Colorado State Treasurer Walker Stapleton, a rare voice of reason on Colorado’s Public Employees’ Retirement Association (PERA) Board of Trustees, told News Talk 1310 KFKA talk show host Amy Oliver in a recent interview that when the Board voted to maintain an unrealistic 8 percent rate of return one Board member provided the following reason, ”We can’t lower the rate of return because then we would have to explain why SB 1 didn’t solve the problem.”
The unnamed Board member referred to Senate Bill 1 passed in 2010 with support for the PERA Board of Trustees, which was supposed to bring PERA back to solvency.
Oh, the horror of admitting a mistake! Surely wounded pride is much worse than continuing PERA’s unrealistic expectations on the rate of return, which will leave taxpayers and PERA members on the hook for a massive shortfall anywhere from $21 billion to $35 billion.
Certainly it’s better to ignore industry experts and save face in the present than face the reality of PERA’s insolvency.
In a Denver Post guest editorial last spring, Stapleton courageously exposed the “hard truth” of PERA’s future if we continue with current policy:
PERA is not structurally sound, and Coloradans are on the hook should the system fail. Although the stock market recouped some of its sharp losses in 2010 and Senate Bill 1 made incremental improvements last year, PERA still maintains an unfunded liability of close to $25 billion, which is the measure of what it owes compared to its assets.
If this current and growing gap is not addressed, which Forbes magazine estimates at $15,000 for every Colorado taxpayer, the people of Colorado are ultimately responsible for funding this massive shortfall.
Just add that $15,000 to our current unfunded federal liabilities, which is somewhere north of $1,000,000 per taxpayer.
The eight members of the PERA Board (five voted against maintaining the 8 percent rate of return) aren’t the only ones unwilling to face reality. State Representative Sal Pace (D-Pueblo), now looking to challenge Congressman Scott Tipton in the 3rd CD, did vote against SB 1 but only because he doesn’t think PERA has a solvency problem. The Pueblo Chieftain quoted from Pace’s Web site in February 2010:
‘I voted against the proposal because I don’t believe that the problems with PERA need an immediate fix and the solutions proposed unduly placed a burden on our seniors,’ Pace said in a statement on his Web site Tuesday.
Pace noted the high concentration of PERA enrollees in Pueblo and said projections that PERA would be insolvent within 20 years don’t take into account the possibility that the slumping economy will rebound, and that a target date for solvency of 50-60 years from now (which before SB1 had been the goal) ‘would be less onerous and more fair.’
The “possibility that the slumping economy will rebound”? I keep that “possibility” right next to my unicorn feed.