change to a partially vested pension plan must: be balanced by a corresponding change in benefits, be a change that is ‘actuarially necessary’ or be a change that strengthens or improves the pension plan, according to Dineen.”

“However, under the definition of ‘partially vested’ in the Peterson test, the plan also must have unfunded liabilities and not be meeting the current costs of pension benefits, she said.”

Link:

https://www.cu.edu/sg/messages…

Here are some more materials I’m interested in (of course, some of these documents may be “privileged”):

–  I seem to recall reading that Colorado PERA Executive Director Greg Smith has written in the past relating to contractual public pension rights.  I would like to see his thoughts on this subject prior to commencement of the PERA Board’s efforts to breach PERA pensioner contracts.

–  Communications between PERA officials/administrators and public sector union officials relating to the development of the 2009 PERA Board pension reform recommendations.

–  Communications between PERA officials/administrators and representatives of Governor Ritter’s Office relating to the development of the 2009 PERA Board pension reform recommendations.

–  Communications between PERA officials/administrators and SB 10-001 co-prime sponsor Brandon Shaffer/other legislators relating to the development of the 2009 PERA Board pension reform recommendations.

–  Communications between PERA officials/administrators and the General Assembly’s Office of Legislative Legal Services relating to the development of the 2009 PERA Board pension reform recommendations.

–  Internal Colorado PERA e-mails/communications relating to the development of the 2009 PERA Board pension reform recommendations.

–  Any materials provided by Colorado PERA representatives or Senator Josh Penry or Senator Paula Sandoval to Nicole Myers of the General Assembly’s Office of Legislative Legal Services regarding an amendment to SB 09-282 placing into the PERA statutes a requirement that the Colorado PERA Board of Trustees provide pension reform recommendations to the General Assembly.  (I would like to know if Colorado PERA essentially “asked itself” to provide recommendations to the General Assembly.)

–  Instructions provided by Colorado PERA to actuaries involved in the 2009 examination of alternative PERA pension reforms.

–  Transcripts and audio recordings of Colorado PERA Board of Trustees deliberations of pension reform alternatives.

–  Colorado PERA published materials relating to the contractual public pension rights.

My hope is that through these materials we might learn the extent to which Colorado PERA Executive Director Greg Smith encouraged or discouraged the attempt to breach public pension contracts by the PERA Board.  We may also learn whether (as I suspect) the plan to breach PERA pensioner contracts was premeditated, i.e., whether a faГ§ade of false deliberation was constructed by Colorado PERA lobbyists and public sector union lobbyists to lend credibility, objectivity, and legitimacy to a preordained conclusion to breach PERA pensioner contracts.

These are some of the materials relating to Colorado public pension rights that I believe should be available to the public.  However, in spite of the “transparency” of Colorado PERA, I have questions regarding the extent to which Colorado PERA is obligated to make these materials available.  In seeking an answer to my questions, I found guidance in an excellent article published in The Colorado Lawyer in 2007 by Caleb Durling of the law firm Reilly Pozner LLP.

The article, “The Pension Committee Decision: The Duty to Preserve Records” is publicly available on the internet at this link:

http://www.rplaw.com/wp-conten…

Here are a few relevant excerpts from the article:

“By now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records- paper or electronic-and to search in the right places for those records, will inevitably result in the spoliation of evidence.”

“Over the last decade, courts have refined the obligations of parties to preserve and collect paper and electronic documents.”

“Judge Scheindlin has turned to the thornier problems of defining parties’ obligations to preserve and collect relevant documents, both paper and electronic, and the sanctions for the parties who do not act willfully or in bad faith but who, by handling their discovery obligations with a ‘pure heart and an empty head,’ cause the loss or destruction of documents through negligence or gross negligence.”

“As with her Zubulake opinions, courts and litigants across the country, including in Colorado, will rely on Judge Scheindlin’s framework and reasoning in Pension Committee when discovery problems emerge, particularly with regard to the loss of paper and electronic documents due to carelessness or gross negligence.”

“As a result, she awarded monetary sanctions to the plaintiff and ordered that the plaintiff also was entitled to an adverse inference instruction concerning the deleted e-mails and destroyed backup tapes.”

“The goals of sanctions are to: (1) deter spoliation; (2) place the risk of erroneous judgment on the spoliating party; and (3) restore the prejudiced party to the position it would have been in but for the wrongful destruction.”

“The case has two overarching takeaways for litigants. First, document preservation is an obligation that cannot be ignored. Second, there now are relatively well-defined standards of conduct and sanctions available to enforce that obligation.”

“Pension Committee removes all doubt concerning both the duty to preserve paper and electronic documents and the sanctions that can result for even the negligent failure to satisfy that duty.”

In regard to “litigation holds,” Mr. Durling writes:

“Zubulake IV, the most influential of the five opinions, held that a party’s duty to preserve documents arises when ‘a party reasonably anticipates litigation.'”

“The duty to preserve arises, as Judge Scheindlin explained in Zubulake IV, when ‘a party reasonably anticipates litigation.’  At that point, the party must suspend any routine document retention and destruction policy and institute a litigation hold.”

” . . . the ‘failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.'”

I wonder, at what point did Colorado PERA anticipate litigation resulting from the recommendation to breach PERA pensioner COLA contractual obligations?  At what point did Colorado PERA institute a “litigation hold” in this regard?

I seem to recall numerous statements from Colorado PERA officials in the last decade regarding their expectation that PERA members and retirees would litigate any breach of their pension contracts.   Such statements may very well be found on the transcript of the “Commission to Strengthen and Secure PERA.”  In all likelihood, such statements were made during Colorado PERA’s 2009 statewide road trip campaign to build support for the breach of PERA pensioner contracts.

At a minimum, a quick search reveals that Colorado PERA officials expected this litigation as of January 15, 2010.  On January 15, 2010, PERA officials were quoted in the press stating that they expect litigation over the PERA Board’s proposal to breach public pension contracts:

“That’s where the lawsuits come in.  Williams and others say numerous PERA members, especially retirees, have indicated they are likely to pursue litigation if their benefits are cut.

No matter what, ‘There will be lawsuits,’ Williams said.

Link:

http://www.coloradostatesman.c…

Was Colorado PERA’s “litigation hold” in place as of January 15, 2010?

