Goal: An effective public retirement system is financially sustainable over the long term without crowding out spending for other priorities or presenting unacceptable risks to retirees and other taxpayers.

Reality: The state’s public pension finances, while improved by both 2010’s Senate Bill 1 and unusually strong investment returns, remain precarious and worrisome for PERA members.

While Senate Bill 1 was a step toward long-term sustainability, it significantly increased the financial burden on public entities like school districts, straining the rest of their budgets. Public employer contribution rates are substantially higher than they’ve ever been before and that reduces funds available for public services.

To illustrate, Colorado Springs District 11 budgeted $95 million for teacher salaries in 2013-14[2]. Given current contribution rates (17.45%)[3]the district must pay $16.6 million into the pension fund on their behalf. This high payment rate means lower teacher salaries, higher school fees for families, and/or fewer books and supplies in the classroom.

If, instead, the state and its school districts implemented a smarter retirement structure[4], the district could hire 207 more teachers[5] or give each of the 2,000 district teachers a $3,315 per year raise[6], while still providing retirement benefits to district employees.

As can be seen in the graph above, employer contributions are already eating up a significant portion of public employer budgets, and are on the rise. A recent report by PERA indicates that the contribution rate for schools will reach a crippling 20% by 2018.[1]

Relocating Richard

Richard got his first teaching job in Colorado but, after 11 years in the Centennial State, Richard’s wife wants to return to her home state of North Carolina. Although Richard spends the rest of his career teaching in North Carolina, his total pension is considerably less than it would have been had he taught in the same state for his entire career.

PERA Profile
Years teaching in Colorado classrooms: 11

Richard’s lifetime benefit under the current structure: $20,982

Richard’s lifetime benefit with a smooth accrual plan: $77,615

Richard earns $56,633 less under the current PERA structure