Colorado State Treasurer Walker Stapleton issued an ominous warning to the Douglas County School Board during its April 17 meeting: Without dramatic changes to the Colorado Public Employees Retirement Association, the organization’s shortfalls will take a potential stranglehold on state school budgets.
That’s dangerous not just for school districts and numerous other state agencies, but teachers who rely on the retirement funds to be there in their golden years.
The organization has a $22 billion unfunded liability, he said, which amounts to more than $15,000 per Colorado taxpayer.
The problem is an outgrowth of over-promised fund growth, he said. PERA assumes an 8 percent return on its investments over the next 30 years, criticized by many as unrealistic in the current economy. Lowering the assumed rate of return would increase the amount of needed contributions, but for every year the rate of return is unmet, Stapleton said, PERA’s insolvencies grow.
“PERA has absolutely no idea how to pay for these insolvencies,” Stapleton told the board, his tone clipped and urgent. “Deep changes need to be made.”
It’s hardly the first time Stapleton has sounded the alarm on the issue, but his words clearly made Douglas County School Board members uneasy.
The issue is far graver than most people know, Stapleton said, in large part because its complexities require a high-level understanding of accounting and finance. But he said it’s also because PERA executives, who he said have a vested interest in keeping the information quiet, aren’t required to disclose some financial details Stapleton feels are critical. Even though he’s a PERA board member, Stapleton doesn’t have access to that information. He filed a lawsuit in 2011 to get it, an effort denied earlier this month in Denver District Court. Stapleton is not giving up.
“It is absolutely preposterous that I can’t get detailed financial information,” he said. “We need transparency to understand the problems in our state.”
A 2010 Colorado Senate Bill designed to resolve PERA’s issues has not done so, Stapleton said, an admission Gov. John Hickenlooper has already made.
“If that’s the case, let’s get off our duffs and fix this thing,” he said. “For vested plan members, the promises they’re being given may not come true. It’s hugely unfair to younger workers. We need to level with our teachers and we need to get to work on fixing this.”
School board members were disquieted by the news, and plan to ask the PERA board president to attend a future meeting and answer some hard questions.
“Our teachers have been through enough,” school board member Craig Richardson said. “We want them to have a pension they can count on.”
Stapleton has been described as single-minded in his efforts at PERA reform, but he was anything but apologetic about that during his address to the school board.
“I care because I want our schools to be places where our kids and my kids thrive,” he said. “I want to be sure the money we are spending in this state is getting to our kids, not to maintain an unstable retirement plan.”
The school district has proposed spending $2.2 million of its 2013 budget to cover increases in PERA contributions for teachers and staff.