Who Is In Charge

PERA retiree cuts challenged in court

A class-action lawsuit seeking to overturn the Public Employees Retirement Association solvency plan was filed against the state in Denver District Court Friday, just three days after Gov. Bill Ritter signed Senate Bill 10-001 into law.

At issue is the provision that cuts retirees’ annual benefit increases from 3.5 percent to 2 percent starting in 2011. (For this year there will be no increase. Future increases could drop below 2 percent under certain conditions.)

Despite support for the bill by organized employee groups, there’s widespread anger about the cut among individual retirees, and the lawsuit doesn’t come as a surprise.

The named plaintiffs are Gary Justus, a retired Denver Public Schools math teacher who had more than 29 years of service, and retired Department of Labor employee Kathleen Hancock, who worked for about 15 years.

‘This lawsuit is about the state complying with its own constitution,” Justus said in a statement. “The General Assembly is trying to correct its past mistakes on the backs of the retirees. We can’t go back and restart our careers.” DPS employees and retirees were moved into the PERA system effective Jan. 1.

Justus and Hancock are represented by Stember Feinstein Doyle & Payne, a Pennsylvania firm that has brought employee-benefit suits in other states, and Greenwood Village lawyer Richard Rosenblatt.

According to the lawyers, the “suit is filed on behalf of approximately 100,000 PERA members who became eligible to retire or who have retired since March 1, 1994, when annual pension increases were first guaranteed under state law.”

The suit, citing both court rulings and a 2004 Colorado attorney general’s opinion, argue that the annual benefit increases are a vested contractual right and can’t be changed by legislation. Although PERA operates  separately from state government, benefits and contribution rates are controlled by the legislature.

PERA executives have consistently argued that “actuarial necessity” – the need to make the system financially solvent within 30 years – legally allows for benefit reductions. But, those executives also have acknowledged in legislative testimony that actuarial necessity isn’t well defined in law.

The SB 10-001 plan also includes changes in employer and employee contributions in varies benefit calculations. But, PERA officials say the rescue won’t work financially without cuts in retiree benefits.

Public Employees' Retirement Association headquarters in Denver.

Those cuts, though, could have significant impact on individual retirees. “For example, a public employee who retired in 2002 and who was eligible for $2,772 a month (the average PERA benefit in 2008) will lose more than $165,000 in promised benefits during the next 20 years,” according to a statement from the lawyers.

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 was about 70 percent funded at the end of 2008.

Some observers believe that past legislative actions, including benefit increases, contribution cuts and programs that allowed workers to buy extra years of eligibility, also weakened the pension system. (Those decisions were made in flush economic times, like the general tax cuts that have come back to haunt the state.)

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. Some 44,806 people receive benefits from that 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 that 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. PERA members aren’t covered by Social Security.

The contribution increases required by SB 10-001 have many school districts worried, especially given the planned cuts in state school support this budget year and next.

The bipartisan group of legislative leaders behind the bill wanted it passed and signed before March 1 to head off the scheduled 3.5 percent increase for retirees. Most of the opposition to the bill came from other Republicans, but SB 10-001 passed the Senate 25-10 and the House 36-29.

When he signed the bill Tuesday, Ritter said, “This is a fiscally responsible bill, and it represents another difficult but necessary decision that will require shared sacrifice and shared solutions from public employers and employees alike without imposing an unfair or undue burden on either group.”

A PERA spokeswoman said Friday the agency hadn’t been served with any papers and doesn’t comment on litigation. Defendants in the case are PERA, the state, Ritter and two PERA board officers.

Do your homework

newark notes

In Newark, a study about school changes rings true — and raises questions — for people who lived them

PHOTO: Naomi Nix
Park Elementary principal Sylvia Esteves.

A few years ago, Park Elementary School Principal Sylvia Esteves found herself fielding questions from angst-ridden parents and teachers.

Park was expecting an influx of new students because Newark’s new enrollment system allowed parents to choose a K-8 school for their child outside of their neighborhood. That enrollment overhaul was one of many reforms education leaders have made to Newark Public Schools since 2011 in an effort to expand school choice and raise student achievement.

“What’s it going to mean for overcrowding? Will our classes get so large that we won’t have the kind of success for our students that we want to have?” Esteves recalls educators and families asking.

