Colorado lawmakers this year need to shore up PERA, the ailing retirement fund for public servants. And while we support a number of the elements in a bipartisan fix that is in the making, we’re also troubled by a few of the ideas being kicked around.
Though a bill hadn’t been finalized by late last week, the current plan would place a serious burden on strapped K-12 school districts and very likely result in class-size increases.
Legislators are under pressure to make changes to the fund while it is financially troubled and there is legal leeway to trim some benefits. But we hope they don’t rush to a solution at the expense of public school students, especially if the end result continues to support unrealistically generous retirement benefits during troubled economic times.
Lawmakers appear poised to adopt most of the fixes being proposed by PERA officials, which are billed — for the most part correctly — as a “shared sacrifice.”
But the proposed fix, being called the 2/ 2/2 Plus solution, also has a major flaw. It is being pitched as government employers kicking in an additional 2 percent of salary, employees doing the same, and retirees seeing a 2 percent cap on cost-of-living increases.
The trouble comes with the structure of the employee contribution, which we think in many cases will end up being absorbed by taxpayers, who also are on the hook for the employer contribution.
The employee contribution is supposed to come out of future raises. But what’s going to happen in many school districts is that teachers unions will demand that districts absorb that cost, just as they demand districts absorb the cost of increasing health care, and ask for raises on top of that.
Rather than leave the employee contribution to the uncertain nature of collective bargaining, we’d like to see the PERA fix include the employee contribution as a deduction from employee paychecks.
That way, it’s a straight-up fair sharing of the burden, one that is not shifted to school districts or other agencies and ultimately borne by students or taxpayers.
Officials at Denver Public Schools tell us they believe the new legislative fixes being discussed, in combination with currently scheduled increases in retirement contributions, will require the district to cut $40 million from its budget.
Such a serious budgetary burden would force DPS to cut 800 teachers from its staff of 4,500 teachers, and result in double-digit increases in class size.
We hope legislators, as they are lobbied hard by PERA and employee groups, will keep in mind who will really carry the freight for the legislation being proposed.
Another change we think ought to be pursued during this window of opportunity is increasing the retirement age — but not only for new or recent hires, as the legislation will propose.
If there is an “actuarial necessity” allowing retiree cost-of-living increases to be reduced, we think it could be invoked to push back the retirement age, on a sliding scale, by just a few years, for those in the system who have at least 10 years left before retirement.
We think a shared sacrifice ought to be just that — one that is shared by everyone in the system, including the public employees who benefit from it.