PENNSYLVANIA GOVERNOR RELEASES PENSION REFORM PLAN: YET ANOTHER “LESS DRASTIC” ALTERNATIVE TO THE BREACH OF VESTED RETIREE PENSION CONTRACTS.

–  ACCRUED PENSION BENEFITS WILL BE HONORED; HOWEVER GOV. CORBETT WILL PURSUE CHANGES TO CURRENT EMPLOYEE RATES OF PENSION BENEFIT ACCRUAL GOING FORWARD.

– NO ATTEMPT TO BREACH CONTRACTS, OR TAKE VESTED RETIREE PENSION BENEFITS.  “THE TAXPAYER BEARS THE ENTIRE INVESTMENT RISK OF THE PLAN.”  “THIS UNFUNDED LIABILITY IS ESSENTIALLY A STATE DEBT.”  “A HEALTHY FUNDING RATIO IS CONSIDERED 80 PERCENT.”  “THIS IS A DEBT OWED, AN OBLIGATION ON WHICH THE STATE MUST MAKE GOOD.”

On November 26, 2012, Pennsylvania’s Governor released a proposal for pension reform in the state.  He proposes that the state honor its current public pension debts to retirees, (as well as accrued pension benefits of current employees.)  The Governor proposes that the rate at which current employees accrue public pension benefits going forward be reduced.  This is essentially a proposal made by Professor Amy Monahan of the University of Minnesota School of Law.  

The Governor’s proposal is admirable in that it does not attempt to deny the state’s public pension debt.  Denial of the state’s public pension debt is the immoral and illegal approach that was taken by the Colorado PERA Board of Trustees in SB 10-001, adopted at the 2010 session of the Colorado General Assembly.

A reduction of the rate of future accrual of public pension benefits by current employees is unquestionably a “less drastic” alternative than the actions taken by the Colorado Legislature . . . breach of vested PERA pensioner contracts.  This immoral and illegal act on the part of the Colorado PERA Board of Trustees will delay true, legal, prospective pension reform in Colorado by up to five years, thus the PERA Board action’s will result in Colorado taxpayers bearing additional billions in public pension debt.  A question exists regarding whether this action on the part of the PERA Board constitutes breach of fiduciary duty.

The Governor of Pennsylvania also forthrightly states that public pensions are well-funded at an 80 percent funded level.  Thus, he agrees with the U.S. ratings firm, Fitch Ratings, and with professionals in public pension administration in the United States who are not seeking to welch on the public pension debt.  This position of Pennsylvania’s Governor exposes the stunning level of deceit and hypocrisy in this regard on the part of the Colorado PERA Board of Trustees.

Here are excerpts from a recent news article in Pennsylvania:

“Gov. Tom Corbett’s Budget Office released the Keystone Pension Report Monday in a press release, providing a comprehensive overview of Pennsylvania’s public pensions and demonstrating the impact pension contributions and unfunded liabilities have on the state’s budget.”

“The report outlines the current pension situation facing Pennsylvania, identifies factors that have contributed to Pennsylvania’s pension crisis, and offers a framework for considering structural redesign and reform of the pension system to ensure long-term stability of the plans.”

“We will not touch accrued benefits, nor will we allow the pension problem to continue for future generations.  We need to fix this problem for the future stability of both the pension systems and the commonwealth’s budget.”

Full article available at this link:

http://www.whptv.com/news/loca…

Governor Corbett’s Keystone Pension Report is available for download at www.budget.state.pa.us.

From the Keystone report:

“Like the stone that locks an arch into place, Pennsylvania seeks a keystone-that integral lock that can both secure the delivery of essential programs and services to our more than 12 million residents and make good on the state’s pension obligations to public employees.”

“Reform must pave the way to a future that enables us to provide sustainable support for the core functions of state government and fulfill our consitutional mandates, while meeting our pension obligations to Pennsylvania’s state government and public school employees.”

“An important characteristic of DB plans is that the commonwealth, and ultimately the taxpayer, bears the entire investment risk of the plan, which is reflected in the annual employer contribution rate that the commonwealth must contribute.”

(My comment: Colorado PERA, apparently, does not understand that PERA retirees do not bear market risk.  This is extremely odd, since Colorado PERA employs more than 200 public pension professionals.)

“In other words, the total liabilities (future retirement benefits to be paid) exceed the total assets of the combined plans by $41 billion in 2012.  It is important to note that this unfunded liability is essentially a state debt owed to state workers and public school employees.”

“The latest actuarial valuations show that SERS is 65.3 percent funded, while PSERS is 69.1 percent funded.  When the valuations of the two systems are combined, as Exhibit 9 shows, they are just under 68 percent funded.  A healthy funding ratio is considered 80 percent. The funded ratios of the two systems are expected to continue to decline in the next several years, hitting a low of 55.2 percent for SERS and 59.4 percent for PSERS before they begin to slightly rebound.”

“Former public and school district employees worked throughout their careers to feel secure in the fact that the pension payments they now receive in retirement will not be affected by any reform that the commonwealth undertakes.”

“That being said, components of current employee’s prospective benefit can be changed to conform with prior court determinations regarding deferred compensation.  Given the current state of both pension systems, it may be necessary to explore changes to prospective benefits for all current public and school district employees.”

“Pennsylvania has incurred $41 billion in unfunded liability.  This is a debt owed, an obligation on which the state must make good.”

“As part of their pension reform efforts, several states have instituted increased member contributions.  Depending upon the state, increases have been instituted for either current or new employees, and in some cases, both.”

“Increasing the retirement age even two to three additional years can yield significant savings. Pension benefits would still remain competitive, while allowing public and school employees to retire with security.”

“Changes in how the basic pension formula is calculated, particularly the factor by which years of service and salary are multiplied could result in significant long-term stability to the systems.”

Governor Corbett’s public pension reform proposal has been advocated by Law Professor Amy Monahan at the University of Minnesota School of Law.

In her paper, Public Pension Reform: The Legal Framework, Monahan writes:

“What if, ten years into X’s tenure with the state, the state announces that effective immediately, pension benefits will only accrue at the rate of 1% of salary per year?  I have argued that such prospective changes should be permitted absent an explicit agreement protecting against such changes.”

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/faculty…

Both the plaintiffs and the defendants in the Colorado public pension case, Justus v. State, have appealed to the Colorado Supreme Court.  

