Retirement insights from a Colorado PERA perspective

Legislation & Governance

PERA-related Legislation Sent to Governor

A winter sunset view of Colorado State Capitol Building at Downtown Denver.

After a historic pause, the state legislature returned to work in May. Four bills containing language related to PERA have been approved by both the House and Senate since the legislative session resumed. They now move to Governor Polis’s desk, where he can sign them into law or veto them. If he does not take action, the bills automatically become law after 10 days.

A brief description of each bill, as well as the position taken by PERA’s Board, is included below.

HB 20-1379: Suspension of the state’s direct distribution for one fiscal year

PERA Board position: PERA’s Board opposed the bill. As fiduciaries and pursuant to its funding policy, the Board opposes any reductions in contributions to PERA while PERA has unfunded liabilities.

What the bill does: This bill was introduced after the shuttered economy required billions to be cut from the state budget. The bill suspends the state’s $225 million direct distribution to PERA for the 2020-21 fiscal year. The direct distribution is an amount of money set aside annually in the state budget to bring PERA to full funding. It was first put into law in 2018 as part of SB 18-200. The bill does not adjust retiree benefit payments and is not related to direct deposit. The direct distribution is used solely to pay off PERA’s unfunded actuarial accrued liability.

The direct distribution is not the only source of contributions PERA receives. PERA also receives member contributions and employer contributions. In 2018, member contributions totaled $938 million and employer contributions totaled $1.745 billion. As an employer, the state contributed $567 million in employer contributions in 2018. The state will continue making normal employer contributions during the suspension of the direct distribution in the next fiscal year.

HB 20-1394: Changes contribution rates for judges for two fiscal years

PERA Board position: PERA’s Board opposed the bill. The PERA Board, as fiduciaries and pursuant to its funding policy, opposes reductions in contributions to PERA while PERA has unfunded liabilities.

What the bill does: Like HB 20-1379, this bill is the result of an array of budget cuts the state made in May. The bill makes a temporary change to the contribution rates for state judges and their employer. Judges will contribute an additional five percent to PERA for fiscal years 2020-21 and 2021-22 while employer contributions are reduced by five percent.

These additional member contributions will go directly to each member’s account and are treated as normal contributions. While this change will affect a judge’s take-home pay, it will not affect his or her highest average salary calculation.

While the total contributions coming to PERA will remain equal, the dollars received from employer contributions have a stronger effect in reducing PERA’s unfunded actuarial accrued liability.han employee contributions. As a result, the bill has a slight negative effect on PERA’s goal of becoming fully funded.

This bill only applies to state court judges. The bill does not affect PERA contributions for those who work for the judicial branch in other roles, nor does it adjust contributions made by Denver County Court Judges.

SB 20-057: Adds firefighters employed by the Department of Public Safety to the Safety Officer benefit structure in PERA

PERA Board position: The PERA Board of Trustees considered this bill at its January 17 meeting and decided to not take a position.

What the bill does: The Division of Fire Prevention and Control is part of the Department of Public Safety. This bill alters the benefits firefighters in this Division receive, including PERA benefits, to reflect the nature of the job description.

Certain PERA employers hire people who fall under the category of “Safety Officers.” The state legislature, not PERA, determines which positions fall under this category. Safety Officers have a higher PERA contribution rate than other PERA members. They also use different tables to calculate their benefit. These tables were formerly referred to as “Trooper tables,” as State Trooper was once the primary job to fall under this category. However, in 2018, the state legislature added county sheriffs, corrections officers, and similar positions to the category, a change that went into effect in 2019.

SB 20-057 adds all current and future employees classified as a firefighter I through firefighter VII to the category of Safety Officer, beginning on July 1, 2020.

Current employees who had been building a benefit with PERA under the standard PERA tables will begin building a dual-service benefit under this new structure that takes into account the benefit earned under each structure.  

HB 20-1127: Modifies the rules for retirees hired by a BOCES

PERA Board position: The PERA Board of Trustees considered this bill at its January 17 meeting and decided to not take a position.

What the bill does: PERA retirees who wish to work at a PERA employer in retirement must follow requirements established by the state legislature. The bill modifies the rules for certain retirees hired by a Boards of cooperative services (BOCES).

BOCES provide special education services to the school districts they serve. Almost all of these school districts are in rural parts of the state. BOCES often face difficulty hiring qualified people to serve as special service providers in these areas.

The bill allows a PERA retiree who is a special service provider (which includes school psychologists, early childhood education teachers, speech language pathologists, and more) to work beyond the limits set by these requirements. They can do this for up to five consecutive years without a reduction in their benefits.

