Who Is In Charge

PERA woes loom large for education

The state budget and school finance aren’t going to be the only big-money headaches facing legislators and education interests in 2010.

StockPERALogo102109The recently announced “rescue” proposal for the 438,000-member Public Employees’ Retirement Association carries a big price tag for school districts and colleges, and could affect the retirement incomes and retirement plans for thousands of past and current school and college employees. The plan also could leave some school districts with little flexibility for teacher raises.

Even though various interest groups in the discussion say they agree there has to be some shared sacrifice to bolster the financially battered pension system, questions and qualms already are surfacing over the plan approved by the PERA board on Oct. 16.

PERA was under a legislative deadline to present a reform plan by Nov. 1. The whole issue will be in squarely the lap of lawmakers in 2010, because only the legislature can change PERA benefits or contributions.

PERA’s challenge – and the proposed solution

Its investments hollowed out by the recession, PERA’s net assets available for benefits dropped from $43.1 billion at the end of 2007 to $30.8 billion at the end of 2008, a loss of more than 25 percent. The system pays about $3.1 billion in benefits a year and receives about $1.7 billion in contributions from covered employees and their employers. PERA overall is about 70 percent funded.

“Projections show that the Colorado Public Employees’ Retirement Association (PERA) cannot invest its way out of the situation created by the worst economic downturn since the 1930s,” according to an agency statement last week.

Source: Public Employees' Retirement Association
Source: Public Employees' Retirement Association

Agency leaders have tried to craft a solution that would share responsibility (translation – “pain”) between members, employers and retirees; provide equity among different age groups; be sustainable long term; preserve PERA as a defined-benefits plan; maintain the same benefits across all agency divisions, and minimize impact on short-term member behavior.

If you think school finance is the most complicated issue in state government, you haven’t delved into public employee pensions. Below is a simplified summary of what the rescue plan, dubbed “2+2+2 Plus” by PERA, would do.

• The good news for employees is that their direct contribution of 8 percent of salary would remain the same. It’s been at 8 percent since 1982. (There is bad news in that employers are being asked to increase their contributions from funds that might otherwise go to employee salaries – that’s explained below.)

• The bad news for retirees is that annual cost-of-living adjustments (COLAs) would be capped at 2 percent until the system recovers its financial health. No COLAs would be paid until one year after retirement.

• The bad news for employers (school districts, in this case) is more complicated.

The overall employer contribution for PERA’s school division fluctuated between 12 percent of payroll and 12.5 percent from 1976 to 2008. But, under a previous legislative rescue plan, that rose to 12.95 percent this year, will be 13.85 percent next year and will go to 16.55 percent at the beginning of 2013.

The new rescue plan would extend increases to 2017, topping out at 20.55 percent. (The employer contribution has three parts, a base and two “equalization” contributions. One of those, known in PERA-speak as the SAED, is supposed to come from employer funds that otherwise would have gone to wage increases. The SAED is proposed to total 5 percent of payroll in 2017.)

• Under the plan, the COLA freeze and the increased employer contributions could be reduced once PERA reaches 110 percent funding but would be reimposed if funding dropped below 90 percent.

Those aren’t the only elements of the rescue plan. Other important features include:

  • Calculating an employee’s highest average salary on five years of pay, not the three currently used. This would have the effect of reducing pension payouts. (If approved, this would apply to non-vested employees – those with less than five years of service.)
  • Changing the rules for when an employee can retire with full benefits. The proposed rule for employees not yet vested would require 30 years of service and age 60 for full retirement, a so-called “rule of 90.” (People hired since 2007 are covered by a rule of 85, with a minimum retirement age of 55. Workers hired before 2007 are under a rule of 80 with a minimum age of 50.)
  • Tightening the rules for early retirement.
  • Eliminating the 50 percent match paid to non-vested (fewer than five years of service) employees who leave service and request a withdrawal of their PERA contributions.
  • Requiring contributions from retirees who return to work in a PERA covered job. (Such post-retirement work currently is limited to 110 days a year without affecting pension benefits. But, this change would have the effect of reducing a person’s pay from a post-retirement job.)

The proposed rescue plan would not apply to the new division for Denver Public Schools employees, who join PERA next Jan. 1.)

“We all want to save PERA, but …”

As Dan Daly, chief lobbyist for the Colorado Education Association notes, “Everybody understands we’ve got to do something to fix the system.”

But, the CEA and other groups already have concerns about the PERA plan.

“We would support the ‘2+2+2’ plan, but it’s the ‘Plus” that PERA has proposed that creates problems,” Daly said.

He’s concerned about the shift from three to five-year salary averaging and fears that some provisions proposed could create incentives for people to retire early. “You could sort of get a run-on-the-bank kind of thing.”

The CEA and other groups also support the idea of setting triggers for ending or easing the COLA freeze and employer contributions but aren’t sure 90 percent and 110 percent are the correct levels.