To recap, in 2010, the Colorado Legislature breached its contracts for pension COLA benefits owed to retired, long-time employees . . . the retired employees immediately sued.  In 2011, a lower court determined that the retired employees did not have a contractual right to their pension COLA benefits . . . the retired employees immediately appealed this ruling to the Colorado Court of Appeals.  In 2012, the Colorado Court of Appeals read Colorado pension case law, and determined that the retired employees (as they had been told for 30 years) did indeed have a contractual right to their pension COLA benefits, but that the lower court should apply a test to determine if it was acceptable for the State to seize their property.  Thus, we arrive at the present, with the State of Colorado and its pension-administering arm (Colorado PERA) still seeking to breach contracts with long-time retired employees, and the retired employees unwilling to lie down quietly for a fleecing.

These retired employees want the Colorado Supreme Court to decide that they have a contractual right to their pension COLA benefit, and that under Colorado law, this right is independent of any test for acceptable state seizure of their contracted pension benefits that may be applied.  The State of Colorado and Colorado PERA liked the lower court ruling, that retirees have no contractual right to the pension COLA (even though, unfortunately for their case PERA has put it in writing that the retirees do have such a contractual right.)  Both sides have appealed to the Colorado Supreme Court.

In this article, I will expose what are, in my opinion, deliberate attempts on the part of this pension administrator, Colorado PERA, to deceive the Colorado Supreme Court.  

Colorado PERA is an organization that boasts about its “transparency.”  Having read Colorado PERA’s submission to the Colorado Supreme Court in the case Justus v. State, I am ready to concede that Colorado PERA has achieved a measure of “transparency.”  

While reading PERA’s brief submitted to the Colorado Supreme Court I was impressed by the “transparency” of PERA’s deception.

(I’ll address what I believe are deceptions included in the Colorado PERA Supreme Court Brief later in this article, but first, a look at the Colorado Supreme Court’s rules relating to candor.)

After I put down the Colorado PERA Supreme Court Brief, I picked up a copy of the Colorado Supreme Court’s Rules of Professional Conduct and read about the duty of candor before the court.

Here’s a link to the Colorado Supreme Court Rules of Professional Conduct:

http://www.coloradosupremecour…

Admittedly, I am a layperson, so I have no idea of what constitutes acceptable tactics in civil litigation.  And, we should not forget that all attorneys have an obligation to “zealously” defend the interests of their clients.  However, without drawing any firm conclusions, read a few of the excerpts that I have taken from the Colorado Supreme Court Rules below, and see if you do not agree me that Colorado PERA is walking very close to the ethical line.

From the Colorado Supreme Court Rules of Professional Conduct:

“An advocate (attorney) is responsible for pleadings and other documents prepared for litigation, but is usually not required to have personal knowledge of matters asserted therein, for litigation documents ordinarily present assertions by the client, or by someone on the client’s behalf, and not assertions by the lawyer.”

(My comment: My interpretation of this Colorado Supreme Court rule relating to candor of attorneys is that it is the responsibility of the client [here, Colorado PERA] to be forthright in providing information to the attorney.  In my opinion, Colorado PERA is attempting to deceive the Colorado Supreme Court.  Accordingly, I hold Colorado PERA entirely responsible for the deception I perceive in their Supreme Court Brief, and find no fault with the attorneys PERA has also deceived.  Actually, I feel a bit sorry for the attorneys.  What were all those years in school for?  To try and break clear contractual rights of old people?)

More from the Rules of Professional Conduct:

“There are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.”

“A lawyer shall not knowingly: (3) offer evidence that the lawyer knows to be false.  If a lawyer, the lawyer’s client, or witness called by the lawyer has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.”

(My comment: I have covered Colorado PERA’s attempts at deception through the use of statistics, in particular the “market-based” pension funded ratio . . . ad nauseam.  But, PERA has high hopes for this line of deceit and stubbornly refuses to give it up.  I don’t believe that the “market-based” funded ratio that Colorado PERA uses in its Supreme Court Brief is “false.”  ‘Market-based’ funded ratios are one measure of the fiscal soundness of public pensions.  However; in my opinion Colorado PERA uses this “market-based” funded ratio in the Supreme Court Brief in attempt to mislead the Colorado Supreme Court.  I do think this is a ridiculous and sophomoric tactic, since the Colorado Supreme Court will surely discover the attempt to deceive.

Colorado PERA uses the “market-based” funded ratio in its Supreme Court Brief to exaggerate the financial condition of the PERA trust funds with hopes of bolstering its case to breach pensioner contracts.  Colorado PERA fails to identify the funded ratio it cites a number of times in its Colorado Supreme Court Brief as a “market-based” funded ratio, and thus, I believe intends to deceive the court.  

PERA intends to deceive the Supreme Court by failing to inform the court that the funded ratios used in the legislation subject to court scrutiny (SB 10-001) are “actuarial funded ratios (AFR),” and that AFRs have traditionally been used by Colorado PERA to measure the funded status of the PERA trust funds.  PERA has almost exclusively used AFRs in the past.  It is only at the beginning of the PERA campaign to breach pensioner contracts that PERA began using “market-based” funded ratios.  The funded ratio in the title of the bill, SB 10-001 is an actuarial funded ratio.  I return to “market-based” funded ratios at the end of this article.)

More from the Rules of Professional Conduct:

“This Rule sets forth the special duties of lawyers as officers of the court to avoid conduct that undermines the integrity of the adjudicative process.”

“. . . the lawyer must not allow the tribunal to be misled by false statements of law or fact or evidence that the lawyer knows to be false.”

“A lawyer acting as an advocate in an adjudicative proceeding has an obligation to present the client’s case with persuasive force.”

“Paragraph (a)(3) requires that the lawyer refuse to offer evidence that the lawyer knows to be false, regardless of the client’s wishes. This duty is premised on the lawyer’s obligation as an officer of the court to prevent the trier of fact from being misled by false evidence.”  

“The prohibition against offering false evidence only applies if the lawyer knows that the evidence is false.”

“Thus, although a lawyer should resolve doubts about the veracity of testimony or other evidence in favor of the client, the lawyer cannot ignore an obvious falsehood.”

