PERA
PERA—the pension plan for some 400,000 current and retired state employees—is in peril.
Colorado’s State Treasurer is the taxpayers’ voice on the PERA board. But even as PERA’s Executive Director notes that in its current condition, the retirement system is “unsustainable,” the State Treasurer remains silent. As your State Treasurer, I will not stand idly by and watch PERA sink into the abyss. The stakes are too high for generations of workers and their families.
The problem facing PERA is not unlike that facing pension funds throughout the nation. Wall Street’s decline over the past six months has dragged PERA down with it. The plan’s assets have dropped $13 billion while its debt to future retirees grows at an ever increasing rate- about $3 billion each year. And government workers from the baby boom generation have yet to put their full retirement pressure on PERA.
At best, PERA’s future is questionable. And the risk extends beyond government workers to every taxpayer in the state, since any unfunded liability in state pension funds will ultimately have to be borne by a Colorado-taxpayer-funded bailout.
What is PERA’s leadership, which includes the current State Treasurer, doing about it? Nothing. They say wait until 2010 for now. Next year, they will probably say wait until 2011 while hoping for a miracle. That’s unfortunate for both the taxpayers and the hardworking Coloradans who are counting on PERA. In other words, as losses mount at an accelerating rate, PERA’s board is sitting on its hands and refusing solutions to strengthen and to preserve PERA beyond an infusion of taxpayer dollars.
PERA must be able to honor the promises made, provide workers with an opportunity to retire with a reasonable prospect to live in dignity and ensure that the payment of pension obligations does not consume the entire budget.
PERA also is, once again, trying to merge with the Denver Public Schools retirement plan, a pension plan that is in even more dire straits than PERA. About a quarter of every dollar in the Denver Public School budget is dedicated to paying for employee benefits, with most of it going to the pension plan. Is it any wonder that the district is hard pressed to find the money to properly maintain its schools or to buy enough books? Rather than bailing out Denver Public Schools at the expense of its current members and the state’s budget, the PERA board should be taking all steps necessary to secure PERA’s long-term solvency. And taxpayers just learned that in the midst of all this turmoil, PERA is standing by its payment of $1.2 million in bonuses to its top managers. With PERA, it seems, both the insult and the injury to taxpayers keep growing every day.
PERA needs to reexamine its benefits for current employees and new hires. PERA also needs to think about what share of an employee's retirement benefit should be funded by the employee and possibly expand opportunities for employees to implement their own retirement strategies. A chief problem is that PERA’s board is controlled by PERA members who do not want to make the difficult decisions necessary to reform the benefits they receive. Yet sooner or later, tough decisions must be made so that PERA’s beneficiaries can count on their retirements.
PERA’s board, it seems, wrongly believes it can pass the burden of responsibility for PERA’s losses onto Colorado taxpayers. This is a dangerous point of view, and it’s unacceptable for Colorado’s State Treasurer—the taxpayers’ representative—to sit idly by while losses mount and the cost of resolving this critical issue increases.
At best, PERA’s future is questionable. And the risk extends beyond government workers to every taxpayer in the state, since any unfunded liability in state pension funds will ultimately have to be borne by a Colorado-taxpayer-funded bailout. (To be clear: I would categorically oppose such a bailout, but I would still fear it happening, just as the recent federal bailouts happened over the objections of fiscal conservatives.)
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