As we wrote yesterday, Colorado Gov. John Hickenlooper doesn’t want more taxpayer money going to Colorado PERA to deal with the pension plan’s unfunded liability problem. This would appear to pose some political challenges for PERA as the legislature gears up to confront the issue in January.
But that’s not how PERA Executive Director Greg Smith chose to frame it at last night’s Denver stop on “PeraTour 2.” Instead, Smith said the governor by and large is on board with PERA’s recommended approach to whittling away at the $30 billion unfunded liability. He called this an “incredibly important” development.
Here, in full is what Smith said on the issue last night:
(Hickenlooper) essentially adopted the (PERA) board package except for a couple of pieces. What he adopted was the goal of paying off the 30 year unfunded liability, getting to 100% in 30 years. He didn’t take a lesser course. He didn’t say ‘let’s take some of that stuff out, and let’s do it in 40 years. Or let’s get to 80% or some lesser goal. And that’s incredibly important. I’m pleased to have the governor, even though he’s taking a different course of how to get there to at least acknowledge and recognize the importance of that goal.
Now the governor has taken the approach of not having any employer contribution increases, and in place of those he has turned to the COLA (cost of living adjustments) and lowered the COLA further to 1-1/4%
That is certainly a great basis for a conversation. We look forward to having that conversation and educating (people) about what does that mean in terms of the impact on the system and what does it mean in terms of our view of shared sacrifice.
I wanted to recognize the positives of the governor’s package. You don’t see it proposing a 401(k) transition, or closing down the defined benefit plan or eliminating the COLA entirely, which is what we are seeing all over the country. We are seeing the COLA becoming what is called ad hoc: pay it if they can afford it and they won’t be able to afford it for a long time.
So it is important to recognize the progress being made toward the objective of bringing this pension back to a place where we can eliminate those unfunded liabilities in an established manner over a reasonable amount of time.
Smith acknowledged that even with what he views as Hickenlooper’s support, the political environment and the divided legislature mean any package has only about a 50-50 chance of passage.