“Although paragraph (a)(3) only prohibits a lawyer from offering evidence the lawyer knows to be false, it permits the lawyer to refuse to offer testimony or other proof that the lawyer reasonably believes is false.  Offering such proof may reflect adversely on the lawyer’s ability to discriminate in the quality of evidence and thus impair the lawyer’s effectiveness as an advocate.”

“But the alternative is that the lawyer cooperates in deceiving the court, thereby subverting the truth-finding process which the adversary system is designed to implement.”

“Fair competition in the adversary system is secured by prohibitions against destruction or concealment of evidence . . .”

Now . . . let’s take a look at the new Colorado PERA Brief submitted to the Colorado Supreme Court.

COLORADO PERA’S SUPREME COURT BRIEF – AN ATTEMPT TO SUBVERT THE COLORADO SUPREME COURT’S “TRUTH-FINDING PROCESS.”

Sadly, Colorado PERA repeats many of the same deceptions in its Supreme Court Brief that have been included in earlier briefs it has submitted to the Denver District Court and the Colorado Court of Appeals.  (What is it with deception in legal briefs?   Is this standard operating procedure?  I am amazed!)

Below I provide what I believe are significant excerpts from the Colorado PERA Supreme Court Brief and my comments on those excerpts.

From the Colorado PERA Supreme Court Brief:

“The decision also has wider implications on the legislature and the State: the creation of enforceable public contracts by statute despite the intent and historical practice of the legislature and the reasonable expectations of the parties.”

“Plaintiffs could have no reasonable expectation that ever-changing COLA formulas would freeze, for the first time, when they retired.”

(My comment: PERA attorneys, EVEN YOUR CLIENT HAS THESE EXPECTATIONS . . . THAT THE COLA BENEFIT IS AN ENFORCEABLE PUBLIC CONTRACT!  If Colorado PERA, your client, has these expectations, why should PERA pensioners not also have these expectations?  PERA attorneys, please take a minute to read the words of your client provided in testimony to the General Assembly’s Joint Budget Committee.  Your client put it in writing that PERA pensioners have a contractual right to their COLA benefits.  Colorado PERA believes that pensioners have such a contractual right . . . that belief goes beyond a “reasonable expectation.”

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.”

Link:

http://www.kentlambert.com/Fil…

From the Colorado PERA Supreme Court Brief:

“But this mandatory language bound the PERA administrator while the statutes were in effect-not future legislatures.”

(My comment:  Heads up PERA attorneys, as noted above, the “PERA administrator” you refer to here has testified to the Colorado General Assembly [and helpfully reduced this testimony to writing] that PERA’s pension COLA benefits ARE INDEED a contractual obligation.

PERA attorneys, your client doesn’t believe your argument that the statutes only bind the “pension administrator.”  Your client wrote that the General Assembly cannot decrease the contracted COLA . . . THAT THE GENERAL ASSEMBLY IS BOUND, not the pension administrator.  Did this not come up in your meetings with your client?  Your client’s testimony is on the record, it has been recorded at the Legislature.  It is not going to simply disappear.)

From the Colorado PERA Supreme Court Brief:

“The General Assembly considered readjusting the COLA for retirees as the last option, only after it became evident that no other viable contribution and benefit changes could prevent the pension fund from running out of money.”

(My comment: As you know, I believe that the General Assembly reduced the contracted PERA COLA benefit from retirees [thus breaching pensioner contracts] as a FIRST OPTION.  I believe that the General Assembly created a faГ§ade of deliberation to mask a predetermined attempt to breach the PERA pension COLA contractual obligation.

Colorado PERA contends that “no other viable contribution and benefit changes” were available.  In reality, no other POLITICALLY viable contribution and benefit changes were available.  Colorado PERA left the determination of the pension breach strategy to the 17-member PERA Contract Breach Lobbying Troop.

Here at saveperacola.com, dozens of viable “less drastic” alternatives to pension contract breach have been documented.  Numerous states have demonstrated for Colorado PERA the path to legal, prospective pension reform.  These options were ignored by Colorado PERA and the General Assembly.)

From the Colorado PERA Supreme Court Brief:

“The (District) court held: ‘While Plaintiffs unarguably have a contractual right to their PERA pension itself . . .’

(My comment: As I noted last year, I am curious as to how the Denver District Court arrived at this conclusion that “plaintiffs unarguably have a contractual right to their PERA pension itself” without citing either the McPhail or Bills cases in its decision?  On what authority did the Denver District Court base this determination?  Was it pulled out of thin air?)

In the Colorado PERA Supreme Court Brief, PERA’s attorneys write in regard to the pension cases McPhail and Bills: “Those dated cases are distinguishable.”

(My comment:  Let’s get this straight for the record: Colorado PERA’s attorneys believe that the Colorado Supreme Court decisions in McPhail and Bills that address the contractual nature [under the COLORADO constitution’s Contract Clause] of post-retirement benefit increases for retired public employees who have vested rights in Colorado public pensions are “distinguishable,” and that the Supreme Court should not rely on their own authority.

Instead, Colorado PERA’s attorneys argue that the Colorado Supreme Court should rely on a case [DeWitt] that addressed a “statutory revocation of a testator’s former wife’s interest in a life insurance policy” based on FEDERAL Contract Clause authority, a case in no manner involving “vested rights to employee benefits,” a case concerning the “retroactive application of a Uniform Probate Code provision which automatically revoked the designation of a divorced spouse as a life insurance beneficiary.”  Got it?)

From the Colorado PERA Supreme Court Brief:

“The result is contrary to legal precedent governing the legislature’s formation of public contracts with private individuals, and has far reaching implications because it binds the hands of this and all future legislatures which, under the court of appeals’ decision, are now bound by a contract the legislature did not intend to enter.”

(My comment: The Court of Appeals ruling is not contrary to legal precedent.  As noted earlier in the PERA Colorado Supreme Court Brief, Colorado pension precedents have existed for more than fifty years . . . McPhail and Bills.

The Colorado General Assembly has been aware of this pension precedent for half a century.  The General Assembly has known for decades that public pension benefits are its contractual obligations.  Thus, the General Assembly has for decades amended the PERA statutes in a careful manner that does not impair its PERA pensioner contracts.  For fifty years, the General Assembly has known of its contractual pension obligations.  The General Assembly has adopted legal, prospective PERA pension reforms in the past to diminish its pension unfunded liabilities.  If the General Assembly wanted to further diminish its contractual pension obligations, it had the opportunity to do so through the adoption of additional legal, prospective pension reforms over all of these decades.)

