EDITOR’S NOTE: This story has been updated to reflect opposing opinions following a hearing on Senate Bill 113 on Thursday.

Republicans say they have identified the first step in drawing down the state’s multibillion-dollar unfunded pension liability, though critics say limiting employer contributions would actually increase the liability.

A measure in the legislature would cap employer contribution rates for the Public Employees’ Retirement Association at 2018 levels.

Senate Bill 113, sponsored by Sen. Tim Neville, R-Littleton, was approved by the Senate Finance Committee Thursday on a party-line vote and was sent to the full Senate for consideration.

It faces an uphill battle in the Democratic-controlle House, if the measure makes it over.

“This bill simply caps … rates that have increased since 2006,” said Treasurer Walker Stapleton, a Republican who is championing the proposal. “These sky-high contribution rates are stressing the budgets of our schools and local governments.”

Most state employees contribute 8 percent of their monthly paychecks to PERA. State Troopers contribute 10 percent.

The average employee in the private sector contributes between 5 to 7 percent of their paycheck to their company’s retirement plan. The private employer usually contributes somewhere around that, or slightly less.

Private sector employees, however, contribute to their retirement fund, plus Social Security. Workers pay 6.2 percent of their earnings for Social Security, while employers pay a matching amount for a combined contribution of 12.4 percent of earnings.

PERA members and employers don’t pay Social Security, as PERA is a replacement plan.

In PERA’s system, some employers are expected to contribute as much as 23 percent in 2018. State employers include schools, the state, local governments and courts.

PERA is aware of the bill that would cap contributions, though the board has not yet met to review the legislation. The board is scheduled to meet to review the measure on Feb. 10.

Secure PERA, which represents more than 200,000 PERA members, testified against the bill on Thursday.

“The bill today didn’t change how much money is coming into the fund as they didn’t change the rates – they simply made a political statement about how employer contributions should stay as they are right now,” said Lynea Hansen, executive director of Secure PERA.

“The bill doesn’t change anything, it just sends a message to those of us working on what comes next that the people who vote for SB 113 don’t support increased employer contributions. Without increased contributions, or decreased benefits, or higher market returns, or some combination, you cannot reduce the unfunded liability.”

Stapleton has long been at odds with leaders of the PERA system. He recently lamented a 3 percent raise for PERA chief executive Greg Smith, which brought Smith’s salary to nearly $406,000 for 2017.

The $47 billion, 300-employee retirement system has faced criticism, especially given its $30 billion unfunded liability, which is money PERA will owe in the future, but currently does not have in its accounts. The system serves more than 547,000 members.

Hansen said of the liability, “PERA isn’t running out of money and can pay all of its obligations. It just takes them longer to be 100 percent funded than some would like.”

PERA this year lowered its assumed investment rate of return from 7.5 percent to 7.25 percent, which increased its unfunded liability from nearly $27 billion to $30 billion.

“Without increasing contributions or decreasing benefits you aren’t lowering the unfunded liability,” Hansen added. “The only first step this is, is laying all of any proposed fix on the backs of employees and retirees.”

The state saw only a 1.5 percent return on retirement investments in 2015, though Smith says the overall return on investment outperformed a PERA benchmark for anticipated return and the median return for public funds.

The 1.5 percent return on its $43 billion portfolio at the time fell well short of PERA’s assumed investment rate of return at that point of 7.5 percent. Under the projections, it would take PERA more than 40 years to be fully funded.

PERA distributed about $4.3 billion in 2015 to retirees. Numbers for 2016 aren’t yet available.

Supporters of the bill say even though most PERA members do not contribute to Social Security while they are working for PERA employers, the contribution rates aren’t fair or sustainable.

“This is about protecting taxpayers and PERA members from a system that just keeps going back to the taxpayers and asking for more money without making any structural changes to actually fix what is broken,” Stapleton said. “This will prevent that in the future.”