Daly noted that if PERA ever achieves a surplus, its funds could become a target for cash-hungry legislators, as has happened with Pinnacol Assurance, the state-affiliated workers’ compensation insurer.

Ken DeLay, executive director of the Colorado Association of School Boards, said, “Assuming they (PERA) have done their homework, the concept they’ve come up with seems pretty sound.”

But, “We are worried about the employer contributions … that’s a concern for our members,” DeLay said. “I think we’re going to want to see the whole bill.”

Last year employers paid $430 million into the school division trust fund.

DeLay said school boards also are worried about possible “incentives for mass early retirements. … We don’t want a rush for the door.”

He also alluded to the fact that increased PERA contributions by districts could squeeze the amount of money available for salary increases. Higher contributions would “continue to exacerbate those kinds of conversations” between school boards and teacher unions.

Bruce Caughey, deputy executive director of the Colorado Association of School Executives, wrote this to his members in a recent newsletter: “While the coalition applauds all of the long hours and effort PERA has put into this process and agrees with the guiding principles that were used, we are concerned that the [PERA] board has gone beyond what it may need to accomplish.”

The coalition Caughey referred to is the Colorado Coalition for Retirement Security, a group of nine employee-oriented groups that is monitoring the issue. Education-related members include the American Federation of Teachers/Colorado, CASE and CASB.

A coalition statement said, “We are concerned that the [PERA] board is forgetting the additional framework we find ourselves working in and that is a down economy – we are facing budget cuts at the city and state and school level, employees are being furloughed and health care costs are sky rocketing.”

Let the games begin

Given the amounts of money and numbers of people involved, the PERA reform plan is shaping up as a major fight in the 2010 legislature.

Sam Mamet, executive director of the Colorado Municipal League, predicts a “knock down, drag out” battle that “will make for some interesting bedfellows.” (Local governments have a smaller stake in the battle, since some larger cities and many counties aren’t in PERA. Still, local governments will be watching closely, Mamet said, noting that the recession has hit cities and county revenues hard because of their reliance on sales taxes. School districts get their money from state aid and local property taxes.)

PERA is “obviously gearing up for some heavy-duty lobbying,” one observer noted. The agency has hired two lobbyists from the firm Colorado Communique, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO.

The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler.

Coalition members have their own lobbyists, and the well-staffed higher education lobby is sure to be involved in this issue as well.

While many interests will want legislators to tinker with parts of the plan, PERA is expected to argue that it’s a seamless whole and shouldn’t be cut up.

All that lobbying power will be focused on 100 legislators who will also be wrestling with massive budget cuts and, in many cases, calculating their re-election chances in November 2010.

PERA at a glance

The plan has four divisions with separate trust funds – school, state (including some higher ed employees), local government and judicial. DPS employees will be in a separate, fifth division. PERA-covered employees aren’t eligible for Social Security.

Overall, the system has 190,684 active members, 81,248 benefit recipients and 143,619 inactive members (people with eligibility but no longer working in PERA-covered jobs.)

While often thought of as the state pension system, PERA membership is dominated by employees of schools and colleges. Of PERA’s 190,684 active members, 118,547 are in the school division, which includes all districts in the state except Denver. Some 44,806 people receive benefits from the school division.

In 2008 employers paid more than $430 million into the school division trust fund while employees contributed about $304 million. There were about $1.4 billion in benefit payments. Because of the hit taken in PERA’s investments, in 2008 the net assets of the school division trust fund dropped from about $23 billion at the beginning of the year to about $16 billion at year’s end.

The state division includes employees of 28 colleges, universities and other education agencies, with 11,679 members (about 20 percent) accounted for just by the University of Colorado, Colorado State, Metro State and Front Range Community College. Some higher ed employees have access to other retirement plans.

For the overall PERA system, the average age at retirement was 58 with about 23 years of service, the average age of current retirees is 69 and the average monthly benefit is $2,772.

(Statistical information in this article was taken from PERA documents.)

Do your homework

(Note: You’ll need the latest version of Adobe Reader to open PDF documents from the PERA website.)

the one to watch

Inside the three-candidate battle for northeast Denver’s school board seat

File photo of student at Marrama Elementary School in northeast Denver. (The Denver Post)

Of the Denver school board races on the November ballot, none packs more intrigue than the fight for District 4.

The three-person slate of candidates features an appointed incumbent who’s never run for office and supports the district’s current path, an outspoken recent high school graduate who sharply disagrees, and a former charter school educator with a more nuanced view and — in what on its surface may seem surprising — the endorsement of the teachers union.

The seat represents a large swath of northeast Denver with a wide range of income levels, including areas that are gentrifying quickly and others that have been home to some of the district’s most aggressive school improvement strategies.

