The Common Sense Institute released a study Friday with time-honored advice on money: invest it, don't just spend it.
The report, "Spend Now, Save Later: Impacts of $500M to PERA," looks at the benefits of putting a combination of money from the state budget surplus and federal stimulus directly into the state's Public Employees' Retirement Association, or PERA, which manages the retirement money for roughly 620,000 Coloradans.
A teacher earning the average salary of $54,000 would save $267 a year, according to the Common Sense Institute, which partnered on the study with the Pension Integrity Project at the libertarian-minded Reason Foundation and Secure Futures Colorado, a pension reform advocacy group.
The combination of state and federal dollars is expected to top $5 billion in Colorado.
The one-time payment would be large enough to rollback a recent member contribution rate increase, they found.
“Colorado has a unique opportunity to make bold investments in its future," Chris Brown, CSI's vice president of policy and research, said in a statement. "State leaders can use the recent surge in both federal and state revenue, to save PERA member and Colorado taxpayers more than $870 million over the next decade.”
Brown cited the "clear long-term benefits" of the ongoing returns to teachers, other public employees, their employers and taxpayers "who can save real money every year, all while improving the financial outlook of the state’s pension fund."
In 2018, the legislature passed its second plan in eight years to shore up PERA’s unfunded liability, which at that time was projected at about $32 billion. Senate Bill 200 that session put $225 million into the pension plan and increased the retirement age for full benefits from 58 to 64 years old for employees hired after Jan. 1, 2020, in the school and state divisions, and required employees to contribute 2% more of their income, rolled out over three years.
Read the full report by clicking here.