‘Let’s provide meaningful reforms to PERA — but not on the backs of retirees’
Author: Kerrie Dallman - March 20, 2018 - Updated: March 19, 2018
Many in Colorado, including firefighters, police officers, other public servants — and especially the more than 35,000 members of the Colorado Education Association — want to see the Colorado Public Employees Retirement Association fixed and poised for a solid future. We all depend upon a strong PERA for retirement. However, the current bill (SB-200) moving through the Senate is not the answer. Here is why:
The Senate Finance Committee stripped away a 2-percent increase to employer contributions. This goes against the guiding principle of shared sacrifice of employee and employer. Taking employer responsibility out of this equation unfairly puts the entire weight of fixing PERA on the backs of retirees and current public employees.
The committee further damaged the prospects for a healthy compromise bill by leaving in a controversial defined-contribution provision, which does nothing to improve the financial health of PERA. The alarming move to put PERA on a path to become a riskier 401(k)-style plan does absolutely nothing to achieve the goal of fully funding PERA in 30 years. It will not reduce PERA’s unfunded liability.
Lawmakers should recall that the state and employers have underfunded PERA by $4.5 billion since 2001. This is a significant component of our unfunded liability, which has undermined the stability of our commitment to public employees. It should not be made up solely from current and future retirees.
In a report commissioned by the legislature in 2014, an independent analysis by Gabriel Roeder Smith found the current defined benefit is more cost effective and provides the most meaningful retirement benefit over other plans, including defined contribution.
With the growing educator shortage, we simply cannot afford to shortchange future educators by including a defined-contribution plan. The current bill hurts those who are underpaid already. This is a critical time to deliver on the promise of teaching as a rewarding career, not weaken the ability of educators to live and work in the communities where they serve children. PERA is a priceless benefit that demonstrates value and respect for the years of service educating Colorado’s kids.
The goal here should be to provide a secure, predictable retirement for public employees. Let’s strip the defined contribution out and restore the 2-percent employer contribution. Let’s provide meaningful reforms to PERA — but not on the backs of retirees.