Once again, Colorado’s public pension system is in the news. In a move that surprises absolutely nobody, the state’s Public Employees’ Retirement Association (PERA) plans to return to the legislature in January to ask for more money. Despite the passage of Senate Bill 1 in 2010, a measure that PERA executives and lobbyists defended for years as the only needed solution to our state’s pension crisis, the system once again finds itself in dire need of big reforms.
The truth is that PERA’s unfunded liability continues to grow every single year. For the past seven years I have led the fight to fix our pension system’s staggering $30 billion unfunded liability. There is every chance that the subject is as frustratingly tiresome for you as it has become for me. However, you cannot be a fiscal conservative in Colorado and not place PERA reform at the top of your list of must-fixes. It has taken too long for the pension system to turn their highly paid lobbyists into advocates, rather than roadblocks, in the effort toward true reform of the system.
Understanding this issue and how we got here requires some context. Each of the reforms put into place in Senate Bill 1 were based off of PERA earning 8 percent in the stock market every year. That’s why I have always stated that Senate Bill 1 was not worth the paper it was printed on, as all of its inputs, the taxpayer and employee contributions to the system, were predicated on an 8 percent average return in the stock market year-over-year. When PERA does not reach these sky-high return assumptions, every single year the fund goes further into debt. And that’s what we have seen: because of these unrealistic expectations, PERA has fallen further and further into the red.
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