Archive for the 'pera' Category

3 Bills a Result of Our Citizens’ Budget Project

Posted by on Feb 07 2012 | Citizens' Budget, pera, PPC, Taxes

When we embarked on our Citizens’ Budget project two years ago, we wanted it to be a big deal. It had to be, it was an enormous undertaking. We wanted to leave no stone unturned in our quest for a fiscally sound Colorado state budget. The project ended up requiring months of time from our most dedicated researchers and writers. In the end, we had a 170 page document that touched on all areas of our budget and offered sound solutions to our most urgent needs. Additionally, we made a 6-page executive summary of our findings for those who don’t want the big kahuna.

When the Citizens’ Budget first dropped, we found it was extremely popular with the Tea Party and limited government crowd. We ordered hundreds of physical copies and could hardly keep those puppies in stock! But when it came to our state legislature, there was hardly a peep. 2011 came and went and we wondered why no legislators jumped on any of our suggestions. Yeah, some of them are politically unpopular, but many of them are not. What gives?

But now in 2012 some brave state legislators have taken up the cause for fiscal responsibility! For a great overview of 3 bills working their way through the legislature thanks to our project, look no further than Wayne Laugesen’s editorial in today’s Colorado Springs Gazette. Wayne praises our Citizens’ Budget and goes on to explain how our suggestions to shore up the Public Employees Retirement Association (PERA) made their way into 3 bills thus far.

The first is a bill carried by Rep. Chris Holbert of Parker. The bill “would cap the health benefit for early retirees at $230 a month and eliminate health care payments for retirees who have reached the age of eligibility for Medicare.” Secondly, we have Senate Bill 119 carried by Sen. Tim Neville of Littleton. His bill “would force the board of directors of PERA to adjust benefits in order to “maintain the long-term actuarial soundness of each trust fund.” Our Fiscal Policy Center director and lead author of the Citizens’ Budget Penn Pfiffner gives a great explanation of exactly what that means,

“Today, the PERA board tells state government to get the money it needs. This bill says they have to adjust benefits accordingly. Once taxpayers have made their contribution, it will be up to PERA to make it work. We would no longer be responsible for how PERA handles the money.

Finally we have a Senate Bill 82 carried by Sen. Ted Harvey of Highlands Ranch. His bill “would increase the age at which new public employees would be eligible for retirement benefits.” For example, today some new hires can plan on retiring at 58 years old thanks to PERA. Sen. Harvey’s bill would increase the age to 68 – the same as Social Security.

It’s exciting to see that the tremendous work our research team did two years ago is bearing fruit in 2012. We encourage all legislators to read their copy of our Citizens’ Budget (yes, you have one. If you can’t find yours, contact us immediately!) and take on the challenge to strike at the heart of our continued budget deficits. What’s the heart of our budget issues? As Penn Pfiffner says, “it’s a structural problem.” In other words, it’s time we discard all the accounting gimmicks we have to use each year to balance the budget. If the Citizens’ Budget were in charge, we wouldn’t need any tricks to fix a deficit because there wouldn’t be a deficit year after year.

Read more about the Citizens’ Budget project here.

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VIDEO: AG Suthers on Obamacare Lawsuit, Walker Stapleton on PERA

Posted by on Nov 14 2011 | Health Care, Idiot Box (TV Show), pera, PPC

AG Suthers on the Obamacare lawsuit:

Colorado state treasurer Walker Stapleton on PERA:

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Long-term: PERA is in Trouble

Posted by on Jul 18 2011 | pera, PPC, Taxes

You may have heard that “PERA paints a rosy future” and that “PERA’s future is looking up” from the Denver Post, but I’m afraid it’s not that simple. (Incidentally, you may have heard other things of dubious nature from the Post). I hate to be the bearer of bad news, but you ought to listen to what Independence Institute senior fellow and economist Barry Poulson has to say on the matter in the Colorado Springs Gazette. Barry writes that PERA may be the most troubled pension plan in the country. So no, it’s not “rosy” and it’s certainly not “looking up.”

As much as we taxpayers would love to believe that PERA’s fiscal house is in order, it’s not. The numbers don’t lie. Take this for example,

To pay off liabilities in the pension plan over a 30-year period, annual contributions to PERA would have to more than quadruple from the current 11.3 percent of payroll to 53.9 percent of payroll. There is no other pension plan in the country that imposes such a financial burden on future taxpayers. Every household in Colorado would have to pay $1,739 more in taxes annually, just to meet pension obligations.

Ouch. The picture isn’t so bright when you look at the full 30 year figures. However, you can almost avoid the impending disaster, if like the Post, you only look at the next decade. What’s more, those estimates take into account the reforms enacted in SB-1.  Then what are we to do? Barry suggests a “hard freeze.” A hard freeze will be relatively painful for public employees in the short term, but it may be the only option we have left before full implosion. As Barry concludes, we MUST tackle this problem now. It’s not going to get better on its own.

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If We Hope Hard Enough…

Posted by on Jun 08 2011 | Economy, Government Largess, pera, PPC, TABOR, Taxes

There is an old financial investment saying that “hope is not an investment strategy,” but from what I can tell, that’s about all the current Public Employees’ Retirement Association (PERA) projections are running on. That and crossing some fingers maybe. Financial strategy and investment guru Blaine Rollins hits a home run in this Post guest commentary with an op-ed that would make our own Barry Poulson proud. In the piece, Blaine points out that private firms typically take a conservative approach to calculating their pension liabilities. Usually something around 5% per year is targeted so that if the economy finds itself in the toilet for long stretches, the firm is able to continue making pension payments. States on the other hand, have traditionally picked more aggressive rates of return – like 8% per year. This becomes a problem when their fantasy land projections don’t meet reality. And guess who gets called on to make up the difference?

Taxpayers.

Colorado’s own Public Employees’ Retirement Association went the risky route and chose a whopping 8% rate of return. Such a hopeful outlook has been a point of debate for quite some time now. Barry Poulson discussed PERA’s extremely hopeful rate of return at length in this Independence Institute Issue Paper, PERA Falls Off a Cliff.

In the end, if and when PERA’s hopes don’t materialize and we’re looking at a massive shortfall, there are only two roads to take – and both aren’t pretty.

Betting PERA member retirement plans and Colorado taxpayers’ future on a 30-year, 8 percent return assumption is fiscally irresponsible. With no changes to state or member contributions or benefits, it is easy to see how the PERA assets will fall to zero in the next decade. At that point, Colorado will either need to stop all payment to PERA retirees or raise taxes significantly.

Ouch. Which route do you think will be more politically palatable? The only question is, will they at least have the decency to ask us?

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