With the 2018 legislative session soon drawing to a close, Senate Bill 18-200 (SB 200) cleared its latest legislative hurdle on Tuesday morning, when the Colorado House passed the legislation.
The vote came after a clarification about 21(c) rules, which enable legislators to recuse themselves from a vote if they have a conflict of interest in the matter at hand. The final tally was 38-23, with four lawmakers excused. On May 2, the Senate moved to create a conference committee to work out the differences between the two chambers.
On Monday evening, SB 200 passed the House on a voice vote during second reading, after about 90 minutes of spirited and amicable bipartisan debate. The deliberations didn’t begin until just after 8:00 p.m., reflecting state lawmakers’ packed agenda with only nine days left on the legislative calendar.
During approval discussions about the House Finance Committee report, representatives offered 16 amendments, including four related to restoring the defined contribution plan option that the House previously amended out of the Senate version of the bill. Those four motions all failed, but eight of the other amendments passed. These included:
- Three technical amendments that corrected or clarified prior language in the bill
- A deletion of the previous version with new members after December 31, 2019, retiring at any age and 40 years of service credit at 65 with 5 years of service credit and adding retirement eligibility for new hires at age 60 with 30 years of service credit
- Expansion of the existing Police Officers’ and Firefighters Pension Reform Commission to include oversight of PERA and creating a Subcommittee exclusively focused on PERA and staffed with four legislators appointed from the Commission and ten appointed external experts in relevant industries.
- A provision that allows the annual direct distribution from sources in addition to the General Fund via the budgeting process
- A change to the direct distribution provisions that delineates the amount assigned to the state and to K-12 public education
Later on Monday evening, during the Committee of the Whole reading after the main proceedings, Rep. Polly Lawrence (R-Roxborough Park) offered two amendments. The first would change the Highest Average Salary calculation to seven years and was defeated, 37-28. Rep. Lawrence’s second amendment to raise the retirement age for new PERA hires to age 65 also went down, 36-29. Rep. Kevin Van Winkle (R-Highlands Ranch) reintroduced his amendment to reinstall the defined contribution option for new PERA hires into the bill, but it also lost, 36-29. And Rep. Justin Everett (R-Jefferson County) moved to indemnify the State Legislature and taxpayers against legal action as a result of the passage of SB 200. This amendment also was defeated, 37-28. The House voted to adopt the Committee of the Whole report, 43-22.
To see a comparison of the latest version of Senate Bill 200 with prior versions and the Board’s recommended package, please see this chart.
Defined contributionA type of individual retirement plan in which an employee saves a portion of each paycheck (along with a potential employer match) and invests that money. The employee’s retirement benefit is based on their account balance at retirement. A 401(k) is a type of defined contribution plan.
Will any retiree ever receive a COLA increase if this latest legislation passes? With the 2 year moratorium and the changes to how they calculate future adjustments to COLA, retirees of any age may never see a COLA increase EVER.
Why not phase COLA cuts in? We were waiting for our July 2018 COLA increase. It’s beyond cruel that the legislators should implement these changes two months before our planned increase.
Once again, broken promises on a contract when I signed on to work at PERA. Going from a guaranteed 3% COLA increase down to a 2% increase was bad enough. Now, with this possible legislation, a two year moratorium on COLA will be another broken promise in the last eight years.
Dear Mr. Anderson,
The Annual Increase (COLA) in the current version of SB 200 will be capped at 1.25% and paid in July 2020 if PERA’s investment portfolio returns more than 0% in 2019.
In SB 200 as it exists today, retirees are responsible for 28 percent of the reforms, with current and new members paying 33 percent, employers at 7 percent, and the State through the direct distribution will be paying 32 percent.
Retirees have a CONTRACT, you and the legislature have repeatedly broken it. Where you get funding to cover shortfalls (and your short sightedness) is irrelevant, it should NEVER come from our pockets. Begin by dumping the unconscionable sweetheart deals for Judicial and State Police, NOBODY should be given special treatment, especially not those who make the most to begin with… another prime example of those with wealth and influence stealing from the rest of us.
