PERA Oversight Continues Between Legislative Sessions

The Colorado General Assembly wrapped up the 2021 legislative session in June, but legislative work has continued in the ensuing months at the Capitol. Some of that work over the summer and fall involved committees that conduct routine oversight into Colorado PERA and its operations.

PERA and its Board of Trustees appreciate the value of rigorous review and transparency, so staff regularly engage with these legislative panels to provide updates on PERA’s finances, answer questions and listen to feedback from lawmakers and others. Summaries of those activities are included below.

Legislative Audit Committee

The Legislative Audit Committee met in August to hear an update on PERA’s financial status and receive the results of an independent audit of PERA’s Comprehensive Annual Financial Report. The Committee heard from PERA Executive Director Ron Baker, Chief Investment Officer Amy C. McGarrity, external auditors, and actuarial consultants.

The auditors gave PERA’s annual report a clean audit with no significant issues or outstanding recommendations.

Read more here.

Pension Review Commission and Pension Review Subcommittee

The legislature’s Pension Review Subcommittee, which was established as part of the PERA reforms of Senate Bill 200 in 2018, consists of legislators and members of the public with expertise in topics such as accounting, economics and investment management.

At its Sept. 10 meeting, the Subcommittee voted to draft a bill for the 2022 legislative session that would make up the legislature’s missed $225 million direct distribution payment to PERA from July 2020. The Subcommittee forwarded that bill to the Pension Review Commission, which then forwarded the draft to Legislative Council for review. In November, the Legislative Council voted to approve the bill, clearing the way for it to be introduced in the upcoming legislative session, which begins in January.

Read more about that bill here.

The Pension Review Subcommittee also conducted an independent review of the actuarial assumptions PERA uses in its financial calculations and reporting. Based on that review, the Subcommittee made three recommendations to the PERA Board regarding PERA’s funding policy and Signal Light methodology and reporting.

At its November meeting, the Board discussed the recommendations in detail and heard from PERA staff as well as PERA’s actuarial consultants. Following the discussion, the Board decided to draft a letter to the Pension Review Subcommittee responding to the recommendations. In the letter, the Board stated it agrees with the Subcommittee that there’s a need for clearer communication in the Signal Light report and the Board will consider implementing changes in future versions of the report. The Board also said it will consider making changes to PERA’s funding policy when it undertakes its planned review of the policy in 2023.

Read the Board’s letter here.

Joint Budget Committee

On Dec. 9, PERA Executive Director Ron Baker and Chief Investment Officer Amy C. McGarrity appeared before the Joint Budget Committee for that panel’s annual hearing on PERA. Baker and McGarrity provided the Committee with updates on a number of topics — including PERA’s finances and membership, results of 2020’s actuarial experience study, and market performance in 2021 — and answered questions from committee members.

What’s ahead in 2022

The Colorado General Assembly will convene to kick off the 2022 legislative session on Jan. 12. PERA On The Issues will keep track of any proposed legislation that pertains to Colorado PERA, including the draft bill to make up the state’s missed 2020 payment of $225 million, and provide updates throughout the session. If you haven’t already subscribed to our newsletter, you can do so here.

Actuarial assumptionData such as demographics, mortality rates, and investment returns that retirement plans use to calculate future assets and liabilities.