Park’s enrollment did grow, by about 200 students, and class sizes swelled along with it, Esteves said. But for the last two years, the share of students passing state math and English tests has risen, too.

Esteves was one of several Newark principals, teachers, and parents who told Chalkbeat they are not surprised about the results of a recent study that found test scores dropped sharply in the years immediately following the changes but then bounced back. By 2016, it found Newark students were making greater gains on English tests than they were in 2011.

Funded by the Chan Zuckerberg Initiative and conducted by Harvard researchers, the study also found the reforms had no impact on student math scores.

And while many Newark families and school leaders agree with the study’s conclusion — that students are making more progress now — they had very different ideas about what may have caused the initial declines, and why English growth was more obvious than math.

Supported by $200 million in private philanthropy, former superintendent Cami Anderson and other New Jersey officials in 2011 sought to make significant changes to the education landscape in Newark, where one third of more than 50,000 students attend privately managed charter schools. Their headline-grabbing reforms included a new teachers union contract with merit-based bonuses; the universal enrollment system; closing some schools; expanding charter schools; hiring new principals; requiring some teachers to reapply for their jobs; and lengthening the day at some struggling schools.

Brad Haggerty, the district’s chief academic officer, said the initial drop in student performance coincided with the district’s introduction of a host of changes: new training materials, evaluations, and curricula aligned to the Common Core standards but not yet assessed by the state’s annual test. That was initially a lot for educators to handle at once, he said, but teacher have adjusted to the changes and new standards.

“Over time our teaching cadre, our faculty across the entire district got stronger,” said Haggerty, who arrived as a special assistant to the superintendent in 2011.

But some in Newark think the district’s changes have had longer-lasting negative consequences.

“We’ve had a lot of casualties. We lost great administrators, teachers,” said Bashir Akinyele, a Weequahic High School history teacher. “There have been some improvements but there were so many costs.”

Those costs included the loss of veteran teachers who were driven out by officials’ attempts to change teacher evaluations and make changes to schools’ personnel at the same time, according to Sheila Montague, a former school board candidate who spent two decades teaching in Newark Public Schools before losing her position during the changes.

“You started to see experienced, veteran teachers disappearing,” said Montague, who left the school system after being placed in the district’s pool of educators without a job in a school. “In many instances, there were substitute teachers in the room. Of course, the delivery of instruction wasn’t going to even be comparable.”

The district said it retains about 95 percent of its highly-rated teachers.

As for why the study found that Newark’s schools were seeing more success improving English skills than math, it’s a pattern that Esteves, the Park Elementary principal, says she saw firsthand.

While the share of students who passed the state English exam at Park rose 13 percentage points between the 2014-2015 and 2015-2016 school years, the share of students who were proficient in math only rose 3 percentage points in that time frame.

“[Math is] where we felt we were creeping up every year, but not having a really strong year,” she said. “I felt like there was something missing in what we were doing that could really propel the children forward.”

To improve Park students’ math skills, Esteves asked teachers to assign “math exemplars,” twice-a-month assignments that probed students’ understanding of concepts. Last year, Park’s passing rate on the state math test jumped 12 percentage points, to 48 percent.

While Newark students have made progress, families and school leaders said they want to the district to make even more gains.

Test scores in Newark “have improved, but they are still not where they are supposed to be,” said Demetrisha Barnes, whose niece attends KIPP Seek Academy. “Are they on grade level? No.”

Chalkbeat is expanding to Newark, and we’re looking for a reporter to lead our efforts there. Think it should be you? Apply here.  

Who Is In Charge

Indianapolis Public Schools board gives superintendent Ferebee raise, bonus

PHOTO: Dylan Peers McCoy
Lewis Ferebee

Indianapolis Public Schools Superintendent Lewis Ferebee is getting a $4,701 raise and a bonus of $28,000.

The board voted unanimously to approve both. The raise is a 2.24 percent salary increase. It is retroactive to July 1, 2017. Ferebee’s total pay this year, including the bonus, retirement contributions and a stipend for a car, will be $286,769. Even though the bonus was paid this year, it is based on his performance last school year.

The board approved a new contract Tuesday that includes a raise for teachers.

The bonus is 80 percent of the total — $35,000 — he could have received under his contract. It is based on goals agreed to by the superintendent and the board.

These are performance criteria used to determine the superintendent’s bonus are below: