Retirement insights from a Colorado PERA perspective

Legislation & Governance

Legislative Update: An Uncertain Path Ahead

PERA reform

Colorado’s legislature temporarily adjourned on March 14, well before the clock ran out on the 120 days legislators have to work with. This shutdown, of course, was due to COVID-19, a virus that has altered nearly every aspect of life around the globe. The medical reasons to shut down were clear. But the outlook on reopening is still hazy.

The Colorado Supreme Court cleared up some confusion earlier this month. It ruled that, because the adjournment occurred under a rule of procedure that allows for increased flexibility during disease-related emergencies, the legislature’s countdown clock would be paused, resuming when they return, instead of continuing to tick down while they are away.

Whenever lawmakers do return, they will face a list of questions with no easy answers.

The Road Forward

This ruling gives the legislature additional time to do their work—if the court had decided the legislative clock would continue ticking, session would end on May 6. But the additional time granted to legislators does not necessarily offset the scope of the challenge ahead.

The legislature has a plan to address a few high priority items. For example, the Joint Budget Committee is scheduled to meet on May 12 to hear an updated economic forecast presented by the Governor’s Office of State Planning & Budgeting and Legislative Council Staff. Other high-priority legislation includes the School Finance Act and reviewing sunset legislation, not to mention any additional legislation required to address the pandemic.

While the legislature has mapped out the first steps forward, nobody knows where, how, or when this year’s legislative session will end. The legislature might reconvene to pass a budget, temporarily adjourn again, and reconvene later in the year. They might consider rules to do their work remotely.

To what extent legislators address bills that were introduced as of March 14 is another unknown. This includes addressing bills that would modify the status of firefighters in PERA and change working-after-retirement rules for PERA retirees employed by a board of cooperative services.

Revisiting the State Budget

Passing a budget will be a daunting challenge. The six lawmakers on the Joint Budget Committee, who were allocating dollars amid a bustling Colorado economy in January, now find themselves facing a significant shortfall.

“Before the emergence of COVID-19, the JBC was working with an increase in funding of more than $500 million over last year,” said Michael Steppat, Colorado PERA’s Public and Government Affairs Manager. “Now they face a shortfall that could approach $3 billion. Plus, they have a little more than a month to revisit every single spending decision they have made whereas the normal budgeting process typically takes months.”

The manner in which PERA’s funding is part of the budgeting process is nuanced. Members and employers send PERA contributions based on a percentage of pay. The state budgeting process sets pay rates and employment levels for state employees—a legislative task separate from setting the contribution rates—while school districts and local governments determine pay and employment levels for their employees. As part of SB 18-200, the legislature also created the Direct Distribution, in which an amount, currently $225 million each fiscal year, is sent to PERA, although this component is not appropriated by the Joint Budget Committee.

Federal Funds and the State’s Budget

Over the past two months, the U.S. Congress has passed a number of bills that provide economic relief to individuals, businesses, and also funds for governments at the state, territorial, local, and tribal level. To date, the aid provided by all “phases” of legislation amounts to $2.7 trillion.

About $2.2 billion was allocated for Colorado, as part of the CARES Act, to be split between the state and local jurisdictions with populations exceeding 500,000. The funds do come with strings attached. According to U.S. Treasury guidelines, “expenditures must be used for actions taken to respond to the public health emergency.” In other words, the funds may not be used to offset indirect costs related to the pandemic, including “backfilling” the state budget.

PERA On The Issues will continue following this highly unusual legislative session and post updates as they occur.

Comments

  1. Kenneth Nova says:

    Don’t you mean local jurisdictions with over 50,000 (NOT 500,000)?

  2. Paul says:

    It would be nice to see PERA take a proactive step to approach the legislature and recommend expansion of the legislation to change working-after-retirement rules for PERA retirees support the state agencies that will be swamped with work as a result of COVID 19 and the economic disaster. Suggest increasing the length of time retirees can work without penalty to assist with mitigation of issues involving health, labor, employment, unemployment insurance, etc.