From the Colorado Court of Appeals Decision: Plaintiffs are Not Claiming an UNCHANGEABLE COLA – Plaintiffs are Claiming an IRREDUCIBLE COLA.  

This concept is obviously difficult for Colorado PERA administrators to grasp.  It was not difficult for the Colorado Court of Appeals.

From the Colorado Court of Appeals Decision:

“We note, however, that plaintiffs contend that they have a reasonable expectation of an irreducible (not, as defendants assert, an unchangeable) COLA. Therefore, we direct the district court to consider whether there has been a substantial impairment with that in mind.”

Here are a few examples of PERA’s ongoing deception in this regard . . . now infecting its Brief submitted to the Colorado Supreme Court:

“The legislature had previously readjusted the COLA formula for PERA retirees ten times in forty years . . .”,

“retiree COLAs would once again require readjustment.”,

” . . . the General Assembly had changed COLAs ten times and DPSRS had changed COLAs twelve times during the decades preceding 2010.”,

“There cannot be entitlement to something no Plaintiff ever received: a COLA frozen for life at the rate that happened to be in effect when each became eligible to retire or retired.”

(My comment:  I find this PERA red herring [the “COLAs as unchangeable” tactic of deception] quite tedious.  Clearly, what is “unchangeable” is this PERA tactic of deception itself.

Since the commencement of litigation in Justus v, State, Colorado PERA has relentlessly argued that the plaintiffs in the case Justus v, State object to “changes,” or “adjustments” in the rate of their contracted COLA, or that they seek a “frozen” COLA.  Plaintiffs DO NOT object to “changes,” or “adjustments” in the COLA rate, they object to retroactive, unconstitutional “reductions” in the COLA rate.  Plaintiffs object to the taking of their property – their contracted pension COLA benefits by the State.  [Obviously, improving PERA retiree COLA benefits would not breach retiree pension contracts . . . the retirees would not be harmed if their pension benefits were increased.]  

Instead of acknowledging up front that the plaintiffs in the case Justus v. State were contesting the provisions of SB 10-001 that REDUCED the PERA retiree COLA benefit, the defendants in the case [PERA and the State of Colorado] have employed this “red herring,” claiming that the plaintiffs were arguing that the COLA benefit could not be legally “adjusted,” that it was UNCHANGEABLE.

The Colorado Court of Appeals, in their Decision, saw through this PERA red herring.  In reversing the Denver District Court decision, the Colorado Court of Appeals specifically ordered the lower court to ignore PERA’s attempted deception.  It is astonishing, but Colorado PERA still will not give up this particular line of deception.)

From the Colorado PERA Supreme Court Brief:

“One of the ‘gravest duties impressed upon the courts’ is declaring legislation unconstitutional, which is why the presumption of constitutionality is so strong.”

(My comment:  States do not receive much deference in the courts when they are trying to break their own contracts – trying to escape their own financial obligations.  

From the Madiar article in the ABA Law Journal that we looked at a few weeks ago: “In 1977, however, the (U.S.) Supreme Court clarified that state attempts to impair their own contracts, ESPECIALLY FINANCIAL OBLIGATIONS, were subject to greater scrutiny and very little deference because the STATE’S SELF-INTEREST IS AT STAKE.  As the court bluntly stated:  

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.”)

From the Colorado PERA Supreme Court Brief:

“The General Assembly, after extensive actuarial studies and input from retirees . . .”

(My comment: This “input from retirees” included “input” that the provisions of SB 10-001 were unconstitutional.)

From the Colorado PERA Supreme Court Brief:

“It made ‘modifications to the public employees’ retirement association necessary to reach a one hundred percent funded ratio within the next thirty years.'”

(My comment:  As we have seen, Colorado PERA has had an internal board policy in the past to cap the PERA trust funds at a 90 percent funded ratio.  Thus, when Colorado PERA’s 17-member lobbying troop put this “100 percent funded ratio” threshold into SB 10-001, they codified the hypocrisy of the PERA Board of Trustees.  Also, we know that Fitch Ratings, one of the three large ratings firms in the United States, considers public pension funds to be “well-funded” at an 80 percent actuarial funded ratio.  We also know that according to the Federal Reserve, public pension actuarial funded ratios in the 50 to 60 percent range were typical in the 1970s and yet pension contractual rights were, nevertheless, upheld by U.S. courts.)

From the Colorado PERA Supreme Court Brief:

“This broad new view of government contracting could affect other types of government legislation and create other unintended private contractual rights.”

(My comment:  This is not a “broad new view of government contracting.”  Public pension rights have been considered to be contractual obligations for nearly a century.  PERA attorneys, for your edification, Professor Amy Monahan writes: “The legal protection of public pensions has undergone significant change in the last century.  Historically, public pensions in this country were viewed as mere gratuities that could be withdrawn or amended by the state at any time. Unsatisfied with a legal rule that allowed states to freely abrogate pension obligations, the vast majority of states have rejected the gratuity theory and instead protect public pensions under contract or property rights theories.”

Link:

http://www.ncsl.org/documents/…

From the Colorado PERA Supreme Court Brief:

“Current and future employees will pay the highest rates in PERA’ s history while working up to a decade longer before retirement.”

(My comment:  This Colorado PERA assertion in its Supreme Court Brief is also designed to mislead the court.  Under SB 10-001, age and service requirements for PERA retirement eligibility were NOT altered for current vested employees.  Age and service requirements were extended for future hires [notably, those to whom Colorado PERA has no contractual obligations].  Current PERA members will work not one day longer before retirement under the provisions of SB 10-001.  The addition of time to the age and service retirement eligibility requirements of current employees [although of questionable constitutionality] is clearly “less drastic” than the intentional breach of PERA pensioner contracts.)

From the Colorado PERA Supreme Court Brief:

“The need for review and deference to the General Assembly is particularly acute where, as here, invalidating the statute would threaten not just legislative autonomy but also the fiscal stability of a multibillion dollar state retirement program.”