Insufficient reasoning. To “catch up” from a taking in two consecutive years at 0%, AFTER 7 years of a taking of 1.5%from the contracted agreement, a very small contingent of the class of retirees who retired under the 3.5% agreement will live long enough to make up the combination of losses. To date, Colorado has taken close to $ 46,000 from me. The reasoning was never supported by facts because the affected group, by definition, gets smaller by attrition every single year from the 2010 change. A 2006 retiree at say 60 years old has already turned 72, and now faces 0% until he is 74, then a CAP on into the future that will never be made up, and doesn’t even come near the definition of “ cost of living increase”. Shame on the State, unconscionable, and corrupt.
That is not what PERA promised their members. You say ” retirees are responsible for 28 percent of the reforms”. Retirees did not have any control over what PERA has mismanaged. Where is PERA accountability in all of this mess?
Mark,
The PERA Board has a fiduciary duty to ensure the trusts are on track to being fully funded. This was not the case at the end of 2016 when the investment rate of return was lowered and new mortality tables were adopted by the Board. The longer than 30-year amortization periods required the Board to recommend legislation as outlined in the Board’s Funding Policy: https://www.copera.org/sites/default/files/documents/fundingpolicy2015.pdf
In the version of the legislation sent to the Governor, the cost sharing is as follows: Retirees, 19%; Current and Future Members, 57%; Employers, 8%; Direct Distribution, 16%.
After 25 years of dangerous work on our highways, working nights and weekends, it nice to know that PERA is throwing us retirees under the bus.
Dear Mr. Warda,
The PERA Board took action by making a legislative recommendation that has largely resulted in SB 200. This was done to ensure that PERA is able to pay benefits for generations to come.
In SB 200 as it exists today, retirees are responsible for 28 percent of the reforms, with current and new members paying 33 percent, employers at 7 percent, and the State through the direct distribution will be paying 32 percent.
These percentages could change based on action taken by the legislative conference committee, but all PERA stakeholders are sharing in the solution to ensure PERA is strong.
Nonsense… there are other ways to do this without repeatedly breaking the contract with existing retirees. Enough is enough!
Misleading. The first taking of vested benefits occurred in 2010. That population is smaller today than it was 8 years ago. NOT one retiree had been added to the group that retired with a guarantee of 3.5%.
I would imagine the size of the group in 8 years is DOWN by a significant %. The effective reduction in benefits is significantly magnified on to the aforementioned group. The entire concept of vested benefits has been irreparably violated by first the 2010 taking and now the new twist will result in n actual annual loss to the retiree as CPI increases and income stays at stagnant for 2 years and capped below inflation for 2020 and beyond. If the 2020 CPI inflates At 2.5 % each retiree is losing an Additional 1.25% compounded on the actual loss fri the 2010 Taking.
Incorrect, actually the number of retirees first affected by the breach of contract in 2010 has gone down. If at any time that class of retires was bearing 28% of the burden, then with each death of a retiree from that point, the “burden” on the remainder is increased. Looking at an actuarial table, it appears that on average, there are 82-85 deaths per thousand in a population spanning typical retirement age at the time of the 2010 breach. If there were say, 50,000 retirees in the class who lost the guaranteed 3.5% Annual Benefit Increase 2010, there are roughly now only approximately 25,218. Although there has been 8 years of additional retirees, they ALL entered under the rules as unilaterally changed in 2010. I do not know how many members were in the 3.5% guaranteed group, but the example proves the point. The burden born by the oldest retirees is the greatest and it grows with the shrinking number of souls each year.
Agreed, why do those who already make the most (Judicial and State Police) get a better deal than the rest of us?
I’ll answer that myself, it is because they are abusing their positions of power and influence for personal gain. Plenty of other jobs are statistically more dangerous than State Trooper, so why are the troopers singled out? Judges are at the very top pay scale, yet they get a much higher percentage in retirement, are lees affected by cuts (if affected at all) PLUS they get to double dip by returning to the bench after retiring!!! It is wrong and outrageous that the very people entrusted to protect us and to preserve justice are doing the exact opposite.
