The Haystack

PERA Bill Aims to Cut Back Unfunded Liability

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Maker:L,Date:2017-8-29,Ver:5,Lens:Kan03,Act:Kan02,E-Y

Maker:L,Date:2017-8-29,Ver:5,Lens:Kan03,Act:Kan02,E-Y

Rachel Vigil

Rachel Vigil

Maker:L,Date:2017-8-29,Ver:5,Lens:Kan03,Act:Kan02,E-Y

Rachel Vigil, Editor-in-Chief

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Educators and their supporters alike marched to the Capitol on April 26 and 27 to show support for the House Finance Committee’s version of Senate Bill 200.

The bill concerns educators’, and other public workers’ state-sponsored pension fund. The version of the bill passed in the senate was opposed by the CEA (Colorado Education Association), but both the house and senate bill aimed to reduce the amount of time that it would take to fully fund PERA. If PERA was allowed to operate as it currently does, it would take an estimated 78 years for it to be fully funded.

According to the President of CEA (Colorado Education Association), Kerrie Dallman, when SB-200 came out of the senate, “it was a very partisan bill.” Although “Democrats proposed common sense amendments,” according to Dallman, Republicans opposed them all leaving it so that, “we could not support it.”

However, according to Senate sponsor of the bill, Republican Kevin Priola, the actions it proposed were necessary to both fix PERA and improve the state’s credit rating. His goal is to, “Keep Colorado’s credit rating high.” Though he did not agree with their message, Priola did think that it was good for the educators to, “come down and have their day,” at the Capitol.

Democrat Dan Pabon, sponsor of the bill in the House, and the version supported by educators, agrees with many of the teachers’ concerns. “I think one of the greatest challenges is that people who are entering the profession are not staying…We’re not keeping pace with the cost of housing.” His support of the bill stems from his belief that, “our retirement should be there and should be solvent.” He does agree with Priola that the, “unfunded liability hurts our credit.” Even though he understands the desire for more school funding, he pointed out that this year, “We’ve contributed more in this budget than my last seven years in the legislature.”

Though CEA was in support of the house finance version of the bill, there are parts that they wish could have been amended, particularly the COLA, or cost of living adjustment, which would be lowered to 1.25 percent from its current two percent.

“Colorado has a rising cost of living and it’s really important that our retirees on fixed income are keeping up with current cost,” said Dallman. CEA is also unhappy with the higher retirement age in the PERA bill. As the retirement age is currently 58, the Senate bill would raise it to 65 while the House bill would raise it to 60.

“Most folks are living and working much longer, so [the current system] is a bit of a relic. Raising that age is an important discussion,” stated Pabon on adjusting the retirement age.
The bill passes through the House on May 1. Since two separate versions of the bill passed through the House and Senate, the two versions of the bill will had to be reconciled. Priola hoped that it would result in, “A fair compromise, so both sides feel like they got something and both sides feel like they gave something up.”

The reconciliation took place and the final version of the bill passed through both the House and Senate on May 9, the last day of the legislative setting. It did not include the Senate’s defined contribution option, the COLA will be set at 1.5% following a two year freeze, the state committed to fund PERA an additional $225 million annually, employer and employee contributions will increase starting in 2019, and retirement age has been increased to 64.
Though the CEA did support some of the measures in this final bill, they were against its final version.

“We are very disappointed in our elected officials who did not support educators and retirees, and even chose to take money out of their pockets. SB-200 is a very unfortunate lesson in politics, reminding us that those in power who represent the people can still be completely tone deaf to their constituents, even when 15,000 of them marched on the Capitol little more than a week ago,” said Dallman.
However, the PERA board of trustees, who manage the retirement fund, were in support of the bill and through it achieved what they see as greater solvency for the fund.
“The Board applauds the General Assembly for reaching a sound, bipartisan compromise,” said Tim O’Brien, chairman of the PERA Board of Trustees. “We are pleased to see that, under the leadership of bill sponsors Senators Jack Tate and Kevin Priola, and House Majority Leader KC Becker and Representative Dan Pabon, many of the Board’s principles remained intact and we hope will soon become law.”

Though none of the involved parties were able to get all of their demands met, some are certainly more satisfied than others. Only time will tell if it improves the state’s credit rating by eliminating unfunded liability and if it benefits state employees.

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PERA Bill Aims to Cut Back Unfunded Liability