(My comment:  Colorado PERA’s attorneys have it backwards.  The fiscal stability of the PERA trust funds is not threatened by courts upholding the rule of law in the United States.  The fiscal stability of the PERA trust funds is threatened by PERA-affiliated employers that skip their annual required contributions to the pension, by a PERA Board of Trustees that fails to emphatically and regularly implore the General Assembly to meet pension obligations, by a PERA board that historically intended to underfund the PERA pension by ten percent, by politicians that have used the PERA pension trust funds as a “credit card,” historically skipping needed contributions to meet contractual obligations in order to make discretionary expenditures, by politicians who have irresponsibly slashed the state’s available revenues, and by politicians who have directed state resources to pay local government pension obligations that are not the responsibility of the State of Colorado.)

From the Colorado PERA Supreme Court Brief:

“Even with ambitious 8.5% returns, the state division would run out of money in 21 years and the school division would run out in 25 years.”

(My comment:  PERA’s divisions will not “run out of money” if the State of Colorado and other PERA-affiliated employers begin paying the annual required contributions that they have skipped for the last decade.  Also helpful would be the adoption of legal, prospective pension reform by the General Assembly, and appointment of a commission to examine additional revenue sources that could be directed to the PERA trust funds.  If the General Assembly acts responsibly, a future in which payments to PERA pensioners are taken directly from state general funds can be avoided.  The General Assembly is already making payments for pension obligations [those of local governments] directly from its general funds.)

In regard to the Opinion of the Colorado Court of Appeals, PERA’s attorneys write in the PERA Supreme Court Brief:

“The court nonetheless ignored the statutory language and did not consider repeated COLA changes, including ones made during Plaintiffs’ retirements.”

(My comment:  If anything, I desire to be a helpful layperson.  So, I’m going to help PERA’s attorneys find the language they’re looking for in the Colorado Court of Appeals Decision.

First, the consideration of “repeated COLA changes” in the Court of Appeals Decision – it’s hidden on pages #3 through #12.

Second, consideration of “the statutory language” is on pages 27 and 28 of the Court of Appeals Decision.  Attorneys, for your convenience, I have excerpted this material and present it below.

From pages 27 and 28 of the Colorado Court of Appeals Decision:

“Nonetheless, defendants attempt to distinguish McPhail and Bills by pointing out that the city charter provision at issue in those cases said that retirees ‘shall be entitled to an increase in the amount of their pension’ of a particular amount.'”

“True, the statutes at issue here do not use the word ‘entitled.’  But that makes no difference, for two reasons.  First, the court in McPhail and Bills did not mention the charter language in its analysis.  Instead, the court found a contractual right based on members’ provision of services and contributions to the retirement fund.”

“Second, the language in the statutes here is similar to that at issue in McPhail and Bills.”)

From the Colorado PERA Supreme Court Brief:

“Plaintiffs not only ignore the extensive legislative record, but also the unanimous support from unions and retiree organizations . . .”

(My comment:  Far from “ignoring the extensive legislative record,” plaintiffs with their limited resources [no pension trust funds to raid for this purpose you know] have scrutinized the legislative record and have observed a Colorado General Assembly that has, through its mismanagement and neglect, created a mess.  Now this Colorado General Assembly, irresponsibly and illegally, wants to push this mess off onto a bunch of elderly pensioners.  As to “unanimous support from retiree organizations,” I want to point out that SavePERACOLA IS a retiree organization.  Indeed, SavePERACOLA is a retiree organization that informed the General Assembly at the outset that its proposed actions were unconstitutional.)

Colorado Court of Appeals: The Minnesota and South Dakota Cases Have No Relevance to the case Justus v. State.

From the Colorado PERA Supreme Court Brief:

“Plaintiffs, through counsel who filed similar (since-rejected) lawsuits in Minnesota and South Dakota . . . ”

(My comment:  The Colorado Court of Appeals found that the defendants [Colorado PERA and the state] erred in their reliance on recent court decisions relating to COLA benefits in Minnesota and South Dakota.  The Court of Appeals determined that these two cases have no relevance to the case Justus v. State [the cases are “distinguishable.”]  The Colorado Court of Appeals Decision explains why these two cases are not germane to Justus v. State.  PERA attorneys, I know you liked these cases, sorry.)

From the Colorado PERA Supreme Court Brief:

” . . . the General Assembly has never reduced any existing PERA pension base benefit.”

(My comment:  Nor has the General Assembly impaired its pension COLA contractual obligations prior to SB 10-001.)

Colorado PERA’s Repeat of the “Market-Based” Pension Funding Ratio Deception in its Colorado Supreme Court Brief.

From the Colorado PERA Supreme Court Brief:

“During the 2008 recession, PERA suffered losses totaling $11.8 billion and its funding ratio fell to 52% . . .”

“The recent economic crisis indisputably caused the PERA pension fund to lose nearly $12 billion in 2008 alone and to fall to 52% funded at the end of 2008.”

(My comments:  Colorado PERA has not hesitated to deceive PERA members, the public, and lower courts regarding measures of the fiscal soundness of the PERA trust funds.  PERA repeats this deception in its Colorado Supreme Court Brief, attempting to exaggerate the financial condition of the PERA trust funds by substituting a volatile, non-traditional “market-based” pension funded ratio for the industry-standard, accepted measure of pension funding, the “actuarial funded ratio.”  As we have seen, actuarial funded ratios [AFR] have been used by Colorado PERA throughout its history.  AFRs are widely used in public defined benefit administration because their use is mandated by federal regulatory agencies.

Here is a description of the term “actuarial funded ratio” from the website of the National Association of State Retirement Administrators:

“The most recognized measure of a public retirement plan’s ability to meet current and future obligations is its actuarial funding ratio, derived by dividing the actuarial value of a plan’s assets by the value of its liabilities.”

Colorado PERA has used this “market-based” funding ratio deception in its legal briefs, legal arguments, and public propaganda.  Colorado PERA now brings this deception to the Colorado Supreme Court chambers.

Here are a few examples of Colorado PERA’s historical use of “actuarial funded ratios” in communications to PERA members:

Colorado PERA Update – [Spring 2006 – page 4]: “See that PERA’s [actuarial] funded status was lower [61.5 percent] 30 years ago than what it is now. You may recall that there was no perceived “crisis” in PERA’s funded status in 1975.”

