Focus on PERA at start of legislative session

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FOR IMMEDIATE RELEASE

 

 

Focus on PERA at start of legislative session

Stapleton invites Gov. to join him in finding solution

 

DENVER – January 10, 2018 – As the legislative session kicks off lawmakers are considering competing plans to fix the state’s troubled pension system, and Treasurer Walker Stapleton is urging them to ignore the one put forward by the leadership of the Public Employee Retirement Association (PERA).

 

“PERA leaders had their chance to fix the shortfall after the last recession, and we would not be in this position if they and their lobbyists actually did their jobs,” Stapleton said.  “PERA’s plan has nothing behind it except an overpriced lobbying team and places an unfair burden on small and rural school districts, taxpayers and Colorado families who have already done their fair share to bailout PERA.”

 

Stapleton called PERA’s plan “Senate Bill 1 part-deux” in reference to legislation that was passed in 2010 with the promise of shoring up the funds then $25 billion shortfall.  Since the passage of Senate Bill 1, PERA’s shortfall has grown by nearly $1 billion a year.  Stapleton has been working on the issue for the last eight years and trying to get others to acknowledge that there was even a problem has been an uphill battle at times.  

 

“There are two other plans on the table to fix PERA, mine and the Governor’s,” Stapleton continued.  “I want a real solution and think the Governor does too.”

 

Stapleton has invited the Governor to work with him on crafting a fourth, bipartisan option.  But in the meantime, he is also urging lawmakers to use his “PERA Reform Principles” as a litmus test by which to judge any proposal.

 

Those principles are as follows:

 

1.  Any reform must be based on a realistic rate of return of 5 percent to 5.5 percent.

 

Currently, PERA assumes a 7.25 percent rate of return, and this is an unrealistic expectation. Colorado PERA and pension systems across the country have found themselves in the red because of unrealistic expectations on investment performance. It is time we start funding the defined benefit plan based on a realistic rate of return.  We should start with basing reforms on the Government Accounting Standards Board (GASB) set rate of return.

 

2. Taxpayers have done their part already, no more taxpayer bailouts of PERA.

 

Anything that increases taxpayer (i.e. employer) contributions is a non-starter.  This already happened with Senate Bill 1 in 2010.  And by 2018, many state agencies and schools will be contributing nearly 21 percent of their total payroll to PERA.  That is an outrageous amount and money that should be going into the classrooms, not backfilling an unsustainable pension system.

 

3. Provide real retirement options.

 

PERA touts its defined contribution plan, however, this plan is only offered to a relatively small group of state division employees hired in the mid-2000s.  It is time we offer this option to all public workers and give them a choice in their own retirement future.

 

4.  Salary spiking has to stop.

 

Payouts should be based on the last ten years of service, not the highest paid three years.

 

5. We have to get real about retirement age.

 

Currently, Social Security retirement age is based on a sliding scale (depending on your birth year) starting at 65 and moving up to 67.  By comparison, the PERA retirement age is between 58 and 60 for full benefits. This doesn’t work. PERA reform must bring the retirement age more in line with Social Security for people who are new and recent hires.

 

6. Cost of living adjustments (COLAs) have to be part of the conversation and should never outpace inflation.

 

The COLA has been as high as 3.5 percent in the past, far outpacing the rate of inflation, which is below 2 percent.  The COLA should be an actual adjustment for the cost of living, not an automatic raise year-over-year.

 

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