As we’ve discussed plenty of times, politicians will often attack public pensions for their own political gain. There is a perfect example of this in Colorado, where the state treasurer, Walker Stapleton, is using attacks on public pensions to fuel his campaign for governor this year. Stapleton has used his position to create the perception of a crisis and in response, legislation has been introduced that would make harmful, unnecessary changes to PERA, Colorado’s public pension system.
Colorado PERA made some significant changes less than a decade ago in response to the financial crisis. One of the agreed-upon principles at the time was the idea of “shared sacrifice”: everyone would give up something to preserve the integrity of the system. This includes public employees, who are now paying more and earning lower benefits. For politicians like Stapleton, however, this shared sacrifice isn’t enough. They want to eliminate PERA completely and replace it with a risky and unreliable 401(k)-style plan. This would be a particularly dangerous move in Colorado, where public employees do not participate in Social Security. For them, their PERA benefits are their only source of guaranteed income in retirement.
This year, members of the Colorado State Senate bought in to the “sky is falling” rhetoric about PERA and introduced Senate Bill 200. This legislation makes a whole host of changes to PERA, changes that would weaken retirement security for Colorado’s public employees and retirees. Among other changes, SB 200 freezes COLAs for current retirees for two years, forces employees to contribute more to their retirement, and changes the governance of PERA. In the original version of the bill, it asked both employers and employees to contribute more to PERA. However, the legislation was amended during a Senate Finance Committee hearing last week and employers are no longer asked to contribute more towards their employees’ retirement security. The amended version would require workers and retirees to bear the brunt of any increased costs, violating the principle of shared sacrifice.
Senate Bill 200 also undermines retirement security by expanding the option of public employees to choose a 401(k)-style defined contribution plan instead of the PERA pension plan. This is an unnecessary and risky choice. Colorado public employees who already have this choice overwhelmingly choose the pension plan, with 88 percent electing the PERA plan. During the Senate Finance Committee hearing last week, an amendment was offered to remove this provision from the bill, but it was defeated 3-2, and the amended bill moved to the Senate Appropriations Committee on a 4-1 vote.
Colorado’s public employees and retirees recognize that shared sacrifice still matters and that some changes may be necessary to ensure the long-term stability of PERA. Secure PERA, the group representing thousands of current and retired public employees throughout Colorado, is working to defeat SB 200 in its current form, while continuing to propose amendments so that any legislation that might pass affecting public pensions preserves the principle of shared sacrifice by all.