Colorado PERA News Archive for 2004 [9-16-2004]: “PERA’S [actuarial] funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”

The very bill that Colorado PERA is attempting to defend, SB 10-001, uses “actuarial funded ratios” as a measure of the PERA trust fund’s solvency.  The “100% funded ratio” in the title of SB 10-001 is an “actuarial funded ratio.”  The triggers in SB 10-001 are linked to “actuarial funded ratios.”

In considering the case Justus v. State, it is important that the Colorado Supreme Court know the difference between “market-based” pension funded ratios and “actuarial funded ratios [AFR].”

At the end of 2008, the combined AFR of the PERA trust funds was 69.8 percent.  [Not nearly as scary as PERA’s “52%” figure.]  The Supreme Court should see the PERA trust fund’s combined 2008 “actuarial funded ratio” of 69.8% in an historical perspective.  During the 40-year period, 1970 to 2009, the PERA “actuarial funded ratio” ranged from a low of 54.5 percent in 1973 to a high of 105.2 percent in 2000.  The average actuarial funded ratio over this 40-year period is 78 percent.  At the end of 2008, the PERA actuarial funded ratio of 69.8% was mere 8.2% lower than the average PERA actuarial funded ratio over the 40 year period.  At the end of 2008, PERA’s actuarial funded ratio of 69.8 percent was 10.2 percent below an 80 percent actuarial funded ratio, considered “well-funded” by Fitch Ratings.  During an eleven-year span, from 1970 to 1981, PERA’s actuarial funded ratio was actually lower than it was at the end of 2008, and yet there was no PERA campaign during those eleven years to take vested, earned, accrued, contracted PERA retiree pension benefits.  At the time of the breach of retiree pension contracts in SB 10-001, the difference between the Colorado PERA actuarial funded ratio and Wilshire Associates average actuarial funded ratio for 57 state retirement systems was 3.1 percent.  Should pension contracts for all of these public pension plans be breached at this level? According to Colorado PERA, the answer is yes.

A memorandum [see link below], prepared by the staff of the Colorado General Assembly, provides the historical “actuarial funded ratio” for the Colorado PERA Trust Funds.  Colorado PERA is the source of the historical “actuarial funded ratio” statistics displayed in the memorandum.

Link:

http://www.colorado.gov/cs/Sat…

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 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.”  If the rule of law in the United States somehow survived the low funded ratios of public pension plans in the last century, I believe that we can also make it through this century without breaching public pension contracts.

Colorado PERA claims that, considering the financial condition of the PERA Trust Funds in recent years, the PERA trust funds could not be “sustained” short of the taking of contracted benefits in SB 10-001.  I ask, if the Colorado PERA Trust Funds could not be “sustained” with an “actuarial funded ratio” of 69 percent in 2009, how were the trust funds “sustained” in the past when the actuarial funding ratio approached 50 percent?  Obviously, PERA’s trust funds can be “sustained” when their “actuarial funded ratio” is in the 50-60 percent range, since the “actuarial funded ratio” has been there in the past and the pension trust funds still exist . . . the trust funds were “sustained” without breaching contracts.)

From the Colorado PERA Supreme Court Brief:

“. . . it is important to underscore that this case is not about the right to COLAs. The General Assembly has preserved the cost-of-living protections for current and future retirees.”

(My comment:  I am astounded that PERA’s attorneys will write such rubbish.  If I take only half of the contents of a bank vault, have I “preserved” the contents of that bank vault for its owners?  After all, I did not take 100 percent of the contents of the bank vault.

Finally, Colorado PERA’s attorneys write, “. . . this case is not about the right to COLAs.”

So, now I can die – nothing I can ever hear will top this Colorado PERA statement.

P.S., PERA, smile, if I die your unfunded pension liabilities are reduced . . . no contract breach required.)

DID THE COLORADO GENERAL ASSEMBLY ACTUALLY REQUEST THAT COLORADO PERA MAKE RECOMMENDATIONS TO ADDRESS THE DECREASE IN PERA ASSETS IN 2009?

OR, DID PERA LOBBYISTS PUT THIS LANGAUGE INTO LAW TO PROVIDE COVER FOR A PREMEDITATED BREACH OF PENSION CONTRACTS?  

ENQUIRING MINDS.

Admittedly, my trust in Colorado PERA has worn

thin.

Nevertheless, given: Colorado PERA’s track record in its attempt to escape its contractual obligations,

–  its apparent indifference to all moral, and legal restraints,

–  its disregard for an on-point Colorado Attorney General opinion,

–  its disavowal of unmistakable, adverse legal authority,

–  its cavalier abandonment of the rule of law,

–  its creative interpretations of the term “fiduciary duty,”

–  its habits of deception and demonstrated desire to mislead,

–  its lack of good faith and fair dealing with PERA pensioners,

–  its eagerness to “change the ground rules in the middle of the game,”

–  its use of trust fund beneficiary assets to finance litigation to breach the contracts of those beneficiaries,

–  its use of trust fund beneficiary assets to finance PERA propaganda, as well as political, and lobbying campaigns to breach PERA pensioner contracts,

–  its unabashed manipulation of elected officials to achieve desired policy outcomes,

–  its summary rejection of legal, prospective, “less drastic” alternatives to the breach of pensioner contracts (that have been adopted across the nation),

–  its hypocrisy in placing a 100 percent funding threshold into pension reform legislation in light of its own past policies of underfunding the pension,

–  its complicity in creation of the “problem” it now uses to justify pension contract breach,

–  its ridiculous boasts of “transparency,”

–  its willingness to use a position of power and trust to take earned benefits from elderly, powerless pensioners,

–  its historical failure to emphatically and regularly implore the General Assembly and other PERA-affiliated employers to meet their annual required contributions,

–  its disingenuous characterization of market volatility as a rationale for pension contract breach,

–  its employment of the complex and confusing nature of public pension administration as a means to mislead,

–  its construal of what is in essence a “crime” as something laudable . . . a “model” for other states,

–  its desire to inflate away legitimate government debts through seizure of contracted COLA benefits,

–  its attempt to shift the public debt onto the backs of a relatively small group of pensioners,

–  its pride in having successfully breached pensioner contracts,

–  its use of tactics to breach contracts that shock the conscience,

–  its casual preference to welch on the public debt, and most reprehensible of all,

–  its betrayal of the trust of PERA pensioners who held up their end of the bargain,

. . . given the countless misdeeds of Colorado PERA that we have documented here, I do not believe that raising legitimate questions regarding the motives of Colorado PERA’s board members and administrators is unwarranted.