Is there any chance the State will
ever move to allow PERA to pay retirement benefits and full SS benefits without the requirement of 30 years of covered SS employment? The fact that I missed the 30-yr requirement costs me $300/month. I missed it by 6 years-mainly because of time taken off to bear children. In some cases I missed a year of coverage by 4 hours. I understand each state makes their own decision on this matter.
Ms. Chrislip,
The reductions in your Social Security benefit are done under federal law, so it would not be the State Legislature that would need to take action to recalculate or eliminate the Windfall Elimination Provision (WEP) that impacts PERA retirees who did not spend a career contributing to Social Security.
For more information on the WEP, please see these PERA on the Issues articles:
https://peraontheissues.com/index.php/2017/07/26/colorado-pera-social-security/
https://peraontheissues.com/index.php/2017/11/29/2017-federal-legislation-update/
But… PERA seems to be a lame duck in regard to pressing to change this obvious inequity. I EARNED my SS just like anyone else, why is a PERA retirement a “windfall” when (for example) a 401K is not? Are not both of these retirement plans? Why are they treated differently? Why isn’t COPERA protesting long and loud?
I have a follow-up conversation scheduled with my State Representative on Friday to express my dissatisfaction with the Bill and I encourage everyone to ask your individual representatives how they voted on this Bill. Although I notice multiple Republicans introduced additional draconian amendments that were defeated, there are a whole bunch of Democrats that are complicit in this fiasco, including Mr. Pablon who co-sponsored the Bill. The other person clearly selling retirees and state employees down the river is Governor Hickenlooper, who pushed to reduce the Cost Of Living Adjustment cap down from 2.0% to 1.25%. The Governor also supported the PERA’s inexcusable recommendation to set the COLA at Zero for the next 2 years, as do all the legislators who voted in favor of the Bill.
We have to stop electing people who demonstrate reckless disregard for the economic well being of state employees and retirees. The notion that reducing and eliminating caps on retirees’ COLA’s to help fund the future of our retirement “Plan” reflects, at best, a depraved indifference toward all state employees and retirees.
Is the oversight committee just for the firefighters and police or all of PERA?
Sally,
The existing Police Officers’ and Firefighters’ Pension Reform Committee would be expanded to include a subcommittee of legislators and industry experts who would be focused on PERA.
I think that it is totally irresponsible for the PERA board along with the CEA board to abandon the needs of current retirees. The COLA is critical to retirees to maintain a current level of discretionary money. This was an easy “throw away” and I understand that. It looks like the only way for retirees to make our point is to organize an effort to get our retirees to spend more money online and much less at Colorado businesses. Perhaps someone will notice
The PERA retiree CONTRACT is broken yet again… enough is enough! There are indeed other ways to eliminate this “shortfall”… beginning with eliminating the unconscionable sweetheart deals given to Judicial and State Police. Vote OUT the crooks on both sides of the isle who are literally robbing us, and causing many retirees to fall into a poverty level existence.
I want my contracted 3% annual COLA back, with back pay for what was already taken away. Meanwhile, NO raises or other perks for the legislature, judges, or the PERA board.
Christopher,
The PERA Board members elected by the membership serve without pay. The entire PERA membership, which includes legislators, State Troopers, and judges, will be subject to the changes contained in any legislation that is enacted.
What I clearly do not understand is why haven’t the voices of the constituents been respected. PERA might as well not even have spent the money doing the PERATours and reaching out to the retirees for their opinions. The retirees said they were willing to do shared sacrifice but did not want their COLA reduced lower than 1.5% and that was met on deaf ears by the legislators. I do not blame this on PERA, but I do expect PERA to keep all retirees out of poverty. I also expect the people who I elected into office to respect our democracy and listen to the voice of the majority, their constituents and find a way to do the right thing for the good of all the people. My opinion only.
I’d like to suggest a more fair way to spread the pain than the one currently proposed. (“In SB 200 as it exists today, retirees are responsible for 28 percent of the reforms, with current and new members paying 33 percent, employers at 7 percent, and the State through the direct distribution will be paying 32 percent.”)
It seems it would be more fair to spread the pain in a way that puts the very largest cut in currently advertised benefits for people who have not yet even made the choice to go to work for the State vs. people who either have already made that choice and currently work for the State, or who have already retired and have no more choices in the matter.
