Republican lawmakers are urging for immediate legislative action to deal with the financially damaged retirement plan that covers more than 430,000 Colorado state employees.
Colorado Republican Reps. Mike May, Kent Lambert and Jim Kerr sent a letter yesterday to Speaker Terrance Carroll, D-Colo., urging the lawmaker to hold a bipartisan emergency Joint Select Committee session to address what they believe is a crisis facing the Public Employees Retirement Association of Colorado (PERA), the pension plan for state employees.
Recession hard on PERA
The recession has hit PERA hard. During the past year, the market value of PERA’s portfolio fell 27.2 percent, from $41.4 billion to $30.1 billion, according to the Independence Institute, a libertarian think tank.
“Immediate legislative action may be necessary to help stop the continued hemorrhage of PERA’s fiscal position and the potential loss of retirement benefits for tens of thousands of employees,” said the letter from the Republican lawmakers.
PERA is standing by their belief that there shouldn’t be any legislation to address the “dramatic decline in the PERA investment portfolio” until 2010. The PERA Board of Trustees needs a complete picture of its assets, namely real estate and private equity, before recommending any changes, they say. That information won’t be available until the end of May,
GOP doesn’t want to wait
The Colorado Republicans blasted PERA’s idea to wait until 2010.
“With the magnitude of the current economic crisis, PERA’s plan of doing nothing for another year is tantamount to Nero fiddling while Rome burned,” they said in the letter.
The funding crisis for PERA is a result of the state promising its employees benefits it couldn’t possibly pay for, according Barry Poulson, a Senior Fellow with the Independence Institute who served on a commission to reform PERA earlier this decade. Poulson said the best way to overhaul PERA is by switching it from a defined benefit plan, which promises a specified monthly benefit at retirement, to a defined contribution plan, which is similar to a 401k.
Poulson added that the taxpayers are currently on the hook for the monetary shortfall facing PERA, and that some action must be taken.
May, Lambert and Kerr are proposing that the joint committee on PERA be comprised of eight legislative members, four each from the Senate and the House, and with an equal representation from each political party. Carroll’s office could not be reached for comment by deadline yesterday.
