The financial health of the Colorado Public Employees’ Retirement Association (PERA) should be of concern for both the public servants who are counting on its retirement benefits and for all taxpayers who help pay for them.
Colorado PERA’s Comprehensive Annual Financial Report for 2014, released June 23, shows that its unfunded liability increased over the previous year by about $78 million to a total $25.9 billion – roughly the size of this year’s entire state budget. The bottom line is when it comes to paying for retirement benefits to Colorado public employees, PERA is $25.9 billion in the red.
By PERA’s own new estimates, even with big increases in government contributions required by 2010 legislation designed to fix PERA (Senate Bill 1), it will take 48 years to pay down the unfunded liability for its school division, which covers Colorado public educators. That’s four years longer than PERA estimated last year.
In other words, according to this new report from PERA, the pension system is headed in the wrong direction; its unfunded debt has increased while the already long timeline to pay off this debt has grown even longer. As the Laura and John Arnold Foundation described in its recent Risky Retirement report, insufficient contributions into the system have been the primary driver behind PERA’s growing debt. That trend continued last year, PERA’s new report shows.
The PERA CAFR should serve as a wake-up call for PERA members and other taxpayers, who may want to question the plan’s perpetually rosy rhetoric and take a hard look at PERA’s finances.