Updated: As PERA bill drops Wednesday, Common Sense Policy Roundtable offers advice


The legislation to backfill a projected $32 billion shortfall in the state employees’ pension plan is expected to be introduced Wednesday. One of the biggest priorities of the session lands near its midpoint, the same day a significant white paper on the subject is released.

The bill is expected to offer a bipartisan plan for shared responsibility between taxpayers and state workers to fill the gap between those paying and those receiving retirement benefits from the state’s Public Employees’ Retirement Association. Some Republicans say the gap could be as much as $50 billion. PERA serves more than 500 government agencies and more than 560,000 current and retired public employees in state, local and school district jobs.

Both sides have discussed shared responsibility for the hole and the shared costs to fill it through more money from taxpayers, higher contributions from employees and lower dividends for retirees. The Republican-led bill to be introduced in the Senate by Sen. Jack Tate of Centennial, is expected to attract Democrat sponsors in the House.

The bill would increase most workers contributions from 8 percent to 11 percent of their monthly pay. Employers would see contributions rise from 10.15 percent to 12.15 percent, among other changes. Amounts would be higher for state troopers and judicial division employees.

A fix on PERA would be a bipartisan win both parties could really use for this November’s election, given failures on transportation and other legislative issues that have gone to the ballot the last few years because the House Democratic majority couldn’t find common ground with the Senate Republican majority.

At the state, local and school district level last year, taxpayers put more than $1.6 billion in the workers’ retirement, a contribution that has doubled in the past decade, according to the Common Sense Policy Roundtable, a right-leaning free market think tank in Greenwood Village.

Several proposals have been put on the table by the PERA board and Gov. John Hickenlooper, and the roundtable takes a look at each one.

You can read the paper by clicking here.

The Common Sense Policy Roundtable isn’t telling lawmakers how to fix the state’s over-extended pension plan, but they’re offering some ideas on what to think about in a white paper released Wednesday morning.

Taxpayer contributions to match the pension could bust budgets and necessitate tax hikes to maintain local, state and school district services across Colorado, or cut into the future programs and services, such as schools and public safety.

Tate saw an advance copy of the white paper.

“The Common Sense report does a great job providing the history behind our current crisis,” He told Colorado Politics. “Particularly effective is its highlighting the downward trend of the funded ratio over a time period in which the total taxpayer-funded employer share of contributions increased by more than 60 percent.

“In addition, the report also rightfully points out the crowding-out effect that debt service creates within our state budget, leaving other priorities under resourced — a problem that will only get worse without comprehensive action.”

A key finding in the report is that pay for retired public employees is rising faster than for working public employees.

“The restrictions on pay increases for active PERA members, when combined with escalating bene t costs, have produced a strange outcome,” according to the report’s authors, Chris Brown and Simon Lomax. “Average pay for active PERA members has increased at 2.2 percent per year over the past five years, while average benefit payments for PERA retirees have increased 2.98 percent per year. In the School Division, the average increase in annual pay is lower than the 2 percent Annual Increase paid to most PERA retirees each year.”

The roundtable’s report was supported Colorado Concern, Denver South Economic Development Partnership, the Colorado Bankers Association and the Colorado Association of Realtors.

Brown and Lomax made the stakes clear:

For the fourth time in less than 20 years, Colorado’s public pension system has reached a major in ection point. The long-term scal health of the state is on the line, and the situation cries out for determined, pragmatic and far-sighted leadership from our elected leaders. The threat is serious: Failure to control retirement costs has dragged down states like Illinois, where pensions consume one quarter of the budget, and bankrupted giants of U.S. industry like General Motors.

Editor’s note: This story was updated to include more details about the bill, once Colorado Politics saw a draft of the proposed legislation and to correct a typo in Jack Tate’s name.

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