The Colorado Senate made the opening move today in the anticipated debate to shore up the state’s public employee retirement system by introducing Senate Bill 200. The Colorado Education Association is committed to working with lawmakers and other stakeholders to improve PERA, but only by implementing solutions that fix the financial stability of educators’ retirement funds.
“The alarming provisions in this bill to expand a defined-contribution or 401k-style plan do absolutely nothing to achieve the goal of fully funding PERA in 30 years,” said CEA President Kerrie Dallman. “A drastic overhaul to PERA with political ornaments like defined-contribution are only being driven by well-funded, out-of-state interests such as the Koch Brothers and the Arnold Foundation. Our legislature needs to ignore the outside voices and instead focus on solutions informed by reliable data.”
Recent studies have shown how a defined-contribution retirement falls short in replacing income for retirees. Colorado legislators commissioned three studies in 2014 (via Senate Bill 214) that were conducted by renowned, independent actuaries and the Gabriel Roeder Smith (GRS) study, which found the defined-benefit plan design was a better benefit than any other retirement program regardless of the number of years of service.
Dallman is further concerned a PERA bill that weakens benefits without fixing the system’s shortcomings will only worsen Colorado’s well-documented educator shortage. “This is a critical time to deliver on the promise of teaching as a rewarding career, not weaken the ability of educators to live and work in the communities where they serve children. PERA is an invaluable benefit that demonstrates value and respect for the years of service educating Colorado’s kids.”
PERA, with 560,000 public employees, continues to be one of Colorado’s best investments, pumping more than $6 billion into Colorado’s economy and helping sustain 32,800 Colorado jobs. More than 98,000 Colorado residents spend PERA distributions in every corner of the state. Dallman said any PERA reform should do no harm to a system that serves the people well and dramatically impacts economies from Metro Denver to the San Juan Mountains to the Eastern Plains.
“Educators who teach our children for a long career have earned a stable income that affords them a good quality of life in their retirement years. The defined benefits of PERA allows retirees to remain solid, dependable contributors in their local economies in all market conditions, and demonstrates Colorado’s dignity and respect for public employees who continue to make our state a great place to live, work and raise a family,” said Dallman.
PERA’s defined-benefit plan has provided a meaningful retirement benefit since its inception in 1931. In fact, PERA predates Social Security and PERA members do not receive Social Security. Dallman added any discussion around increasing the retirement age for public employees – educators, state patrol officers, snow plow drivers, correction officers - must account for the demands of these professions.
“We look forward to moving forward with our legislature on a bill based on shared sacrifice that fairly asks all parties – current and future employees, retirees, employers and the state – for changes to ensure PERA is available for generations to come,” Dallman concluded.