The Nov. 7 election is high stakes. Four of the seven seats on the Denver school board are up for grabs. If candidates who disagree with Denver Public Schools’ direction win all four races, they’ll have the political power to change key policies in the state’s largest school district and one nationally recognized for its embrace of school choice and autonomy.

Tay Anderson is one of those candidates. The 19-year-old graduated from Denver’s Manual High School last year and is now a student at Metropolitan State University. On the campaign trail, he has doggedly criticized the district for what he describes as weak community engagement efforts and a move to “privatize” public education by approving more charter schools, which are publicly funded but independently run (in Denver, by nonprofit operators).

He also has led the charge in attempting to tie the current school board and the incumbent candidates to U.S. Education Secretary Betsy DeVos, whose stance on school choice — and especially private school vouchers, which DPS does not support — have made her a controversial figure.

    This is the first of a series of articles profiling this year’s Denver school board races. You can read about where candidates in all the DPS races stand on issues here, in Chalkbeat’s candidate questionnaire. Check out our coverage of the campaign’s first campaign finance reports here.

When DeVos came to Denver in July to give a speech to a group of conservative lawmakers from across the United States, Anderson organized a protest against her. In front of a crowd of hundreds, he called out the current Denver school board members.

“We can tell them, ‘Screw you. You’re fired in November!’” he said.

Anderson has a compelling personal story. The teenager struggled in high school before becoming a leader at Denver’s Manual High. He was student body president, chairman of the Colorado High School Democrats and a member of the Student Board of Education.

Anderson was also homeless for a time and has said his own challenges give him valuable insight into the lives of other Denver students living in difficult situations. About two-thirds of the district’s 92,000 students qualify for subsidized lunches, a proxy for poverty.

“I have had nobody in my corner when I was a homeless student and when I was in and out of foster care,” Anderson said at a recent televised candidate debate. “And now it is my turn to turn to our students and say, ‘I am going to be your champion.’”

His candidacy has attracted more local and national press attention than is usual for a school board race. But while Anderson has said his young age would bring a fresh perspective to the board, his opponents have questioned whether he has the experience to serve.

“It’s one thing to swing a hammer at a frustration, but it’s another to know where to swing it,” said candidate Jennifer Bacon, one of Anderson’s two opponents.

Anderson is running against Bacon, 35, and incumbent Rachele Espiritu, 48. Espiritu was appointed to fill a vacancy on the board in May 2016. The appointment process was long and marked by controversy. The first appointee, MiDian Holmes, stepped aside after details about a misdemeanor child abuse conviction and her mischaracterization of it came to light.

Both Espiritu and Bacon were among the finalists for the position. But Bacon withdrew, explaining at the time it was “in consideration of my need for growth and readiness for this position, as well as my interests in supporting the board.”

Asked recently to elaborate, Bacon said she withdrew because she sensed she wasn’t going to be appointed. She said she, too, had an arrest in her background: for stealing a necklace from Macy’s when she was in college. Bacon said the charge was dropped and she was not convicted. (No charges showed up in a background check done by Chalkbeat.)

Bacon, who attended college in Louisiana, said the arrest was a turning point at a time when she was struggling to find her purpose. She went on to join the Teach for America corps, teaching for a year in New Orleans and a year in Miami.

After teaching, she went to law school and then moved in 2010 to Denver, where she worked first as a dean for the city’s largest charter school network, DSST, and then in alumni affairs for Teach for America. She is now a regional director with Leadership for Educational Equity, a nonprofit organization that trains educators to advocate for policy changes.

Bacon said she wondered whether her positions on key issues also made her an unlikely appointee. For instance, she has said she’s not opposed to charter schools but believes Denver has reached its threshold and should focus on shoring up its traditional schools.

“People ask me if I’m pro-charter,” Bacon said in an interview. “I’m pro-community.”

Since Espiritu was appointed, she has largely voted in line with the rest of the school board. But she chafes at the idea that the board is monolithic or a rubber stamp for the administration. Much back-and-forth occurs before a decision, she said in an interview, and each board member brings a unique background and set of life experiences to the table.

Espiritu often says on the campaign trail that she’s the only immigrant to serve on the board in the last century. She was born in the Philippines and came to the United States as a toddler. She holds a PhD in clinical psychology from the University of Colorado Boulder and helped found a small business called Change Matrix that assists organizations with planning, putting into place and monitoring change. She and her family moved to Denver in 2012.

Espiritu has two sons. Her oldest goes to DSST: Stapleton High, a charter school. Her youngest goes to William (Bill) Roberts School, a K-8 district-run school. She has said that in choosing schools for her children, she focused on quality and not on type.

As a member of the board, Espiritu has paid particular attention to efforts to improve student mental health. She recently encouraged DPS to become a “trauma-informed school district.”