  3. Larry Robbins says:

    Uh Oh! Here we go again retirees. Am I reading too much into this article that Pera is surreptitiously laying the groundwork for some aspect of pension reduction and/or reform. Sorry to be such a naysayer but in the 14 years since I retired, slowly but surely, the State has has whittled down my pension from a living wage to not keeping pace with inflation. The Covid-19 pandemic is causing us all pain but a little honesty as to our future security which was earned (and not rewarded) needs to be preserved at all costs.

    • Cindi DeBoer says:

      I agree! They cannot reduce the principle amount of our retirement, but they keep taking away our increases!!! Maybe teachers should only get 9 months of work credit instead of 1 year…that would help! Quit giving teachers a year of service for less than a year of work. The rest of us had to work a full year for each year of retirement. Taking away our increases has the effect of not keeping pace with inflation. The teachers’ fund is dragging the rest of the funds down! Let them make up their deficit!

      • Craig Ketels says:

        Cindi you clearly don’t understand the timeline of a teacher’s work, day week or year. Educators are the backbone source for the majority of the funds PERA functions on. I’m not sure of your retired profession but I can put you in touch with a number of educators that will allow you to shadow them for a week or so. It will change your perspective on a working timeline. In addition I’ll be glad to help you with a schedule of additional duties that consume and educators “3 months off”period you think exists. Please reply if interested. Craig

  4. Thank you for the update and all of your hard work. Please be prepared to fight to keep PERA member’s retirement from becoming a pocket of money that the legislature can draw from or in any way disrupt. Please help all of our members to understand that their participation and diligence is required in helping make sure this happens for retirees and active members.

  5. Anna Howle says:

    Is everything ok with the retiree budget, will this shortfall effect the retiree budget?

  6. Deborah Harper Williams says:

    Will there be an empact on currently retired teachers?

  7. Mark Zaitz says:

    It would be great to not overreact to all that is going on. Last year’s return on investment, although not formally announced, was strong. Many of the stocks that PERA is invested in are returning to pre-pandemic pricing more quickly than expected ( to date). The economic relief initiatives for individuals and small businesses are reaching so many people. If we are beginning to see the end of this first round of Covid-19, and if by Fall and Winter we see new vaccines and remedies which reduce the severity of the pandemic ahead, the health of PERA and our State may not be are bad as might be expected. Again, my point is the economic future is uncertain, and hopefully the Legislature won’t overreact when they reconvene.

  8. Nadine Montoya says:

    Why is there only mention of change in working after retirement being discussed for employee’s of BOCES and not public schools.
    Pueblo school district could not find qualified teachers to fill classroom positions before the pandemic and will certainly have a shortage of teachers in the next coming years.

  9. Charl Hill says:

    I only hope Governor Polis will save us from our State and Federal Politicians that do not have our best interests in mind. Only their own political games. Including our Cola. Which has been constantly lowered due to mismanagement of PERA funds and not limiting the high Executive Cola so the rest of us can survive on the ever decreasing pay adjustments. They should limit the Cola for any one over 70,000 per year. The high executives can do just fine with really no Cola increases. But can we? I’m sure this response will be edited and no one will see it as our Government officials prefer.

  10. Jo Ann Kennedy says:

    Hi Cindi,
    Teacher’s pay is pro-rated for the year.
    So, their pay is spread over 12 months rather than nine.
    PERA retirees have earned their retirement working in different professions. I find it really distasteful when any group of retirees are criticized.

  11. Bonny Colagrosso says:

    Teachers pay into PERA for 12 months out of the year. Our salaries for “nine months” work are disbursed over 12 months and our contributions toward PERA have only continued to increase. It is doubtful that you have family or acquaintances in the teaching profession but nine months is the general publics’ stereotypical assertion when one hasn’t stepped foot inside a classroom since being a student. The next time you blame teachers for dragging the funds down, I ask you to remember that NONE of the current professions drawing from a PERA retirement plan would even possible without the expertise of a TEACHER to help get you there…

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