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Questioning DPS pension savings

Within the larger debate over how to restructure the DPS pension debt, there continues to be disagreement over whether the 2008 pension refinancing resulted in any savings to the district.

DPS Superintendent Tom Boasberg is unwavering in citing nearly $34 million that he contends was saved, and he is supported in documents provided by the district’s advisers.

Those show that funding the pension, absent the 2008 $750 million deal, would have cost $170.2 million through the end of December. But by entering into the agreement, the district instead spent $136.3 million – a difference of $33.9 million to the district’s advantage.

“That is $33 million in the bank, and will remain in the bank, at the time we re-fix the portion” under consideration in tonight’s vote, said board member Bruce Hoyt, an investment banker. “That will not be offset at all.”

However, in the refinancing now under consideration, if the board were to put one-third of its debt in fixed-rate investments, as DPS staff are recommending, the district would pay out $32.8 million in termination fees and other costs – very nearly matching the $33 million touted by Boasberg and others.

To lock in a fixed-rate on a larger portion of the debt will cost even more. By fixing one-half of the $750 million instead of one-third, as now appears likely, those termination fees and costs jump to $47.3 million.

But as long as the portion of the debt locked in by tonight’s vote is fixed below 8.5 percent – the rate at which DPS was being charged on its unfunded pension liabilities – Boasberg and others insist that nearly $34 million in savings are secured.

“If we didn’t have any of those (termination) costs, we’d be paying 7.2 percent,” said district Chief Operating Officer David Suppes. “But, because we have to add those in, the rate now becomes 8.34 percent.

“Is it more than we’re paying today? Yes. But it’s less than we’d be paying otherwise. Otherwise, we’d be writing the check for 8.5 percent of our unfunded liability, which would be greater than it is, today.”

Count board member Jeannie Kaplan, who has publicly questioned all aspects of the original transaction after voting for it in April 2008, among the savings skeptics.

“I actually think we’ve lost a lot of money. I’m just not sure we’re going to be able to document it,” she said.

Invoking President Bill Clinton’s impeachment-era testimony about the true meaning of the word “is,” Kaplan said an answer to this question raises questions about the definition of the word “savings.”

“I have tried desperately to get it all figured out, and I can’t do it,” Kaplan said. “If you want to say it’s a wash, I guess you can do it. But one of the most frustrating parts of this entire 2008 transaction has been to get a handle on cost and interest and fees.

“I don’t believe that we have saved money in this transaction, and I think going forward, we need to be much more careful with public money,” she added.

Mary Seawell, the board’s treasurer and head of the its finance and audit committee, knows that not all of her colleagues accept that any savings have been achieved.

“I think there are other people who aren’t going to frame it that way,” she said. “I see both sides, and I don’t really think it matters. The cost is the cost, at the end of the day.”

Will there ever be consensus on a question that should, ideally, be a clear-cut matter of dollars and cents?

“Nope,” Seawell said, “and I’m just letting it go. I don’t want to spend one more minute on that discussion,” adding that wrestling with the pension refinancing “is probably the most difficult thing I’ve worked on as a board member, or ever will.”

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