Tempers ran high on the floor of the Colorado House today as members discussed reducing the number of PERA board members selected by employees and replacing them with governor appointees. The bill sponsored by Rep. Jim Kerr, R- Littleton, and Sen. Ellen Roberts, R-Durango, passed on second reading.
The bill would dramatically change the composition of the Public Employees Retirement Association pension fund board by moving the balance of power away from PERA members and toward political appointees who do not and will not receive PERA retirement benefits.
“How can someone who is involved in the benefits themselves make rational decisions about those benefits. It is a conflict,” Kerr said. “We need someone on that board that will say we need to reevaluate how we are doing things here. If you do the same things over and over again the same way and expect different results, that is the definition of insanity.”
Rep. Joe Miklosi, D-Denver, disagreed with Kerr’s assertion, explaining that it was precisely because board members had a vested interest in the PERA fund that the fund would remain strong.
“The reason that I am opposed to this legislation is that it would take individuals who really don’t have the vested interest that the current board members do and place them on that board,” Miklosi said. “And talking to some of the stakeholders in this discussion, to me it is really an effort to change the current makeup of the plan… to change it from a pension plan to a 501k plan. … I am very much opposed to that for a variety of reason.”
Miklosi’s opinion was one that the PERA board had already given voice to after voting to oppose Kerr’s legislation. PERA’s CEO, Meredith Williams, told the Colorado Independent that the board does not control the benefits plans and that those are voted on by the Legislature.
“They probably do have some interest in what the benefit structure is, but they have no control over it. Nor do they have any control over the contribution structure,” Williams said. “The board is an oversight administrative board… The power to do those things is vested in the general assembly.”
Democrats expressed the opinion that those on the board are voted on for their experience in financial and actuarial fields and said that once voted on to the board, members receive considerable training.
However, Republicans said that while on-the-job training is useful, it is no substitute for life-long experience and outside perspective. Democrats countered by pointing to findings that showed similar pension programs with vested members outperformed those that did not have such members.
Currently three members are statutorily required to have financial, actuarial or other forms of experience with investments and pensions.
Williams told the Colorado Independent in a previous interview that PERA’s pension plan pays for itself.
“We take in less than a billion dollars in taxpayer dollars, and we pay out three billion dollars into the Colorado economy–so, it isn’t a bad trade off,” Williams said.
Rep. Spencer Swalm, R-Centennial, said that he stood behind Roberts’ belief that the board is unbalanced and controlled by the unions.
“We still have very serious problems with defined benefits plans in this country, as I said there is almost none left in this country. This bill is not a full fix for that.”