The bill requires a BOCES that hires a PERA retiree to provide full payment of all PERA employer contributions, disbursements, and working retiree contributions. In addition, the BOCES is required to pay an additional amount equal to two percent of the retiree’s salary to PERA.

Under the bill’s provisions, all BOCES combined may hire no more than 40 people over five years.

Editor’s note: This story was updated on 6/9 to reflect the passage of SB 20-057

Unfunded actuarial accrued liabilityThe present value of expected benefit payments in excess of the actuarial value of PERA’s assets.Unfunded actuarial accrued liabilityThe present value of expected benefit payments in excess of the actuarial value of PERA’s assets.

Comments

  1. Linda K Woodstock says:

    Does adding all these additional classifications and employees help or hurt PERA as it relates to its long-term unfunded liability? At first blush, I am not certain that I approve.

    • Marlilyn Walters says:

      I am not sure of the way these bills will my monthly benefit. check. After last year’s. bill I thought we had some. Safeguards. What’s the bottom line?

  2. Larry Williams says:

    If the state does not contribute, what impact does that have on COLA adjustment

  3. Barry Northrop says:

    The state has certainly been hurt financially due to the pandemic but it is clear that its employees and retirees continue to lose ground in their pension plans because it is expedient. All the legislation to shore up the unfunded liabilities is easily trashed and this pattern will continue. Temporary pain becomes permanent and permanent fixes become broken.

    • Linda Bay says:

      Interesting how the article doesn’t mention what retirees and employees had to give up in the bargain to get the state’s direct distribution. A trend over the years: we agree to give up our contracted benefits in order to “share the pain” during a crisis, then the state backs out of their promises.

  4. sally atkins says:

    does this mean that pension payments will be effected?

    • PERA On The Issues says:

      Hi Sally. These bills do not affect benefit payments.

      • Paul says:

        Dear Pera Representative (reply requested)

        Unless I am wrong, it is misleading for PERA to continue to say the bill withholding the distribution to reduce the unfunded liabilities “do not affect benefit payments.”
        Most of us consider the affect on benefit payments to include further reductions of the Annual Increase (COLA). SB 200 added a formula that assesses the unfunded liabilities and if they don’t meet a certain threshold, the Annual Increase will be reduced. Please address the affect on Annual Increases for July 2021 and or July 2022 in consideration of the following.
        I grant you that the July 2020 AI is already approved because the assessment was completed before this new bill 20-1379 becomes law and it will have no affect on benefit payments this year. However, when a future calculation for the unfunded liabilities is completed we will be lacking $225 million and far less likely to meet the threshold to receive the full Annual Increase. So no affect this year bu at high degree of probability that the absence of this money will make it nearly impossible to meet the SB 200 threshold necessary to provide us with full Annual Increases for 2021 and 2022…
        I think we would all appreciate it if you would comment specifically on the probable impact of withholding the $225 million distribution on the necessary threshold we need to meet in reducing the unfunded liabilities in order to obtain full Annual Increases for July 2021 and July 2022.
        So many of the PERA replies to questions like Sally’s (above) including replies to questions in a previous article on the same topic continue this mantra that there will be “no affect to benefit payments” which is another way of saying “nothing to see here.”
        I understand there are other factors in the formula used to determine whether we meet the threshold for a full AI in the future years but the absence of $225 million dollars as a result of this new bill obviously will make it difficult if not impossible to meet the threshold to obtain the full Annual Increase in future year(s). $225 mill is not a drop in the bucket.
        So in short? Isn’t it true that suspension of the $225 million distribution will most likely further reduce Annual Increases for July 2021 and or July 2022?

        Please don’t dismiss this direct question by providing a link to the formula. Thank you.

      • Barry Thorpe says:

        YET…..They will use” unfunded liability” as the next excuse to to erase Annual Increase, virtually eliminated in 2010.

        How long will PERA seek to become fully funded, by simply not paying its debts? Using the Public Employees to cover losses due to a Pandemic, is yet another “taking”. This is exactly why the modification to AI was suspicious…
        you take away benefits during a boom economy, and now also take away benefits in a struggling economy.

        One interesting revelation in this though……The 30 year target argument falls flat, and is shown to have been arbitrary in the first place. None of the recent legislation to cut AI benefits was necessary if the State can simply take out 225 Million. is there a provision for adding an additional 225 million next year to repay the shortfall??

  5. Tom Tamshen says:

    I would like to see PERA publish a list of State Senators and Congress persons who vote for and agaist these issues to better educate members on there representative and who we want to support.

    Not funding PERA this time will establish an unacceptable pattern.