“I want us to be a district that addresses student and educator trauma in a proactive or preventative way that’s culturally sensitive and systematic in fashion,” she said at a September board meeting. “…We need to shift our thinking from asking what is wrong with a child to what happened with a child.”

Parts of northeast Denver have struggled academically. The region is home to the district’s biggest-ever school turnaround effort, as well as two of three schools the board voted unanimously last year to close due to poor performance.

The candidates’ disparate views on school closure offer a window into what differentiates them. Espiritu voted for the closures, though she noted at a subsequent board meeting that doing so was “a painful process … and such a difficult decision.”

Anderson has said he opposes closing any more traditional, district-run schools. Bacon, meanwhile, has said that while she doesn’t believe in “trapping kids in failing schools,” ideas about how to turn things around should originate with affected families.

Two local groups that traditionally endorse candidates and contribute large sums of money struggled this year with who to support in District 4. The Denver Classroom Teachers Association endorsed Bacon, but a progressive caucus of the union chose to separately support Anderson. The pro-reform group Stand for Children did not endorse any candidate, explaining that both Bacon and Espiritu surpassed its “threshold for endorsement.”

Of the three candidates, Espiritu had raised the most money — $73,847 — as of Oct. 11, when the first campaign finance filing period ended. Bacon had raised $59,302, including $10,000 from the teachers union, while Anderson had raised $16,331.

Espiritu and Bacon have also benefitted from the support of independent expenditure committees. A union-funded group called Brighter Futures for Denver spent $139,000 on Bacon. Two other groups, Students for Education Reform and Raising Colorado, which is associated with Democrats for Education Reform, spent a total of $73,229 on Espiritu.

Sorting the Students

As Nashville heads to court over sharing student information with the state, here’s why Memphis probably won’t

PHOTO: Grace Tatter
Nashville's Davidson County Chancery Court building where the state filed against Metro Nashville Public Schools over sharing contact information with charter schools.

Tennessee’s two largest school districts are often in lockstep on key issues. But in a recent tiff with the state about sharing student information with charter schools, the two districts are poised to part ways.

Leaders of Nashville’s school district have repeatedly defied an order from Tennessee’s education commissioner to share student addresses, phone numbers, and other information with the state’s controversial turnaround district, as required by a new state law. The state filed a lawsuit this week in response.

Meanwhile, leaders of the Memphis district have spoken out about the rule — but are preparing to comply. The district has given parents until Sunday, Oct. 22 to opt out of sharing their contact information with charter schools.

Instead of outright rejecting McQueen’s deadline last month like Nashville did, Superintendent Dorsey Hopson sought a compromise and the district has indicated contact information after the opt out window could be shared.

“… we respectfully request you extend your deadline until October 23, 2017 to allow our families the opportunity to make an informed decision regarding their rights and to give our board an opportunity to vote on the release of the data,” Hopson said in a letter to McQueen.

The state education department says it is holding off filing a similar suit against that district, for now. The Memphis district “is still deciding whether to comply, whereas Metro [Nashville] has made its decision already,” state spokeswoman Sara Gast said. “Given that, it is appropriate to file here and then review Shelby’s decision to decide if litigation is necessary.”

Shelby County Schools declined to share how many parents have chosen to opt out so far, but said it plans to share information with its board about the effort next week.

The fight has ignited long-simmering tensions around enrollment and the state’s influence in local schools, and comes on the heels of Metro Nashville Public Schools board voting to join Shelby County Schools in its landmark funding lawsuit against the state.

Memphis leaders have also said that the issue at hand is student privacy, though a robocall to Memphis parents indicated that the main goal of the opt-out process was not to lose students to charter schools.

Memphis’ compromise stance will be good news to groups like parent advocacy organization Memphis Lift, which says it has gathered about 1,200 parent signatures urging Shelby County Schools to release the contact information.

What Memphis parents should know about how schools share student information

The legal questions at stake are the first challenge to a slight, but significant, amendment to federal rules

The Nashville school board cited two reasons for defying the state’s order in late August: One is U.S. Department of Education rule that allows districts to have discretion on who gets student directory information. The second was that when state lawmakers crafted the law that requires school districts to share student information, they did not intend for that information to be used for recruitment.

According to Frank LoMonte, a First Amendment lawyer and director of The Brechner Center at the University of Florida, said the lawsuit could have national implications.

“What we’re about to see is the first test of whether the U.S. Department of Education amended rules in 2011 are enforceable or not,” he said. What it comes down to, he said, is if a federal rule can give local districts the permission to violate state law.

The Nashville board’s second justification reflects concerns from State Rep. John Forgety, who chairs a key House education committee. He says the state is misinterpreting the law he helped create.

The state said in a statement that Commissioner Candice McQueen is seeking to confirm her interpretation of the new state law, “ensuring that families can be informed of all public education opportunities available to them.”

Below is a copy of the state’s court filing: