Here in Colorado, people responsible for overseeing Colorado PERA seem to spend an inordinate amount of time fashioning silk purses out of sows’ ears. Just trust the experts and everything will be fine, regardless of how dire they might appear, the consistent message goes.
Many PERA members and a majority of the organization’s board seem content to accept this at face value.
So here’s some good news: This past week, a public official directly responsible for public pension solvency sound an alarm in no uncertain terms.
And here’s the bad news: This took place in Oregon, not Colorado.
Outgoing Oregon Investment Council Chair Katherine Durant, who resigned last week, went out with a bank, sending a letter to Gov. Kate Brown warning that multiple constituencies will have to accept a dose of bitter medicine if the Public Employees Retirement System (PERS) is to remain solvent. Here’s a small fragment of the letter:
“Failure to act quickly and decisively will result in a severe imbalance in our State’s obligations to the beneficiaries compared to the State’s resources to meet those obligations. This “house of cards” will quickly collapse, leaving Oregon in a fiscal crisis.”
Durant goes on to lay out eight steps toward resolving the issue, which she noted would draw opposition from both sides of the aisle, ‘which probably means they have merit in in solving our state’s approaching train wreck.”
Among her proposed steps, as reported in the Portland Business Journal:
- Make an annual $1 billion payment to PERS, at least, until the unfunded liability is gone.
- Move elected officials to 401(k) accounts.
- Raise the full retirement age from 58 to 67 to match Social Security.
- Require state workers to make contributions to the plan.
- Make it easier to terminate non-performing state workers.
Here’s hoping Durant’s letter jump-starts a serious conversation in Oregon, and that somehow it spreads to Colorado before it’s too late.