    • PERA On The Issues says:

      Hi Tom. Thanks for the comment. To make the article easier to navigate, we did not include individual votes on each bill, as 100 legislators vote on each bill. However, the bill number at the beginning of each summary contains a link to the bill’s page on the General Assembly’s website. Once there, you will be able to find a detailed history of the bill, including voting history, committee history, and more.

  6. Tracie says:

    How will these changes impact our benefits if you are receiving PERA now?

  7. Phil RIeg says:

    HB 20-1379: How is it okay to pass a Bill one year to shore up PERA and then pass another Bill 2 years later to suspend $225 million in payments approved by the first Bill? If approved to suspend this years payment they will also try to suspend next years payment. We have already been deprived of a proposed 3% raise this year and our PERA contributions will increase again. Where does this end?

  8. RMS says:

    We worked so hard to get the State to agree to pay into PERA to take on some of their fair share of the unfunded liability issue in this last round of PERA changes. We all lost benefits again, So, is there any language in the bill that prohibits the legislature to come back in a year or two and then penalize PERA members and retirees yet again because we have not met the arbitrary guidelines for allowable liabilities set forth in the previous legislation? I too would like to see a list of every Colorado legislator and how they voted on this bill.

  9. Susie says:

    Where does the 7% raise during the Pandemic for legislators fit into that I understand, was also passed while dipping into PERA funds?,. True or false?

  10. Carolyn DeLaTorre says:

    Whenever the State says something is “temporary” or a “one time” fix beware! It usually turns into a permanent thing! The 250 million payment the State was supposed to pay to PERA to go toward the unfunded liability was important and it was part of what was supposed to be “shared pain” in this unfunded liability solution to make PERA whole in 30 years. Please don’t let the State leave us hanging, as full time employees had their small raise reduced last year and retirees had their COLA reduced in these measures the Legislature passed in 2018 and more were scheduled next 2 years; but yet the State can just forget about their commitment To us for this “shared pain”? Now I would be certain raises at all probably won’t happen for full time employees at all and what happens to the “unfunded liability solution” then? State employees have paid the price since 2008 now for the previous recession and now the pandemic! Glad I did retire last Fall! State employees always seem to be what is first to be cut no matter what! The Public has forgotten we went over a decade with only 5.5% TOTAl in raises and 3% past 2 years with .50 of that taken away for PERA unfunded liability; the public thinks all state employees are on a “ gravy train” that is not true! All this decade of no raises took a lot of money away for our retirements in our HAS calculations; so we got a double whammy with that!
    Please don’t let the Legislature further erode what was agreed on to close the unfunded liability more than just one time!

  11. Jean says:

    There are thousands of retirements from private industry that never are provided raises! Those of us who have PERA retirements and can retire at 50 with full benefits (75% plus more sometimes) are very well compensated. Everyone has to take a hit this year and PERA retirements have to do their part.

    • Paul says:

      Jean,

      I agree with your point, “”Everyone has to take a hit…” but I do not agree that PERA retirees should take the hit through legislation that singles pensioners out by withholding the $225 million distribution described in this article. The appropriate place for all of us to take the hit, or share the pain, is as taxpayers. PERA retirees, as taxpayers, along with all taxpayers have the responsibility to fund budget shortfalls so the state can meet its financial obligations. Raise my taxes if you must but keep your hands off my PERA.
      Your comparison of thousands of people in “…private industry that never are provided raises!” to PERA members able to “…retire at 50 with full benefits…” is a bogus comparison that right wing radio talk show hosts and like minded politicians float to try to justify chipping away at their goal to diminish if not eliminate PERA retirement benefits, including Annual Increases (COLAs).
      It is detrimental to all PERA retirees to buy into and promote such biased arguments that create a false equivalence between current PERA retirees who took state jobs with a compensation plan that included a clearly defined pension plan, including Annual Increases and a group of private industry retirees who took jobs with employers who offered different compensation plans that did not include these benefits at the time they were hired or when they retired.

  12. 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.

    The comment above was made to a “Pera on the Issues” article on April 29, 2020 which appears to have come to fruition. Face it folks, we’re at the mercy of political hacks hellbent on eliminating our hard earned retirement benefit. It’s just a matter of time, mark my words! These sound boards are a waste of time posting comments. Retirees must organize to fight back against the ongoing legislative effort to dismantle the fruits of our labor. Just Say NO!
    If we don’t, who will? Clearly PERA can’t.

  13. G. Mergl says:

    Whatever happened to reform Social Security’s WEP/GPO. It seems like whenever new cuts are proposed all the past reforms get forgotten.

    • PERA On The Issues says:

      Hi G. Rules for Social Security are made and administered at the federal level. This story was focused on legislation at the state level.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe To Stay Up To Date

  • Share

  • Print