Colorado’s public pension system is not sustainable and the state could be in a budget crisis if the system’s issues are not addressed, says state Treasurer Walker Stapleton.
Stapleton, a Republican, criticized the state’s 8 percent rate-of-return assumption in a meeting Wednesday with The Durango Herald editorial board.
States have been cutting the assumed return rate – how much a state and its workers have to contribute to the system – because of the weak market and low interest rates. Indiana cut its return assumption from 7 to 6.75 percent last year, one of the lowest assumed rates in the country.
California is “bleeding red ink” because of its public pension system and its rate of return is 7.5 percent, Stapleton said.
“We’re making larger public promises to employees than even California,” he said.
A recent report from Morningstar Inc., a national investment research company, found that the Colorado Public Employees’ Retirement Association is one of 21 state pension funds that are not “fiscally sound,” according to a November 2012 Denver Post article.
Stapleton said the state Legislature needs to shift its focus from social issues such as gun control and civil unions to economic ones and address the pension system.