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House OKs PERA benefits bill

The Colorado House Friday gave preliminary approval of House Bill 12-1150, which would change the method of calculating retirement benefits for state workers, teachers and others who join the Public Employees Retirement Association after Jan. 1, 2013.

The bill is the first of seven PERA-related bills to make it to the floor this session. Two others are pending in House committees, one has been killed in a House committee and three have died in the Senate.

Friday morning’s debate was a predictable partisan affair, with Republicans arguing that benefits need to be controlled to help ensure the system’s financial sustainability and Democrats maintaining the bill is unfair and also unnecessary because of a 2010 law that made pension reforms.

HB 12-1150 would set retirement benefits based on the average of an employee’s seven highest years of salary rather than the current average of the three highest years. Republicans argue that’s needed to prevent “spiking,” which can happen when employees jump to significantly higher salaries late in their careers.

As passed by committee, the bill would have applied to current PERA members who aren’t vested in the system – those with less than five years of service. That provision was removed by a floor amendment Friday, meaning the bill would apply only to future employees.

Current PERA law has different limits on spiking, something usually not mentioned by GOP supporters of HB 12-1150. The bill could reduce benefits for new employees by 6-11 percent compared to current law, acording to some estimates.

Some statehouse observers believe the bill was sparked by a few isolated examples, such as former Gov. Bill Ritter’s jump to a $300,000 salary at a Colorado State University energy institute from his $90,000 pay as governor.

A legislative staff analysis estimates the bill would reduce PERA’s accrued current liability by less than $1 million but doesn’t project into the future what the savings would be (read the fiscal note). Because the bill only would apply to new employees, it’s actual savings presumably wouldn’t be felt for decades, when those people begin to retire.

Debate rages for an hour

Here’s a sampling of some key points and quotes from the floor debate:

PERA’s long-term sustainability: Rep. Larry Liston, R-Colorado Springs, compared PERA to the Titanic, saying, “PERA is going to run into an iceberg and it’s going to sink” unless changes are made.

The value of the 2010 law: “We are on a path to sustainability,” said Rep. John Kefalas, D-Fort Collins.

Punishing state employees: “This is just a slap in the face to state employees,” said Rep. Crisanta Duran, D-Denver. “State employees have been used as a scapegoat.”

Protecting the public: “it’s also about justice for the taxpayers of Colorado. … “They’re expected to pick up the tab” if PERA has to be bailed out in the future, countered Rep. Don Beezley, R-Broomfield.

Spiking: The bill “punishes the normal person to get at a few people,” argued Rep. Matt Jones, D-Louisville.

The debate had moments of the factual confusion that often crops up in PERA debates. Sponsor Rep. Kevin Priola, R-Brighton, meant PERA when he said in 1999 “they made benefits more generous.” System benefits are set by the legislature, not PERA’s board.

Republicans hold a 33-32 majority in the House so will need all those votes to give final approval to the bill. If it passes the House it’s not expected to survive the Democratic controlled Senate.

Despite the bipartisan majorities that passed Senate Bill 10-001, PERA has smoldered since then as a partisan issue, fanned by some legislative Republicans who believe the system is financially unsustainable and needs to be changed. GOP state Treasurer Walker Stapleton also is a leading PERA critic.

PERA bills have drawn wide attention this year, with retirees packing committee hearings and bombarding lawmakers with thousands of emails.

For the record

The Senate Friday gave final 35-0 approval to House Bill 12-1090, which would require the annual Oct. 1 enrollment count date be moved if it conflicts with a religious holiday. The measure now goes to the governor.

The House voted preliminary approval of House Bill 12-1146, which would continue a dropout recovery program under which community colleges can offer high school classes to certain students.