2010 PERA Board: We had to breach contracts due to the market downturn.

Meredith Williams, Colorado PERA’s former Executive Director assured PERA retirees in the past that market volatility has no impact on their contracted pension benefits:

“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.”

Link:

http://www.copera.org/pera/abo…

And yet again in 2010, State Treasurer and PERA Board member (at the time) Cary Kennedy tells us that SB 10-001 was enacted as a result of market volatility:

“Responding to this unprecedented drop, some states, including Colorado, took steps to shore up the solvency of their pension funds.”

Link:

http://blog.ednewscolorado.org…

The Colorado PERA Board claims credit for SB 10-001 as well as for the “100 percent” actuarial funded ratio threshold in SB 10-001:

Colorado PERA, “The Colorado PERA Board’s recommendation largely became SB 10-001.”

Link:

http://www.copera.org/pdf/5/5-…

From the PERA website:

“The work of the Colorado PERA Board culminated in the crafting of Senate Bill 10-001 (SB 10-001.)  The Colorado PERA Board supported the recommended bipartisan changes to the bill by Senate President Brandon Shaffer and Senator Josh Penry since the changes still accomplished the Colorado PERA Board’s goal of reaching 100 percent funding levels for each of Colorado PERA’s divisions in 30 years.”

Link:

http://www.copera.org/pdf/5/5-…

Again, will the members of the PERA Board please explain how the decision to place a 100 percent actuarial funded ratio in SB 10-001 was reached in light of the PERA Board’s historical policy of capping the actuarial funded ratio of the PERA Trust Funds at a 90 percent level?  Did no board member take note of the hypocritical nature of this recommendation?   It has historically been Board policy to maintain a degree of PERA pension underfunding (10 percent), and yet it is now Board policy to breach retiree contracts to the point that a 100 percent actuarial funded ratio is achieved.  As we have seen, the 1999 George K. Baum study performed under the auspices of Colorado PERA (it’s on PERA letterhead) for State Treasurer Mike Coffman asks:

“Why does PERA appear to have a policy to keep a 10% unfunded liability?”

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/…

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 an elaborate 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?

We should know the answers to these questions.  (If Colorado PERA is such a “transparent” organization as it boasts, why do we not know the answer to these questions?)

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?

After all, if you intend make extreme recommendations . . . that the State of Colorado, and PERA-affiliated employers breach their contractual pension obligations, would it not be useful to later claim that the state Legislature requested that bold recommendations be made?  

That such recommendations should be sufficiently extreme to restore the PERA trust funds to a 100 percent actuarial funded ratio?  (In spite of the fact that the PERA Trust Funds had visited this lofty 100 percent perch only twice in its 81-year history?  And, that the PERA Board had historically sought to cap the PERA Trust Fund AFR at a 90 percent level?)

Would that not provide useful cover?  “They told us to make the recommendation!”  

Where was the scheme to breach PERA contracts actually born?  Will we ever know?

Does the genesis of SB 10-001’s COLA theft provisions lie in the minds of a pension administrator?  Or, in the hopeful heart of a self-interested lobbyist?

Did the PERA Board of Trustees conceive the idea to take contracted COLA benefits?  If so, which PERA board member gets the credit?  Or, was the idea to breach pension COLA contractual obligations brought to the PERA Board by an outside organization?  A public sector union lobbyist perhaps?

Well, it should be possible to discover the answer.

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.  

Here’s the language in the bill:

24-51-211, C.R.S.  (2) ON OR BEFORE NOVEMBER 1, 2009, THE BOARD SHALL SUBMIT SPECIFIC, COMPREHENSIVE RECOMMENDATIONS TO THE GENERAL ASSEMBLY REGARDING POSSIBLE METHODS TO RESPOND TO THE DECREASE IN THE VALUE OF THE ASSOCIATION’S ASSETS, INCLUDING REAL ESTATE, PRIVATE EQUITY, AND OTHER INVESTMENTS, TO DECREASE THE AMORTIZATION PERIOD OF EACH DIVISION OF THE ASSOCIATION AND TO ENSURE THAT EACH DIVISION OF THE ASSOCIATION WILL BECOME AND REMAIN FULLY FUNDED.

Note that this language 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.”)

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.  Her name is 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.

It would be interesting if, after years of emphasizing that the Colorado General Assembly requested that the PERA Board of Trustees make recommendations to address the decrease in PERA assets, it turned out that it was in fact PERA’s lobbyists who actually put this language into SB 09-282.  It would be interesting to learn if this language was placed in SB 09-282 in order to provide cover for a premeditated attempt to breach PERA retiree contracts.

Questions for Senator Sandoval:  Did you decide to move the deadline for the PERA Board to report out by two months of your own accord?  Or, was this a request from Colorado PERA lobbyists?  

It would be worth listening to the recordings of hearings on SB 09-282 by the House and Senate Finance committees.  (For that matter, it would be worth listening to all of the committee discussion from 2009 on PERA bills adopted or postponed indefinitely that year.)

Here are a few excerpts from a summary of the Senate Finance Committee hearing on SB 09-282 on April 14, 2009:

“03:28 PM

Mr. Williams responded to questions about the contribution rates for the retirement plans.  He stated that the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA.”

“05:20 PM

Ms. Kennedy continued discussing the timing of when to bring the DPS system into PERA’s plan.  She also responded to questions about the management of the current pension systems and retirement benefits.  Discussion ensued about solvency issues.”

This fact jumps out:

On April 14 at 3:28 PM, Meredith Williams (Colorado PERA’s Executive Director at the time) testified to the Senate Finance Committee that “the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA.”

Meredith Williams made this statement one week BEFORE the requirement to report to the General Assembly was even in the bill.

That requirement was placed in the bill on the Senate floor one week after Meredith William’s testimony (on April 21, 2009.)

I suppose that listening to the tape of this bill hearing before the Senate Finance Committee on April 14, 2009 might provide some insights.

Alternatively, we could put the question to Senator Penry, or bill drafter Nicole Myers, or Senator Sandoval.

Premeditated?