Lawmakers said today they have reached a deal with Gov. Bill Owens to fix the state’s ailing public employee pension system, avoiding a special session to address a potential $11 billion shortfall.
The deal includes offering alternative plans to more members of the Public Employees Retirement Association to help reduce the shortfall and changing the composition of the board, said Rep. Bernie Buescher, D-Grand Junction.
The compromise must still be approved by the House and Senate before the Legislature adjourns next week.
The proposal would allow newly hired employees in higher education to choose a defined-contribution plan, which allows them to decide how their retirement money is invested but does not guarantee how much their pensions will pay.
Currently, only state government employees have that option, and the rest are in defined-benefit plans, which have fixed pension payments and generally cost employers more to fund than defined-contribution plans.
The compromise also includes shrinking PERA’s board by one member, to 15. PERA members would make 11 appointments, the governor would make three, and the state treasurer would be a permanent member.
Currently, PERA appoints 14 members and the state treasurer and auditor are permanent members. Owens has complained that makeup gives taxpayers too little say in PERA’s finances.
State Treasurer Mike Coffman, who convened a task force in 2004 when he became alarmed by the deteriorating financial condition of the fund, said he was disappointed the compromise did not include further changes to the board.
He blamed the board for many of PERA’S problems, which he said include risky investments and generous perks.
“The governor did the best that he could do, given the fact that he has a Democratic controlled Legislature. I hope this legislation is a wake-up call to this board,” Coffman said.
A spokeswoman for PERA did not immediately return a call.
Owens spokesman Dan Hopkins said allowing new hires in higher education to choose will make a big difference.
“We made substantial progress fixing PERA. We have taken it from where it would never be solvent to making the fund solvent,” Hopkins said.
PERA covers 68,000 retirees and 175,000 active workers in state and local governments.