1)Perhaps it is unrealistic for the State to be so far out of sync with the rest of modern businesses regarding the degree of generosity in its pension options. Perhaps having to work to an older age with some combination of longer years of employment in order to get a full pension would not be viewed by the younger work force coming aboard as the big problem we think it would be for them. Fewer of our younger members of our American workforce expect /plan to work very long any one place during their careers, and having a variety of options seems more in line with the work philosophy of our younger workforce, with working more years and to age 65 in order to get full PERA benefits being one of those options some could choose.
2) Current employees have already made the choice to go to work for the State, anticipating a generous level of pension benefits, but many still have flexibility in how long they decide to work for the State vs. somewhere else where they would accrue Social Security, or have access to creating other kinds of retirement plans, and thus still have choices in their retirement planning, In fairness, current employees who are in their last 10 years of most commonly anticipated work life ( 55-65) should continue to have same benefit structure as our current one since it is least realistic for them to “change horses” at that late point in their careers.
3) Current retirees who have already made all of their choices about being a State employee at all, as well as the duration of their years of State employment and age of retirement, should bear the very smallest percentage of the financial burden for remedying the current PERA woes because they made a contract with the State in good faith and now have the least ability at this late stage in their lives to find additional/new employment to supplement PERA. “That ship has sailed,” for those who have already retired from the State. 28% seems like more than a fair share, given the staggered levels of choice among the three groups discussed here, with retirees at the bottom of that hieracrchy.
Good points Carol. If we even accept the notion that the pension liabilities have an arbitrary deadline by which they must all be met.
Remember that economics is a pendulum, and expertise during a boom should suffice during a downturn. The pension system must always have an eye on the future, but it must never reach backward to the group already served, fully vested, who kept the contract as presented to them. This current taking is particularly suspect because of the incredible growth in funding Colorado has experience they first reached into loyal retirees’ pockets in 2010. Investments have soared, sources of revenue have greatly increased. It’s fine to adjust and go forward, but unjustified to go back and take from the ageing and ever shrinking class of the fully vested who performed their end of the contract in good faith. Colorado is a wealthy State, it should proudly pay its public servants.
Thank you Barry, well said!
Can this portion of text be explained in more detail? “In addition, the bill requires benefit recipients whose effective date of retirement is on or after January 1, 2011, and who have not received a COLA on or before May 1, 2018, to receive benefits for at least a 36-month period following retirement before the benefit is adjusted with the COLA.” I want to clearly understand the COLA increase changes in SB 200 I’ve been reading about above and the last couple of months, since I’m a recent retiree of 2016.
They are telling you, no COLA until 3 years after you retire. At a cap of 1.25% it will take you 8-9 years to catch up for that loss. The cost of living NEVER goes down. Even at a direct CPI match it doesn’t keep up with necessities like insurance and local changes in costs.
Dear Ms. Naranjo,
Those retirees who have received an Annual Increase (or COLA) will have a two year suspension (2018 and 2019) before a 1.25% increase would be paid in July 2020. If a retiree has not received an Annual Increase, the wait would be three years. Please call Customer Service if you have questions about your PERA benefit.
I will post again, once the legislature eliminates/reduces colas they will never return to the original promises. The only ones who seem to care are the current retirees who have been lied to over the years. If national govt tried to cut soc sec colas there would be an instant uproar. But, of course they do get by with reducing soc sec to PERA retirees who earned and paid for the benefit.
I’ve been following again the lack of support from those we should have advocating for retirees remain silent. Here is a comment I found from a news article. Becker responded, however, that the COLA rollbacks are needed because PERA needs an immediate cash infusion to keep back ratings agencies threatening to lower the state’s bond ratings and force it to pay more for any borrowing it undertakes, and the COLA represents the biggest immediate bang for the Legislature’s buck. So maybe someone needs to ask Becker about the four billion dollars that the state owes. Shame on PERA for remaining silent and not opposing a bill that will again hurt retirees. This is just the opposite of what you said you would do! PERA do you agree with Becker’s comment? Doesn’t your silence say just that? A 1.25% capped COLA is too low with a auto adjust that will take us down to .5%. If by law the COLA can’t be reduced below .5% than how does a two year 0% freeze figure? Remember PERA this isn’t a COLA, but a annual increase. My PERA retiree counselor pointed out to me that ” I shall receive a 3.5% annual increase”.
Why didn’t PERA come out and oppose Senate bill 18-200? Enclosed are a couple reminders. Meanwhile, board members — including two of Hickenlooper’s own appointees — ripped into the governor’s plan for failing to address what they see as the elephant in the room. According to PERA’s actuaries, the government has underfunded its share of the pension by $4.5 billion since 2003.
“This is a gaping hole for me in terms of parity and shared sacrifice,” said Susan Murphy, one of the governor’s board appointees.
Without a COLA provision, PERA retirees would see a loss of about 32 percent of their anticipated retirement income. It is not just this loss of income that concerns the PERA board, but also the decline in retirees’ purchasing power, or their ability to purchase products with current monetary values. The value of any currency changes as inflation changes. Without the inflation protection a COLA provides, retirees would experience a 58 percent reduction in purchasing power over the 38-year period. The PERA board believes strongly that we cannot make such drastic cuts to our
public servants’ retirement.
By TIMOTHY M. O’BRIEN | Guest Commentary
January 5, 2018 at 12:00 pm
Does any of this ring a bell? Why do you remain silent about this?
After reading some of these comments, it seems that most aren’t aware that pensions could be DRASTICALLY reduced if measures are not taken NOW. I feel we are in this bind because in the 1990s when the economy was doing well, benefits were increased across the board. The maximum was set at 100% of pay instead of 80% and workers could retire at age 50 with 25 years in. Is that sustainable? A 50 year old in 1996 is only 72 now. That’s a long time to draw a pension with perhaps 20 more years to go.
Recently in one of your replies to a retirees comment Colorado PERA says: We understand that health care costs are rising at rates that outpace inflation. This is true not just for PERA retirees, but for the entire country. PERA is aware of this and we remain actively engaged with our insurance carrier partners and community organizations in efforts to achieve value in health care via better quality and lower cost. Please be assured that PERA will continue to work with all of these partners to do what we can to improve cost and quality for our retirees. Apparently you acknowledge how inflation impacts all retirees. Although your silence in opposing Senate bill 18-200 speaks otherwise. I just read another article today that sheds light on how our money is being invested that should have every retiree concerned. PERA should be concerned as well and do everything in it’s power to make things right.
I spoke with my State Representative, Susan Lontine, on Friday to ask about her vote and again register my dissatisfaction with SB 200, specific to the COLA. After acknowledging she voted for the Bill, she expressed her belief that the COLA was NOT going to be reduced to Zero for 2018 and 2019 but it would remain capped “the same” as it was for retirees last year (2.0%) for 2018 and 2019 before being reduced to 1.25%. I expressed to her that was incorrect based on my understanding, after having read the Bill, and as reported to retirees through PERA On The Issues. I asked her to check again. She responded to me (below) this morning and included a response from KC Becker (D) Boulder, the House Majority leader. Notice my Rep’s assertion that, “I have heard from the majority of PERA retirees, and I have some very active members in HD1, is that they understand the need for shared pain.”
For me, I find it hard to believe that the “majority” of PERA retirees in my district (HD1) or elsewhere support the COLA changes in the Bill as my Rep suggests, and I would like to here from you folks in this stream if that is true. Otherwise, I ask you to clarify to Rep Lontine what you meant when you allegedly expressed your willingness to “share the pain”.
The Majority Leader’s response was what I expected, and that is to report that PERA, the Governor, the Senate and the House all agreed to deprive (“timeout”) retirees of the COLA during 2018 and 2019 and that they are on board with a lifetime reduction to the COLA capped at 1.25%. Although Rep Lontine initially misunderstood the meaning of the language in the Bill regarding the COLA for 2018 & 2019 when she voted on it, she obviously still supports it, at least in part because she believes that the majority of PERA retirees in HD1 support it. Below are the word for word replies from Susan Lontine and KC Becker.
Mr. Pluta,
I apologize for not getting this to you by last night. Attached is a response on your question from one of SB 200’s prime sponsors, Rep. KC Becker, (D) Boulder, who is the House Majority Leader.
I understand your concerns but what I have heard from the majority of PERA retirees, and I have some very active members in HD1, is that they understand the need for shared pain.
This is still not the final version, as it still needs to go thru conference committee before we adjourn. Please pay special attention to the last line of Rep. Becker’s response.
Sincerely,
Susan Lontine
Representative
Colorado House District 1
303-866-2966 Office
720-394-3768 Cell
State Capitol Building, Rm 329
Begin forwarded message:
From: KC Becker
Date: May 5, 2018 at 6:41:52 AM MDT
To: Susan Lontine
Cc: KC Becker , Dan Pabon
Subject: Re: SB 200
The proposals from PERA, CEA, the Governor, the Senate and House are all the same regarding the COLA time out: there would be a 2 year time out for new retirees (meaning no COLA at all for those 2 years) and a 3 year time out for existing retirees. New retirees already have a 1 year time out.
Stapleton asked for a 20 year time out.
KC Becker
House Majority Leader
Colorado House District 13
303-866-2578
I Request PERA monitor scrutinize and weigh in on the following regarding my above comment. In my comment (near the end) I included House Majority leader KC Becker’s May 5, 2018 word for word characterization of where the COLA issue stands. You will notice Becker refers to a 2 year time out for new employees and a 3 year time out for existing retirees. The PERA article above links to a Chart that shows the most recent version of the Bill says just the opposite (2 yrs for existing retirees and 3 years for…). Which is correct?
I overlooked this when I read through Becker’s May 5, 2018 statement and wrote my comment. I will appreciate it if you can clarify the inconsistency between the PERA Chart and Becker’s word for word statement. Sorry if my oversight causes any confusion. Thank you, Paul Pluta
Dear Mr. Pluta,
Please see PERA Board Chairman Timothy M. O’Brien’s guest editorial in The Denver Post: https://www.denverpost.com/2018/05/07/obrien-pera-reform/
It is a sad day for Colorado when sb18-200 passed due to the mismanagement of funds by past an present law makers an pera board members throwing lower income retirees into poverty barely affecting higher paid retirees. How can that be fair across the board? Would not a tier system be more appropriate? Should we not have some accountability for our monies? Should we not have an open audit for all to see were monies are being used? Sincerely Ronald c Manring
Dear Mr. Manring,
The Office of the State Auditor performs an audit of PERA each year using a third-party audit/accounting firm. These audits are published publicly. For the last seven years, the auditors have had no findings or recommendations to improve PERA’s controls.
https://leg.colorado.gov/sites/default/files/documents/audits/1613f_co_pera_legislative_audit_report_2016.pdf
My recollection of the SS WEP provision is that it hasn’t always existed. As memory serves this came into effect under President Clinton’s term in office. Yes he of course signed the legislation but as we all know Congress has to have crafted and approved it at their level before it was placed on his deck. This would need to be fact checked as I may be completely wrong on this. If indeed I’m correct this could, of course be changed. Not easily done as it obviously was done to save the Fed’s money.
It would be interesting to know if PERA took a position on what was being proposed by the Federal government when this was going on.
I personally don’t expect PERA to go make the case for us as we all should have been paying attention to what the Fed’s were up to at the time. Yes if PERA had the ability to help us at this time in creating a central voice that could be advanced to our Colorado delegation that would be great as we all know numbers count. If we could get one of our Congressmen or one of our two Senators to carry a bill forward who knows we might stand a chance of getting our situation. I’m sure state retirees in other states are experiencing the same issues we are.
Dear Mr. Linebaugh,
Please see these PERA on the Issues articles for more information on the WEP and GPO:
https://peraontheissues.com/index.php/2017/07/26/colorado-pera-social-security/
https://peraontheissues.com/index.php/2015/11/09/whats-the-deal-with-the-wep-and-gpo/
https://peraontheissues.com/index.php/2015/11/09/whats-the-deal-with-the-wep-and-gpo/