Solution for PERA spreads the pain around

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By Greg Romberg

When I first met former Colorado attorney general Duane Woodard in 1981, he was a member of the Public Utilities Commission. He and the other two commissioners were charged with evaluating requests from utilities to raise their rates. A variety of businesses, governments and residential consumers that needed utility services would routinely challenge the rate hikes. The PUC needed to determine that utilities received a fair rate of return while ensuring that consumers got fair rates. Duane said that if anyone looked happy leaving the final announcement of a big rate case, he was worried he hadn’t done his job right.

Under that analysis, SB 1 looks like a pretty good bill!

Colorado’s primary public retirement fund is a mess. The Public Employees Retirement Association is seriously underfunded. Everyone who has reviewed the situation believes that, without significant changes, PERA will not have enough money to pay the retirement benefits its members have earned.

There are a variety of reasons PERA is in trouble. The biggest is overly generous rules allowing employees to buy years of service in lieu of actually working that were enacted early in the Owens administration to encourage turnover in the state workforce that were used (and abused!) beyond what proponents of the change ever envisioned.

In the best example of true bipartisan cooperation in recent memory, Senate President Brandon Shaffer and Senate Minority Leader Josh Penry went to work last summer to solve the problem. They’ve come up with a solution that meets the Woodard balancing test of no one being happy. They jointly sponsored SB 1 to save PERA. It increases the contribution of employers. It caps cost-of-living increases for retirees. It changes how retirement benefits are calculated by adjusting the rules for how employees’ highest average salaries are utilized to set retirement pay. It increases the age at which an employee may be eligible for a full retirement benefit. It tightens the rules under which a current PERA retiree may continue to draw pension benefits and go back to work for a public employer.

Under the Woodard test, no one will leave a hearing on SB 1 with a smile. The bill seems to have found a proper balance of spreading the cost of a very difficult problem fairly among all of the interested parties.

The Senate passed the bill Feb. 1 by a vote of 34-1. It now goes to the House of Representatives. While no one is happy with the changes that must be enacted to ensure PERA remains solvent, there is no question that something needed to be done.

Kudos to Shaffer and Penry for their work to craft a difficult solution to a no-win problem.

Greg Romberg is president of Romberg and Associates, a government relations and public affairs firm. He lives in Evergreen with his wife, Laurie, and three daughters.