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PERA's solvency crucial to Colorado
The PERA plan proposes changes that would go into effect in 2013; some believe changes should occur sooner. The rationale for delayed changes is to allow the economy to recover and hopefully see an improved stock market. The argument for more immediate action is the need to address losses as soon as possible.
PERA's retirement plan for public employees was created in 1934 in lieu of Colorado joining the federal Social Security Administration. Most Colorado public employees do not have Social Security for retirement; therefore, the PERA plan is a state obligation.
Cost of living adjustment benefits have been cut from a maximum of 3½ percent to 2 percent. The lowered COLA percentage creates risk should inflation increase. PERA's 15-member board of trustees, based on PERA's actuarial analysis, believes the plan will bring the fund back to sustainability within 30 years or less.
Another consideration is that about 87 percent of PERA's monthly retirement payments go back into local Colorado communities; it does not disappear into Wall Street bonuses. PERA retirement money spent locally creates jobs, employment, and a stronger economy.
The localness of PERA money also underscores the importance of keeping PERA's defined benefits in place; this means more money goes into Colorado coffers. If the Colorado Legislature were to move PERA from a defined benefit program to a defined contribution plan - such as 401Ks, among others - more Colorado money would go to Wall Street.
Keeping PERA solvent is a benefit for public retirees, education and the Colorado economy. The largest PERA division, education, should be strengthened to encourage quality students to enter teaching. Currently, Colorado is 48th among 50 states in per capita education expenditure. Coloradans do not want to go to 50th.
Bringing the PERA trust fund to sustainability is essential for retirees and quality education in Colorado.
Don Gordon, president, La Plata School and Public Employees Retirement Association, Durango
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